Nature predates business and forms the foundation of all economic activity. The Taskforce on Nature-Related Financial Disclosure (TNFD) defines nature as comprising four key ‘realms’: land, ocean, freshwater, and atmosphere, each with its unique ecosystems and biodiversity. Despite this, business has historically prioritised profit over environmental stewardship, often overlooking the interconnectedness of climate change and biodiversity loss.
INTEGRATING BUSINESS WITH NATURE
A holistic approach is required for businesses to align with nature’s limits and cycles. Systems thinking, which recognises the interdependencies within ecosystems, should guide business strategies. Integrating nature into business means adapting existing models to be more sustainable, while integrating business into nature requires reimagining business models to operate within natural boundaries. This shift enables innovation, ecosystem restoration, risk management, and resilience.
THE IMPORTANCE OF ADDRESSING CLIMATE AND NATURE-RELATED RISKS
Climate and nature-related risks are becoming increasingly material − for example the impact of deforestation on the agricultural industry − leading to changes in climate patterns like reduced rainfall and increased temperatures. In a recent interview3 with Ms Fundi Tshazibana, Deputy Governor of the South African Reserve Bank (SARB),
Chief Executive Officer of the Prudential Authority, and Network for Greening the Financial System (NGFS) Vice Chair, she highlights four key reasons why organisations should start looking at climate and nature-related risks:
- Economic stability − Understanding and managing these risks is crucial for maintaining economic and financial stability, especially in sectors heavily reliant on fossil fuels.
- Physical risks − Increased frequency and severity of weather events, such as floods and droughts, pose significant economic and financial threats.
- Regulatory compliance − Adapting to evolving regulations aimed at reducing emissions and protecting natural resources is essential to avoid penalties and ensure compliance.
- Global collaboration − Climate change is a global issue that requires collaboration and knowledge-sharing among organisations and central banks worldwide to develop effective responses.
While South Africa currently lacks mandatory climate or nature-related regulations for the financial sector, the SARB has issued guidance for climate-related governance and risk practices, as well as disclosures for banks and insurers, in May 2024. Affirming the regulator’s awareness of the threats climate change and natural capital risks pose to the financial system, the SARB’s climate roadmap communicated the regulator’s intent to consider further supervisory requirements and the development of nature risk guidelines.
The South African National Biodiversity Institute (SANBI), the French Development Agency (AfD), the Department of Forestry, Fisheries, and the Environment (DFFE), and the SARB collaborated on the study on nature-related risks for South Africa’s economy. Given the results, the SARB pursued more detailed research with the ENCORE Partnership (Natural Capital Opportunities, Risk and Exposure – open-source application) to understand these risks for South African banks and their impact on financial stability. Tools like ENCORE help financial institutions assess their dependencies and impacts on nature.
STAKEHOLDER EXPECTATIONS AND RISK MANAGEMENT
Investors and consumers are increasingly environmentally conscious. Failure to address climate and nature impacts can result in reputational damage and loss of market share. Climate-related events and resource degradation can disrupt operations and supply chains, affecting traditional financial risk categories such as credit, market, liquidity, operational, and underwriting risk.
Integrating these risks into risk management frameworks and business strategies enables organisations to manage threats and capitalise on opportunities for sustainable growth.
THE ROLE OF CHARTERED ACCOUNTANTS
CAs are expected to:
- Accurately reflect nature-related risks and opportunities in financial statements
- Advocate for sustainable investments and practices, and
- Support the business together with sustainability experts and risk teams on the importance of integrating business with nature
CAs must have a good understanding of climate and nature-related risks, evaluate business dependencies on natural resources, and identify opportunities for cost savings and new markets. Compliance and reporting are integral to organisational responsibility. It is essential to remain up to date with evolving regulations and frameworks such as the TNFD, the Sustainability Accounting Standards Board (SASB), publications from the NGFS, as well as reporting standards such as the IFRS Foundation’s sustainability and climate disclosures − IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-Related Disclosures − and the Global Reporting Initiative (GRI). Accurate and transparent reporting on nature-related impacts and initiatives should be prioritised to ensure genuine integration of sustainable business practices rather than merely fulfilling compliance requirements.
CAs should hence form part of core teams that incorporate climate and nature considerations into financial planning, define relevant metrics and KPIs, and prepare for readiness in transitioning to transparent nature-related reporting in line with the related frameworks.
In this process, avoiding greenwashing is critical, as misleading claims about a company’s environmental credentials can result in significant financial and reputational consequences, including litigation.
BUILDING CAPACITY AND STAKEHOLDER ENGAGEMENT
Many lessons can be observed from Nedbank’s initial Climate Risk Materiality Assessment performed in 2023 and the Nature Risk Assessment Phase 1 performed in 2024.4 The most important lesson learned was that colleagues in Sustainability, Strategy, Credit Risk, and Internal Audit, as well as Business Unit risk managers – among others − should form part of the journey from the outset. Here are a few golden nuggets to share:
- Build a relationship of trust with stakeholders. It is a critical non-negotiable. The current operating landscape is new and uncertain. Uncertainty fuels fear of the unknown as well as a lack of trust and non-trusting behaviour.
- Continuous stakeholder training is essential to ensure they understand the necessary actions and their significance, thereby recognising the importance of achieving the goals and added business value.
- During the nature assessment, internal stakeholders should be actively involved in the execution. This involvement was crucial to ensure internal capacity-building and embedding this expertise in the organisation. This approach has proven to be so rewarding that the team is set up to perform these assessments independently going forward.
- Never give up, despite how difficult stakeholders might be. This is a journey, not a sprint. Constantly work on creating a positive morale among stakeholders.
Continuous learning and stakeholder engagement are essential.
CONCLUSION
Adapting to a VUCA (Volatile, Uncertain, Complex, Ambiguous) world means that integrating business with nature is essential for success. In today’s world, mere sustainability and risk avoidance are no longer enough: businesses must embrace change, build resilience, and actively pursue innovation. As climate change and biodiversity loss increase risks, holistic and ecological approaches strengthen organisations’ competitiveness and meet stakeholder expectations.
CAs play a pivotal role in this transition, driving sustainable practices and unlocking opportunities for innovation and competitive advantage.
NOTES
- The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy, position, or views of the Nedbank Group Limited, its subsidiaries, affiliates, or associated entities. Any content provided is for informational purposes only. Reviewed by SAICA.
- Refer to the book by Professor Wayne Visser, The breakthrough movement to regenerate nature, society and the economy, for further reading.
- Published on 13 May 2025.
- Refer to the 2023 and 2024 Nedbank Climate Reports available online, Results and reports | Nedbank.
Author
Liza Botha, Head ESG Risk | Group Strategic Risk | Group Risk at Nedbank
