Biodiversity reporting has become essential for corporate sustainability. Why? Because approximately $58 trillion in global economic output depends on ecosystem services, whilst biodiversity loss threatens supply chains and business continuity. The Corporate Sustainability Reporting Directive (CSRD) and EU Biodiversity Strategy 2030 are transforming biodiversity from voluntary consideration into mandatory disclosure requirements.

The 2025 CSRD first wave revealed critical gaps in sustainability reporting. Biodiversity (ESRS E4) was most frequently deferred, with only 33% of companies reporting it as material. However, frameworks advanced: Science Based Targets Network launched Ocean Targets in March 2025, whilst Task Force on Nature-Related Financial Disclosures (TNFD) adoption nearly doubled to 730+ organisations, demonstrating growing recognition among financial institutions of nature-related risks.

This guide outlines strategic requirements for integrating biodiversity into sustainability reporting, focusing on 2025-2026 compliance for European companies and financial institutions navigating disclosure requirements.

Why Biodiversity Reporting Matters: Risks and Opportunities

Biodiversity loss represents both systemic risk and strategic opportunity. Global wildlife populations declined 69% since 1970, whilst the World Economic Forum projects further 10% decline by 2050 without intervention. For companies, this translates into material risks across supply chains, regulatory compliance, and stakeholder relations.

The Corporate Sustainability Reporting Directive now applies to ~50,000 EU companies—quadrupling coverage from the previous directive. First-wave sustainability reporting exposed significant data gaps, prompting the European Commission's "Quick Fix Proposal" allowing temporary deferrals on granular biodiversity data.

However, deferral carries substantial financial risks. Auditors will challenge "immateriality" claims from 2026, particularly as 79% of asset managers now use nature-related financial disclosures for investment decisions, showing financial institutions move faster than regulators on biodiversity risks.

Understanding Risks and Opportunities

Material Risks:

• Supply chain disruptions from ecosystem degradation affecting natural resources
• Regulatory penalties under disclosure requirements (CSRD, EUDR)
• Reputational damage from biodiversity impacts
• Climate-related risks compounding through biodiversity loss
• Invasive species introduction via supply chains

Strategic Opportunities:

• Enhanced access to sustainable finance
• Competitive differentiation through nature-positive outcomes
• Innovation in nature-based solutions
• Market leadership as international regulations expand

Regulatory Framework: CSRD and International Regulations

The Corporate Sustainability Reporting Directive represents the cornerstone of EU sustainability reporting. Effective from 2024 for large entities, the Sustainability Reporting Directive (CSRD) expanded coverage to approximately 50,000 companies. CSRD compliance became mandatory from 2025, requiring companies to address biodiversity loss systematically.

ESRS E4 establishes disclosure requirements for:

• Biodiversity impacts across business activities
• Dependencies on ecosystem services
• Material risks from biodiversity loss
• Science-based targets to halt biodiversity loss
• Financial materiality of nature-related risks

Double materiality fundamentally reshapes disclosure requirements. Companies must assess both impact materiality (effects on biological diversity) and financial materiality (effects on company's financial performance). This ensures nature-related risks are classified as material even when short-term financial impacts aren't immediately evident.

First-Wave Implementation Challenges

Early CSRD reports revealed significant gaps:

• Only ~33% identified biodiversity as material (vs 85%+ for climate change)
• Frequent failure distinguishing gross vs net biodiversity impacts
• Heavy phase-in use delaying financial risks reporting
• Supply chain opacity limiting biological diversity assessment

Jozef Síkela, Czech Minister for Industry, emphasised: "The new rules force companies to disclose environmental impacts—for transparency and corporate sustainability."

The 7 Principles of Biodiversity Sustainability Reporting

Effective biodiversity reporting follows seven core principles enabling informed decisions:

1. Double Materiality Assessment

Assess both impact materiality and financial materiality—how business activities affect biodiversity and how biodiversity loss creates financial risks for the company's financial performance.

2. Location-Specific Disclosure

Provide site-specific information with geographic precision. Sustainability reporting practices must include geo-coordinates for high-risk operations where supply chain impacts on ecosystem services are material.

3. Supply Chain Scope

Extend beyond direct operations to entire supply chains. Companies reporting must engage suppliers systematically on natural resources usage and ecosystem service dependencies.

4. Science-Based Targets

Align biodiversity initiatives with the global biodiversity framework (Kunming-Montreal) and SBTN. Science-based targets provide credible pathways to halt biodiversity loss and restore biodiversity by 2050, supporting sustainable development goals.

5. Stakeholder Engagement

Involve local communities, conservation organisations, civil society, and other stakeholders in identifying biodiversity risks and developing nature-positive outcomes, including equitable benefit sharing.

6. Methodology Transparency

Disclose methods to quantify biodiversity impacts, data sources, and uncertainties. Transparency builds credibility with financial institutions making informed decisions based on sustainability reporting.

7. Continuous Improvement

Regularly update assessments based on evolving science, international regulations, and stakeholder expectations, ensuring corporate sustainability strategies align with emerging risks and opportunities.

