Biodiversity is a crucial component of your ESG reporting. Why? Because over half of global economic output depends directly or indirectly on natural systems. At the same time, biodiversity is increasingly becoming mandatory through regulatory requirements like the EU Biodiversity Strategy 2030 or the Corporate Sustainability Reporting Directive (CSRD).
Companies that integrate biodiversity into their strategies minimize risks, strengthen their market position, and meet future requirements. The time to seriously address biodiversity is now.
A clear understanding of regulatory requirements is essential to successfully integrate biodiversity metrics into your ESG reports and corporate strategies.
The Corporate Sustainability Reporting Directive (CSRD) significantly expands the scope of companies required to report in the EU: from 11,700 companies (under the Non-Financial Reporting Directive, NFRD) to approximately 50,000 companies. For capital market-oriented and larger companies in Germany, the CSRD applies from 2025.
The European Sustainability Reporting Standards (ESRS) specify the requirements of the CSRD. Particularly relevant here is the ESRS E4 standard, which specifically addresses biodiversity and ecosystems. Companies must disclose not only their impacts on biodiversity but also their dependence on natural systems. This includes both quantitative data and qualitative assessments of ecosystem services.
The EU Taxonomy complements these requirements by defining clear criteria for environmentally sustainable economic activities. The protection and restoration of biodiversity and ecosystems are among the six environmental objectives. Companies must disclose the proportion of their revenues, investments, and operating expenses that are taxonomy-aligned – a metric that is becoming increasingly relevant for investors.
Jozef Síkela, Czech Republic's Minister for Industry and Trade, aptly summarizes the importance of these developments:
"The new rules force companies to disclose their social and environmental impacts – for more transparency and sustainability. Data on the environmental and social footprint will be publicly available to anyone interested in this footprint."
Another central aspect is the principle of double materiality, which complements these frameworks.
The concept of double materiality fundamentally changes how companies report on biodiversity. Unlike traditional financial reports, it's not enough to merely consider the financial impacts of environmental risks. Companies must consider both the impacts of their business activities on biodiversity and ecosystems (impact materiality) and the financial consequences of biodiversity loss (financial materiality).
For example: A chemical company must document how its production wastewater affects local aquatic ecosystems, even if this has no short-term financial impact. At the same time, financial materiality captures how the loss of ecosystem services – such as clean water – can lead to significant costs.
This dual perspective ensures that biodiversity risks are often classified as material, even if they haven't been a focus of corporate management before. The CSRD explicitly requires companies to explain how environmental and social factors influence their business and conversely, how their activities affect society and the environment.
The following overview provides a compact comparison of the main frameworks and their requirements.
| Framework | Scope | Biodiversity Metrics | Reporting Frequency | Audit Requirement |
|---|---|---|---|---|
| CSRD/ESRS E4 | ~50,000 EU companies | Quantitative and qualitative indicators on impacts and dependencies | Annual | External audit required |
| EU Taxonomy | All CSRD-obligated companies | Share of taxonomy-aligned activities in % | Annual | Part of CSRD audit |
| SFDR | Financial market participants | Principal Adverse Impacts (PAI) on biodiversity | Annual | Internal control |
The requirements of this regulatory landscape are complex and demand a structured approach from German companies. Experts advise bringing in external specialists to ensure compliance with new regulations and specifically training employees on EU regulations and their impacts. At the same time, companies should create internal processes that ensure their activities meet EU Taxonomy criteria.
These regulatory foundations are the starting point for practical implementation – the next step is identifying and measuring specific biodiversity metrics.
Now that the regulatory foundations are set, it's time to select the appropriate biodiversity metrics. These should not only meet legal requirements but also provide strategic value for your company. Choosing the right metrics is crucial to both fulfill reporting obligations and generate long-term value.
A central area of biodiversity assessment is land use and land cover. These metrics show how many hectares of natural habitats are occupied, altered, or restored by your business activities. Particularly relevant is habitat fragmentation, the interruption of contiguous ecosystems by infrastructure or other interventions.
Also in focus is species diversity and population dynamics. Since 1970, global wildlife populations have declined by 69%. Companies can document this decline using indicators such as the Species Threat Abatement and Restoration Metric (STAR). This shows how strongly your activities influence the extinction risk of various species.
Pollution indicators measure the direct impacts of your emissions on the environment, whether through nitrogen and phosphorus inputs that promote eutrophication, or through pollutants like pesticides and heavy metals. Additionally, metrics on ecosystem services help calculate the value of natural systems. These include services such as water regulation, pollination, carbon storage, and climate resilience – all factors that highlight the economic relevance of biodiversity protection.
These metrics form the basis for transparent monitoring. The next step is developing measurable methods to assess and report biodiversity impacts.
With the GRI 101: Biodiversity 2024 Standard, which replaced the earlier GRI 304 in January 2024, companies are provided with a clear framework for capturing their biodiversity impacts. This standard helps trace the connection between business decisions and biodiversity losses and take appropriate action.
