Snorre Gjerde, Zacharias Sautner, Alexander F Wagner, and Alexis Wegerich
Review of Finance, Volume 30, Issue 1, January 2026, Pages 11–42, https://doi.org/10.1093/rof/rfaf050
The loss of natural capital, biodiversity, and ecosystem services is one of the major crises facing humanity. Nature loss can affect companies either directly in their operations or indirectly through their supply chains. The risks through which companies may be affected are either physical or transition-related. Physical risk results from dependencies of economic activity on nature and the consequent vulnerability to nature degradation, including changes in ecosystem functioning and loss of ecosystem services. Transition risk results from changes in regulation, technology, investor sentiment, or consumer preferences. Jointly, these risks have been termed “nature risks”. In our paper, we use a survey instrument to shed light on whether and how companies are exposed to nature risks, how exposed companies address these risks, and how they interact over these risks with their investors. We distributed the survey among the investee companies of Norges Bank Investment Management (NBIM), yielding a response from 385 companies.
Our first set of results centres around the financial materiality of nature risks. Overall, 48% of companies state that they are exposed to nature risks, 39% assert that they are not, and 13% are uncertain. When we asked which type of nature risks are financially material, slightly more companies stated physical risks than transition risks. Both risks are not a topic of the distant future: 43% (27%) of exposed companies believe that physical risks (transition risks) already have financially material effects on their companies today.
Our second set of results evaluates how companies gauge the financial materiality of nature risks. We find that nature-related impact assessments have become relatively common, with 50% of companies conducting or planning to conduct them for major investments; corresponding numbers are smaller for dependency assessments (33%). Almost twice as many respondents (82%) report current or planned actions to mitigate negative impacts on nature, relative to actions aimed at offsetting such impacts (43%). Perceived challenges in addressing nature risks are widespread, mostly related to a lack of data and cost concerns. Though, until recently, nature-related disclosures in Forms 10-K or earnings calls were scant, disclosure practices appear to be evolving: 74% of companies indicate that they now provide or plan to provide disclosures on nature risks.
Our third set of results documents that investor attention to nature topics has increased in recent years. Yet, disagreement exists on the extent to which investors incorporate nature risks into investment decisions. Many companies that believe investors consider nature risks think, at the same time, that investors do not assess the implications of these risks for standard determinants of company valuations (cashflows and discount rates). Almost half of all respondents perceive nature-related engagement by investors as value-generating. The main perceived benefits of engagement are that it provides advice and raises internal focus on nature topics. Finally, only one in four companies believes that investors prioritize climate topics over nature topics and also view this as the appropriate priority. These views line up with the emphasis of natural scientists that the biodiversity and climate crises are coupled.