Nature risk is a built environment risk

Every element of our built environment depends on nature, through land, materials, water, and climate stability. As nature rapidly moves up the corporate agenda, many organisations are discovering the same challenge: nature disclosures demand strategic clarity, backed up by technical evidence. Strengthening the understanding of how built assets both depend on, and impact nature is becoming essential for meeting emerging Environmental Social and Governance (ESG) expectations, aligning with evolving disclosure frameworks and demonstrating responsible stewardship across the value chain.

Understanding nature risk in the built environment is no longer optional

Built assets rely on stable soils, water, biodiversity and functioning ecosystems to manage heat, flooding and extreme weather. As these systems decline, dependencies quickly become material risks, driving asset damage, safety issues, higher operating costs, and reduced resilience.

These risks also extend across material sourcing and supply chains, but they also present an opportunity. Organisations that proactively review their supply chains, operations and assets can identify inefficiencies and drive greater margin, while reducing exposure to disruption and cost volatility.

With investor scrutiny intensifying and disclosure expectations scaling under the Australian Sustainability Reporting Standards (ASRS), Australia’s mandatory climate-related disclosure framework, nature is now a material financial, operational, and governance consideration for assets across the economy.

The Taskforce on Nature-related Financial Disclosures (TNFD) now provides the global reference framework for understanding how built assets depend on and impact nature, and what this means for risk, resilience and long-term value.

What nature risks look like in the built environment

Risks generally fall into three areas:

1. Dependencies: Built assets depend on healthy natural systems such as reliable water availability, stable soils, vegetation cover, coastal buffers and functioning floodplains. When these systems degrade, exposure to heat stress, flooding, subsidence and water scarcity increases.
2. Impacts: Construction and operations can place pressure on nature through land clearance, habitat fragmentation, altered hydrology, pollution and resource extraction, increasing regulatory, community and reputational risk.
3. Financial risks: Dependencies and impacts translate into material outcomes, including asset damage, higher capital and operating costs, project delays, insurance constraints, reduced asset life and challenges to long-term value and resilience.

The climate and nature connection

ASRS requires organisations to identify and disclose material climate-related risks and opportunities, including how these affect strategy, financial performance and resilience and for the built environment, this cannot be done in isolation. Climate and nature risks are deeply intertwined, with nature loss both amplifying climate impacts and shaping how assets respond to a changing climate.

Nature risks are increasingly reflected in climate disclosures, while physical risks are intensified when degraded ecosystems reduce flood protection, cooling, or water security. Transition risks also emerge as regulations, planning controls and market expectations respond to biodiversity loss and resource scarcity. As a result, assumptions about resilience and adaptation in transition plans increasingly depend on the health of surrounding natural systems. Understanding these links is critical to producing credible, decision‑useful insights and provides a clear starting point for applying the TNFD LEAP approach.

TNFD LEAP approach

TNFD may seem complex, but the Locate, Evaluate, Assess, Prepare (LEAP) approach provides a clear, step-by-step process to help organisations identify and manage nature-related risks and opportunities and integrate these considerations into planning and reporting.

LEAP guides organisations to:

• Locate where the business interacts with nature across assets, operations and the value chain.
• Evaluate key dependencies and impacts on natural systems, such as water, ecosystems and ecosystem services.
• Assess the resulting business and financial risks and opportunities arising from those dependencies and impacts.
• Prepare to respond through strategy, governance, metrics, targets and disclosure.

LEAP is designed to be practical and proportionate, encouraging organisations to start with material locations and assets. Rather than requiring perfect data from the outset, it prioritises decision-useful insights and supports the gradual development of depth and maturity, as understanding and information improves over time.

Organisations that act early will be better placed to manage cost, resilience and approvals risk in an increasingly constrained and regulated environment.

Want to learn more?

SLR supports nature-related risk and opportunity assessment across the built environment, from hyperscale data centres and commercial developments to large, diversified asset portfolios.

We help organisations move from high-level nature ambition to practical action through integrating strategic advisory, technical environmental expertise and location-specific data insights. We enable organisations to identify and assess nature-related risks and opportunities, embed them into governance and investment processes and meet evolving disclosure requirements under ASRS and TNFD.

Part 1: Demystifying the ‘L’ in the TNFD LEAP Approach

ASRS: Where to start for Mandatory Climate Disclosures