Nature: a practical lens for ESG and climate risk

Growing environmental, regulatory and market expectations – both in New Zealand and internationally – are leading boards to operate in an increasingly dynamic and unpredictable setting. Today’s directors are being called upon to lead in conditions where environmental, social and governance (ESG) risks are more interdependent and complex, but often poorly defined.  

Boards must now consider how to understand and manage nature-related opportunities and risks alongside climate change, and how to integrate nature into ESG practices. Nature-related risks are significant for the New Zealand and global economy. The collapse of key ecosystem services, such as pollination, freshwater and timber, could reduce global GDP by up to US$2.7 trillion annually by 2030, according to the Network for Greening the Financial System. 

However, there is an important question to consider: is nature another addition to existing climate change and ESG practices, or is it simply a more practical way to frame these challenges and opportunities for an organisation?   

Framing climate change and ESG practices under the umbrella of nature-related risks and opportunities has proven both effective and legitimate for organisations seeking to engage with their stakeholders and value chains.  

Among the more technical aspects of climate change and ESG matters, nature remains an area that offers broad appeal and strategic clarity. A nature framing helps boards understand risks and opportunities in a place-based context, and connects environmental, social and equity issues into a single view. 

Nature is not an addition to climate change and ESG. It is the means to understand and manage them more effectively. 

Nature-led strategy and resilience 

New Zealand’s economy is unequivocally tied to the natural environment. New Zealand’s industries, services, products and trade depend on the fundamental processes, the material goods and the regulatory services provided by nature. 

For businesses, nature risks arise when they depend on nature-related goods and services that are under pressure or declining. Common services, such as pollination, the supply of freshwater, the regulation of healthy soils and the provision of food and fibre, face a range of pressures from climate change, overexploitation and pollution in New Zealand. 

Since all businesses are either directly or indirectly embedded in nature and depend profoundly on the flow of goods and services it generates, decisions and policies to promote business resilience and growth should also be beneficial to nature.  

By using nature as the lens to understand and manage climate change, ESG risks and opportunities, boards can make ‘nature-smart’ decisions about capital and resource allocation.  

Protecting and enhancing resources and resilience 

Many of our most prominent economic activities and consumption patterns are reducing nature’s ability to sustain critical nature-related goods and services upon which all businesses depend. Globally, for every US$1 invested in protecting nature, US$30 is spent on degrading and destroying it, according to the UN Environment Programme’s State of Finance for Nature 2026. This highlights a significant disconnect between nature-related dependencies and decisions about capital and resource allocation. 

However, ‘nature-smart’ policies and decisions implemented by boards today can provide measurable benefits to business performance, productivity and resilience, while also enhancing relationships with their stakeholders and value chains. Understanding how and where to invest capital and resources requires boards to look beyond their direct operations and act within the broader landscape.  

The remediation of the Kaipara Moana, featured in the Natural Infrastructure Plan, is an example of how risks and opportunities can be managed at a landscape scale. Following the impacts of Cyclone Gabrielle and the Auckland Anniversary Day floods, the Kaipara Moana Remediation project set out to grow the region’s economic prosperity by investing in projects across the catchment to improve soil conservation, land stabilisation, water quality improvements and flood attenuation, strengthening nature-based resilience.  

An independent benefit case study from March 2025 evaluated the cost and benefits of the project. It estimated a return of $3.94 per $1 invested, primarily returned to local and national economies.