In 2025, corporate action on nature has evolved from what was often seen as an environmental obligation into a strategic necessity.1 Taking action is not just about preserving our natural resources—it is a key element of business strategy.
Nature plays a critical role as a foundation for the global economy, with more than half the world’s GDP dependent on nature.2 In this way, nature degradation—including biodiversity loss, ecosystem collapse, and natural resource shortages—has emerged as one of the world’s foremost global economic risks.3
In turn, many companies are developing nature strategies to mitigate risks to their supply chains, operations, and reputations. Climate-related extreme weather events cost $2 trillion globally over the past decade,4 for example, and two-thirds of businesses face substantial water risk, whether in their direct operations or throughout their value chains.5 In addition, approximately 1.2 billion jobs globally—representing roughly 40 percent of the workforce—rely on ecosystem services provided by natural forests, oceans, and landscapes.6
But action on nature is not just about mitigating risk; organizations can unlock significant opportunity by taking a proactive stance. McKinsey analysis identified 11 high-potential value pools (such as industrials, water, and waste) that could be worth anywhere from $9 trillion to more than $12 trillion in annual revenues by 2030.7
Concurrently, investors, consumers, and regulators are putting increasing pressure on companies to prioritize nature alongside other sustainability goals. In 2024, the FAIRR Initiative, an investor network representing $51 trillion in assets under management, ranked biodiversity as the second-most-critical theme after climate change.8 Business and industry representation at the 2024 meeting of the UN Conference of the Parties to the Convention on Biological Diversity (CBD COP16) in Colombia was more than double that of the previous conference.9 At the same time, nature-related regulations and voluntary disclosures are increasing in both size and scope. The European Union’s Corporate Sustainability Reporting Directive (CSRD), for example, will require about 50,000 companies to transparently report their impacts on nature, among other things, in the years to come.10
Despite being critical to business success, nature often does not benefit from the attention, strategic focus, and understanding required for meaningful progress. Why not? While there is growing willingness to act, developing clear, actionable pathways to integrate nature into business strategy remains a challenge. Nature is a vaguely defined space (see sidebar, “What is a nature strategy?”), lacks universally accepted metrics, does not always align with short- to medium-term priorities set by corporations, and represents a nascent market embedded in a rapidly evolving landscape.
To help businesses focus on what matters, this article presents ten tests that can help companies evaluate how effective their current strategy is in capturing the growing nature opportunity and building resilience against nature-related risks. Just as with overall corporate strategy, there is no single right answer. Each approach must be carefully tailored to fit the individual needs of the organization. But companies that answer yes to many of the below questions should be well on their way to unlocking the value of nature while safeguarding business growth.
Test 1: Is nature relevant for your operations and business success?
Understanding how nature is intertwined with operations and overall business success is the first step for a top-tier nature strategy—and the first test.
With very few exceptions, corporations both rely on and have an impact on natural ecosystems. More and more companies are recognizing this interdependence and acting on it. A growing proportion of Fortune Global 500 companies now have nature-related targets or acknowledgments (Exhibit 1), with about 26 percent of these companies now reporting on at least three dimensions of nature, an increase of more than 60 percent since 2022.11
Understanding your company’s relationship with nature means evaluating your dependencies on nature and potential footprint across your operations. Many companies start by mapping their value chain—from sourcing materials to delivering products and pursuing growth opportunities—which enables them to evaluate nature’s role in determining supply chain resilience, operational needs, sales, and regulatory exposure. As a first step, you can answer the following questions:
- How reliant are your operations on natural resources such as land and water? Are you reliant on any raw materials at risk of scarcity? Answers to these questions help identify your physical risks from nature.
- What impact do natural ecosystems have on your product offering, value proposition, and license to operate? This is relevant for a range of sectors, including industries that use substantial amounts of land across their operations, as well as insurance, where products are linked to climate and nature risk.
- Which of your assets, products, and capabilities could represent a true competitive advantage as emphasis on nature increases? Maintaining a forward-looking perspective can help ensure that nature is a critical driver of business success rather than an operational challenge.
- Are there any upcoming regulations that will affect your sourcing, your footprint, or other facets of your business? This analysis can help identify your exposure to transition risks.
- What topics are your stakeholders focused on today, and what will they care about in the future? As nature and natural capital become increasingly relevant and important, many of your stakeholders are likely to increase their expectations around nature-related action and disclosures.