Further support comes from the Task Force on Nature-related Financial Disclosures (TNFD), which introduces risk-based approaches. In July 2024, GRI and TNFD published a joint interoperability map. This makes it easier to understand the connections between GRI standards and TNFD recommendations and integrate them into ESG reporting.
The Science Based Targets Network (SBTN) is also a key player in setting science-based targets. Companies can define measurable goals to reduce their biodiversity impacts. These goals are aligned with global frameworks such as the Kunming-Montreal Global Biodiversity Framework, which aims to halt and reverse biodiversity loss by 2050.
Approaches at landscape and jurisdictional levels promote large-scale collaboration and support shared sustainability goals. A key success factor is linking biodiversity protection with other environmental aspects such as climate protection and social measures. Experts agree: Only through integrated approaches that bring these dimensions together can sustainable results be achieved.
The complexity of biodiversity – it is multidimensional and highly location-specific – fundamentally distinguishes it from comparatively uniform metrics like carbon emissions.
Theo Trabaud succinctly captures the importance for companies:
"Integrating biodiversity into finance is not only good for the planet - it's smart business."
Neglecting biodiversity aspects can lead to immediate financial consequences – a risk companies should not underestimate.
Choosing the right tools for measuring biodiversity is essential for effective ESG reporting. At the same time, regulatory requirements are increasing, putting pressure on companies. The available tools differ in their focus, data requirements, and applicability, especially for German companies. Based on defined metrics and legal requirements, they offer practice-oriented approaches to make biodiversity measurable.
The Task Force on Nature-related Financial Disclosures (TNFD) Framework has established itself as a central building block. It seamlessly adapts to the Task Force on Climate-related Financial Disclosures (TCFD) and takes into account the new ISSB standards as well as EU CSRD requirements for biodiversity reporting. The interoperability map from GRI and TNFD clearly shows the connections between the various standards.
Various specialized tools are available for practical implementation:
German companies can additionally use tools like ENCORE, which maps dependencies and impacts on ecosystem services and identifies industry-specific risks. For water-intensive industries, Water Watch offers complementary indicators that focus on water-related biodiversity.
The first step is to familiarize management and all relevant departments with biodiversity concepts, tools, and frameworks. This is particularly important because biodiversity – unlike carbon – has no directly measurable value and is significantly more complex to assess.
A sensible starting point is mapping operational sites and their proximity to biodiversity-sensitive areas. This allows for better capture of direct and indirect impacts. Building on this, the supply chain should be analyzed. Here, collaboration with local stakeholders, conservation organizations, and research institutions is crucial to understand and address regional challenges.
Implementation should be gradual, for example through a pilot project in a clearly defined business area or specific region. This allows for initial experience gathering and process optimization before methods are rolled out company-wide. In parallel, companies should monitor their progress and regularly report on measures to identify, measure, and manage biodiversity risks.
| Tool/Framework | Focus | Data Requirements | Suitability for German Companies |
|---|---|---|---|
| TNFD | Nature-related risk disclosure | Governance, strategy, risk management | High – EU CSRD compliant |
| BFFI | Ecosystem/habitat impacts | Environmental pressure data | Medium – especially for financial sector |
| STAR | Species threat | Primary biodiversity data | High – scientifically grounded |
| Environmental P&L | Monetary valuation | Monetary values | Medium – challenging to implement |
| Product Biodiversity Footprint | Product-related impacts | GHG emissions, water consumption | High – good for using existing data |
The choice of the right tool depends on your industry, available resources, and regulatory requirements. While the TNFD framework provides a comprehensive framework for reporting, specialized tools like STAR are particularly suitable for detailed analyses in species conservation.
Forecasts show that without new policy measures, global terrestrial biodiversity could decline by 10% by 2050. Companies should therefore rely on frameworks that consider both mandatory requirements like the CSRD and EU Taxonomy as well as voluntary standards like GRI and SASB.
Incorporating biodiversity metrics into ESG strategy is a demanding but necessary step that requires strategic clarity and measurable progress. Why? Because $58 trillion in economic value creation – more than half of global GDP – depends directly on nature and its ecosystem services. This makes it all the more important to purposefully link biodiversity with a company's ESG goals.
Unfortunately, biodiversity is often neglected in ESG strategies, even though it is essential for long-term corporate stability. The numbers speak for themselves: According to the World Wildlife Fund, global wildlife populations have declined by an average of 69% since 1970. This dramatic development makes it clear that companies must include biodiversity as an integral part of their sustainability strategy.
A role model is provided by Groupe Caisse des Dépôts, which has developed a comprehensive biodiversity policy. This is based on the five IPBES drivers and includes an investment commitment of 5 billion euros in conservation measures. The strategy is based on four central pillars: measuring ecological footprint, reducing negative impacts, increasing positive effects, and promoting research and awareness. All progress is monitored through specific indicators.
