Across the workplace and pensions ecosystem, a new category of financial risk is gaining momentum and entering the mainstream. The recent COP30 marked the moment that nature became a financial variable, carrying the same weight as climate risk did after COP26. As a result this looks set to become a new fiduciary duty.
Nature-related systemic risk has moved from theory to balance sheet reality. The UK remains the most exposed G20 economy to flooding, both in terms of population and GDP. Storm Claudia offered a stark demonstration. Across Wales and the West Country, rivers burst their banks . Homes were evacuated, roads were closed, businesses halted, and supply chains were disrupted. Events like this are no longer exceptional.
One in six UK properties already faces a significant flood risk, which is expected to rise to one in four within 25 years. Nearly 40 per cent of England’s roads are exposed to flooding. Water scarcity may reach five billion litres per day by 2050. Insurers are withdrawing from high-risk areas. Nature risk now affects employers, scheme sponsors, investment portfolios, members and workplace wellbeing at the same time.
Historically, advisers focused on longevity, inflation, covenant strength and climate transition. Nature must now join that list because it shapes operational continuity, employer resilience, insurance affordability, real asset valuations, DC member outcomes and DB funding stability. Nature performs essential services that underpin the real economy. Flood regulation, drought buffering, water purification, soil and crop stability, clean rivers, coastal defence and temperature moderation are all infrastructure functions, but ones not built from concrete and steel.
A household scenario brings this to life: Take a couple in their mid-forties, both working, with two children, a mortgage and a home just outside a major city. After years of relative stability, their postcode is reclassified as being at a higher flood risk. Their home insurance renewal increases by 40 per cent. Their lender requests additional checks. Two neighbouring properties lose value. The family’s pension scheme holds UK real assets exposed to the same risks. What began as an environmental shift becomes a direct hit to household planning, affordability and long-term security.
Nature risk moves through every layer of financial life. For households, it affects mortgages, premiums, earnings and resilience. For employers, it affects covenant, continuity, workforce wellbeing and cost stability. For schemes, it affects funding plans, asset exposure and long-term outcomes.
There is also a clear commercial case for nature resilience: Nature-based infrastructure is a proven stabiliser. Wetlands reduce flood peaks. Rewiggled rivers restore system stability. Oyster reefs filter water and dampen wave energy. Woodlands improve soil structure and microclimate resilience. Purina is a proven example. The company has supported the restoration of millions of native oysters in Norfolk, as oyster reefs protect supply chains, improve water quality, and reduce coastal risk. This is nature as infrastructure in practice because it is cheaper and more effective than engineered alternatives.
Payments for ecosystem services, water quality improvements and nature-linked resilience contracts can also create uncorrelated, real world income streams. And the regulatory direction of travel is clear. Nature will soon occupy the same governance space that carbon did after the COP26 conference. It will be reflected in manager due diligence, stewardship expectations, annual reviews, risk registers, and product governance.
Across every dimension, nature resilience is an economic asset. So, what can advisers, workplace leaders and trustees do in 2026?
The starting point is understanding. Climate and nature risks should be integrated into household, employer and portfolio assessments, including water, flooding, pollution, drought and soil health. Consultants and asset managers should be engaged directly. The key question is simple: How are you assessing nature-related physical risk across our equity, bond and real asset holdings?
Investment beliefs and risk appetite should be updated to reflect the treatment of nature alongside climate, inflation, and liquidity risks.
Stewardship needs strengthening through clear expectations around water risk, resilience plans and nature metrics. And real-world impact matters. Place-based nature solutions belong alongside infrastructure, property and long duration assets. When nature breaks, households, employers, sponsors, and members all pay.
