Twelve questions on nature for Canadian board directors to ask management

Canada is one of the most naturally endowed countries on Earth. Home to 24% of the world’s boreal forest, 37% of its lakes, 25% of its wetlands, and approximately 80,000 species.

Yet Canadian ecosystems are under increasing strain. Resource-intensive industries such as mining, oil and gas, agriculture, fishing and forestry are increasingly exposed to nature risks. These risks extend far beyond resource-intensive sectors, creating risks for the entire Canadian economy. Nature-related disruptions can ripple through supply chains, affect asset values and lead to credit, market and operational risks across the financial system. 

Many Canadian businesses are inadequately prepared to address nature-related risks and opportunities in core decision-making, at a time of growing nature-related regulatory scrutiny, litigation exposure, and investor action. Directors can no longer treat nature as an externality. Below we share 12 questions to help Canadian board directors consider when integrating nature-related risks and opportunities into governance, and demonstrate compliance with their legal duties.

Gaining an overview of nature’s relevance to our business

1. How and where does our business depend and impact on nature?

Why ask? Fulfilling your director’s duties to manage your organization’s nature-related issues starts with pinpointing how the business relies on nature’s services, how it impacts on nature, and where this is happening. Identifying the geographic locations of your organization’s interfaces with nature, including across your value chains, is essential. Nature in one location differs from nature in another location, which means the same dependency or impact on nature in location A can create different risks and opportunities to your business than if it was occurring in location B. Nature-related dependencies and impacts will also vary between sectors and companies.

Guidance and tools exist to support mapping of dependencies and impacts for your organization. As a starting point, the TNFD provides sector-specific guidance that sets out dependencies and impacts by sector.

2. How do our dependencies and impacts on nature give rise to potential financial and non-financial risks?

Why ask? Dependencies and impacts on nature from your organization’s operations can create material risks for your business, shareholders and stakeholders, including as the business grows. For example, a mining company highly dependent on purified freshwater is exposed to financial risks if the supply of water becomes diminished or disrupted, potentially limiting future expansion or increasing costs. Similarly, a mining operation located near sensitive boreal forest may face project delays, regulatory restrictions, or rising remediation and engagement costs if biodiversity impacts are not adequately managed, affecting asset valuation and long‑term project viability. Business growth (e.g., operational expansion; increased production) may also be impacted due to resource scarcity, evolving regulatory requirements, and stakeholder scrutiny.

3. How do our dependencies and impacts on nature generate potential opportunities for the organization?

Why ask? Every business should consider efforts to improve the resilience of nature, particularly in the locations where it has key dependencies and impacts on nature. Increasing the resilience of nature, and therefore your organization’s future business resilience, should include both reducing negative impacts on nature and contributing positively to nature’s restoration through activities such as conservation and regeneration. Avoiding or reducing negative impacts on nature, or contributing to the regeneration of nature through business innovation, may present commercial opportunities.

It is equally important that directors consider nature-related commercial opportunities as well as risks.

4. What is the interplay between our nature- and climate-related dependencies, impacts, risks and opportunities? 

Why ask? While boards have built significant competence over the last decade around the science and commercial implications of climate change, our planetary systems are deeply interconnected and require an integrated approach across all four realms of nature—atmosphere, land, oceans and freshwater. Climate change is identified by scientists as one of the five drivers of nature change, alongside land/freshwater/ocean use change, resource use/replenishment, pollution/pollution removal and invasive alien species introduction/removal. These other drivers of potential risk and opportunity to business are currently invisible to most organizations, creating potential risks to revenues, cashflows and balance sheets unattended to and potential commercial opportunities not realized.  

In May 2025, commentary was published discussing the importance of Canadian businesses not overlooking nature risks, noting businesses should take a holistic risk mitigation approach to these interconnected issues. The imperative for companies now is to broaden the aperture of their understanding of climate-related risks and opportunities to incorporate nature-related issues beyond greenhouse gas (GHG) emissions. Directors’ duties span both climate and nature-related issues, and they need to be understood and managed in an integrated fashion. The Canadian government has stated it will invest over CAD 5 billion from 2021 to 2031 to address climate change and biodiversity loss, whilst 15% of Canadian institutional investors, representing a combined CAD 4.3 trillion in AUM are prioritizing the interconnectivity between climate and biodiversity as a dual solution.

