How do biodiversity metrics fit into sustainability reporting

For years, biodiversity sat at the edges of corporate sustainability. Companies tracked their carbon footprint and reported on materials used and waste, but nature rarely made it onto the board agenda. That’s changing.

Regulatory pressure is building on multiple fronts. The Kunming-Montreal Global Biodiversity Framework, agreed in 2022, set a global target to halt and reverse nature loss by 2030. The EU has aligned itself with that ambition and is translating it into legal obligations. Meanwhile, voluntary frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD) are gaining traction: more than 730 organisations across 56 countries have now committed to publishing nature-related disclosures aligned with its recommendations, a 46% increase since 2024.

For companies subject to the Corporate Sustainability Reporting Directive (CSRD), the relevant standard is ESRS E4 on biodiversity and ecosystems. Following the Omnibus I Directive, which took effect in February 2026 and removed roughly 80% of companies from mandatory CSRD scope, fewer organisations face the obligation today. But for those that do, E4 remains one of the most data-intensive standards and one of the least well understood. In this article we unpack what it covers, when it applies, and why the companies best positioned for the future are the ones starting now.

Biodiversity in CSRD: what ESRS E4 covers

ESRS E4 addresses biodiversity and ecosystem services. Companies usually present this topic as part of the environmental section of the Sustainability Statement, alongside other environmental topical standards including climate change (E1), pollution (E2), marine and water resources (E3), and resource use and circular economy (E5).

ESRS E4 covers five disclosure areas: 

1. Transition plan for halting and reversing biodiversity loss

2. Policies, including how companies address sites in or near biodiversity-sensitive areas

3. The actions taken and resources allocated to manage biodiversity

4. Targets related to biodiversity and ecosystems

5. Metrics used to track performance against material impacts. 

This scope is important because biodiversity isn’t measured by a single indicator. Unlike climate, where carbon emissions serve as the primary unit of measurement, biodiversity is assessed across many interrelated indicators. Understanding what those indicators are, and which ones are relevant to your business, is one of the first practical challenges companies face when approaching biodiversity.

Is biodiversity material to your business?

Not every company in scope for CSRD will need to report in detail on E4. Whether biodiversity is material to your business depends on the outcome of your Double Materiality Assessment (DMA), and that starts with understanding your value chain.

The DMA process for biodiversity follows the same logic as for other topics. Companies begin by mapping their business activities across the value chain (upstream, in their own operations, and downstream) and then assess what potential impacts those activities have on nature. An agricultural business, for example, may cause habitat change through land conversion. A manufacturer may contribute to ecosystem degradation through chemical discharge. A food and beverage company may affect pollinator populations through its supply chain’s use of pesticides.

Once likely impacts are identified, companies score them against three variables: the scale of the impact (how severe), the scope (how widespread), and the remediability (how reversible). The impacts that score highest across these dimensions are deemed material, and trigger the corresponding disclosure requirements. From these impacts, companies can then identify the associated financial risks and opportunities.

The DMA also works in the other direction. Companies may find that nature has a material effect on them, through what ESRS calls dependencies. Dependencies are the natural, human and social resources companies rely on to carry out their business processes and keep the business running. From dependencies, companies can identify financial risks and opportunities. Take a beach resort that depends on healthy coral reefs and clean marine waters, for example. Where the ecosystem thrives, so does the business: healthy reefs and clean waters attract guests and open up revenue from diving, snorkelling and ecotourism. Where it degrades, the resort’s core offering goes with it. Identifying these connections is the foundation of credible biodiversity risk management.

One important clarification was introduced under the Omnibus: materiality is assessed at the level of individual data points. If a specific biodiversity impact is material to your business, you aren’t required to report on the entire disclosure requirement under E4. Only the data points and metrics relevant to the specific impact or dependency identified need to be included. This makes reporting more precise.

The TNFD LEAP approach: how it connects to your DMA

Alongside the ESRS DMA process, the TNFD’s LEAP approach (Locate, Evaluate, Assess, Prepare) offers a practical four-phase framework for identifying and managing nature-related risks and opportunities, and maps closely onto the DMA.

In the Locate phase, a company identifies where its operations and value chain intersect with natural ecosystems. In Evaluate, it examines which ecosystem services it depends on and which it affects. In Assess, it determines where those dependencies and impacts translate into financial or reputational risk. In Prepare, it decides how to respond and what to disclose.

For a beach resort, the process plays out as follows. Locate places the resort at the interface of a coastal marine ecosystem. Evaluate reveals dependencies on healthy coral reefs and clean water for the tourism product itself, and impacts including wastewater discharge, coastal erosion from construction, and pressure on local marine life. Assess identifies the material risk that reef degradation, already accelerating due to climate change, could erode the resort’s core offering and asset value. Prepare translates that into disclosure commitments and, in the best cases, concrete conservation measures.

The LEAP approach provides a structured way to think through the full landscape of nature-related issues before making materiality judgements.

Which metrics does ESRS E4 require you to report?

The specific metrics a company must report under E4 depend on which impacts, risks and opportunities have been found to be material in the DMA. The standard covers metrics relating to all four of its subject areas: drivers of biodiversity and ecosystem change, state of species, condition of ecosystems, and ecosystem services.

