In a world where climate and nature risks are increasingly intertwined, financial risk professionals face the challenge of making nuanced decisions in complex, high-stakes scenarios. This article introduces an innovative approach to learning about these topics through GARP’s Climate and Nature Risk Scenario Games, which immerse participants in plausible, real-world dilemmas faced by a fictional multinational company.
By grappling with net zero and nature-positive strategies, managing supply chain risks and balancing profitability with sustainability, these scenarios equip risk professionals with practical insights and a deeper understanding of the challenges and opportunities in navigating the climate and nature crises — critical tools for leading your organizations through an uncertain future.
We currently offer four downloadable climate scenario games, designed for individual or group play with colleagues, peers, or students. These include a physical risk scenario, a transition risk scenario, a net zero scenario, and a nature risk scenario, all available for download here.
The article below provides a detailed analysis of our most recent scenario game on nature risk,, including participant dilemmas, audience voting patterns, and key takeaways from our expert panellists.
Introducing the Nature Risk Scenario Game
In Q4 2024, GARP brought its Nature Risk Scenario Game to two distinct audiences. The first, hosted in collaboration with Chapter Zero and the Climate Governance Initiative (CGI), engaged a global group of non-executive directors (NEDs), while the second was directed at GARP’s core audience of risk professionals. In both sessions, participants stepped into the role of a fictional company’s board and were invited to vote on four pivotal dilemmas projected over a six-year horizon.
“There’s a direction of travel for both climate and nature. This isn’t cyclical, this is one way. The climate crisis is only going to get worse until we achieve net zero, and the nature crisis is only going to deepen until strong collective action is taken. So short-term decisions will probably come back to bite you.”
– Nigel Brook, Clyde & Co
Across the two live sessions, we were joined by a global audience from over 100 countries. To set the scene, the audience was asked about their firm's current approach to nature risk, as shown in Figure 1.
Figure 1: How Would You Describe Your Current Approach to Nature Risk?
With nature a new area for many, it’s perhaps not surprising that only a quarter of the audiences’ firms have developed a strategy that includes nature risks. Just over half of the audiences’ firms were aware of nature risks but were yet to develop a plan for action, leaving around a quarter that didn’t consider nature risks to be relevant to their business.
Dilemma 1: Environmental Impact of Insetting Projects
At the heart of the Scenario Game was EatWell Plc., a fictional multinational food and beverage company created to mirror the complexities of real-world corporations. Employing 250,000 staff and with an annual turnover of £85 billion, EatWell operates with a network of over 3,000 suppliers. Once considered a climate laggard, the company has undergone a dramatic transformation to emerge as a genuine leader in climate action. This evolution set the stage for participants to grapple with realistic, high-stakes dilemmas, reflecting the multifaceted challenges faced by large, complex organizations in balancing profitability, sustainability, and reputational integrity in an era of heightened environmental accountability.
The first dilemma starts at the end of 2024 with EatWell facing criticism over environmental damage from some of its nature-based schemes used to offset carbon within its own supply chain (so-called ‘insetting’). With scrutiny mounting, the company must decide whether to continue these problematic projects or wind them down and seek costly, high-quality offsets on the broader market to maintain credibility.
Figure 2: Vote on Environmentally Damaging Offsets Within EatWell’s Supply Chain
As we can see from the voting outcomes in Figure 2 above, GARP’s audience of risk professionals had a slim majority in favour of option B, in which EatWell would proactively address criticism and prioritize nature-positive projects despite the financial costs and operational delays. This proactive strategy also resulted in the company embedding “protecting and promoting nature” as a core business objective, signalling a significant shift in its long-term strategy.
In contrast, the non-executive audience voted in favour of option A with a two-thirds majority. Option A involved standing firm on current projects and pushing back against criticism as misplaced and unjust. The push-back fosters healthy debate around balancing climate and nature priorities, but EatWell ultimately ends up winding down the nature-negative initiatives at the cost of short-term net-zero targets and pivoting to a holistic approach the encompasses both climate and nature considerations moving forward.
