Identifying and Reducing Biodiversity Risks in Supply Chains: Strategies and Tools for Sustainable Business

Identifying and reducing biodiversity risks in supply chains is more important today than ever before. Why? Because companies not only need to comply with legal requirements such as the German Supply Chain Due Diligence Act (LkSG), but are also economically dependent on healthy ecosystems. Without intact ecosystems, companies face severe consequences for production, finances, and reputation. According to the World Economic Forum, more than half of global GDP—approximately $44 trillion—is moderately or highly dependent on nature and its services, underlining the direct economic stakes for businesses (source).

Key Points:

• Main causes: Land use change, pollution, climate change, overexploitation. These drivers are responsible for the rapid decline in biodiversity, with the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) reporting that around 1 million animal and plant species are threatened with extinction (source).
• Legal requirements: EU Regulation on deforestation-free products, Corporate Sustainability Reporting Directive (CSRD).
• Economic risks: Up to $2.7 trillion decline in global GDP by 2030, as highlighted by the World Bank (source).
• Solutions: Supplier audits, Life Cycle Assessments (LCA), geodata, sustainable procurement policies.

Integrating biodiversity into ESG strategies not only protects nature but also safeguards your own competitiveness. Act now—it pays off.

Regulatory Requirements and Stakeholder Expectations

Key Regulatory Frameworks

The EU has established a set of rules requiring companies to focus more closely on biodiversity risks. A central element is the EU Regulation on Deforestation-Free Products (EUDR). Its goal: to ensure that products consumed in the EU do not contribute to deforestation or forest degradation anywhere in the world. This regulation aims to reduce carbon emissions caused by EU consumption and production of relevant raw materials by at least 32 million tons per year.

The World Economic Forum underscores the importance of such measures:

“Clear and robust deforestation compliance measures, such as the European Union Deforestation Regulation (EUDR), provide an example of how these policy measures can tip the scales to a transparent green transition.”

Additionally, the Corporate Sustainability Reporting Directive (CSRD) significantly expands sustainability reporting requirements, covering a wide range of ESG topics. The Corporate Sustainability Due Diligence Directive (CSDDD) goes even further, obliging companies to identify and address human rights and environmental risks throughout their entire value chains.

The EU Taxonomy Regulation also provides guidance by defining what qualifies as a sustainable economic activity. Another initiative is the planned EU framework for nature credits by 2027, which aims to promote verified outcomes in biodiversity.

For example, in the automotive industry, complex supply chains—from the Xinjiang Nonferrous Metal Industry Group to global OEMs—can amplify biodiversity risks, highlighting the need for robust due diligence and traceability (source).

In addition to these legal requirements, stakeholder expectations are also rising—more on this in the next section.

Stakeholder Expectations for Biodiversity Measures

Expectations for companies to actively protect biodiversity are steadily increasing. According to surveys, 73% of European consumers already avoid brands linked to deforestation (source). At the same time, investors are divided on whether biodiversity should be a top priority. The market for sustainable products is expected to exceed $150 billion by 2027 (source).

These developments are unsurprising given that biodiversity is valued at up to $140 trillion for global GDP (source).

NGOs are also playing an increasingly important role, acting as experts, mediators, and drivers in negotiations. The Carbon Disclosure Project highlights:

“There is increasing realization that the global effort to combat climate change cannot be effective without addressing the nature crisis simultaneously.”

The Heinrich Böll Foundation warns that a sustainable development path is necessary to protect both climate and biodiversity. This convergence of regulatory, consumer, and NGO pressure means that biodiversity is now a core component of modern ESG strategies.

Integrating Biodiversity into ESG Strategies

The combination of regulatory requirements and rising stakeholder expectations makes it essential to consistently integrate biodiversity aspects into ESG strategies. This is crucial not only for risk mitigation and compliance with new regulations but also for investor appeal. The urgency is reflected in alarming figures: already 40% of global plant species are threatened with extinction (source).

The economic consequences of ecosystem collapse could be severe: by 2030, global GDP could decline by $2.7 trillion. At the same time, transitioning to nature-positive business models offers enormous opportunities: up to $10 trillion could be generated annually and 395 million jobs created by 2030 (source).

A practical example is provided by Desjardins Global Asset Management (DGAM). In 2022, the company signed the Finance for Biodiversity Pledge, committing to protect biodiversity in its financial activities. Biodiversity metrics such as waste, water, land use, and wildlife mortality were integrated into due diligence processes. In 2023, DGAM held targeted biodiversity dialogues with 11 companies on topics like deforestation and waste management.

