Asking Better Questions on Nature: A New Fiduciary Lens for Asset Owners & Managers

For decades, institutional investors have measured risk in terms they could price, model and report. Nature did not fit that frame. It had no standardised metric, no central counterparty, no ticker. That is changing, and faster than most CIOs anticipated. The question now is not whether nature belongs in a portfolio conversation, it is whether asset owners are equipped to have that conversation with the rigour their beneficiaries deserve.

 

Nature as a core investment issue

 

The starting point is brutally simple. Accelerating nature loss is already putting pressure on share prices, credit ratings and market capitalisations in multiple sectors through air pollution, freshwater stress, deforestation and microplastics.

At the same time, demand from governments, investors and consumers to halt and reverse nature loss is generating new commercial opportunities for companies and for the financial institutions that allocate capital to them. Fiduciary duty has therefore evolved. Asset owners are expected to reflect the potential financial implications of environmental issues, including nature, in investment decision-making that is consistent with their objectives and time horizons. When they delegate to asset managers, that duty extends to manager selection, mandate design and monitoring.​

The Taskforce on Nature-related Financial Disclosures (TNFD) frames this shift through a practical lens. It defines nature as the natural world, with an emphasis on living organisms and their interactions across four realms land, freshwater, ocean and atmosphere, with climate treated as a subset of the atmosphere realm. Ecosystem services, such as water provision, flood mitigation, pollination, climate regulation and cultural benefits like recreation, are the real economy pathways through which nature shows up on balance sheets.

For long term asset owners, this is the crux. If portfolio companies depend on ecosystem services that are being degraded faster than they are being restored, then nature loss is a structural risk to beneficiaries’ future payouts.​

 

From blind spot to mainstream agenda

 

Despite that logic, nature beyond climate has remained largely invisible in most portfolios as a risk driver and as a source of opportunity. The TNFD guide for asset owner chief investment officers is therefore striking not because it invents a new theory, but because it reveals how quickly practice is beginning to move.​

Recent investor surveys show that 93 out of 100 investors began assessing their nature related issues within the last three years. Among the seventy six largest asset managers globally, 30 percent have already published an assessment of the direct impacts and dependencies of their investments on biodiversity, and another 24 percent have carried out an assessment without yet publishing it.

In other words, the phase of “we do not know where to start” is ending. A first wave of managers is experimenting, disclosing and making mistakes in public, which gives asset owners something tangible to interrogate. The question is no longer whether to talk about nature. It is whether the questions that asset owners ask are precise enough to separate superficial narratives from emerging best practices.​

 

Why questions are a fiduciary tool

 

The TNFD guide is explicit about the role of questions. It is written for CIOs and their teams, to be used in selection, assessment, monitoring and engagement with current and prospective managers. It assumes that asset owners will set their own nature-related ambitions in consultation with trustees, but it gives them a structured way to translate those ambitions into expectations of managers.​

The guide clusters thirteen core questions into four themes.​

• Asset manager governance and policies for nature-related issues.
• Assessing and managing nature-related dependencies, impacts, risks and opportunities in the investment process.
• Integrating nature into stewardship processes.
• Nature-related reporting and disclosure.

For asset owners, the discipline of asking these questions achieves three things. It surfaces alignment or misalignment between their own approach to nature and that of each manager. It pushes managers to move beyond general ESG rhetoric into concrete, decision-useful information. And it signals that nature is an enduring strategic issue rather than the theme of the year.​

 

Governance and policy conversations

 

The first cluster of questions focuses on what nature means at the level of the asset management firm rather than any single product. CIOs are encouraged to start with a deceptively simple query. What is the manager’s overarching view of the connection between nature and investment activities, including allocation, evaluation and stewardship.​

This is not about reciting global biodiversity goals. It is about whether the manager recognises nature as a core risk and opportunity issue across all asset classes and sectors, and how that view is reflected in organisation-level stewardship. A more sophisticated manager will be able to articulate how financial effects might materialise over different time horizons, how systemic risks emerge from cumulative nature loss, and how its approach aligns with global policy frameworks such as the Kunming Montreal Global Biodiversity Framework.​

From there, governance comes under the spotlight. Asset owners are invited to look for clear senior leadership responsibility for nature, ideally building on but not confined to existing climate governance. That includes board oversight, involvement of risk, compliance, strategy and sustainability functions, and evidence that leadership has a baseline understanding of the links between nature, climate, business and society. What matters is not the organogram, but whether nature is discussed with sufficient frequency and depth at board, executive and investment committee meetings.​

Policies are the third part of this governance conversation. Some managers integrate nature into existing ESG or climate policies; others adopt standalone nature policies that may focus on themes like deforestation or oceans. Asset owners are encouraged to probe scope, coverage and coherence. Does the policy apply across entities, products, asset classes and sectors, and does it recognise all aspects of nature land, freshwater, oceans and atmosphere beyond greenhouse gas emissions. Are expectations for investees and implications for capital allocation clearly spelt out. Is there a process for addressing policy breaches and engaging affected stakeholders, including Indigenous Peoples and Local Communities.​

Finally, goals and targets bring a quantitative lens to this governance agenda. Asset owners are encouraged to ask what nature-related goals or targets a manager has adopted, why those particular targets were selected, and how they relate to the manager’s overall strategy and existing climate goals. Advanced managers will be able to explain the portfolio’s exposure to nature-related issues, how that analysis informed their targets, and how delivering against those targets is expected to affect risk and return over time.​

 

Bringing nature into the investment process

 

The second theme moves closer to the engine room of investing. Once dependencies, impacts, risks and opportunities have been identified, the critical test is whether they are integrated into portfolio construction, security selection and risk management.​

