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Physical: Droughts, deforestation and landslides

As climate change accelerates and ecosystems are degraded, physical risks such as droughts, deforestation, and landslides are becoming more severe and financially consequential. These risks directly threaten the integrity, productivity, and long-term viability of assets across sectors.

Droughts can severely disrupt operations reliant on water-intensive processes—from agriculture and mining to manufacturing and power generation. Water scarcity increases operational costs, restricts output, and heightens regulatory scrutiny, particularly in drought-prone regions.

Deforestation not only accelerates biodiversity loss but also contributes to ecosystem instability and soil degradation. For businesses dependent on natural resources or operating in deforestation-linked supply chains, this can result in reputational damage, shifting regulations, and exposure to stranded assets.

Landslides, often intensified by both drought and deforestation, pose acute threats to infrastructure, especially in mountainous or heavily deforested areas. They can destroy roads, pipelines, buildings, and utilities, causing immediate service disruption and long-term repair costs.

Together, these risks lead to higher operational expenses, increased legal and regulatory exposure, and potential asset write-downs.

NatureAlpha’s Geoverse 2.0 empowers users to proactively assess and mitigate these risks, using high-resolution geospatial and biodiversity data to guide investment strategies that are resilient, sustainable, and aligned with a nature-positive future.

NatureAlpha Team
April 11, 2025

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Transitional: Investor divestment & strategy revision

As nature-related risk becomes a core consideration in sustainable finance, investor divestment is emerging as a significant transitional risk for companies failing to align with biodiversity and ecosystem protection goals.

Transitional: Litigation and liability risk

As environmental regulations tighten and public scrutiny intensifies, litigation and liability risk is becoming a critical transitional issue for businesses and financial institutions.

Transitional: Supply chains, systems & processes

As the global economy undergoes a transition toward sustainability, companies face increasing pressure to re-evaluate the supply chains, systems, and processes that underpin their operations.

Transitional: Policy change and activism

As awareness of biodiversity loss and environmental degradation rises, policy change and activism are rapidly reshaping the operating environment for businesses and investors.

Transitional: Natural resource availability

As the global economy shifts toward sustainability, natural resource availability is becoming a central transitional risk. Businesses that rely heavily on finite or declining resources are increasingly exposed.

Transitional: Regulatory and compliance changes

As global momentum builds around sustainability and biodiversity protection, regulatory and compliance changes are emerging as a key transitional risk for businesses and financial institutions.

Physical: Pandemics and social impact

The interconnectedness of human health, biodiversity, and business has never been more evident. Pandemics and their cascading social impacts present significant physical risks to businesses.

Physical: Biodiversity & ecosystem loss

As the natural world continues to degrade, biodiversity and ecosystem loss is becoming a major driver of physical risk—undermining the very systems businesses rely on for resources, resilience, and stability.

Physical: Water risk and rising sea levels

As global temperatures rise, physical water risks and sea level rise are emerging as some of the most material threats to infrastructure, economies, and investment portfolios.

Physical: Droughts, deforestation and landslides

As climate change accelerates and ecosystems are degraded, physical risks such as droughts, deforestation, and landslides are becoming more severe and financially consequential.