Wijnand Broer of PBAF sums it up:

“It's fine to quantify, but don't ever hide behind the data or the lack of data. There is so much you can already do based on common sense... Based on common sense, you already understand what your financial risks will be, and what actions you can take to limit those risks. It's an important message not to wait, but to start.”

How Companies Can Identify Biodiversity Risks in the Supply Chain

Identifying biodiversity risks in the supply chain requires structured approaches and suitable assessment tools. The greatest risks often lie in raw materials and their origins. According to a 2023 study in Nature Food, 90% of biodiversity loss associated with food production is linked to just seven commodities: beef, soy, palm oil, coffee, cocoa, wood, and rubber (source).

The challenge: Assessing such risks is complex, as they can vary greatly depending on the company, supply chain, and location. The first step is to analyze the interactions between your own supply chains, operations, products, and nature. What impact does the company have on nature, and what dependencies exist? This is where specialized tools and audits come into play, helping to pinpoint risks.

Risk Assessment Tools and Frameworks

A helpful tool is the TNFD framework, which helps companies systematically identify risks and opportunities in relation to nature. The LEAP approach—Locate, Evaluate, Assess, Prepare—offers a clear structure.

Key elements include: governance structures, strategic objectives, analysis of biodiversity impacts and dependencies, and assessment of business risks and opportunities. TNFD also provides a Supplier Biodiversity Assessment Tool applicable across industries—from energy and agriculture to consumer goods. This allows companies to systematically assess their suppliers and identify biodiversity risks early on.

Mapping the supply chain is a proven approach. It helps to understand the baseline, identify dependencies, and make impacts on nature visible. The CDP Forests Questionnaire is another widely adopted tool for assessing deforestation risks in supply chains (source).

Conducting Biodiversity-Focused Supplier Audits

Supplier audits are an effective way to gather information about suppliers’ environmental management and performance. They enable you to assess their practices and impact on biodiversity. For instance, the Roundtable on Sustainable Palm Oil (RSPO) certification includes biodiversity criteria in supplier audits, helping companies manage risks in palm oil supply chains (source).

A key component is Biodiversity Impact Assessments (BIA), which reveal how supplier activities can affect nature. At the same time, companies should offer training programs for suppliers to raise awareness of biodiversity and sustainable practices.

Clear, measurable goals aligned with international standards are essential. Transparent communication about these goals, progress made, and planned actions also strengthens accountability and collaboration. Together with suppliers, areas for improvement can be identified and best biodiversity practices implemented.

In addition to audits, Life Cycle Assessments (LCA) provide valuable insights into biodiversity pressures along the supply chain.

Using Life Cycle Assessments (LCA)

Life Cycle Assessments (LCA) allow you to analyze the impact of local land use on global biodiversity loss. They consider the entire supply chain and account for the diverse impacts that arise at different locations and process steps.

A spatially explicit LCA adds geographic information to the data, improving the accuracy of environmental impact assessments. Studies show that 88% of global biodiversity loss occurs outside individual countries’ borders. Beef, dairy, chicken, cheese, pork, fats, oils, and coffee are major contributors to the loss of Mean Species Abundance (MSA), with land use and climate change as the main drivers (source).

Since land use changes—especially from agriculture—have a significant impact on nature, companies should monitor impacts along global supply chains and develop targeted risk mitigation measures.

Using Geodata and External Databases

Geodata, such as satellite monitoring and global biodiversity databases, are valuable tools for locating and monitoring biodiversity hotspots in supply chains. These technologies enable precise and continuous monitoring. Platforms like Global Forest Watch provide real-time data on deforestation and biodiversity loss, supporting proactive risk management (source).

Clément Bégat, Associate Director at G-ON, emphasizes:

“Our clients are increasingly asking for biodiversity strategies that go beyond what regulations require. This tool helps us address impacts both on-site and in the supply chain, which are often ignored by current certifications.”

By combining various data sources and tools, companies gain a comprehensive picture of their biodiversity risks and can take targeted action.

How Companies Can Reduce Biodiversity Risks

Once biodiversity risks have been identified, it’s crucial to address them directly. This is the only way to secure long-term value creation and minimize risks. Based on a systematic analysis, the following approaches can help effectively reduce biodiversity risks.

Developing Biodiversity-Friendly Procurement Policies

A good starting point is to introduce sustainable procurement policies. These provide companies with a clear framework for integrating environmental and social aspects into their purchasing processes. The first step is a thorough analysis of existing procurement practices. It’s important to define concrete ESG standards (Environmental, Social, and Governance) and SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound) to make progress traceable.