Key Metrics: Measuring Biodiversity Impacts

Selecting appropriate metrics requires balancing disclosure requirements, data availability, and strategic relevance. The 2025 landscape emphasises geospatial precision and supply chain transparency.

Core Measurement Categories

Land Use and Habitat: Companies must disclose hectares of natural habitats affected. The EU Deforestation Regulation now requires geo-coordinates of converted land, moving disclosure requirements beyond aggregates to site-specific information.

Species Diversity: The Species Threat Abatement and Restoration (STAR) metric enables quantifying how business activities influence extinction risk, supporting efforts to restore biodiversity.

Pollution Pressures: Measure impacts through nitrogen inputs, pesticide contamination affecting ecosystem services, microplastics, and invasive species introduction via supply chains.

Ecosystem Services: Quantify dependencies on water regulation, pollination services, carbon storage, and climate resilience—connecting biodiversity management to business continuity.

Financial Institutions' Metrics

Financial institutions face unique biodiversity reporting challenges requiring portfolio-level assessment:

• Portfolio exposure to high-impact sectors (agriculture, extractives)
• Financed emissions linked to land use change
• Engagement metrics on nature-related risks
• Capital allocation toward nature-positive outcomes vs nature-negative outcomes
• Risk-adjusted returns incorporating biodiversity risks

Frameworks: TNFD, GRI, SBTN

Strategic framework selection requires understanding each approach's disclosure requirements and integration with mandatory sustainability reporting.

Task Force on Nature-Related Financial Disclosures

The TNFD Framework emerged as leading voluntary standard for nature-related financial disclosures. Over 730 organisations adopted TNFD disclosure recommendations by late 2025—nearly doubling from 2024, reflecting growing recognition of nature-related risks and opportunities.

TNFD provides structured approach adapting to climate-related financial disclosures (TCFD), enabling integrated sustainability reporting on climate change and biodiversity. The LEAP methodology (Locate, Evaluate, Assess, Prepare) systematically identifies nature-related risks across business activities.

The July 2024 GRI-TNFD interoperability map clarifies framework connections, facilitating corporate sustainability reporting aligned with CSRD disclosure requirements.

GRI 101: Biodiversity 2024

GRI 101: Biodiversity 2024, effective January 2026, fundamentally shifts reporting practices:

• Supply chain scope: Companies reporting must assess biodiversity impacts across entire value chains
• Location-specific disclosure: Global aggregates no longer meet disclosure requirements
• Enhanced materiality: Stronger emphasis on identifying material topics through double materiality
• Ecosystem services: Explicit requirements on dependencies

Science Based Targets Network

The Science Based Targets Network provides methodology for setting science-based targets aligned with the global biodiversity framework. March 2025's SBTN Ocean Targets enabled seafood sector validated targets:

• Zero sourcing from overfished stocks
• Zero conversion of critical marine habitats
• Bycatch reduction for endangered species

The AR3T framework (Avoid, Reduce, Restore, Regenerate, Transform) structures target-setting across ecosystems, supporting biodiversity initiatives to restore biodiversity whilst enabling sustainable development and economic growth.

Strategic Integration into Corporate Sustainability

Effective biodiversity reporting demands integration into core business practices beyond disclosure requirements.

The Business Case

The World Economic Forum estimates $58 trillion in value creation depends on ecosystem services, creating both material risks and opportunities requiring sophisticated risk management.

Climate-Biodiversity Nexus: Climate change accelerates biodiversity loss through temperature shifts and extreme weather. Conversely, ecosystem degradation reduces natural carbon sinks, creating feedback loops compounding both climate-related risks and nature-related risks. Companies must address biodiversity loss as integral to climate risk management.

Financial Institutions' Role: Financial institutions increasingly recognise nature-related dependencies create systemic financial risks. Portfolio exposure to high biodiversity impacts threatens returns as international regulations expand.

Leading Practice Examples

Groupe Caisse des Dépôts, a major financial institution, committed €5 billion to biodiversity initiatives demonstrating how financial institutions integrate biodiversity management into capital allocation for a sustainable future.

Desjardins Global Asset Management integrated biodiversity into investment strategy after signing the Finance for Biodiversity Pledge in 2022, incorporating waste, water, and land use metrics into due diligence.

Microsoft set science-based targets to become carbon negative, water positive, and zero waste by 2030 whilst advancing ecosystem protection, linking climate change mitigation with biodiversity initiatives supporting human well-being.

Kering implemented biodiversity management based on SBTN's AR3T framework, monetising biodiversity impacts through Environmental Profit & Loss accounting.

Implementation Success Factors

Despite growing recognition of biodiversity risks, only 5% of companies defined measurable science-based targets. Closing this gap requires:

Executive Commitment: Elevate biodiversity to board oversight with accountability integrated into enterprise risk management.

Baseline Assessment: Map operational sites and supply chains systematically, requiring site-specific information on biodiversity-sensitive areas and supplier engagement.