Another example is Desjardins Global Asset Management (DGAM), which has integrated biodiversity as one of four priority ESG themes into its investment strategy. Since signing the Finance for Biodiversity Pledge in 2022, metrics on waste, water, land use, and wildlife mortality have been incorporated into due diligence processes.
Although 51% of companies recognize biodiversity loss as a risk, only 5% have defined concrete, measurable goals. Here, the Science Based Targets Network (SBTN) offers a specific approach for goal setting with its AR3T framework (Avoid, Reduce, Restore, Regenerate, Transform).
An example of ambitious goal setting is provided by Microsoft, which has committed since 2020 to becoming carbon negative, water positive, and zero waste by 2030 – while advancing ecosystem protection. L'Oréal also pursues over 15 goals aligned with planetary boundaries, while Kering has implemented a biodiversity strategy based on the AR3T framework.
The development of such goals should follow a structured approach: First, current performance is assessed, then stakeholder feedback is integrated, and finally goals are aligned with long-term corporate strategy. Once goals are defined, clear governance structure and reliable data quality are crucial.
For biodiversity to be anchored in corporate strategy, clear responsibilities, transparent data storage, and seamless reporting are necessary. Green Century Capital Management relies on targeted engagement activities: When biodiversity deficits are found in portfolio companies, dialogue is sought first, followed by resolutions if needed. In 2023, this approach led to Kraft Heinz adopting a global forest protection policy.
AP2, a Swedish pension fund, also shows how it's done: In collaboration with Climate & Company, the fund is developing a publicly accessible methodology to assess deforestation risk for each portfolio company. The goal is to achieve a deforestation-free portfolio by 2025.
Ensuring data quality is crucial. Companies should rely on robust internal controls and recognized frameworks like the Task Force on Nature-related Financial Disclosures (TNFD). Partnerships with conservation organizations can additionally help create credibility and increase impact.
An often overlooked point: Biodiversity data is more complex than carbon metrics, for example. They have no directly measurable value and require specialized expertise. Therefore, continuous training of responsible teams is essential to master the challenges in this area.
Incorporating biodiversity metrics into ESG reports is no longer an option but a necessity – both from a regulatory and economic perspective. Companies that act early, systematically capture their biodiversity impacts, and take action based on them secure a clear competitive advantage.
Effective biodiversity reporting can be divided into three essential steps:
These measures not only create the basis for meeting future regulatory requirements but also offer strategic advantages. As emphasized in the report, reliable biodiversity metrics are crucial – not only for ESG reporting but also for long-term corporate strategy. Regulatory requirements are evolving rapidly: By 2030, companies must implement standards such as the Kunming-Montreal Global Biodiversity Framework or Germany's National Biodiversity Strategy 2030. Those who ignore these developments risk not only regulatory sanctions but also significant reputational and market losses.
To meaningfully incorporate biodiversity metrics into your ESG reports, you should first thoroughly analyze the impacts of your business activities on biodiversity. Based on this, you can define clear, measurable goals that are closely linked to your corporate strategy. It's important to keep in mind the specific legal requirements in Germany that mandate reporting on environmental and biodiversity aspects.
A good approach is to follow internationally recognized standards such as ISO 14001 or the Global Reporting Initiative (GRI) Standard. These provide a solid foundation for consistently measuring environmental impacts. It's also important to select appropriate indicators that reflect both your company's dependencies on ecosystems and the risks of your business activities in relation to biodiversity. Examples could include habitat loss, impact on protected species, or use of ecosystem services.
Regular reviews and updates of these metrics are essential to meet stakeholder expectations and regulatory requirements. Transparency plays a central role: The documented results should be presented clearly and comprehensibly in your ESG report. Practical tools and established frameworks can help you implement these processes efficiently and in a structured manner.
Companies can use the principles of double materiality to assess both their impacts on biodiversity and the financial risks and opportunities from biodiversity loss. This involves consideration in two dimensions:
Clear and transparent reporting is crucial here. It not only helps meet regulatory requirements but also strengthens trust in the company and underscores its commitment to sustainability. To make analyses comprehensible and measurable, companies should rely on proven methods and established frameworks.
Companies today have access to various methods and frameworks to measure impacts on biodiversity and report transparently about them. Particularly useful are biodiversity metrics that make it possible to clearly assess the state and impacts at the company level. These approaches can be applied both for specific projects and along the entire supply chain.
An important standard for reporting is GRI 101: Biodiversity 2024. This framework focuses specifically on biodiversity aspects in ESG reports and is aligned with EU-wide ESG requirements. It provides companies with a systematic basis for identifying risks and opportunities in biodiversity while meeting regulatory requirements in Germany.
With such tools and frameworks, companies can make their biodiversity goals measurable and make informed decisions that meet both ecological and legal requirements.