Nature rises as a board priority

Australia's first director study on nature-related governance shows
early, uneven progress as new environmental laws promise a new approach.

Australia has entered a significant period of environmental reform, with the Australian Parliament passing long-awaited updates to the Environment Protection and Biodiversity Conservation Act 1999 (EPBC) on 28 November 2025.

The reforms coincide with the release of Nature Enters the Boardroom, an Australian-first study by the AICD and the University of Sydney Business School examining how boards are beginning to approach nature-related governance, strategy and risk.

Taken together, the policy changes and emerging governance practices identified in our study point to a maturing business approach to the environment.

A new national environmental framework

Following extensive negotiation, including amendments supported by the Australian Greens, the government succeeded in passing its Environment Protection Reform Bills at the end of the parliamentary year. The reforms implement recommendations from the 2020 statutory review of the EPBC Act, conducted by Graeme Samuel, including:

• Establishing a National Environmental Protection Agency (NEPA) with independent compliance and enforcement powers;
• Introducing an 'unacceptable impact' test, enabling refusal of projects likely to cause unacceptable harm to nationally protected environmental values;
• Binding National Environmental Standards, which will be developed during 2026;
• Updating offsets and restoration mechanisms to ensure clearer expectations and stronger environmental outcomes.
• Requiring disclosure of greenhouse gas emissions and emission reduction plans from proponents of large emitting projects.

Samuel, who led the independent review completed in October 2020, welcomed the reforms, noting the legislation ‘faithfully reflects in total the substance of the review'. He emphasised the importance of the new national environmental standards, describing them as ‘the foundation stones of future regulation of environmental protection and restoration,’ and cautioned that the standards must be specific and unambiguous to avoidinconsistent decisions and legal uncertainty.

The reforms capture several of the key improvements sought by business, although responses from the business community have been mixed, including disappointment at the lack of bipartisanship from the Opposition. The Australian Conservation Foundation welcomed the enhanced protections for native forests and highlighted the importance of the government ensuring the reforms operate as intended.

Directors identify nature as a material governance issue

Against this backdrop, Nature Enters the Boardroom finds that eight in 10 directors agree that nature is important to their organisations. Directors increasingly recognise nature risks as financial –driving supply chain disruption, higher costs and litigation risk.

The study points to a shift from treating nature mainly as a reputational concern to understanding it as integral to business resilience and long-term value creation.

Policy barriers and competing pressures hold boards back

While directors recognise the significance of nature-related risks, systemic policy gaps have held back progress. In the study, half of directors cited unclear policy settings as a barrier, with 76 per cent specificallynominating the lack of national environmental standards.

With enabling legislation now passed, boards may soon have a more stable foundation for planning and risk assessment. Samuel stressed the importance of precision: ‘The standards must leave no doubt in the minds of development proponents, conservationists and regulators as to their meaning and application.’

Boards adapt climate governance practices to nature

The study shows that many boards are leveraging established climate governance structures in response to nature. Among listed respondents:

• One in four has already integrated nature into climate strategy
• 43 per cent have discussed doing so
• More than half intend to integrate nature and climate strategies over time

This reflects the practical advantages of adapting more established systems, particularly in entities subject to mandatory climate reporting.

As Ken Dean FAICD observed in the study: ‘Most nature outcomes are, by definition, more local and more visible than the results of climate action. That should make sensible nature governance less political, and much more widely understood and supported at community and national levels.’

Current practice: updating risk frameworks and early disclosure

The most common step boards are taking is the integration of nature into risk management frameworks. In the study:

• 52 per cent of listed company directors report that their boards have updated risk systems to capture nature-related risks
• The figure rises to 54 per cent for not-for-profit boards and 62 per cent for government boards

Disclosure, however, remains uneven. Primary Industries and Manufacturing appear most advanced, with 56 per cent of respondents in these sectors either disclosing or preparing to disclose, followed by Professional and Business Services at 40 per cent. At the same time, one-third of directors across the study reported no nature-related disclosures. Alignment with emerging global frameworks such as Taskforce on Nature-related Financial Disclosures and the EU’s Corporate Sustainability Reporting Directive (CSRD) remains limited – characteristic of early-stage practice. In the study, Dr Ken Henry AC encouraged increased engagement with such frameworks: ‘Early movers can shape how disclosure frameworks develop and ensure they're practical. Don't wait to be told what to do – help design it.’

A cohort of early adopters

Approximately 20 per cent of boards in the study stand out as 'active' in their nature-related governance. These boards are more likely to request a dedicated nature strategy, commission external expertise, set nature-related targets and assess an organisation's disclosure readiness. They also tend to consider climate and nature together, reflectingtheir interconnectedness.

This group demonstrates the emerging direction of more integrated governance practice. As Christine Holman GAICD explained: ‘Nature capital matters – a lot. You need to understand how your business affects nature, whether that's through your supply chain or directly, in delivering your products and services.

‘Once you grasp that impact, it's crucial to price the risks and opportunities of nature capital, as you would any other relevant business risk, into your financial planning process, including capital management and therefore the impact on the firm's financial statements.’

Suggested board actions

Drawing on the study's findings, boards may wish to consider the following actions as nature-related governance expectations continue to develop:

• Anchor in duties. Treat material nature-related risks as part of directors' duties of care and diligence, and in acting in the organisation's best interests.
• Recognise financial impacts. Request analysis of nature-related cost implications, asset exposures and capital considerations.
• Localise oversight. Understand state-based, sectoral and regional obligations alongside national standards.
• Link to economic drivers. Connect environmental policy changes to impacts on productivity, insurance and access to finance.
• Leverage climate governance. Use existing climate-related risk and reporting structures as a foundation for nature governance.
• Use disclosure as a governance tool. Frameworks such as TNFD can support internal decision-making, not just external reporting.
• Formalise oversight. Clarify how nature will be incorporated into board and committee structures and reporting lines.

Nature Enters the Boardroom draws insights from a survey of over 250 non-executive directors and chairs, as well as interviews with 12 senior directors across listed, private, not-for-profit and government organisations.

The report includes practical guidance, case studies, and questions to support board oversight as expectations evolve. It also highlights the need for clarity from government, clarity that the recent reforms begin to provide.