Experience shows that such policies not only enable energy and emissions savings but also strengthen collaboration along the supply chain. This creates a partnership-based approach that positively impacts the entire value chain. For example, Unilever’s Sustainable Agriculture Code has helped the company reduce environmental impacts and improve supplier engagement (source).

Strengthening Collaboration with Suppliers

Close collaboration with suppliers is another key to implementing sustainable practices throughout the supply chain. Long-term partnerships based on shared values make it possible to reduce the carbon footprint and achieve sustainability goals.

An example from the manufacturing sector shows how this can work: A supplier partnered with a sustainable investment company that provided both funding and expertise for installing solar panels and modernizing equipment. The result? A significant reduction in CO₂ emissions and an improved supplier reputation. Regular communication—through meetings or shared platforms—helps coordinate sustainability goals early and set joint priorities.

Integrating Biodiversity into Supplier Evaluations

Incorporating biodiversity criteria into supplier contracts and evaluations is another important step. Companies should define measurable targets for biodiversity management to support both internal decision-making and external reporting.

A successful example is Starbucks: The company sources 100% of its coffee through the Coffee and Farmer Equity (C.A.F.E.) Practices program, developed in partnership with Conservation International. This program demonstrates how biodiversity criteria can be put into practice (source). Vishal Patel, VP of Procurement Marketing at Ivalua, sums it up:

“Sustainable procurement at the organizational level involves integrating Environmental, Social, and Governance (ESG) factors into procurement policies and processes, as well as collaborating with suppliers according to sustainable strategies.”

With clear biodiversity goals in supplier evaluations, companies can build sustainable partnerships that continuously improve.

Monitoring and Continuous Improvement

Another key aspect is the regular monitoring of biodiversity performance. Companies should set operational targets and implement a monitoring system. For example, an annual system for tracking deforestation risks could be introduced, with results discussed in commodity roundtables. Modern technologies such as remote sensing, sensors, eDNA, and drones offer cost-effective and precise ways to monitor biodiversity. The use of eDNA (environmental DNA) is gaining traction for monitoring species presence in supply chain landscapes (source).

Practical examples illustrate the benefits of such approaches: In Ecuador, the International Rural Development Service (ILD) supports families and cooperatives in growing cocoa sustainably in agroforestry systems and complying with relevant EU regulations. In Ghana, Fairtrade International works with farming families to create economically viable livelihoods through training in climate-friendly agriculture and traceability systems. Regular monitoring and impact measurement help track progress and make the added value of such measures visible.

Tools and Frameworks for Biodiversity Management

Implementing biodiversity strategies requires specialized tools and proven frameworks. These help to precisely assess ecological risks and make progress measurable. The right combination of digital solutions and international standards is crucial for building sustainable supply chains. Below, we present key digital tools that address these challenges.

Key Tools for Biodiversity Risk Management

The Supply Chain Risk Assessment and Management Toolkit, developed by the Alliance of Bioversity International and CIAT, has proven extremely useful. The Mercon Coffee Group relied on this toolkit in 2023 to realign its sustainable procurement management. Giacomo Celi, Sustainability Director at Mercon Coffee Group, explained:

“When you talk about sustainability in smallholder supply chains in developing countries and rural areas, there are lots of intangible values and risks that are not easily quantifiable. Yet as a business, we have to take decisions based on data, science and numbers.”

The toolkit includes four main components: macro risk assessment, supply chain mapping tool, micro risk assessment, and prioritization and action planning. By using these instruments, Mercon established risk as a key performance indicator and aims for fully sustainable sourcing by 2030.

Another helpful solution is the elan! Supply Chain Portal from OroVerde and Global Nature Fund. It offers practical recommendations for designing deforestation-free supply chains. These tools form the basis for meeting international standards and frameworks.

International Standards and Frameworks

Modern biodiversity strategies are based on frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) and the Science Based Targets for Nature (SBTN). While TNFD defines 14 disclosure categories, the new GRI 101: Biodiversity 2024 Standard helps companies better understand their biodiversity impacts. Elodie Chêne, Senior Standards Manager at GRI, puts it succinctly:

“If you need to set targets, go for SBTN. If you need to measure your impact, go to TNFD. And if you want to disclose, go to GRI.”

The Kunming-Montreal Global Biodiversity Framework (GBF) sets a global goal to halt and reverse biodiversity loss by 2030. The plan is to protect at least 30% of the world’s land and marine areas and restore 30% of degraded natural areas. In addition, $200 billion per year is to be mobilized for biodiversity protection, and environmentally harmful subsidies reduced by $500 billion (source).

