From awareness to influence: governing climate and nature risk

When insurers decline cover, banks reconsider lending.

When banks reconsider lending, asset values shift.

When customers question your commitment to sustainability, they stop buying your products.

That is how climate risk can impact your financial position and viability.

Directors do not need to debate whether climate and nature change are real. Markets are already responding. Insurance premiums are rising in exposed regions. Some insurers are withdrawing from new business. Lending decisions increasingly consider insurability. Risk is being priced, property by property.

This is not ideology. It is economics.

Directors need to respond to that reality – moving from awareness to influence.

Over the past few years, Chapter Zero New Zealand has built strong climate literacy across the governance community. That foundation matters. Directors understand the terminology, the frameworks and the regulatory landscape far better than they did five years ago.

But awareness is not the end point.

Directors are not passive learners. They allocate capital. They approve strategy. They oversee risk and performance. Climate and nature considerations must be integrated into those core disciplines – not treated as a separate sustainability agenda.

When I say climate governance is good governance, I mean sustainable thinking should already be embedded in how boards approach asset acquisition, supply chain resilience, infrastructure planning and capital allocation. If it is not, that is a governance gap.

Integrating climate, nature and resilience

Over the past 12 months, the conversation has widened. It is no longer only about emissions, but it is also about nature, biodiversity, infrastructure fragility and physical climate risk.

Extreme weather events are testing assets and supply chains. Infrastructure deficits built up over decades are being exposed. Insurance markets are responding with increasingly sophisticated data and pricing models.

For a small trading nation like New Zealand, whose prosperity depends heavily on its natural environment, climate and nature governance is economic strategy. Protecting biodiversity, land and water quality is directly linked to protecting export markets, tourism revenues and brand value.

This year, we will explicitly frame climate, nature and resilience together – as interconnected governance issues that boards must consider holistically.

Capital discipline and commercial reality

Boards have finite capital. The question is not whether to invest in sustainability. The question is where capital will generate durable, sustainable returns in a world of rising physical risk, evolving regulation and shifting customer expectations.

Exporters are responding to market signals. Customers in Europe are demanding traceability and assurances around deforestation and emissions intensity. In some cases, this creates price premiums for those who can demonstrate credible action, including certifying their products.

Property owners are investing in electrification, energy efficiency, and improved building standards because tenants expect it and insurers price for it. Supply chains are shifting from “just in time” to “just in case” thinking to strengthen resilience.

Globally, regulatory approaches are diverging. Some jurisdictions are accelerating climate policy. Others are emphasising a new definition of ESG being energy, security and geopolitics. For New Zealand boards, this reinforces the need for diversification and disciplined strategy. We cannot rely on one market or one regulatory setting.

Our reputation as a responsible producer is commercially valuable and protecting it is prudent governance.

These are commercial decisions. They sit squarely at the board table.

Building confidence across the governance community

One of our priorities this year is to elevate practical case studies. Directors learn from directors. Real examples – what worked, what it cost and what changed at the board table – are far more powerful than abstract frameworks.

Across sectors, we are increasingly seeing organisations embed climate and nature considerations into due diligence, risk registers and strategic planning. Often, boards are doing more than they realise because sustainable thinking aligns with good commercial discipline.

Reaching the quiet middle remains critical. Many directors understand the issue but have not yet integrated it into strategy. Confidence – not intent – is often the barrier. Tone matters. Our role is to support and enable, not to shame.

Disclosure must also remain proportionate and decision useful. Reporting should inform better capital allocation, not become an end in itself. Technology, including artificial intelligence, will increasingly support data collection and traceability, but balance is essential.

Looking ahead

Chapter Zero New Zealand will continue to strengthen director capability and influence within the governance ecosystem. 
Our priorities are clear:

• • Empower directors as leaders, not passive learners
  • Integrate climate, nature and resilience into core governance practice
  • Share practical examples that build confidence
  • Support proportionate, decision-useful disclosure
  • Engage constructively across the governance landscape

By 2030, I would like climate and nature governance to be commonplace and unremarkable. Not a separate agenda item. Simply embedded in how boards approach risk, strategy and capital allocation.

Because when markets price risk, directors cannot afford not to respond. 
That is not activism. It is governance.