Appointing Nature to the Board - can it be done?

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It’s been seven years since the Ganges and Yamuna Rivers in India and Whanganui River in New Zealand made headlines for being granted legal standing.

Under the law of India and New Zealand respectively, the rivers constituted legal persons with their own rights, duties and liabilities so the principles of human rights law could be leveraged to preserve and protect them (although the Ganges and Yamuna only lasted a year before being turned back into, well… just rivers). The idea of “rights of nature” has persisted in the intervening years, with many creative attempts to protect our natural world through existing legal frameworks – see here for an article summarising some recent ones.

There is a particularly interesting movement currently taking place in the UK which seeks to introduce “nature-positive corporate governance” within the structure of private limited companies and the laws applying to them. The movement is spearheaded by not-for-profit, Lawyers for Nature CIC (Lawyers for Nature) and its flagship project to date has been that of “appointing nature to the board”. Sort of like a wordy version of this Apple advertisement that is baked into a company’s constitution.

In 2022, Faith in Nature Ltd (Faith in Nature) became the first company to appoint nature to its board, followed by House of Hackney Group Ltd (House of Hackney) in November 2023 and the Better Business Network in January 2024. Scottish company, Intra Drive has also announced its intention to follow suit. It’s early days but there seems to be some degree of gathering momentum amongst like-minded companies.

So what does putting nature on the board really mean?

We’ll follow the approach pioneered by Faith in Nature in conjunction with Lawyers for Nature and Earth Law Center as the test case. Then we’ll look at any changes in the method as applied by House of Hackney, being the other standout example for which documents are publicly available at the time of writing.

Changing the company’s objects	New objects have been inserted in the articles, including promoting the success of the company: For the benefit of its members as a whole, and “through its business and operations to use its best endeavours to (i) have a positive impact on nature as a whole, and ii) minimise the prospect of any harmful impact of the business and operations on nature, in a manner commensurate with the size and resources of the company, taken as a whole". The wording also creates an additional obligation upon all directors to promote the success of the company in achieving its objects as set out in (i) and (ii) above, with particular regard to the company’s impact on the environment and affected stakeholders, including nature.
Appointing a non-executive director	Unsurprisingly, you can’t actually appoint the natural world to a board of directors – at least not under English law. Faith in Nature’s articles of association now include a non-executive director referred to in the articles as a “Nature Guardian” tasked with “representing nature with the requisite expertise and the role to ensure that the board of directors gives due consideration to the environmental impact of the company’s decision making process has…”. “Nature” here means “the natural world and all non-human species that inhabit it as represented by the Nature Guardian”. The duties and responsibilities of the Nature Guardian were further fleshed out in the terms of reference and consultancy contract agreed with the appointed person, the terms of which have not been made public. Faith in Nature appointed Lawyers for Nature as a corporate director to fill the role of Nature Guardian with a member of Lawyers for Nature nominated as the natural person by which the Nature Guardian would act.
Board meetings	The Nature Guardian is given a vote at board meetings by virtue of their status as a non-executive director. In addition, the articles introduce the concept of “nature reserved matters”, being “such matters relating to nature and designated as such by the board of directors from time to time”. Whilst the Nature Guardian is not given a veto right over nature reserved matters, they may provide the board with written materials to be circulated with the agenda of the meeting at which nature reserved matters are to be discussed and are required for any meetings discussing such matters to be quorate. Should the board go against the advice of the Nature Guardian in respect of a particular nature reserved matter, it is obliged to provide reasons for doing so in writing.
Reporting obligations	Faith in Nature also introduced an obligation for the board to provide an annual nature report to the company’s shareholders, the contents of which must to be to the satisfaction of the Nature Guardian. The nature report should cover a balanced and comprehensive analysis of the impact of the company’s business and operations and contain sufficient details to help shareholders understand the due regard given by the directors to environmental impact issues arising in the course of decisions made by the board. The first nature report produced by Faith in Nature in November 2023 is publicly available here.

Changing the company’s objects

New objects have been inserted in the articles, including promoting the success of the company:

For the benefit of its members as a whole, and
“through its business and operations to use its best endeavours to (i) have a positive impact on nature as a whole, and ii) minimise the prospect of any harmful impact of the business and operations on nature, in a manner commensurate with the size and resources of the company, taken as a whole".

The wording also creates an additional obligation upon all directors to promote the success of the company in achieving its objects as set out in (i) and (ii) above, with particular regard to the company’s impact on the environment and affected stakeholders, including nature.

Appointing a non-executive director

Unsurprisingly, you can’t actually appoint the natural world to a board of directors – at least not under English law. Faith in Nature’s articles of association now include a non-executive director referred to in the articles as a “Nature Guardian” tasked with “representing nature with the requisite expertise and the role to ensure that the board of directors gives due consideration to the environmental impact of the company’s decision making process has…”. “Nature” here means “the natural world and all non-human species that inhabit it as represented by the Nature Guardian”.

The duties and responsibilities of the Nature Guardian were further fleshed out in the terms of reference and consultancy contract agreed with the appointed person, the terms of which have not been made public.

Faith in Nature appointed Lawyers for Nature as a corporate director to fill the role of Nature Guardian with a member of Lawyers for Nature nominated as the natural person by which the Nature Guardian would act.

Board meetings

The Nature Guardian is given a vote at board meetings by virtue of their status as a non-executive director. In addition, the articles introduce the concept of “nature reserved matters”, being “such matters relating to nature and designated as such by the board of directors from time to time”. Whilst the Nature Guardian is not given a veto right over nature reserved matters, they may provide the board with written materials to be circulated with the agenda of the meeting at which nature reserved matters are to be discussed and are required for any meetings discussing such matters to be quorate. Should the board go against the advice of the Nature Guardian in respect of a particular nature reserved matter, it is obliged to provide reasons for doing so in writing.