At the European level, regulatory requirements such as the EU Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Regulation on Deforestation-Free Products (EUDR) are tightening. Companies are required to minimize human rights and environmental risks—including biodiversity—throughout their entire value chains.

How Fiegenbaum Solutions Can Support You

Fiegenbaum Solutions offers concrete risk mitigation strategies based on these tools and frameworks. Through Lifecycle Assessments (LCA), biodiversity impacts can be captured and assessed along the entire value chain. The company develops ESG strategies, integrates biodiversity criteria, and supports compliance with requirements such as the CSRD and the EU Taxonomy.

Particularly noteworthy is the expertise in impact modeling and scenario analysis, enabling data-driven evaluation of different biodiversity strategies. The close link between climate and biodiversity risks is also addressed through climate risk assessments and resilience planning.

Johannes Fiegenbaum brings current market insights, regulatory know-how, and an entrepreneurial perspective as an independent consultant. Thanks to flexible consulting structures—from project-based solutions to long-term retainer agreements—companies of all sizes can benefit from this expertise.

Key Takeaways

Systematically identifying and reducing biodiversity risks is essential—a 73% decline in wildlife populations and a potential economic loss of $2.7 trillion by 2030 highlight the urgency (source).

The World Economic Forum sees enormous opportunities in nature conservation: by 2030, $10 trillion in business opportunities could be generated annually and nearly 400 million new jobs created. Unilever is a prime example, generating €1.2 billion annually with plant-based alternatives to animal proteins (source). These figures make it clear why swift and decisive action is indispensable.

Active engagement pays off: it secures supply chain continuity, strengthens resilience, and improves access to capital. Richard Young, Managing Director of Nature Positive, emphasizes:

“The potential risk from biodiversity loss will reach a point that regulators can no longer ignore, leading to a mandatory company reporting.”

Companies that fail to consider biodiversity impacts already risk losing access to capital today.

The CSRD (Corporate Sustainability Reporting Directive) requires reporting on financial risks from biodiversity loss and environmental impacts. The concept of double materiality is central here. It is crucial to establish internal responsibilities and communicate actions transparently.

As outlined above, the key lies in protecting ecosystems—at every decision-making level. Close collaboration with suppliers, the use of regenerative agricultural practices, and the application of circular design principles are essential steps. Companies that act now not only secure their market position but also create long-term stability in their operations. Integrating these approaches into supply chain strategy completes the picture.

FAQs

How can companies identify and assess biodiversity risks in their supply chain?

Today, companies can specifically identify and assess biodiversity risks in their supply chain—thanks to specialized tools and georeferenced data. These technologies allow for precise analysis of location-based risks without the need for time-consuming and costly surveys. For example, using platforms like Global Forest Watch and the TNFD framework enables real-time monitoring and structured risk assessment.

A key approach involves AI-powered analyses and risk assessment tools that help make biodiversity impacts visible. This allows potential threats, such as habitat loss or the endangerment of protected species, to be identified early. Companies can then develop appropriate countermeasures and integrate them directly into their supply chain management.

By combining data analysis, targeted site assessment, and sustainable planning, companies can not only reduce risks but also actively contribute to preserving biodiversity. At the same time, they are better positioned to meet increasing regulatory requirements.

How can companies better understand and meet stakeholder expectations for biodiversity measures?

Companies can better meet stakeholder expectations regarding biodiversity measures by initiating and actively shaping dialogue early on. It is crucial to involve stakeholders in planning and implementation processes to truly understand their perspectives and priorities. This exchange lays the foundation for collaboration built on mutual understanding. Engaging with NGOs, local communities, and investors through regular forums or sustainability committees can provide valuable insights (source).

It is equally important to set clear and measurable goals for biodiversity measures. Regular reporting on progress not only demonstrates transparency but also builds trust and signals genuine commitment. Practical approaches such as supplier audits, life cycle assessments, or alignment with biodiversity-focused frameworks provide valuable tools for companies to meet stakeholder requirements and advance sustainable business practices. Such measures combine ecological responsibility with economic foresight.

What are the benefits for companies of integrating biodiversity criteria into their ESG strategies?

Considering biodiversity criteria in your ESG strategies brings numerous advantages. Firstly, you can reduce supply chain risks, which not only increases the stability of your processes but also minimizes potential disruptions. Secondly, it boosts your innovative strength by fostering new approaches and solutions based on sustainable principles. At the same time, you remain on the safe side when it comes to complying with current and future legal requirements—a crucial factor for long-term competitiveness.

Another plus: A sustainable orientation improves your company’s image and makes you more attractive to investors who are increasingly focused on responsible action. This not only strengthens your market position but also builds lasting trust with customers and partners.