The guide starts with dependencies and impacts. Many managers begin with top-down heat mapping using sector averages to identify hot spots. More advanced practitioners combine that with bottom-up analysis of specific holdings, incorporating location-specific data as it becomes available. For asset owners, useful questions include how the manager defines the scope of analysis, how it plans to expand coverage over time, and how it deals with the reality that many nature-related dependencies and impacts will play out over time frames longer than traditional planning horizons.​

Risk assessment then builds on that dependency and impact mapping. The TNFD categorises nature-related risks into physical, transition and systemic. Good practice is to assess all three, to link identified risks back to concrete dependencies or impacts in specific locations, and to be transparent about uncertainty and data gaps. Asset owners can ask how managers identify concentrations of nature-related risk in particular funds, sectors or geographies, and what metrics they use to translate those risks into potential financial effects, such as loss estimates under different scenarios.​

Opportunities, by contrast, remain underexplored. Many managers still equate nature opportunities narrowly with conservation finance, missing the broader set of activities that create value by reducing negative impacts on nature or regenerating ecosystems. The guide encourages asset owners to look for managers who identify opportunities within conventional sectors and instruments, not just in specialist funds, and who assess both the benefits to nature and the financial implications in terms of growth, resilience or cost savings.​

Integration is where the pieces come together. Asset owners are prompted to ask how the results of nature assessments influence investment strategies, investment decisions and wider risk management processes. That includes how nature-related risks are prioritised relative to other risks based on magnitude, likelihood, vulnerability, speed of onset and severity of impacts on nature and society. It also includes whether nature-related risks are being quantified as part of risk budgets, how tracking error attributable to nature is monitored, and who is empowered to override benchmark or model limits on nature related grounds.​

 

Stewardship and policy engagement as leverage

 

The third theme recognises that, for many asset owners, nature exposure is shaped as much by stewardship as by buy and sell decisions. Engagement, voting and collaborative initiatives can be powerful channels for managing nature-related risks and opportunities in portfolios, and for improving the quality of corporate disclosures over time.​

The guide encourages asset owners to interrogate managers’ nature-related stewardship practices on three fronts. First, goals and expectations. Do managers have clear, measurable objectives for nature-related engagement, such as the share of high risk holdings with systems to control or verify compliance with no deforestation or no conversion commitments. Are expectations for investees on nature issues integrated with investment policies, climate strategies and longer term transition plans.​

Second, prioritisation and escalation. Because stewardship resources are finite, asset owners should understand how managers decide which holdings to focus on, for example, based on exposure to nature risk, portfolio weight, systemic importance or potential influence. They should also ask how managers escalate when progress stalls, through voting, shareholder resolutions, position sizing or ultimately divestment, and whether those escalation policies are time bound.​

Third, collaboration and policy engagement. As nature related standards and regulations evolve, managers can use their influence in industry associations, investor coalitions and consultations to foster enabling environments rather than lobbying for the status quo. Asset owners can probe how nature features in these activities, which issues are prioritised, and how managers manage misalignments across different policy positions.​

 

Reporting that is useful, not decorative

 

The final theme, reporting and disclosure, is where many asset owners will feel the tension between ambition and current reality most acutely. Nature cannot be reduced to a single metric equivalent to tonnes of CO2, and data gaps remain significant.​

The TNFD guide does not pretend otherwise. Instead, it encourages asset owners to look for managers that report a concise, decision useful set of nature-related metrics and qualitative indicators, aligned where possible with TNFD’s recommended disclosures and additional guidance for financial institutions. Strong practice might include a risk dashboard showing evolving nature exposures and tracking error, performance attribution that isolates alpha linked to nature, a stewardship scorecard, explanations of data quality and methodology changes, and logs of policy breaches or overrides.​

Equally important is the mode of communication. The guide explicitly frames reporting as part of a two way dialogue rather than a one direction compliance exercise. Asset owners are encouraged to seek managers that welcome iterative conversations to refine metrics and expectations as science, regulation and portfolio strategies mature.​

On the regulatory side, asset owners can ask whether managers are aware of their obligations to disclose financially material nature-related risks even where there is no nature specific regulation, and how they are preparing for forthcoming rules and standards.

 

A practical agenda for CIOs

 

Taken together, the TNFD question set offers asset owners a simple but powerful reframing. Nature is not a new silo in responsible investment. It is a lens through which governance, strategy, risk management, stewardship and reporting are all being quietly rewired.​

For CIOs, this translates into a concrete agenda.

• Clarify the institution’s own view of nature, including ambition level, priority issues and time horizons.​
• Embed nature into manager selection, due diligence and monitoring through a consistent question set that covers governance, process, stewardship and reporting.​
• Reward managers who are honest about data gaps, explicit about trade-offs, and transparent about how learning is being institutionalised over time.​
• Use stewardship and policy engagement as levers to shift real economy behaviour, not only as reputational risk management tools.​

The shift from generic ESG dialogue to sharper, nature-specific questioning will not be frictionless. Definitions will evolve, metrics will be refined, and some early targets will prove overambitious or poorly calibrated. Yet the direction of travel is unmistakable. As more companies and financial institutions adopt TNFD-aligned approaches, the availability and quality of nature data will improve, and the questions that asset owners ask will continue to sharpen.​

For long-term asset owners, this is an opportunity. By treating better questions on nature as a fiduciary instrument, not a soft overlay, they can help reprice nature risk and opportunity in their portfolios, support the transition implied by the global biodiversity framework, and ultimately protect the real-world foundations on which every future cash flow depends.

Read the full report: Asking Better Questions - For asset owner chief investment officers