Highlights from the 2025 IBA Annual Conference: biodiversity and director duties, financial disclosures and credit markets

The panellists, from left to right: Emily Morison, Sebastian Theis, Thomas Mason, Lorna Püschel and João Daniel De Carvalho

Risks linked to nature and biodiversity loss are increasingly recognised as material to business and financial decision-making. According to the World Economic Forum (WEF) 2025 Global Risks Report, biodiversity loss is the second most severe risk facing humanity over the next ten years. This recognition is manifesting in a number of global trends.

First, international and regional frameworks to assist businesses to assess and disclose these risks are emerging, including the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations, the EU Corporate Sustainability Reporting Directive, the International Sustainability Standards Board’s development of biodiversity-related standards, and new guidelines on biodiversity in strategy and operations from the International Organization for Standardization.

Second, recent legal opinions issued by legal experts highlight liability risks facing company directors who fail to account for relevant nature-related risks in corporate decision-making. In addition, interest in nature markets as mechanisms to finance ecosystem protection and restoration is on the rise.

Against this background, the IBA Environment, Health and Safety Law Committee,^[1] with support from the IBA Legal Policy & Research Unit^[2] and IBA Power Law Committee,^[3] convened a multi-disciplinary panel at the 2025 IBA Annual Conference in Toronto to explore how lawyers can navigate these trends and help clients stay ahead of the regulatory curve.

This article highlights key insights from that conversation.

Nature-related risks: what are they?

Kicking off the discussion, Thomas Mason (Associate Director, Nature, Nature Positive) outlined key features of nature-related risks, highlighting that nature encompasses more than just species and habitats – it also includes critical natural resources and goods such as water, timber and food. The health and stability of ecosystems which provide these is highly interconnected with the effects of physical climate change. In light of this, nature-related risks to businesses can be physical (for example, drought caused by climate change can disrupt manufacturing operations, and global declines in pollinators imperils food supply chains).

Conversely, ‘transition’ related nature risks arise from shifts in policy, regulation and market expectations. For instance, compliance with the new EU Regulation on Deforestation-free products (EUDR) will significantly impact producers with purchasers who fall within the scope of the regulation. Thomas observed that these impacts have triggered some initial pushback from countries such as Malaysia and Indonesia where EUDR commodities are significant contributors to GDP, and where questions around the legality of importing raw or transformed goods from such jurisdictions into the European market pose uncertainty for businesses.

Lawyers have a key role to play in helping companies and boards integrate nature into decision-making

Thomas observed that integration of nature risks into corporate risk management strategies is underway: for instance, the rising cost of insurance premiums linked to environmental risks is already a pressing concern for many chief financial officers and chief revenue officers. Companies are beginning to map out where they are most exposed to physical and transition nature-related risks, especially across their owned and controlled assets, where data and oversight are more accessible.

Challenges remain, however, particularly with respect to assessing and managing risks in supply chains: Thomas observed that many businesses depend on natural resources such as water, crop fibres and feedstocks, yet have limited control or visibility over the ecosystems that underpin these inputs. He highlighted that many companies simply do not know where to begin – they are unsure what to ask suppliers or customers to report on when it comes to nature-related risks. He highlighted that lawyers will play a key role in helping companies navigate these challenges, understand evolving regulations and keep pace with emerging market expectations.

Lorna Püschel (Director, Biodiversity and Protected Areas, VGC Abogados) added that at early stages of project development, lawyers play a role in identifying applicable environmental regulations to ensure that environmental assessments run smoothly and secure approval, and that clients comply with the mitigation hierarchy. She noted that compliance gaps can pose serious financial, reputational and even operational risks, including fines or permit revocations.

Increasing liability risks for directors: a view from Chile

Lorna observed that, in Chile, awareness among directors of the relevance of nature to corporate decision-making is growing – driven in large part by Chile’s ‘Economic Crimes Law’, which was recently expanded to include environmental crimes among the offences which trigger corporate liability. Importantly, companies that design and implement effective crime-prevention models can be exempt from liability. This shift has placed biodiversity and environmental impacts directly within the remit of corporate governance, and has incentivised organisations to improve their internal governance systems. Consequently, many firms are now revising their compliance programmes to include environmental considerations, integrating biodiversity and broader environmental management into existing risk-control and prevention models.

Lorna noted that international nature disclosure frameworks are also raising expectations around nature governance within Chilean companies. She emphasised that significant work remains to be done with respect to raising awareness among boards about biodiversity-related risks and opportunities, and that currently, corporate understanding of climate-related issues far exceeds that of biodiversity risks.

Scaling credible nature markets requires key gaps to be addressed – and a different approach to carbon markets

Turning to nature credit markets, João Daniel De Carvalho (Carbon Removal Sourcing Manager, Carbonfuture), explained that these markets can provide avenues for companies to contribute toward global biodiversity goals, without relying on formal compliance regimes.

Sebastian Theis (Postdoctoral Researcher, University of Toronto) emphasised three interconnected gaps which must be addressed to enable the credibility and scalability of these markets. First, accessible, high-quality, timely and auditable nature data is essential to enable market participants to verify claims and reduce the risk of low-quality credits. Second, the legal underpinnings of market instruments must be strengthened to ensure that agreements generate high-quality assets and simultaneously uphold ecological outcomes. Third, the true success of nature markets will ultimately depend on their ability to price the externalities of nature degradation effectively such that it becomes more economically rational for companies to innovate and reduce impacts at source than to rely on purchasing credits.

‘The successful nature market of the future,’ Sebastian reflected, ‘will be a hybrid ecosystem. It will look less like a traditional, commodity market and more like a highly regulated public utility.’

Reflecting on his role in driving Brazil’s first biodiversity crediting methodology, João added that nature markets must prioritise scientific rigour, social integrity and consistent baselines, while avoiding the fragmentation of standards. He emphasised that, unlike carbon, biodiversity is multidimensional and typically requires a ‘basket of metrics’ to capture ecological complexity. For this reason, in João’s view, voluntary biodiversity credits should be treated as contribution claims rather than offsets, since biodiversity loss cannot be simply neutralised in one location by gains in another (although some ‘payments for ecosystem services’ frameworks still allow for localised offsetting).

In João’s words, ‘payment for ecosystem services is how we bring nature into the economy – not as an externality, but as the foundational nature infrastructure on which our societies and economies depend.’

Equipping lawyers to embrace nature in legal practice: introducing the IBA Nature-Intelligent Legal Services Toolkit

In closing, the panellists agreed that a deeper understanding of nature-related risks is becoming integral to legal practice, with lawyers playing an important role in facilitating positive nature outcomes through their work.

To facilitate this shift, the IBA Environment, Health and Safety Law Committee and IBA Law Firm Management Committee, working with Nature Positive and biodiversity law experts, are designing a toolkit to help legal service providers understand their clients’ exposure to nature-related risks and to raise broader awareness among the legal profession of the importance of nature and its intersections with legal practice. The toolkit will launch in early 2026 (access a summary of this project here).  

This article was prepared by the IBA Legal Policy & Research Unit (LPRU), with special thanks to LPRU intern Bohdana Sokoliuk.