Key Takeaways
The discussions following Dilemma 1 revealed the complexities and challenges of navigating the dual demands of nature loss and climate change. One key insight was that many carbon offsetting projects, despite their emissions-reduction potential, can negatively impact the environment through factors such as water, soil health, pollution and biodiversity. Seeking out projects that are neutral or promote co-benefits across nature and climate is therefore key.
Panellists agreed that integrating nature into climate strategies is essential to prevent unintended consequences and to adapt corporate approaches as new scientific evidence emerges. A proactive stance on nature risks was also seen as a safeguard against potential legal liabilities and reputational harm.
“I know climate change is very complex, but nature is even more complex. Science is absolutely critical and companies should be more connected to science when making decisions on nature.”
– Roberto Silva Waack, Marfrig, Wise Plasticos and Synergia & Arapyau
Dilemma 2: New Environmental Laws
Dilemma 2 occurs in 2026, when new environmental laws in Brazil disrupt major supply chains, including EatWell's. Violations in a competitor’s supply chain sparks protest, raising concerns about EatWell's own Brazilian suppliers. The board must decide whether to continue operations in Brazil, despite potential legal and reputational risks, or to switch suppliers to mitigate these risks.
Option A involved switching to alternative suppliers in countries with less stringent regulations, avoiding immediate compliance risks but facing backlash and logistical difficulties. Option B focused on engaging with the Brazilian government to address supply chain challenges directly, a move that earned praise for its collaborative approach but drew criticism from some shareholders concerned about delays and financial implications.
Figure 3: Vote on Supply Chain Strategy
As can be seen in Figure 3, this time, option B received comprehensive majorities from both GARP’s audience (72%) and the non-executive audience (98%). But both options underscored the urgent need for EatWell to accelerate its supply chain review, a process that would reveal the investment needed to ensure the long-term sustainable production of the company's key commodities such as coffee, soybeans, and maize.
Key Takeaways
The panel discussion highlighted the increasing importance of aligning business practices with emerging environmental standards to stay ahead of global regulatory changes. Switching to suppliers in countries with less stringent rules might seem like a short-term solution, but it was not regarded as a sustainable strategy as environmental regulations continue to expand worldwide.
The discussions also emphasized the value of working collaboratively with regulators, suppliers, and other stakeholders to strengthen supply chain resilience. Building long-term, sustainable supply chain operations can mitigate risks such as financial penalties, legal challenges, and reputational harm. Failing to adapt proactively could jeopardize not only regulatory compliance but also the trust of consumers and investors.
There’s a risk of this sort of legislative change spreading to other countries. When we look at legislative or regulatory change globally, we see a lot of topics emerge quickly within industries or regions. They often don’t exist in isolation for very long.
– Tim Smith, Norges Bank Investment Management
Dilemma 3: Challenges in the Insurance Market
By 2028, the interconnected impacts of the climate and nature crises have become evident. Prolonged heatwaves intensify drought conditions, worsened by deforestation, intensive farming practices and monoculture cultivation. The loss of biodiversity and a decline in pollinator populations further compound the challenges, leading to significantly reduced yields for many essential crops. Meanwhile, other regions within the supply chain face severe flooding, damaging crops and fixed asset and triggering widespread disruptions.
Frequent insurance claims have led insurers to demand either steep premium increases or unacceptably large excesses being added to EatWell’s agreements. The board must choose between investing heavily in resilience measures to help reduce premiums or accept significantly higher premiums and deductibles, effectively increasing the company’s level of self-insurance while buying leadership time and flexibility.
Figure 4: Vote on How to Approach Increased Insurance Premiums
Both audiences strongly supported Option A, as can be seen in Figure 4, with GARP’s audience at 78% and the non-executive audience at 87%. This option involved significant investment in resilience measures, reducing future premiums and enhancing relationships with suppliers through co-benefits like lower carbon emissions, reduced water usage and minimized Scope 3 impacts. However, the steep upfront costs meant pausing research and development projects, delaying a product launch, and impacting short-term profits. Shareholder opinion was divided, creating fractures within the board.