You may already be performing some of the analyses required to answer these questions, perhaps as a result of existing voluntary or mandatory reporting systems, such as the Taskforce on Nature-related Financial Disclosures (TNFD) or CSRD. If not, answering these questions doesn’t have to be a labor-intensive process, nor should it be done in silos: there are frameworks and tools that simplify this exercise.
For risk assessment, existing governance frameworks can efficiently isolate areas in which environmental factors might affect operations and profitability, or vice versa. A double materiality assessment,12 for example, can help isolate an organization’s most important nature-related impacts, risks, and opportunities (IROs). These impacts and dependencies can be mapped across different sites within a company’s footprint, which can clarify the geographical distribution of risk (Exhibit 2). In addition, environmental, social, and governance (ESG) analyses focused on nature can help identify where a company could create value and build a competitive advantage. For value protection, strategic scenario planning tools can help model potential futures, identify risks (for example, water scarcity or raw material sourcing), and provide actionable insights without placing significant demands on your team.
The question is not if nature will affect your business, but when and how. Both near- to medium-term pressures, such as regulatory changes and extreme weather, and longer-term challenges, such as raw-material sourcing and new technologies, are inevitable. Is your company ready?
Further reading
Nature risk rising: Why the crisis engulfing nature matters for business and the economy, World Economic Forum, January 19, 2020
“Nature in the balance: What companies can do to restore natural capital,” McKinsey, December 5, 2022
“How to make ESG real,” McKinsey Quarterly, August 10, 2022
Test 2: How does your nature strategy complement your company values and enhance your competitive advantage?
As with corporate strategy, your nature strategy is most likely to succeed when it is fully embedded within broader business strategy and tied to core assets and competencies. The authenticity and degree of this connection are what create real opportunities, including in strengthening stakeholder relationships (for example, with employees and local communities), unlocking proprietary advantages (such as by improving access to resources, building brand equity, and reducing supply chain risk), and securing early-mover advantage in new themes (for instance, nature markets or circularity).
Your nature strategy should be aligned to your company’s distinct value proposition and unique competitive advantages. For example, a company highly dependent on water can use its nature strategy to create opportunities via access to a proprietary source (perhaps enabled by a reputation for good stewardship), efficient water usage in operations, and use of the company’s unique insights into future water needs and prices.
Increasingly, companies are seizing fast-developing opportunities to integrate nature-based solutions into their strategies to differentiate their products and gain a competitive edge. For example, advanced biotechnology—driven by innovations in genetic engineering and advanced computing—can increase efficiency in ways that are both scalable and sustainable, such as by increasing crop production and recycling efficiency through biofermentation. Up to 60 percent of the physical inputs in the global economy, across industries including food, cosmetics, medicine, chemistry, and construction, could be produced using innovative biological processes or be replaced with substitutes using bio innovations.13
Many companies are already strategically linking their brand identities and overall strategy to their connection with nature. As nature continues to gain prominence among stakeholders, including employees and investors, these sorts of linkages will increasingly become expected.
Further reading
Stephen A. Greyser and Mats Urde, “What does your corporate brand stand for?,” Harvard Business Review, January–February 2019
Spotlight on nature: Case studies for business transformation towards a nature-positive future, World Economic Forum, September 2024
Test 3: Does your nature strategy reflect market shifts?
Given the rapid pace of global environmental and economic changes, pinpointing trends can feel like trying to hit a moving target. A winning strategy needs to be based on both a clear view of the future and an ability to adapt.
Recently, certain market shifts have become too widespread and consequential to be ignored. Below are some of these shifts in the nature space. Are you factoring these into your strategic decision making?
- There is growing international consensus on the vital importance of taking action to protect and restore nature. At CBD COP15 in 2022, close to 200 countries committed to conserving 30 percent of land and seas, and wealthy nations pledged $30 billion per year toward biodiversity efforts by 2030.14 While actual progress against these targets has been slow to date, there is a steady march toward a more nature-positive future.
