As ecosystems degrade and biodiversity declines, nature-related risks are no longer abstract environmental issues—they pose tangible financial and legal threats to businesses worldwide. Boards of directors face mounting pressure to recognize dependencies on biodiversity and healthy ecosystems, anticipate how extreme weather or habitat loss could disrupt supply chains, and recalibrate corporate strategy to withstand shocks.

Across the world, a series of legal opinions is drawing a clear line: failing to address nature-related risks may breach directors’ duties. Five pivotal legal opinions have been issued in Canada, Australia, England and Wales, Japan, and New Zealand in the past three years. Each legal opinion offers a deep dive into how lawyers interpret directors’ duties and local laws, highlighting how directors need to identify, manage, and disclose material risks linked to biodiversity loss, freshwater stress, ecosystem degradation, and extreme weather events. They provide directors with a clear understanding of their duties and risks, and support companies to strengthen governance, enhance disclosures, and demonstrate due diligence.

From Canada to New Zealand, these legal opinions converge on one point: nature-related risks are foreseeable and financially material. Boards that fail to take action could face shareholder lawsuits, greenwashing claims, and regulatory challenges.

Canada

Lisa DeMarco and DT Vollmer of Toronto-based law firm, Resilient LLP, released a legal opinion last month declaring unequivocally that Canadian directors have a legal duty to address risks stemming from biodiversity loss, freshwater stress, ecosystem degradation, and extreme weather. Failing to do so could expose them to a range of legal action, including shareholder and creditor lawsuits as well as greenwashing and negligence claims.

“Three of Canada’s largest industries – real estate, rental, and leasing; manufacturing; and mining, quarrying, and oil and gas extraction – are all recognized as industries with high-level supply chain dependencies on biodiversity and are exposed to nature-related physical risk,” they write in the legal opinion. Other key Canadian industries that depend on ecosystem services include forestry, agriculture, and fisheries and aquaculture.

Australia

Authored by Sebastian Hartford-Davis and Zoe Bush, the legal opinion concluded, in October 2023, that nature-related risks to a company should be regarded as foreseeable now, given the large amount of information already available about economic dependency on nature and the rate at which it is being degraded in Australia and globally.

The lawyers recommended that directors of Australian companies identify their company’s dependencies and impacts on nature and consider potential risks these pose to the company. Failure on the part of a director to identify, manage, and disclose material nature-related risks may lead to increased shareholder pressure and even litigation against personal assets of directors.

England and Wales

Board directors could potentially breach their duties to their company by failing to consider or act on relevant nature-related risks, according to a legal opinion published in March 2024. It was authored by a team of corporate and financial law barristers (high-ranking silks Sharif Shivji KC and Rebecca Stubbs KC leading Karl Anderson and Hossein Sharafi, with contributions from environmental law expert, James Burton). It explains how board directors could breach their duties under the Companies Act 2006 if they fail to identify and mitigate latent financial risks arising from a company’s unaddressed nature-related impacts and dependencies.

The opinion identifies a number of examples where nature-related risks can have material financial consequences for companies, such as a decline or collapse of ecosystems that underpin a company’s operating model, as well as shifting consumer preferences and legal requirements.

Japan

A legal report published in March 2025 noted that international disclosure requirements relating to biodiversity are relevant to directors’ duties with respect to climate in Japan. It was written by Professors of Law in Japan, Dr. Yoshihiro Yamada and Dr. Masafumi Nakahigashi, together with Dr. Janis Sarra, Professor of Law Emerita at the University of British Columbia. They confirmed that the management of nature-related risks is highly intertwined with climate-related risks, and that nature risks may constitute material financial risks that directors have a duty to oversee.

New Zealand

A New Zealand legal opinion, published by Chapman Tripp, confirms that company directors have a duty to ensure that their businesses identify foreseeable and material nature-related risks and to take such risks into account in decision making.

The main risk to directors of businesses dependent on nature-based services, particularly in the primary, tourism, and manufacturing sectors, is to underestimate the potential impact of nature-related risks (whether or not the business contributes to or has control over the risk). Directors will increasingly be expected to ensure processes are in place to: identify their businesses’ dependencies on nature; assess their businesses’ exposure to material nature-related risks; and manage financially material nature-related risks, as they would any other serious business risk.