From boardroom to biodiversity: The evolving role of directors in a 'nature positive' world

Aug 27, 2024

A diver explores an underwater reef: Embracing nature positive practices enhances company reputation.

Embracing nature positive practices enhances company reputation. Image: Unsplash/NEOM

Pavitra Raja

Community Lead, CEO Action Group On Nature Pillar, World Economic Forum

Jack Hurd

Executive Director, Tropical Forest Alliance; Member of the Executive Committee, World Economic Forum

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A nature positive business strategy involves assessing impacts and dependencies on nature across the value chain and implementing policies that actively restore and enhance natural ecosystems as part of business operations.
Embracing nature positive practices improves operational efficiency, strengthens long-term resilience, ensures regulatory compliance and enhances company reputation.
Corporate directors can achieve nature positive outcomes by setting an aspirational vision, ensuring effective governance and applying nature-inclusive risk management, stakeholder engagement and performance metrics.

As environmental challenges mount worldwide, the "nature positive" concept is emerging as a vital strategy for businesses. This approach emphasizes halting and reversing biodiversity loss, ensuring that natural ecosystems are preserved and enhanced.

By integrating these principles into corporate governance, directors not only fulfil their fiduciary duties but also unlock significant economic, social, and environmental benefits. Corporate directors can thus spearhead their companies' efforts to adopt nature positive strategies, enhancing biodiversity, ecosystem resilience, and long-term sustainability.

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What does 'nature positive' mean?

Nature positive is a transformative approach to halting and reversing biodiversity loss. For businesses, this means integrating nature positive solutions into their core operations and decision-making processes.

A nature positive business strategy is built on a rigorous assessment of the impacts and dependencies of operations on nature and then the adoption of an approach to enhance the functioning of natural ecosystems across the firm’s full value chain, including resource consumption, waste management, and overall ecological footprint.

By doing so, they can identify opportunities to minimize impacts and enhance biodiversity and ecosystem resilience.

Benefits of adopting nature positive strategies

Embracing nature positive approaches offers numerous benefits:

Regulatory compliance: Positive initiatives' proactive nature helps companies stay ahead of compliance requirements and avoid potential fines and penalties. By aligning with emerging regulations, companies can confidently navigate evolving policy landscapes.
Operational efficiency: Sustainable practices often lead to cost savings and operational efficiencies, such as reduced resource consumption and waste. Implementing energy-efficient technologies, optimizing resource use and minimizing waste generation can significantly reduce costs.
Long-term resilience: Preserving and enhancing natural ecosystems ensures the long-term availability of critical resources and the stability of supply chains. Healthy ecosystems provide essential services, such as clean water, fertile soil, and climate regulation, vital for business continuity and resilience.
Enhanced reputation: Companies committed to nature positive practices build stronger reputations and brand loyalty, appealing to environmentally conscious consumers and investors. Demonstrating leadership in sustainability can differentiate companies in competitive markets and attract like-minded stakeholders.

Increasing nature-positive responsibility

Efforts have been made globally to place obligations on corporations to prioritize nature positive strategies.

Key examples include:

The European Union (EU) Biodiversity Strategy for 2030: Companies must disclose their impact on biodiversity and adopt measures to restore degraded ecosystems.
The UK Environment Act 2021: Setting out legally binding targets for biodiversity and requires companies to report on their environmental impacts while introducing measures for nature conservation and restoration.
The Corporate Sustainability Reporting Directive: Large companies in the EU are required to report on sustainability matters, including biodiversity and ecosystem impacts.
Global Biodiversity Framework: The UN Convention on Biological Diversity has established international biodiversity targets for the next decade. Target 15 specifically urges companies to incorporate biodiversity into their corporate strategies, policies, and reporting. This aims to ensure businesses contribute to biodiversity conservation and sustainable use.

In Australia, legal developments have also expanded corporate directors' fiduciary obligations to include nature positive approaches. Failure to adopt these strategies can result in penalties:

Legislation and court cases: Recent court rulings have established that corporate directors may be held liable for failing to manage nature-related risks. This expansion of fiduciary duties aligns with global trends emphasizing the importance of environmental stewardship.
Environmental, social, and governance (ESG) responsibilities: Directors must increasingly incorporate ESG into their decision-making processes. This includes assessing and mitigating the company's impact on biodiversity and ecosystems.

These legal precedents ensure companies are compliant with emerging regulations and that directors are positioned as leaders in sustainable business practices.

Additionally, the Taskforce on Nature-related Financial Disclosures provides guidance for companies to report and manage their impacts and dependencies on nature, enhancing accountability and encouraging nature-positive investment.

The pivotal role of corporate directors

Corporate directors are uniquely positioned to drive the transition towards nature positive outcomes. Here are key ways they can lead this effort:

Leadership and vision: Directors must set a clear vision and commitment to nature positive goals, embedding sustainability into the company's mission and strategic objectives. This ensures all stakeholders understand and embrace these priorities. A visionary leadership approach can inspire employees, partners and investors to support and actively participate in nature positive initiatives.
Governance and accountability: Effective governance frameworks are essential. Directors should establish policies and practices that promote transparency, accountability and continuous improvement in sustainability performance. This includes integrating nature positive principles into corporate governance structures and decision-making processes. Regular monitoring and reporting on sustainability performance help maintain accountability and drive progress.
Risk management: Environmental risks are significant business risks. Directors need to incorporate biodiversity and ecosystem health into their risk management frameworks, identifying and mitigating potential threats to the natural environment. This proactive approach protects the company's interests and contributes to broader environmental resilience. Incorporating environmental risk assessments into business continuity planning can enhance the company's ability to respond to ecological disruptions.
Stakeholder engagement: Building strong relationships with stakeholders, including employees, customers, investors and local communities, is crucial. Directors should actively engage these groups in the company's nature positive initiatives, fostering collaboration and shared value creation. Stakeholder engagement ensures that diverse perspectives are considered and collective efforts are directed towards common goals. Transparent communication and meaningful collaboration can enhance trust and support for the company's sustainability efforts.
Performance metrics and reporting: Measuring and reporting on nature positive outcomes is essential for transparency and accountability. Directors should oversee the development and implementation of metrics that track the company's progress in enhancing biodiversity and ecosystem resilience. This includes setting measurable targets, regularly assessing performance and publicly reporting on achievements. Robust performance metrics enable companies to demonstrate their commitment to sustainability and provide stakeholders with a clear understanding of their environmental impact.

Ethical and strategic

As stewards of their organizations, corporate directors have a unique opportunity to lead the transition towards a nature positive future. By integrating biodiversity and ecosystem resilience into corporate governance, they can drive significant economic, social and environmental benefits.

Recognizing the crucial role that corporate directors play and adhering to emerging legislative mandates, businesses can turn environmental challenges into opportunities for growth and resilience, ensuring a thriving future for nature and industry.

Embracing nature positive strategies is not just an ethical imperative; it is a strategic advantage that will shape the future of sustainable business.

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