- Regulation and voluntary action are aligning. As national and supranational nature-related regulation proliferate (such as the EU Deforestation Regulation [EUDR], CSRD, and SEC rule 33-1128015), voluntary disclosures, which offer guidance on assessing, disclosing, and managing impacts and dependencies on natural ecosystems, are also gaining traction.16 For example, TNFD was supported by more than 500 organizations with a collective $17.7 trillion assets under management as of October 2024, a 57 percent increase from January 2024.17 Some companies additionally leverage TNFD to help them comply with required disclosures, such as CSRD, given the ongoing work to maximize consistency among frameworks.18
- Markets are developing to address nature-related issues and create opportunities. Beyond the carbon market, multiple nature-related markets exist today, including those related to water and wetlands. The market for voluntary biodiversity credits is also growing and is projected to be worth up to $180 billion by 2050,19 with a number of countries, including Finland,20 already announcing plans to create markets of their own.
Companies that do not factor these shifts into their strategy and decision making face downside risks and may lose the chance to benefit from the opportunities presented by new regulations and markets.
Further reading
Nature-positive industry sector transitions, World Economic Forum, September 12, 2023
“Nature-positive investments: Good for the planet and long-term value,” McKinsey, April 18, 2024
Biodiversity credits: Demand analysis and market outlook, World Economic Forum, December 2023
Test 4: Are your climate and nature strategies fully linked? Better yet, are they a combined effort?
Climate and nature are inherently interdependent, and many of the levers companies use to reduce physical risks from climate events and carbon emissions—while generating a positive return on investment—will in turn have beneficial effects on nature. This is particularly the case when it comes to areas such as water use and biodiversity. Aligning nature and climate strategies can therefore unlock synergies and cost efficiencies by enabling both sets of interconnected risks to be addressed comprehensively. In addition, an integrated approach can facilitate greater value creation (for example, through dual-purpose product lines), as well as attract and mobilize capital for sustainable initiatives.
To evaluate whether you’re fully benefiting from an integrated strategy, consider your approach to risks and opportunities related to both climate and nature. Is an understanding of their interconnectedness shared across all functions and employees? Do you address how climate-related risk (such as extreme weather) may exacerbate nature risk (for instance, biodiversity loss or water scarcity) within each area of operations? Are you investing in innovative solutions (such as regenerative practices or circular-economy models) that address both climate and broader nature challenges?
If you are focusing primarily on carbon and other greenhouse gases, consider expanding the robust management processes that exist in those areas to also cover other nature dimensions. This broader coverage can often be achieved by leveraging existing teams, processes, systems, and disclosures; as their names suggest, for example, frameworks from the Taskforce on Climate-related Financial Disclosures (TCFD)21 and the TNFD are intricately linked and mutually supportive.
Further reading
“Corporate commitments to nature have evolved since 2022,” McKinsey, December 10, 2024
Addressing climate change: Why biodiversity matters, UN Environment Programme, 2014
“Ten key requirements for a systemic approach to climate adaptation,” McKinsey, November 8, 2023
Test 5: Has nature been integrated into your overall corporate strategy and approach to growth?
Integrating nature into your corporate strategy helps mitigate risks, create value, and meet regulatory expectations, as well as building trust with investors, stakeholders, employees, and customers.
To gauge whether you have integrated nature into your broader strategy effectively, ask yourself the following questions:
- Have you identified clear connections between nature and your value drivers, market scenarios, and sustainability and social impact? Do these connections—including both downside risk and upside opportunity—properly inform your overall portfolio?
- Do you have a proprietary view of the future related to nature and natural capital, as well as an approach to take advantage of related trends? Are leaders fully informed and prepared to embed this view into strategic decisions?
- How do you consider the above risks, opportunities, and shifts in your overall resource allocation?
As markets and preferences shift, there is growing potential to enhance your business’s overarching value-creation strategy through nature-conscious approaches. For example, margins for once-niche nature-focused products such as recycled plastics and meat substitutes can be 15 to 150 percent higher than those of traditional products.22 Treating nature as distinct from your business ignores the fact that you depend on nature to do business; integrating the two can unlock substantial opportunities.
Further reading
Aaron De Smet, Wenting Gao, Kimberly Henderson, and Thomas Hundertmark, “Organizing for sustainability success: Where, and how, leaders can start,” McKinsey, August 10, 2021
Nature strategy handbook: It’s now for nature, Business for Nature, November 2023
Test 6: Does your nature strategy balance commitment and flexibility?
While clear, well-defined commitments serve as a foundation for an effective nature strategy, the complexities of economic, environmental, and social dynamics mean that companies will also need to remain nimble.
