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Biodiversity as a Material Financial Risk: What Board Directors Need to Know

Biodiversity – the variability among living organisms – is being lost at a rate 100 to 1,000 times higher than that of the past million years. This poses significant risk to economic activities and financial assets, which depend on biodiversity.

It is imperative that boards understand all of the indirect, but very real, implications of biodiversity loss for their business. Failure to consider biodiversity risks and opportunities in governance and disclosure may constitute a breach of directors’ duties – but may also create opportunities for businesses to be part of the transition to a ‘nature-positive’ economy.

This guide highlights the material financial risks and opportunities, and directors’ duties of loyalty and care, related to biodiversity loss.

It also provides key questions board directors should ask in the boardroom to engage with management and ensure they are meeting their duties to the company.

This is the fourth in a series of learning materials on climate change as it relates to board duties and governance produced by the Commonwealth Climate and Law Initiative (CCLI) and the Climate Governance Initiative.

Read other briefings in this series, on: Climate Change Litigation, Climate Change Disclosures, and Climate Change and ESG-related Risks in Value Chains

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