(Source: Microsoft Images)

At Morelli Consulting, we believe that integrating climate and nature risks into your ESG strategy is essential for long-term resilience and value in today’s nature-dependent economy. This article, written by our Nature-based Solutions lead Reaa Chadha, outlines key definitions and explores how aligning strategies and reporting on these risks can benefit your business.

 

What are Nature-based Solutions?

 

Nature-based Solutions (NbS) are actions that protect, manage and restore natural ecosystems. They address business challenges while providing benefits for both human well-being and biodiversity. These actions harness the power of ecosystems to contribute to outcomes such as flood protection, carbon storage and water purification.

NbS encompass a range of interventions implemented at different scales:

• Conservation measures: Protecting existing ecosystems like forests, wetlands and coral reefs. This may include promoting biodiversity conservation, developing legal, education and training interventions, and establishing protected areas. 
• Restoration activities: Rehabilitating degraded lands and ecosystems. Examples include the reintroduction of native species into a local ecosystem, in addition to preventing sources of degradation and pollution. 
• Sustainable management: Implementing practices that maintain ecosystem health while allowing resource use. This may include closely monitoring plant and animal populations and adapting harvesting practices to optimise for biodiversity and soil quality. 
• Green infrastructure: Integrating natural elements into built environments. Examples of this are embedding plants, trees and wildlife within roofs, walls, walkways and connecting natural habitats through nature corridors.

For businesses, NbS offer practical ways to mitigate environmental impact, build resilience against climate risks and create value through sustainable operations.

 

What is climate risk?

 

Climate risk refers to the potential negative impacts that climate change can have on an organisation’s operations, financial performance and strategic objectives. These risks have become a growing concern for businesses worldwide, driven by regulatory requirements and market expectations.

Climate risks fall into two primary categories:

Physical risks

• Acute risks: Immediate threats from extreme weather events like floods, hurricanes and wildfires.
• Chronic risks: Long-term shifts in climate patterns affecting resources, supply chains and operations.

Transition risks

• Policy and regulatory changes: Carbon taxes, emissions caps and disclosure requirements.
• Technology shifts: Market disruptions from low-carbon alternatives.
• Market changes: Shifting consumer preferences and investor expectations.
• Reputational concerns: Stakeholder perceptions of climate action or inaction.

It is recognised good practice that companies affected by regulation conduct comprehensive climate risk assessments that examine direct operations and their entire value chain to develop effective mitigation and adaptation strategies.

 

Disclosure frameworks supporting better management of climate and nature

 

The Task Force on Climate-related Financial Disclosures (TCFD) and the Taskforce on Nature-related Financial Disclosures (TNFD) are complementary frameworks that help businesses address climate and nature-related financial risks. They provide standardised approaches for companies to assess, manage and report environmental impacts and risks. They also underpin and, to a large extent, overlap with many of the regulatory frameworks now implemented or in development such as Corporate Sustainability Reporting Directive (CSRD) and International Sustainability Standards Board (ISSB). CSRD and ISSB require organisations to consider climate and nature related risks and opportunities. CDP is another sustainability disclosure framework that has integrated TCFD and TNFD to improve awareness and management of climate and nature risks.

 

TCFD framework overview

 

The TCFD framework, established in 2015, focuses on climate-related financial risk disclosures across four core pillars:

1. Governance: Board and management oversight of climate-related risks and opportunities.
2. Strategy: Actual and potential impacts of climate risks and opportunities for business strategy and planning.
3. Risk Management: Processes for identifying, assessing and managing climate-related risks.
4. Metrics and Targets: Measurements and goals used to assess and manage relevant climate risks and opportunities.

 

TNFD framework overview

 

The TNFD framework was developed following the successful deployment of TCFD. It applies the same four-pillar structure to nature-related risks and opportunities. However, it also builds upon the original guidance with the addition of the LEAP framework. Key aspects of LEAP include:

1. Locate: Understand where the business’s activities interface with nature.
2. Evaluate: Assess the organisation’s dependencies and impacts on nature.
3. Assess: Identify key nature related risks and opportunities.
4. Prepare:  Create strategic plans and disclosures aligned with nature.

 

Framework synergies and efficiency opportunities

 

The overlap between these frameworks can provide efficiency and insight compared with addressing them separately. 

• Data collection synergies: Similar data requirements enable coordinated information gathering.
• Enhanced risk assessment: Combined, integrated analysis provides a more comprehensive view of environmental risks, and can better capture interconnections between climate and nature risks.
• Streamlined reporting: Aligned disclosure structures reduce reporting burden.
• A stronger case for action: Long-term climate projections may have nearer-term nature impacts, increasing the incentive to act now.
• Strategic alignment: Creates cohesive environmental strategy rather than siloed, fragmented approaches.
• Compliance preparedness: Places organisations ahead of evolving regulatory requirements which reduces the risk of fines or reputational damage due to insufficient disclosures.

 

(Source: Microsoft Images)

Conclusion: Building resilience through integration

 

The integration of nature-based solutions with climate risk assessment creates a powerful framework for business resilience and strategic advantage. By understanding the connections between climate and nature, organisations can develop more effective risk management approaches, identify new opportunities and position themselves for long-term success in a carbon-constrained, nature-positive future.

The companies that will thrive in the coming decades are those that recognise environmental and social challenges not as separate issues to be managed in silos, but as interconnected dimensions of business strategy requiring holistic approaches. By leveraging frameworks like TCFD and TNFD in tandem, businesses can build the foundation for resilient and sustainable operations.

_________________________________________________________________________________________________________

How we can help

 

At Morelli Consulting, we provide specialised expertise in integrated climate and nature risk management that helps clients navigate complex environmental challenges while creating business value.

Our unique capabilities:

• Framework implementation: Hands-on experience implementing TCFD and TNFD disclosures.
• Science-based analysis: Advanced modelling capabilities linking climate scenarios to business impacts.
• Nature-based Solutions design: Custom NbS development tailored to specific business contexts.
• Strategic integration: Proven methodologies for embedding environmental considerations into core strategy.
• Regulatory navigation: Up-to-date expertise on evolving disclosure requirements.

Get it touch today to explore how your organisation could build greater commercial resilience through our climate and nature related services.