How to Avoid Common Pitfalls When Managing Nature-Related Risks

Biodiversity loss is directly threatening global food production. As biodiversity declines, agricultural yields become less stable, input costs inevitably rise, and supply chains face more frequent and severe disruptions.

But this isn't just an environmental issue: it's an operational and financial risk for agrifood companies.

Nature buffers shocks and reduces reliance on expensive inputs. Diverse agro-ecosystems are more resilient to climate extremes and market volatility. This stability is crucial for long-term business sustainability.  

It also opens new markets, reduces regulatory exposure, and ensures access to a wide range of resources for future innovation in food, medicine, and agricultural technologies.

This article explores some of the challenges to mitigating these risks.

Common Pitfalls and How Leading Companies Are Avoiding Them 

While the urgency is clear, many companies stumble when it comes to concrete action. However, leading brands are reframing these failure points as solvable problems. 

Many firms struggle to quantify their biodiversity impacts and integrate them into their reporting.

Challenge: Measurement and disclosure still lag, and ESG frameworks often neglect biodiversity.

The complexity of global supply chains makes it difficult to track biodiversity impacts back to their source.

Best Practice

Leading companies are leveraging nature-related risk tools like ENCORE and conducting geospatial risk assessments to identify biodiversity hotspots and evaluate commodity-specific risks. They're starting with high-impact commodities where their footprint is most significant.

Case Studies

Major food companies, including Nestlé, Mengniu Dairy, Nutrien, Suntory Holdings, Tesco, and Alpro (Danone), have publicly adopted or are actively piloting the TNFD and SBTN frameworks, with public disclosures and pilot participation confirming their leadership in nature-related target setting and reporting.

Mengniu Dairy is among the latest firms to align with TNFD recommendations. Nestlé is referenced in TNFD’s guidance documentation as engaged with the process, and Nutrien has publicly stated its participation in shaping TNFD guidance for the agri-food value chain.

Nestlé has also participated in the SBTN validation pilot, as have Suntory Holdings and Tesco. Alpro (Danone) conducted a comprehensive SBTN materiality assessment and piloted the integrated target-setting process for both freshwater and land targets.

Challenge: Traceability and value chain fragmentation

There's a common misconception that investing in biodiversity inevitably erodes the bottom line.

Best Practise

Companies are adopting "supply shed" approaches, focusing on specific geographic areas where their ingredients originate, fostering collaboration among multiple stakeholders. They're also implementing tiered engagement strategies with suppliers, recognizing that different levels of intervention are needed across a fragmented value chain. Digital transformation and technology adoption are also playing a crucial role. Food businesses are increasingly using digital tools like blockchain for traceability, AI for demand forecasting and risk management, and IoT sensors for real-time monitoring to create more transparent and resilient supply chains.

Case Studies

McDonald’s is addressing this through the “Routes to Regen” initiative, a regional supply shed approach that engages producers, NGOs, and suppliers to build place-based solutions. This project, launched in partnership with King Charles III’s Sustainable Markets Initiative (SMI), brings together McDonald’s, McCain Foods, Waitrose & Partners, financial institutions, and a range of supply chain partners to support UK farmers in transitioning to regenerative practices, particularly in the east of England.

This involves providing financial, technical, and peer-to-peer support for farmers, building collaborative models, and utilizing frameworks like the Sustainable Agriculture Initiative Platform’s ‘Regenerating Together Framework’ for measurement. Beth Hart, McDonald’s chief sustainability & social impact officer, emphasizes that implementing regenerative practices requires “real and lasting partnership across the supply chain.”

Tesco’s sustainability strategy also highlights partnerships and data-driven approaches to address fragmentation and embed sustainability at every stage of its global supply chain.

Challenge: Perceived trade-off between profitability and biodiversity.

There's a common misconception that investing in biodiversity inevitably erodes the bottom line.

Best Practice

Forward-thinking companies are reframing this as a long-term investment. They're using scenario modelling to demonstrate how short-term investments in biodiversity can lead to significant long-term cost savings and enhanced resilience.

Case Studies

Danone's soil health pilots are a prime example. By investing in practices that improve soil health, they are reducing their reliance on costly synthetic fertilizers, demonstrating a clear link between ecological health and economic efficiency.

Opportunity: Strategic Risk and Strategic Advantage

The consequences of biodiversity degradation are already impacting productivity. Pollinator decline threatens crop yields, soil collapse compromises fertility, and increasing regulatory bans on certain pesticides force a re-evaluation of agricultural practices. However, early movers are transforming these risks into opportunities for strategic advantage.

Companies are increasingly building resilience by:

• Driving upstream engagement through soil and water KPIs: By setting clear targets for soil organic carbon and water quality, they are incentivizing their suppliers to adopt more sustainable practices.
• Utilizing blended finance and results-based payments: These innovative financial mechanisms are being deployed to scale landscape restoration efforts, sharing the benefits and risks across public and private sectors.

Case Studies

• Nestlé: Through its "Nestlé Regeneration" program, the company is investing in regenerative agriculture practices across its supply chains, aiming to protect and restore ecosystems while enhancing farmer livelihoods. Their efforts include comprehensive biodiversity assessments and targeted interventions, providing support like training and financing to help farmers achieve improvements in biodiversity, water, and soil metrics.
• McDonald's: Beyond "Routes to Regen," McDonald's is actively involved in initiatives that promote sustainable beef production, addressing land use change and biodiversity conservation at a landscape level.
• General Mills: Their commitment to sourcing from farms practicing regenerative agriculture is directly contributing to improved soil health, increased biodiversity, and enhanced ecosystem services, building long-term resilience into their supply chain.

Companies investing in biodiversity today are not just mitigating risk; they are actively positioning themselves for future market resilience, regulatory alignment, and enhanced brand reputation.

From Ambition to Implementation: Tools That Support Progress

For companies ready to act but unsure where to start, the good news is that robust tools and frameworks exist. The challenge lies in selecting and applying the right ones.

Key frameworks provide essential structure and guidance:

• TNFD LEAP (Locate, Evaluate, Assess, Prepare): This framework offers a systematic approach for companies to understand, assess, and manage their nature-related risks and opportunities. It helps identify dependencies and impacts on nature across their operations and value chains, paving the way for targeted interventions.
• Science Based Targets for Nature (SBTN): Similar to the Science Based Targets initiative for climate, SBTN provides a clear framework for companies to set measurable, actionable, and time-bound targets for nature that align with global biodiversity goals. This helps translate ambition into concrete, trackable objectives.

Furthermore, specialized tools are emerging to support implementation:

• Nature Metrics' GRA (Global Risk Assessment) and agri-metrics approach: These tools provide granular data and analytics to help companies assess biodiversity risks and opportunities within agricultural supply chains, offering actionable insights for sustainable sourcing and intervention.

The conversation in the agrifood sector is decisively shifting from "why" to "how." The companies that will thrive in the coming decades are those that treat biodiversity not as a peripheral issue but as a core systems challenge. By leveraging the comprehensive tools at hand and moving decisively from intent to robust implementation, food giants can not only safeguard their future but also lead the way in building a more biodiverse and resilient food system for all.