Nature and business: Understanding the value, risks and opportunities of our natural world

A business may depend on a river it does not own, a forest it does not manage, or soil it has never considered part of its balance sheet. Yet the availability of clean water, fertile land, pollination, healthy ecosystems and stable natural environments can determine whether that business can continue operating, how much it costs to produce and whether its supply chains remain reliable.

Nature is deeply connected to business, even when that relationship is not immediately visible. Agriculture depends on healthy soils, water and biodiversity. Tourism relies on natural landscapes and wildlife. Manufacturing requires water and raw materials. Construction depends on land and natural resources, while financial institutions may have exposure to businesses whose operations depend on ecosystems that are under increasing pressure.

But this relationship works both ways. Businesses do not simply depend on nature; they also influence its condition. The way land is acquired, resources are extracted, products are manufactured, waste is managed and suppliers operate can contribute to deforestation, water pollution, habitat destruction, biodiversity loss and the depletion of natural resources. These impacts may occur directly through business operations or further along the value chain, sometimes far from where the final product is sold.

This makes nature a business issue, not just an environmental one.

For communities living close to forests, rivers, wetlands and other natural ecosystems, these issues are particularly significant. Nature is not simply an environmental asset; it is a source of food, water, energy, income, cultural identity and security. Smallholder farmers, Indigenous Peoples and local communities often play an important role in managing natural resources, maintaining traditional conservation practices and protecting ecosystems. Yet they may also face the greatest consequences when these resources are degraded, while having limited access to the economic benefits generated from their protection.

This raises an important question: if healthy ecosystems create value for businesses, economies and society, how do the people who help protect them share in that value?

Increasingly, different financing mechanisms are being explored to answer this question. Carbon markets, for example, create opportunities to generate revenue from projects that demonstrate verified reductions or removals of greenhouse gas emissions. Forest conservation, reforestation, mangrove restoration and improved land management can qualify for carbon credit projects where the relevant methodologies and standards are met.

For local communities, participation in these projects can create additional income through conservation activities, restoration work and sustainable land management. However, generating carbon credits does not automatically translate into better livelihoods. The arrangements governing land and resource rights, project ownership, community participation and revenue distribution matter. Communities should be involved in decisions from the outset and should receive a fair share of the benefits generated by activities taking place on or affecting their lands.

The same principle applies to emerging biodiversity finance mechanisms. Biodiversity credits are being developed to recognise measurable improvements in biodiversity and ecosystem condition. While this market is still evolving, it could create new ways of financing habitat restoration and conservation. But the ecological value being protected is often maintained through the knowledge, labour and stewardship of local people. Their participation, rights and interests must therefore be central to how these mechanisms are designed.

Another approach is Payment for Ecosystem Services (PES). Unlike mechanisms focused specifically on carbon or biodiversity credits, PES arrangements can recognise a broader range of benefits provided by healthy ecosystems. These include water regulation, soil conservation, flood control, carbon storage and biodiversity protection.

For example, communities managing forests in an important water catchment may receive payments or other incentives from downstream users who benefit from the continued availability of clean water. Farmers adopting land management practices that reduce soil erosion and protect watersheds may also benefit from such arrangements. The underlying idea is to create a direct link between those who maintain ecosystem services and those who benefit from them.

PES can therefore provide an opportunity to recognise conservation as an economic activity rather than relying solely on communities to bear the costs of protecting natural resources. Its success, however, depends on clear institutional arrangements, transparent payments, secure rights, meaningful participation and safeguards against excluding vulnerable groups.

Beyond these mechanisms, nature is also creating opportunities through conservation finance, sustainable forestry, regenerative agriculture, ecotourism and nature-positive enterprises. These activities can attract investment, support local businesses, create employment and diversify livelihoods while contributing to the protection and restoration of ecosystems. The opportunity is not simply to generate income from nature, but to develop economic models in which maintaining healthy ecosystems becomes part of how businesses and communities create value.

However, the growing economic opportunities around nature should not distract from an equally important issue: the risks businesses face when the ecosystems they depend on are under pressure.

Water scarcity can disrupt production and increase operating costs. Soil degradation can affect agricultural yields and the reliability of food supply chains. Biodiversity loss can undermine pollination and other ecosystem services. Deforestation and ecosystem degradation can affect access to raw materials, damage business reputations and expose organisations to changing regulations and stakeholder expectations.

These risks are not limited to businesses operating directly in natural resource sectors. A manufacturer may depend on agricultural commodities sourced from areas experiencing water stress or deforestation. A financial institution may have exposure to companies whose operations depend on increasingly fragile ecosystems. A retailer may face scrutiny over the environmental impacts associated with products sourced through its supply chain.

Understanding these relationships requires businesses to look beyond their immediate operations. They need to examine where their resources come from, how their suppliers interact with nature, which ecosystems support their activities and how their own decisions affect the environment and surrounding communities.

This is where nature-related risk and opportunity assessments become important. Organisations need to understand their dependencies and impacts on nature, identify the risks and opportunities arising from these relationships, and consider how they should respond through their strategies, operations and investment decisions.

Frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations provide guidance for organisations to identify, assess, manage and disclose nature-related dependencies, impacts, risks and opportunities. The Global Reporting Initiative (GRI) Standards also support organisations in reporting their impacts on biodiversity, water, ecosystems and other environmental and social matters. Together with wider sustainability reporting developments, these frameworks are encouraging businesses to look more closely at how their activities interact with the natural world.

This is an important shift. Nature-related information should not be treated as a reporting exercise separate from business strategy. Understanding exposure to resource scarcity, ecosystem degradation and changing environmental expectations can inform procurement, investment, supply chain management and long-term planning. It can also help organisations identify opportunities to improve resource efficiency, support restoration, develop more sustainable products and participate in emerging nature-based markets.

Ultimately, the conversation about nature and business is about recognising that economic prosperity cannot be separated from the health of the natural systems that sustain it. Businesses must understand both how nature supports their operations and how their activities influence ecosystems. At the same time, the people who protect and depend on these ecosystems must be recognised as important participants in the transition towards more sustainable economic models.

Creating this balance requires more than environmental commitments. It calls for sound policies, credible financing mechanisms, responsible business practices, transparent benefit-sharing and meaningful community participation.

The question is not simply how businesses can benefit from nature, but how they can create value while protecting the ecosystems and supporting the communities that make that value possible.