As Ottawa positions climate and nature at the centre of its new Climate Competitiveness Strategy, unveiled this week as part of Budget 2025, experts say corporate boards can no longer treat environmental risk as a secondary concern. In a recent webinar hosted by Queen’s University’s Institute for Sustainable Finance (ISF), panellists warned that ignoring biodiversity and ecosystem loss could expose directors – and their insurers – to liability.
Canadian corporate directors who overlook their companies’ dependence on ecosystems, biodiversity, and natural resources could soon find themselves facing real legal exposure, according to experts speaking at a recent webinar hosted by Queen’s University’s Institute for Sustainable Finance (ISF).
“The [usual misconceptions] surround the perception that nature is not a financial risk. Nature, the corporations’ dependency on nature and [their] impacts on nature can, in fact, be very much a material risk to the corporation,” said Lisa DeMarco, senior partner and CEO at Resilient LLP.
DeMarco’s comments came as part of a broader discussion about a new legal opinion from the Canadian Climate Law Initiative (CCLI). The opinion concludes that corporate directors already have a legal duty to consider how nature loss and ecosystem degradation can affect their organizations – and that failing to do so could expose them to claims and shareholder actions similar to those already emerging in climate-related litigation.
“Failing to identify those nature-related risks and dependencies and impacts as subsets of nature-related risk can have a number of consequences, and they are very specifically related to potential director liability and derivative claims,” DeMarco explained.
She said that the era when nature could be treated as a side issue or a corporate social responsibility topic is ending. “The key element is that doing nothing is highly risky for corporations,” she said.
While many governance debates frame nature and climate issues as part of a company’s environmental, social, and governance (ESG) strategy, DeMarco noted that Canada’s legal framework makes these duties much deeper than voluntary best practice.
“This is not something nice to have in Canada. This is a Constitutional duty,” she said.
DeMarco pointed to the recognition of Aboriginal and treaty rights under the Constitution as an example of how environmental and community considerations are legally embedded in Canadian corporate conduct. Failing to consider nature-related impacts can therefore implicate both fiduciary responsibilities and constitutional obligations.
That distinction matters for risk managers and insurers. If nature-related governance failures are viewed as breaches of duty, they could generate directors and officers (D&O) claims similar to those already filed over climate misrepresentation, disclosure omissions, or oversight failures.
For DeMarco, proactive engagement and partnership are central to reducing that exposure. “Consulting often and looking at how we can create indigenous business partnerships is very strategic. And financially wise,” she said.
Her point underscores a growing legal and commercial consensus: boards that integrate Indigenous consultation early in their decision-making processes are less likely to face regulatory, reputational, or litigation risk. That engagement is no longer framed merely as reconciliation or ESG practice – it’s a governance safeguard that can also create new business opportunities.
The Taskforce on Nature-Related Financial Disclosures (TNFD), launched globally in 2021 to build on the success of the Taskforce on Climate-related Financial Disclosures (TCFD), recently published its first guide for board directors. The guide identifies key questions that directors should be asking their management teams to ensure they understand their organization’s dependencies on nature.
“How are we assessing and measuring our potentially material nature-related dependencies, impacts, risks, and opportunities, and what data are we using and what data are we generating?” said Candice Dott, TNFD’s director of market engagement for North America.
The emphasis on measurement and data mirrors the early stages of climate risk disclosure, when regulators and investors began pushing companies to quantify their exposure. For insurers and underwriters, it also provides a signal of board maturity: firms that can demonstrate nature-risk data collection and oversight are more likely to be viewed as lower governance risks.
Dott also pointed to a critical capacity gap that may soon become an underwriting and regulatory concern. “Do we have the requisite skills and experience... to help adequately, manage the organization's nature-related issues?” she asked.
That question cuts to the heart of governance readiness. Boards that lack in-house expertise or fail to seek external guidance could be seen as falling short of their duty of care, particularly as the financial relevance of nature-related risk becomes clearer.
For Canada’s insurance sector – and especially for D&O underwriters, this means that the definition of governance risk might be expanding. Directors who fail to identify and manage their company’s dependencies on natural systems may now face the same scrutiny as those who ignored climate risk a decade ago.
The legal precedent is already being formed. DeMarco’s opinion and the TNFD’s framework both argue that environmental dependencies can directly affect financial performance, asset valuation, and regulatory compliance. That places nature squarely in the category of material business risk.
For corporate leaders, this means that treating biodiversity and ecosystem loss as distant or optional concerns is no longer defensible.
As DeMarco warned, “The key element is that doing nothing is highly risky for corporations.”
