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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. Legal actions related to biodiversity loss, environmental harm, and failure to disclose nature-related risks are rising—bringing with them the potential for financial penalties, reputational damage, and operational disruption.

Courts and regulatory bodies are increasingly holding companies accountable for their environmental footprints, particularly where operations or supply chains contribute to deforestation, pollution, or habitat destruction. Failure to meet emerging biodiversity-related disclosure standards—such as those outlined in the Taskforce on Nature-related Financial Disclosures (TNFD)—can result in enforcement actions, fines, or lawsuits.

Shareholders, NGOs, and communities are also pursuing litigation around greenwashing, failure to mitigate environmental risks, or breaches of fiduciary duty. For high-impact sectors such as extractives, agriculture, and infrastructure, the risk is particularly acute.

These trends signal a new era of legal accountability, where businesses that ignore or inadequately address nature-related risks may face material liabilities.

NatureAlpha’s Geoverse 2.0 helps organisations proactively identify and mitigate legal exposure. By providing asset-level, science-based nature risk insights, the platform supports more robust governance, transparency, and reporting—ensuring companies are better protected in the courtroom as well as the marketplace.

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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.