Much like when deciding to enter a new sector or geography in corporate strategy, your approach to nature must evolve as external conditions change, even when your commitment to the overarching goal remains in place. This is particularly true in today’s evolving nature space, which is characterized by shifting regulations, inconsistent progress metrics, and dynamic natural systems. Adaptability is especially important for companies that operate across regions or industries, since local conditions—regulatory, cultural, or environmental—significantly affect the success of nature-related initiatives.
Many of the tenets from McKinsey’s ten timeless tests of corporate strategy can be applied to nature.23 As that framework lays out, most strategies, including nature strategy, are a portfolio of three things: big commitments informed by competitive advantage; no-regret actions that pay off without question; and real options, which involve relatively low costs now but can be elevated or adapted as conditions change. Ask yourself: if the conditions around your “big nature commitments” change (for example, because of regulation), and your no-regret actions were only designed to get you halfway, can you recalibrate and rebalance your “real options” (such as inputs or approach to circularity) enough to bridge the gap?
A robust corporate or nature strategy needs to be agile and carefully sequenced. A common approach is for companies to concentrate on a few key decisions requiring substantial commitment now, while ensuring room for adjustments and further choices as opportunities or challenges emerge.
Scenario planning and stress testing can then be powerful tools to determine whether your nature strategy has struck the right balance between commitment and flexibility. Test your strategy’s resilience by running it through various scenarios, such as regulatory changes, supply chain disruptions, or market shifts. Can it stay on course, or does it need major adjustments? Can you build in contingency plans that can be easily activated? Are all departments—finance, supply chain, R&D—ready for a coordinated pivot if necessary?
Ongoing evaluation and flexibility can foster innovation while creating a culture in which teams feel empowered to experiment with new ideas, discovering more efficient ways to achieve long-term success—both for your business and for the planet.
Further reading
Chris Bradley, Martin Hirt, and Sven Smit, “Have you tested your strategy lately?,” McKinsey Quarterly, January 1, 2011
Test 7: Do your nature actions create a portfolio of risk/return profiles?
The right mix of actions will not only align with your strategic objectives but also ensure you are investing enough to reap the intended benefits. The principles involved in putting together this mix of actions in the nature space are the same as those used to develop a standard corporate portfolio strategy; in both cases, the right combination will involve a mix of long- and short-term actions that vary in both their probability of success and their exposure to the different categories of risk. This means pursuing actions that are net present value–positive under current conditions, as well as long-term initiatives that are contingent on market or regulatory changes.
In assessing your mix of actions, ask yourself the following questions:
- Is your portfolio of actions balanced across your full set of nature-related dependencies and impacts?
- Do your quarterly, or annual, actions work together to set you up for success in any scenario? Do they fit like building blocks to reach the ultimate target?
- Are you discounting the potential impact of your actions appropriately? For example, are you accounting for the possibility that future technological developments needed to realize a nature-related benefit may not materialize?
As with any portfolio strategy, your company will need to revisit these questions regularly and update forward-looking assumptions based on the latest available information. Doing so will help ensure that your strategy stays aligned with evolving market dynamics and organizational goals.
Further reading
“Active portfolio management: Five practical insights for value creation,” McKinsey, November 5, 2024
Test 8: Have you operationalized your nature strategy?
Without clear, actionable steps, even the most thoughtfully designed nature strategy will remain theoretical. Operationalizing a strategy ensures that it moves from theory to reality, with initiatives that are actively implemented, tracked, reported on, and adapted over time.
Successful operationalization requires a robust foundation of operational, managerial, and cultural capabilities. Operational skills ensure that the organization has efficient processes and sufficient resources, skills, and capacity in place to support nature initiatives; managerial capabilities empower teams to own and drive nature actions; and cultural alignment creates an environment in which employees support, and are supported by, the nature strategy. Without assessing and building these capabilities, strategies may encounter resistance, resulting in inefficiency and underperformance. In particular, leaders need an understanding of nature’s interconnected impacts, on their own company and beyond, to effectively integrate insights into decision making and steer the company forward.
To test your path toward change, consider the following questions:
- Do you have the right data, technology, and tools for effective implementation and tracking? Have you trained your team to use them?
- Is a clear and effective leadership structure in place to oversee and support nature initiatives? If so, is it integrated into broader corporate strategy and governance, as laid out in test 5?
- Does your company’s culture encourage the innovation, adaptability, and resilience required to succeed in the rapidly evolving nature space?
For many stakeholders, a comprehensive nature strategy is a new concept. This means that developing the systems, capabilities, and convictions necessary to answer these questions in the affirmative may be a significant endeavor.
