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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. These changes represent not only evolving legal obligations but also shifting expectations from investors, consumers, and civil society.

The rise of frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD), the Corporate Sustainability Reporting Directive (CSRD), and Sustainable Finance Disclosure Regulation (SFDR) signals a dramatic increase in the volume, complexity, and scrutiny of environmental reporting. Companies unprepared for this shift risk falling behind or facing regulatory penalties.

Non-compliance or delayed alignment can result in loss of access to capital, increased audit and reporting costs, and reputational damage. As standards evolve, firms may also face forced divestment from investors looking to reduce their exposure to poorly aligned or opaque operations.

Additionally, new rules may mandate greater transparency around biodiversity impacts, nature dependencies, and value chain exposure—placing pressure on sectors historically under regulated in these areas.

NatureAlpha’s Geoverse 2.0 helps companies stay ahead of these changes. With automated, TNFD-aligned metrics, real-time risk scoring, and ready-to-use disclosure tools, organisations can confidently navigate regulatory shifts, reduce compliance burdens, and align their strategies with a nature-positive economic future.

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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.