This is where the multi-metric challenge becomes concrete. A company with material impacts related to land use will report on different indicators than one with material impacts related to invasive species or marine ecosystem conditions. Understanding the definitions behind these metrics matters. Understanding what counts as a natural ecosystem, and what invasive alien species means in your specific context, is an important step before attempting to collect data.

The EU Deforestation Regulation (EUDR): what it means for your supply chain

Separate from CSRD, the EU Deforestation Regulation (EUDR) introduces a distinct set of obligations for companies working with specific commodities. The regulation applies to businesses trading cattle, cocoa, coffee, palm oil, rubber, soy and wood, along with their derived products. It requires companies to demonstrate that these commodities don’t come from land that was deforested or degraded after 31 December 2020.

The EUDR applies to large and medium-sized operators and traders from 30 December 2026, following two delays to the original 2024 application date. Micro and small operators have until 30 June 2027 to comply.

For companies in scope, the first practical step is supply chain traceability: knowing where commodities originate and whether those origins can be verified as deforestation-free. Tracing supply chains to their source, understanding the land-use conditions at origin, and identifying deforestation risk in key sourcing geographies is precisely the kind of nature-related due diligence that TNFD and ESRS E4 also require. Companies preparing for EUDR compliance will find that the groundwork translates directly into their DMA and TNFD processes.

How biodiversity connects to climate, water and social reporting

Biodiversity doesn’t sit in isolation, it connects to nearly every other environmental topic. It’s inseparable from climate, because forests, wetlands and soils are carbon sinks whose destruction drives emissions. It runs through water, pollution and resource use, because those pressures are also the main drivers of nature loss. It surfaces in social topics, because the communities most affected by biodiversity decline are often the same ones a company’s operations touch, a point explicitly recognised in ESRS S3 on affected communities.

This interconnection isn’t just conceptual. It has practical implications for how companies structure their reporting. A company that has already done serious work on its climate transition plan, its water stewardship or its supply chain due diligence will find that much of the groundwork for biodiversity is already in place. The additional step is making the nature dimension explicit, and applying the right frameworks to organise and disclose it.

CSRD biodiversity reporting: who needs to comply and when

The Omnibus I Directive has changed the scope and timeline for CSRD reporting. Wave 1 companies (the largest listed companies and financial institutions) are unaffected and are already reporting, with first reporting taking place in 2025 for financial year 2024. Wave 2 companies, primarily large non-listed companies, now face a two-year delay and will begin reporting in 2028 for financial year 2027. Non-EU parent companies with significant EU turnover remain in scope, reporting from 2029 on financial year 2028 data.

For Wave 2 companies and non-EU parents, the delay is an opportunity, not a setback. The data collection, value chain mapping and materiality assessment work required takes time. Companies that wait until 2027 to start will find themselves under pressure. Those that begin now will be better positioned to report with confidence and credibility.

Setting biodiversity targets: the Science Based Targets Network (SBTN)

Once a company understands its material biodiversity impacts and dependencies, the next step is setting targets to address them. The Science Based Targets Network (SBTN) provides guidance on how to set nature targets that are grounded in science and aligned with the Kunming-Montreal Framework’s 2030 goals.

The SBTN follows a five-step process: Assess, Prioritise, Set targets, Act, Track. The guidance covers topics including freshwater use and land use, ocean and biodiversity. Targets are submitted for independent validation, which ensures they meet the scientific requirements set out in the SBTN’s methods.

The first companies to have their targets publicly validated include GSK, Kering and Holcim, which completed the validation pilot in 2024. With more than 150 additional companies already preparing targets through SBTN’s Corporate Engagement Programme, the field is growing.

SBTN targets are a structured, credible pathway from understanding nature impacts to taking measurable action on them. They operate outside the certification model. For any company building a serious nature strategy, they're an essential component.

Practical next steps

Biodiversity is a complex topic, but the starting point is clear. The companies that will get ahead are those that begin with a clear picture of where they operate and what they depend on.

The practical steps follow a logical sequence:

1. Map your value chain. Understand where your business operates geographically, which activities carry biodiversity risk, and which suppliers and sourcing regions are most exposed.

2. Conduct a DMA or LEAP assessment. This step focuses on identifying your material impacts and dependencies, and understanding the financial risks and opportunities that flow from them.

3. Get clear on definitions and metrics. Biodiversity is measured across multiple interrelated indicators, and understanding what each one means in your specific context is a prerequisite for credible data collection.

4. Set targets. Once material impacts are understood and key metrics are established, science-based targets through the SBTN provide a credible framework for committing to measurable improvement.

What matters at this stage is whether you’ve built a credible understanding of where your business touches nature and where nature touches your business. Reporting volume and target ambition come later. That foundation takes time to develop. The value chain mapping, the materiality assessment, the data collection: none of it can be compressed into a few months before a reporting deadline.

For companies no longer in mandatory scope following the Omnibus, that may feel like a reason to wait. It isn’t. Investors, lenders and clients are asking nature-related questions regardless of what the regulation requires. Supply chain partners in scope for CSRD and EUDR will increasingly need nature-related data from their suppliers. The business case for understanding your nature exposure doesn’t depend on a reporting deadline.

The companies best positioned for what comes next are the ones that started early enough to understand what they’re actually reporting on. Reporting volume follows from that understanding. It can’t substitute for it.

The question for companies today isn’t whether biodiversity will matter to their business. The regulatory and market signals are clear. The question is how much preparation time they give themselves before it does.