Neha joined the Research Team at Integrum ESG in 2023, having worked previously in the ESG space for over 2 years at organisations including CRISIL Ltd. and SG Analytics. Neha has an MSc in Environment, Science and Society from UCL and she holds the CFA UK Level 4 Certificate in ESG Investing.
How Nature Risk Is Moving to the Core of ESG and Investment Strategy
This article is drawn from Integrum ESG’s “ESG Landscape 2026: Key Forces Shaping Risk” thought leadership released in January 2026.
2025 marked a turning point for biodiversity and nature within ESG.
What was once treated as a secondary environmental issue has become a financially material risk and a growing focus for capital allocation. At the same time, the year exposed the limits of existing frameworks and the challenge of turning ambition into credible and decision-useful data.
A defining signal came from the International Sustainability Standards Board, which confirmed it will carry forward global nature-related disclosure standards, taking forward the work initiated by the Taskforce on Nature-related Financial Disclosures.
Nature, biodiversity and ecosystem services are no longer voluntary add-ons. They are moving toward the same institutional footing as climate reporting, with growing expectations around measurement, disclosure and integration into investment processes supported by more robust regulatory data infrastructure.
Adoption of TNFD recommendations accelerated across listed companies and financial institutions. At the same time, standards such as the Global Reporting Initiative continued to strengthen biodiversity-related requirements.
This momentum has intensified focus on how biodiversity risks and impacts are measured, compared and translated into information that is usable within investment and risk frameworks and supported by consistent issuer-level sustainability data.
Investment flows into biodiversity-related finance continued to rise in 2025.
Public and private capital is increasingly directed toward nature-based solutions, biodiversity credits and emerging instruments such as biodiversity-linked bonds. These developments reflect growing recognition that ecosystem degradation carries direct implications for asset values, supply chains and long-term economic stability.
Research is no longer treating nature loss as an abstract environmental concern. Instead, biodiversity loss is increasingly modelled as a systemic financial risk with quantifiable implications for portfolio performance and risk exposure across sectors and strategies.
This shift has driven renewed interest from institutional investors seeking to understand how biodiversity risk affects valuations, sector outlooks and long-term return assumptions.
As biodiversity becomes central to ESG strategies, scrutiny of corporate claims has intensified.
In 2025, biodiversity-related greenwashing cases increased significantly. High-level “nature-positive” narratives often outpaced measurable action or verifiable outcomes. This mirrored broader market dynamics in which sustainability claims face growing demand for evidence-based substantiation.
Regulators, civil society and market participants are increasingly focused on whether biodiversity commitments are supported by credible data, clear targets and demonstrable outcomes.
Firms making broad environmental claims without measurable backing face rising reputational and regulatory risk and greater scrutiny of sustainability controversies and conduct issues.
Measurement remains one of the most persistent challenges in biodiversity disclosure.
Unlike carbon emissions, universally accepted and scalable biodiversity indicators are still emerging. Ecosystems are dynamic and spatially specific, making standardised measurement complex.
During 2025, coalitions of NGOs, business groups and standards bodies began piloting simplified biodiversity metrics. Research initiatives aimed at linking biodiversity loss to financial risk also gained momentum.
These efforts represent important groundwork for more consistent disclosure and analysis supported by transparent methodologies and documented data processes.
However, technical complexity, data scarcity and methodological fragmentation remain significant hurdles. Translating biodiversity impacts into comparable and decision-useful metrics continues to be a core challenge for both corporates and asset managers.
New standards and stricter scrutiny
An International Sustainability Standards Board exposure draft on nature-related disclosures is expected by late 2026. This could establish a global baseline for how companies report biodiversity risks and impacts.
Such a development would represent a major inflection point. Nature disclosures would move closer to comparability and potential compliance rather than remaining largely voluntary.
At the same time, vague or misleading biodiversity claims will carry higher reputational and regulatory risk. Asset managers will face growing expectations to demonstrate that biodiversity considerations are reflected in investment decisions and stewardship activity supported by auditable and explainable ESG data.
Growth in biodiversity-linked finance
Financial innovation linked to nature outcomes is expected to accelerate. Biodiversity credits, biodiversity bonds and related instruments are likely to attract capital from institutions seeking measurable environmental impact alongside financial returns.
As these markets develop, scrutiny will increase around the credibility of underlying metrics, verification mechanisms and alignment between capital deployment and ecological outcomes supported by consistent cross-provider ESG data.
Integration with climate and ESG strategy
As pilot metrics mature, biodiversity is expected to be integrated more closely with climate, water and land-use risk frameworks.
Firms will increasingly incorporate nature into broader risk management and sustainability strategies rather than treating it as a standalone theme.
Significant challenges remain.
Measurement continues to be a central obstacle. Ecosystems are complex and heterogeneous, making robust and comparable indicators difficult to define. Data availability remains uneven across regions and sectors.
At the same time, the rise of nature-related greenwashing highlights the gap between market ambition and accountability. Global biodiversity finance still falls short of international targets such as those outlined in the Kunming-Montreal Global Biodiversity Framework.
Bridging this gap will require stronger metrics, improved data infrastructure and closer alignment between disclosure, investment practice and real-world ecological outcomes.
Asset managers looking to assess biodiversity and nature-related risk should:
Integrate biodiversity and nature-related risks into investment analysis and portfolio risk frameworks, ensuring exposure is understood at issuer, sector and supply chain level.
Challenge biodiversity and nature-related claims by prioritising consistent, decision-useful data and measurable outcomes rather than narrative positioning.
Prepare for emerging global nature-related disclosure standards by strengthening internal governance, data sourcing and alignment between stewardship activity, reporting and investment practice.
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