Reporting obligations

Faith in Nature also introduced an obligation for the board to provide an annual nature report to the company’s shareholders, the contents of which must to be to the satisfaction of the Nature Guardian. The nature report should cover a balanced and comprehensive analysis of the impact of the company’s business and operations and contain sufficient details to help shareholders understand the due regard given by the directors to environmental impact issues arising in the course of decisions made by the board. The first nature report produced by Faith in Nature in November 2023 is publicly available here.

House of Hackney – taking it one step further

House of Hackney, a company specialising in beautiful interiors, has followed the example of Faith in Nature with a few key differences:

Concept of future generations	House of Hackney has extended the amendments to the objects in its articles to include reference not just to nature but to the interests of, and consequences upon, “future generations”, being “seven generations of humans, plants and animals on earth from today’s date”. Reference to future generations is also made in the nature reserved matters which are explicitly stated in the House of Hackney articles rather than left up to the board as per Faith in Nature.
Role of Nature Guardian	Rather than a non-executive director, the Nature Guardian here is a director or board observer and is not given a vote at board level, although they are required for forming a quorum on decisions relating to nature reserved matters.
Investor consent rights	These articles contain investor consent rights which give the Investor Representative significant influence over the appointment of the Nature Guardian and the ability to, with the cooperation of the board, waive the requirement for the Nature Guardian to be present at discussions of nature reserved matters.

Concept of future generations

House of Hackney has extended the amendments to the objects in its articles to include reference not just to nature but to the interests of, and consequences upon, “future generations”, being “seven generations of humans, plants and animals on earth from today’s date”. Reference to future generations is also made in the nature reserved matters which are explicitly stated in the House of Hackney articles rather than left up to the board as per Faith in Nature.

Role of Nature Guardian

Rather than a non-executive director, the Nature Guardian here is a director or board observer and is not given a vote at board level, although they are required for forming a quorum on decisions relating to nature reserved matters.

Investor consent rights

These articles contain investor consent rights which give the Investor Representative significant influence over the appointment of the Nature Guardian and the ability to, with the cooperation of the board, waive the requirement for the Nature Guardian to be present at discussions of nature reserved matters.

But… does it work?

Ultimately, the answer to this question depends on what is trying to be achieved. There are certainly some points at which the concept of putting nature on the board doesn’t quite align with the legal principles these companies have tried to leverage:

Enforcement: a company’s articles of association are a statutory contract binding the company and its shareholders. This means that the only people that can enforce the rights set out in the articles are the shareholders in their capacity as a shareholder or someone acting on behalf of the company itself (e.g. a shareholder bringing a derivative claim). Both the Faith in Nature and House of Hackney articles also include express wording clarifying that the amendments made do not create or grant any right or cause of action to a person other than the company. So, if nature’s voice is not listened to by the board then nature does not have a general right to enforce the provisions of the articles – it is reliant upon a small number of humans to invest their energy and money in bringing court proceedings.
Longevity: The provisions that have been included in relation to nature are all entirely vulnerable to a special resolution amending or replacing the articles at any point provided there is approval from 75% or more of shareholders. Subsequent events in the life of the company might mean that the articles do get amended in ways that dilute or delete the “nature on the board” wording. This could be the influence of profit-driven investors or of something more benign, as in the case of Faith in Nature which has since amended its articles again to incorporate the B Corp objects and reporting obligations to a somewhat duplicative effect.
Expertise: Appointment of a non-executive director to help a company by offering their particular expertise is not a new concept. It’s important to remember that if they are appointed to the board, the Nature Guardian is subject to the general rules around directors’ duties as well as just the responsibilities given to them in the articles. Given the broad scope of the concepts of nature and future generations, there is a question around the extent to which a Nature Guardian appointed to the board would be able to fulfil their duties as a director for the purposes of the Companies Act, especially as they may be held to a higher standard in exercising reasonable care under s.174 Companies Act 2006 if they are holding themselves out as having specific expertise.

However, that does not mean the concept lacks merit – and perhaps a completely watertight legal solution isn’t really the goal of this movement anyway. As discussed in our article on B Corps, there is a huge amount of soft power in companies signalling that they care about more than just making a profit and not just because it aligns with the consumer zeitgeist of now. Most recent and proposed sustainability related legislation is aimed at regulating the largest companies but there is so much that smaller companies can do to create a culture of better business just in the statements they make and networks they form, and often at a faster pace than top-down regulation. Faith in Nature’s first nature report does indicate that where the leadership of a company is fully committed to the concept, it can have a significant influence over the way in which the company functions and frames its sense of identity as a business. For instance:

Holding additional meetings to discuss nature related issues in between regular board meetings.
Offering training and budget to educate both internal personnel and like-minded peers.
Bringing fresh enthusiasm and ideas to industry level discussions around sustainability and environmental impact.

The report also acknowledges that the role of Nature Guardian is a big ask and that responsibility for representing nature should not just fall on one person’s shoulders. Faith in Nature envisage that the role will develop to rotate amongst different people and aim to create a “hive mind” of experts who can feed into the views represented by the Nature Guardian appointed to the board and, by extension, upskill the business community in general.

If the impressive effort put in by Faith in Nature continues to inspire other SMEs to pay more heed to the natural world then, in the words of its Nature Guardian: “this alone is groundbreaking and the company should rightly be proud of what it has been able to achieve as a modest, mostly UK-based family company”.

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Catherine Sellars