Integrating nature into decision making

5. How are we assessing and measuring our potentially material nature-related issues across different time horizons? What data are we using and generating?

Why ask? The concept of materiality sits at the centre of your director’s duty to manage nature-related issues. Different organizations take different approaches to materiality for nature-related issues based on applicable regulatory requirements, the vision and values of the organization and the informational demands of their shareholders. Managing material nature-relatedrisks and opportunities requiresa robust assessment process for determining the potential financial implications of the dependencies, impacts, risks and opportunities your organization has identified.

Identifying and measuring select qualitative and quantitative indicators over time is an essential foundational step to enable you to assess, evaluate and manage nature-related risks. Documenting this process can provide evidence that your decision-making was robust and help demonstrate that you are fulfilling your director’s duties. The TNFD guidance provides both a recommended assessment methodology—the LEAP approach—and a recommended set of metrics for both assessment and disclosure.In Canada, where disclosure of material risks is required under existing securities laws and disclosure frameworks, this is inclusive of material nature-related risks.

While board members will typically want to see a quantification of key nature-related risks and opportunities in financial terms, methodologies are still under development. While some guidance is available and select large companies and financial institutions are quantifying their nature-related risks and opportunities, qualitative evaluations of financial implications—such as classifying a risk or opportunity as high, medium or low—are more feasible for most companies at this time. The Audit Committee’s remit could be expanded to provide oversight of nature-related indicators and metrics.

6. How are we engaging with our value chain and Indigenous Peoples, Local Communities, affected and other stakeholders to understand their views with respect to our nature-related issues? 

Why ask? Because nature-related issues are location-specific, engaging with stakeholders and Indigenous rightsholders in those locations is central to effectively identify, assess and manage nature-related dependencies, impacts, risks and opportunities. The Canadian Legal Opinion confirms that nature-related risks may arise from Indigenous rights and land claims. The quality of the organization’s stakeholder engagement can have a direct, and sometimes immediate, impact on the financial prospects of the organizations. Stakeholders and Indigenous rightsholders may help identify and close blind spots in your understanding and management of nature-related issues, including opportunities for value creation (e.g., by benefitting from customary and traditional knowledge of ecosystems).

Given the relational nature of many stakeholder engagement processes, it is important to start with stakeholder engagement as early as possible and sustain that engagement in a meaningful and authentic way. Broad stakeholder engagement also helps organizations to meet expectations under international standards of responsible business practice and the growing range of related legislation in Canada, as well as reporting requirements and investor expectations.

7. How does management integrate nature into short- and long-term decision-making when:

• Reviewing and revising strategy and business plans, including transition plans.
• Drafting and implementing risk management policies.
• Setting organizational KPIs and incentive plans.
• Considering annual budgets.
• Overseeing major capital expenditures, acquisitions and divestitures.

Why ask? Nature, including climate change, is a strategic management issue that must be integrated in core business processes and decisions. Nature-related risks fall within existing financial risk categories and are not new categories of risk. Nature risks can augment exposure to other sustainability-related risks, thereby increasing overall financial risks. Nature-related opportunities can also span the full breadth of the organization’s operations, from procurement and sourcing, to product design and financing arrangements.

Understanding the external context: Market, standards, regulations and investor expectations

8. How do we expect nature-related issues to change over time in our sector, and in the markets and locations in which we operate?

Why ask? As the consequences of climate change and nature loss escalate and the financial implications for companies and financial institutions become more evident and significant, the external market context companies operate within is changing. Regulatory requirements, consumer expectations and investor risk management requirements are shifting. The science related to how ecosystems operate is also constantly evolving. It is therefore critical that management teams and boards build their capacity for ‘nature intelligence’ as part of their broader business intelligence.

9. Are we up to date with shifting regulatory developments, both voluntary and mandatory, industry standards and investor expectations across the jurisdictions in which we operate?

