Why you’d regret scoping nature out of CSRD and your business strategy

While some of the world's biggest companies and financial institutions are committing to nature-related disclosures, many others are still excluding nature from their business reporting and strategies. In particular, we see companies omitting nature from their Corporate Sustainability Reporting Directive (CSRD) approach, believing it's not relevant. Here are five common reasons we often hear for this exclusion and why they can be misguided:

1. "Nature is for Activists, Not Businesses”

There has been a common misperception that nature has no real importance or economic value to businesses. However, this is changing, with companies and financial institutions increasingly recognising the systemic impacts of nature—both positive and negative. Indeed, as we’ll discuss later, the economy relies on natural capital like raw materials, biodiversity, and ecosystem services to function. It is becoming clear that this goes far beyond activism; it's a crucial economic and financial issue.
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Earlier this year, the WEF found that found that environmental risks are now the most significant risks for the next decade. And yet, these same risks are the ones that executives feel least ready to address. If your business is prioritising its bottom line, its impact and dependency on the natural world must become integral to its strategy.  Nature is the largest source of risks for companies over the next decade, and the one they know least about.

2. “Focusing on Climate is Enough”

Climate change is just one part of the broader environmental crisis.  Issues like ocean health, deforestation, and freshwater scarcity also pose significant risks to businesses. Though corporate leaders often don’t talk about these other parts of nature, they are intrinsically linked to the corporate world.

A study from Oxford found that nature-related risks, like pollution and deforestation, amplify climate risks, potentially leading to $5 trillion in economic losses. Additionally, nature can offer effective solutions to tackling the climate crisis. Natural climate solutions could contribute to a third of the emission reductions needed to avoid the worst impacts of climate change. There is no Net Zero without nature and vice versa.

According to Dr Nicola Ranger, who led the Oxford study, “Nature is not the elephant in the room, it’s the huge green scorpion running towards us. The sting in its tail will significantly amplify the impacts of climate change in ways that are difficult to predict. It is not just about birds and butterflies; we are fundamentally eroding the natural capital upon which our societies and economies are built.”

3. “Our Double Materiality Assessment Shows Nature Isn’t Material”

Companies can exclude nature from their double materiality assessments because they don't fully grasp how they impact and depend on it. According to a PWC report , 55% of global GDP relies on nature. This is particularly true for sectors like food, energy, infrastructure, and fashion which contribute to 90% of human-caused pressure on biodiversity. If 55% of the global economy depends on nature, the remaining 45% is still indirectly reliant on it. Our high-tech, sanitised global economy is fundamentally tied to nature. Overlooking this connection is a major mistake. Every business, whether directly or indirectly, is affected by nature.

4. "Nature is Too Complex to Address”

Nature is complex, but there are plenty of tools and frameworks available to help businesses start assessing their impacts and dependencies. The Taskforce on Nature-related Financial Disclosures (TNFD) framework for example, builds on the well-established Taskforce on Climate-related Financial Disclosures (TCFD) principles, making it easier for companies to integrate nature-related risks into their existing climate strategies.

Acknowledging competing priorities and limited resources, businesses don’t have to do everything at once. A business’ relationship with nature is deeply complex and constantly changing. Because of this, companies should take an iterative approach which prioritises key areas and then expands and deepens its focus over time.
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There is an array of free-to-access and easy-to-use tools to simplify the process. Making decisions today without any understanding of the nature implications can lead to a disjointed strategy that has to be rebuilt when you finally integrate nature. Starting now, even with imperfect data, is crucial.
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5. "We’re Too Busy to Focus on Nature. We Will Address it Later”

Addressing nature may add to your workload, but you will likely have to deal with it at some point. There is a clear direction of travel for nature disclosures. For example, under the European Sustainability Reporting Standards (ESRS) there are numerous nature-related disclosures (e.g. pollution, water, biodiversity and ecosystems), while CPD has also included a new biodiversity module.

Given how intertwined our economy is with nature, even if you scope out some nature-related disclosures, you’ll likely touch on nature in other areas. Starting now is better than scrambling later and there are a plethora of opportunities for early movers.

‍Next Steps‍

Speak to us – we’re always on hand to help companies on nature, so drop us a note if you’re stuck on a particular element or don’t know where to start.

Our diagnostic - our diagnostic helps companies to understand where they are on nature and how they can build on existing ESG performance. Whether you’re a new starter or an established nature reporter, this will help you think through where to focus and how to prioritise. Link here

Just start – read TNFD or CSRD guidance and start at the beginning. You’re probably already further along than you think (e.g. through work on climate change or modern slavery you likely already understand your value chain). Even the most basic understanding of your relationship with nature can be transformative to how you do business – so don’t delay.

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Get in touch: information@fola.earth