Initiative in Sustainable Finance: Corporate Nature Risk Perceptions
Research Highlight by Zacharias Sautner, Alexander Wagner et al. (Review of Finance)
How do companies perceive nature risks? This paper reports the results of a global survey of companies, now accessible on the Review of Finance website.
The authors find that nearly half of all responding companies (48%) view nature risks as financially material, yet less than 25% believe investors assess how these risks affect cash flows or costs of capital.
- Snorre Gjerde, Lead Policy Advisor at Norges Bank Investment Management (NBIM)
- Prof. Zacharias Sautner, University of Zurich and Swiss Finance Institute (SFI)
- Prof. Alexander Wagner, University of Zurich and Swiss Finance Institute (SFI)
- Dr. Alexis Wegerich, Head of ESG Analytics at Norges Bank Investment Management (NBIM)
Research Question
The paper explores how companies worldwide perceive, manage, and respond to financial risks arising from their dependencies and impacts on nature including biodiversity loss and ecosystem degradation. The issue is timely, as nature loss is emerging as a critical business and financial risk, drawing increasing attention from investors, regulators, and policymakers.
Methodology
A global survey was sent to over 6,000 listed companies in Norges Bank Investment Management’s (NBIM) equity portfolio, yielding 385 responses. The questionnaire focused on the financial materiality of nature risks, risk management practices, and perceptions of investor engagement. Respondents mainly held senior roles in sustainability and investor relations, ensuring relevant expertise.
Key Findings
- Financial materiality: 48% of companies view nature risks as financially material; 43% of these cite physical risks and 27% cite transition risks already affecting them today.
- Channels and industries: Financial effects are widely dispersed across supply chains, operations, and products, making standardized assessment challenging. Higher risk awareness is seen in consumer staples, industrials, and basic materials, especially in Asia and North America.
- Management and disclosure: 50% conduct or plan nature impact assessments, but only 33% examine nature dependencies. Most (82%) focus on mitigation, while fewer (43%) use offsets. 74% already provide or plan to provide disclosures, with Taskforce on Nature-related Financial Disclosures (TNFD) and other frameworks mentioned.
- Investor engagement: 40% report experiencing nature-related investor engagement, and three-quarters of these view engagements as value-generating, often prompting strategic action. Only about 40% believe investors formally consider nature risks, and under 25% think these risks are factored into cash flows or cost of capital.
- Obstacles: Data gaps and costs are leading obstacles to managing and reporting on nature risks.
Implications and Conclusions
Nature risks are seen as financially relevant by many companies, but standardized risk assessment and reporting lag behind climate counterparts. There remains a disconnect between companies’ growing awareness and actual investor action, with engagement proving an important catalyst.
Coordinated action across regulation, standards, and engagement is needed to systematically embed nature risk in financial decision-making.
More Information:
Snorre Gjerde, Zacharias Sautner, Alexander F Wagner, Alexis Wegerich, Corporate nature risk perceptions, Review of Finance, 2025https://academic.oup.com/rof/advance-article/doi/10.1093/rof/rfaf050/832244
Photo source: Justus Menke via Unsplash
Initiative in Sustainable Finance News