Further reading
Nature finance and biodiversity credits: A private sector roadmap to finance and act on nature, World Economic Forum, October 21, 2024
Test 9: Are you creating measurable positive impact on nature?
To understand your impact, you need to establish clear quantitative metrics and conduct regular assessments. To see if your efforts are hitting the mark, approach the measurement of your environmental impact as you would approach the measurement of any other business metric, including your growth, market share, or profit.
Start by reviewing your progress against your established targets and commitments for your impact on nature. You don’t have these yet? Prioritize developing them. Today, targets are often practice-based, but companies are increasingly likely to switch to best-in-class targets, which focus on nature-positive outcomes rather than specific practices or activities. Instead of measuring success in terms of the number of biodiversity programs developed, for example, companies will likely shift to tracking biodiversity uplift.24 And instead of setting KPIs around the adoption of sustainable land-use practices, they might decide to set them around deforestation-free supply chains and reduced water usage. These outcomes can then be linked to financial performance—through metrics such as water usage per dollar of profit—enabling companies to set targets related to intensity metrics and refine their focus on operational efficiency.
Company-wide targets should then be systematically translated into specific, measurable metrics and KPIs for business units, ensuring that each part of the organization understands its role in achieving overall objectives. Choosing the right metrics and measurement approaches can be daunting, given the existence of so many different methodologies. There is a growing—though still not exhaustive—body of guidance on how to develop the right set of metrics from the large and evolving set of possibilities. TNFD provides a menu of metrics options, for example, while recent analysis from the World Economic Forum in collaboration with McKinsey provides clarity on metrics for nature markets.25
Once your framework of targets, commitments, and metrics is in place, the next step is to track your progress. For those just starting out on this journey, TNFD provides recommendations for all elements of the monitoring and evaluation (M&E) and disclosure processes. For a quick assessment of your current approach to M&E, ask yourself the following questions:
- Do you have systematic processes in place to track progress against your goals? What is your contingency plan if you are off track?
- Have new methodologies and technologies emerged that can help you measure your impact more quickly, at a lower cost, or more accurately?
- How do you compare with peers, both in terms of the metrics you have chosen and your progress against them?
- Are targets and goals being met? If not, how can the strategy be reevaluated to improve performance?
Further reading
Nature-positive industry sector transitions, World Economic Forum, September 12, 2023
Biodiversity credits: Demystifying metrics for nature markets, World Economic Forum, September 2024
Test 10: Does your nature strategy enhance your company’s long-term business resilience?
In today’s rapidly changing environment, assessing and mitigating nature-related risks is crucial to building resilience against, for example, extreme weather, resource scarcity, and market shifts. As outlined in test 1, the first step is identifying the threats to your business so that you have a clear understanding of where your vulnerabilities lie.
Companies then need to go through a careful process of assessing—and, where necessary, bolstering—their approach to threat mitigation. You can start by asking the following questions:
- Does your resilience planning recognize and address the full range of your medium- and long-term nature risks?
- Are your mitigation actions robust enough to protect your operations and supply chain?
- Do you use innovative solutions to prepare for challenging conditions?
As with test 9, tracking progress will first require the identification of appropriate metrics or KPIs. In this case, the chosen metrics will need to measure both the evolution of risks and your progress on mitigating them. For example, an agricultural company operating in water-stressed regions may set water-related targets, and mitigation actions in this case could include the implementation of new, fast-evolving monitoring technologies.26
Addressing nature-related risks can go beyond boosting resilience and contribute to business success. Companies that integrate ESG priorities into their strategies while also outperforming on fundamentals such as revenues and profits are more than twice as likely to grow revenues by more than 10 percent than companies that outperform on fundamentals but do not incorporate ESG priorities into strategy.27 Not only can you do well by doing good—you can also do better than your peers.
Further reading
“How resource scarcity is driving the third Industrial Revolution,” McKinsey, April 1, 2014
“Water: A human and business priority,” McKinsey Quarterly, May 5, 2020
Global resources outlook 2024, UN Environment Programme, March 1, 2024
Nature will have an increasing impact on the balance sheets and income statements of virtually every company, both directly and as a result of the global transition needed to address the challenges posed by its decline. As with all foundational elements of corporate strategy, establishing a clear perspective on your position and understanding the necessary actions to stay ahead will be critical to long-term business success.