Science-Based Targets: Establish science-based targets aligned with the global biodiversity framework using SBTN's AR3T approach to halt biodiversity loss and restore biodiversity.

Stakeholder Engagement: Engage diverse stakeholders including communities dependent on ecosystem services, conservation organisations, government agencies responsible for international regulations, financial institutions requiring disclosure of nature-related dependencies, and civil society.

Data Infrastructure: Implement systems enabling informed decisions through location-specific data, supply chain integration, progress tracking, and risk management supporting better understanding of financial materiality.

Implementation Roadmap

Translating disclosure requirements into reality requires structured approach:

Phase 1: Foundation (Months 1-6)

• Train management on biodiversity concepts and disclosure frameworks
• Establish cross-functional task force addressing biodiversity risks and climate-related risks
• Map sites and supply chains to biodiversity-sensitive areas
• Select frameworks (TNFD, GRI 101, SBTN) aligned with disclosure requirements

Phase 2: Assessment and Targets (Months 6-12)

• Map supply chain tiers identifying high-risk commodities affecting biological diversity
• Quantify biodiversity impacts and dependencies on ecosystem services
• Assess financial materiality of nature-related dependencies
• Set science-based targets to address biodiversity loss

Phase 3: Disclosure (Months 12-24)

• Implement biodiversity initiatives testing nature-based solutions
• Develop sustainability reporting systems meeting CSRD requirements
• Prepare reporting aligned with TNFD disclosure recommendations
• Engage financial institutions on progress toward nature-positive outcomes

Avoiding Common Pitfalls

Don't Rely on "Immateriality"

Whilst many classified biodiversity as immaterial in 2025, auditors will challenge this from 2026. Invest in measurement capabilities and conduct robust double materiality assessments.

Prioritise Site-Specific Information

TNFD disclosure recommendations, GRI 101, and SBTN require location-specific data. Invest in supply chain mapping, particularly for EUDR high-risk commodities.

Address Complexity

Biological diversity is multidimensional—more complex than climate change. Use multiple indicators, engage ecological expertise, and maintain transparency about limitations in reporting practices.

Integrate Climate-Biodiversity Strategies

Climate-related risks and biodiversity loss are interconnected. Nature-based solutions address both simultaneously. Integrate climate-related financial disclosures with nature-related financial disclosures.

Future Outlook

Regulatory Intensification

Disclosure requirements will become more granular. Expect stricter audit standards, CSRD extension to additional jurisdictions, integration into International Sustainability Standards Board (ISSB) frameworks, and strengthened enforcement.

Financial Institutions Driving Accountability

Financial institutions increasingly use biodiversity metrics for investment decisions. Companies with weak reporting practices may face divestment from sustainable finance products, higher capital costs, and reduced valuations.

Technology-Enabled Measurement

Satellite monitoring, AI-based assessments, and blockchain traceability enable better understanding of biodiversity and ecosystem services, reducing costs and enabling real-time monitoring.

Nature-Positive Business Models

Beyond risk management, corporate strategies explore how biodiversity drives innovation. Nature-based solutions, regenerative agriculture, circular models, biodiversity offsets where appropriate, and ecosystem service markets represent opportunities supporting sustainable development goals.

Conclusion

Integrating biodiversity into sustainability reporting is regulatory, economic, and strategic imperative. The 2025 Corporate Sustainability Reporting Directive first wave showed deferral strategies carry significant financial risks, whilst early movers gain advantages through financial institutions' confidence.

Effective biodiversity reporting requires:

Comprehensive Assessment: Identify biodiversity risks and opportunities using recognised disclosure frameworks, moving to site-specific information and systematic supplier engagement addressing nature-related dependencies.

Science-Based Targets: Establish science-based targets aligned with the global biodiversity framework, validated through SBTN, addressing material risks whilst linking to corporate sustainability objectives including climate change mitigation and sustainable development goals.

Robust Disclosure: Implement sustainability reporting systems meeting Corporate Sustainability Reporting Directive disclosure requirements whilst supporting risk management and opportunity management. Ensure methodology transparency and progress tracking against science-based targets to halt biodiversity loss and restore biodiversity.

Economic dependence on ecosystem services—$58 trillion—creates both existential financial risks for companies ignoring biodiversity loss and strategic opportunities for decisive action supporting a sustainable future. International regulations intensify, financial institutions increase scrutiny, and civil society expectations rise.

For decision-makers, the path forward requires courage beyond minimal compliance with disclosure requirements, commitment to building capabilities enabling better understanding of nature-related dependencies, and collaboration across supply chains with other stakeholders. The window narrows. Business as usual amid accelerating nature loss is not viable for corporate sustainability or human well-being.

Further Resources

For companies strengthening sustainability reporting, Fiegenbaum Solutions offers comprehensive advisory:

• Sustainability Consulting—Strategic CSRD guidance and science-based targets
• Biodiversity Risk Management—Supply chain strategies
• TNFD Implementation—Nature-related financial disclosures framework