Option B was a more cautious approach, involving the acceptance of higher premiums and deductibles on future claims. While this allowed the company to avoid immediate, large-scale investments, it only deferred the inevitable need to address long-term supply chain resilience. While some stakeholders praised the decision for its prudence, others criticized the lack of decisive action.
Key Takeaways
The panel focused on the inevitability of rising insurance costs as the frequency and severity of climate and nature-related disruption increases. Investments in resilience building can make companies more attractive to insurers, as they are more able to withstand environmental shocks. Panellists agreed that the cost of inaction is steep — companies risk either unaffordable premiums or losing access to insurance altogether.
The evolving role of insurers was also seen as an opportunity. Beyond underwriting risks, we might see insurers becoming strategic partners, helping businesses model future climate impacts, and identifying targeted investments in resilience.
The insurance market’s appetite for these kinds of cover may diminish over time, expressed as increased premium, the restrictions of the terms and ultimately withdrawal from a market. Customers who invest in resilience may be more attractive to insurers, who might be willing to ride the resilient risk.
- Nigel Brook, Clyde & Co
Dilemma 4: Hard Commercial Decisions on Unsustainable Products
Dilemma 4 occurs in 2030, when climate and nature are recognized as interconnected global priorities. We see the first joint Climate and Nature COP refocusing efforts and mandatory nature-related disclosures coming into effect.
EatWell launches a strategic review of its reliance and impacts on nature. This process highlights the long-term sustainability concerns around key products, including meat-based foods (which are highly resource-intensive) and almond milk, a low carbon but water-demanding alternative produced in water-stressed regions.
Consumer confusion over conflicting environmental impacts adds to the challenge, as does a landmark ecocide case against a major supplier, which places the food industry under intense scrutiny. The Board is asked for its strategy on the balance between profitability with sustainability.
Figure 5: Vote on Future of Unsustainable Business Lines
Both audiences strongly supported Option B (GARP 79% and the NEDs at 86%), in which unsustainable lines were closed (refer to Figure 5). This brought initial challenges, including a major shareholder divestment, but supportive investors stepped in, and the move is generally praised for prioritizing planet over profit. EatWell capitalizes by investing in vertical farming and lab-grown meat, creating profitable solutions for water-stressed regions. This progressive stance resonated with nature-positive investors, strengthening its market position. Ultimately, EatWell adopts a phased approach to closing the lines, balancing operational and financial demands.
Option A involved continuing with its unsustainable products, triggering significant backlash, including shareholder criticism, damaging press, and board resignations, which prompted a 5% share price drop. Though the board eventually reversed the decision, the delay harmed EatWell’s environmental credibility and strategic momentum.
Key Takeaways
The panellists discussed the dangers of delaying tough decisions, which can lead to greater financial and reputational costs over time. Companies that persist with unsustainable products risk alienating shareholders and eroding brand credibility. By contrast, forward-looking organizations that invest in innovative product areas can mitigate regulatory risks, reshape consumer demand, and position themselves as market leaders. The transition away from unsustainable products is inherently complex, especially for global businesses, but embracing this complexity and developing regional strategies can facilitate a smoother, more impactful sustainability journey.
The major risk is oversimplifying these issues. It is complex; you have to embrace the complexity. You will have to generate multiple solutions that depend on the opinions of different stakeholders. Engagement with social enterprises is crucial. Be very attentive to the context and the dynamic of the market. Try to avoid overly simple global solutions.
- Roberto Silva Waack, Marfrig, Wise Plasticos and Synergia & Arapyau
There is going to need to be a shift in production and consumption if we are going to achieve net positive and it won’t necessarily be popular. However, the nature-positive transition will also create new opportunities in new technologies, products, and business models. These are inevitable changes, get ahead if you want to survive.
- Karen Ellis, WWF UK
As a reminder, all four of our scenario games, covering physical risk, transition risk, net zero and nature risk can be downloaded here. They include everything you need to host your own live scenario game with colleagues, peers, or students.
Tim Walton is a Vice President at the GARP Risk Institute specializing in sustainability and climate risk. His work spans research, program management and content production.
Topics: Climate Risk Management, Nature Risk Management, Green Finance & Sustainable Business