Why ask? Nature-related industry standards and regulatory requirements beyond climate are emerging quickly. Nature-related assessment and reporting has been advanced by the TNFD and is already covered in the European Corporate Sustainability Reporting Directive (CSRD), Global Reporting Initiative (GRI) impact reporting standards, IFRS sustainability reporting standards, and CSDS.

More broadly and more importantly, even where no disclosure regulation for nature exists in relevant jurisdictions, directors must consider disclosing material nature-related risks to comply with their general duties of disclosing material risks. Investors may have additional expectations beyond current voluntary and mandatory requirements. Forty-four per cent of Canadian investors highlighted biodiversity as a key ESG topic in 2025, and 68% of global asset managers and owners have an investment policy which considers nature. Investor coordination initiatives on nature, such as Nature Action 100 and the PRI Spring Initiative, signal growing investor interest and sophistication on these issues.

Organizational competence on nature-related issues

10. Does the board and senior management team have the requisite skills and experience to adequately manage the organization’s nature-related issues?

Why ask? Following the precedent set by expectations of climate competence at board and management levels, organizations are increasingly expected or required to explain their governance of nature-related issues beyond climate change. This is propelled by global standards like the IFRS S1 sustainability reporting standard and select jurisdictions, like the EU with the Corporate Sustainability Reporting Directive, putting in place regulation to this extent.

More generally, as organization directors, board members are permitted to delegate but must properly supervise the discharge of any delegated functions (see further in question 12). The board and management therefore need a collective level of functional fluency on nature-related issues to adequately manage nature-related risks and opportunities. They must know what to ask their teams and independent advisors for, when to obtain expert advice and understand what satisfactory responses and deliverables look like.

Where the board and management already have a solid current understanding of nature-related issues, ongoing capacity-building initiatives remain necessary given the rapidly changing landscape of science, regulatory and voluntary frameworks and stakeholder expectations. Building such capacity can also ensure that boards can go beyond functional fluency and use their knowledge and understanding to harness the strategic opportunities of acting on nature.

11. Are the organization’s skills and capabilities on nature-related issues, including assessment and learning, being institutionalized for the long term?

Why ask? With the planet set to exceed the Paris Agreement target and nature loss accelerating at an unprecedented rate, nature-related issues, including climate, will continue to rise further up the business, finance and policy agendas. For your organization to remain resilient and competitive in the long term, it is critical that efforts to assess and manage nature-related issues are institutionalized, and not overly reliant on individual champions at the management or board level. Ensuring that organizational capabilities, management decision-making systems and board competence on nature-related issues beyond climate change are built and sustained for the long term is now a core part of the fiduciary duty of company directors.

Consider the board’s own knowledge development requirements on nature-related issues beyond climate change, and ensure you develop processes for selection of future board directors who are both climate and nature literate. Consider establishing a schedule for discussing nature-related issues in the boardroom. The frequency of discussions should be determined by the materiality of nature-related risks and opportunities to your organization.

Board reflection

12. Are we confident that we are fulfilling our legal duties in relation to nature across the jurisdictions in which we operate? What evidence do we have that we are doing so?

Why ask? The Canadian Legal Opinion confirms that in light of the plethora of global and Canadian reports highlighting the materiality of nature-related risks, such risks are not far-fetched, but are real risks that are known, well-documented and reasonably foreseeable at this time.

The Canadian Legal Opinion confirms that nature-related risks fall within directors’ existing duties under Canadian law. Canadian corporate boards are expected to consider how their companies depend on, impact and are exposed to nature. Directors’ duties are often informed by reference to the market, social and regulatory context. Given the dynamic evolution in nature-related regulations in Canada, international voluntary frameworks and standards, stakeholder expectations and an increase in nature-related litigation, directors should fulfil their duties with a forward-looking strategic lens.

Directors may be liable for failing to consider financially material nature-related risks, and be held accountable for their organization’s impact on nature.

Note: This blog is based off a guide we produced in collaboration with PwC Canada, Commonwealth Climate and Law Initiative, and the Institute of Corporate Directors.