Integrating Biodiversity into ESG Strategies: Risks, Tools, and Regulatory Compliance

Biodiversity is a crucial component of modern ESG strategies. Companies face the challenge of combining ecological responsibility with economic success. EU regulations such as the Biodiversity Strategy and the Taxonomy Regulation set clear requirements, while stakeholders are increasingly demanding sustainable action. Increasingly, investors and consumers are also scrutinizing corporate biodiversity performance, recognizing its direct link to long-term financial resilience and global sustainability (World Economic Forum).

What you need to know now:

• 55% of global GDP depends directly on nature (WEF New Nature Economy Report).
• By 2030, 20% of EU land and marine areas are to be restored under the EU Nature Restoration Law.
• Sustainable business models could create USD 10 trillion in value annually (WEF Future of Nature and Business).
• Tools like IBAT and the WWF Biodiversity Risk Filter support risk analysis.
• The CSRD requires companies to disclose biodiversity risks starting in 2026.

Act proactively: Assess risks, integrate biodiversity goals into your strategies, and leverage digital tools for transparency. This strengthens your market position and ensures regulatory compliance. As biodiversity loss accelerates, companies that act early can secure a competitive edge and build resilience against future shocks (McKinsey).

Assessing Biodiversity Risks and Opportunities

Conducting a Risk Assessment

Assessing biodiversity risks complements the regulatory and economic aspects of an ESG strategy, giving companies the opportunity to systematically analyze their dependencies on ecosystems and their impacts. This involves a closer look at both the operational profile and the supply chains. According to the CDP Global Biodiversity Report 2023, more than 31% of companies identify supply chain biodiversity risks as material, highlighting the importance of a comprehensive approach.

The process includes several steps: First, the company’s operational footprint is recorded, including land use, habitat changes, resource extraction, and waste disposal. Assessing the supply chain is particularly challenging, as many risks arise in upstream production stages. Here, audits and certification systems are used to create transparency. The Science Based Targets Network recommends mapping value chains to identify hotspots for biodiversity impact and dependency.

Companies use specialized tools to identify and visualize risks—in the form of maps, diagrams, or tables. This systematic analysis helps make risks not only visible but also measurable, enabling targeted management.

Tools and Frameworks for Assessment

Numerous digital tools and frameworks are available for assessing biodiversity risks. The Integrated Biodiversity Assessment Tool (IBAT), for example, provides data from global databases such as the IUCN Red List, the World Database on Protected Areas, and key biodiversity areas. The WWF Biodiversity Risk Filter offers global risk assessments for land and marine areas and identifies locations near biodiversity hotspots.

Another useful tool is the Biodiversity Impact Assessment Framework (BIAF), developed by The Biodiversity Consultancy in collaboration with WWF Switzerland. It quantifies the impact of investments using the BECS framework and is particularly suitable for pre-investment assessments. ISS ESG also offers a tool that evaluates dependencies on ecosystem services and enables portfolio comparisons for around 17,000 issuers (ISS ESG Biodiversity Tool).

Life Cycle Assessments (LCAs) are also an important tool for analyzing the environmental impact of a product throughout its entire life cycle. However, given the complexity of biodiversity, they often reach their limits. Thomas White, co-lead of a related study, emphasizes:

"LCAs can be very powerful tools for understanding impacts on biodiversity, but without careful navigation, these uncertainties can lead to misinformed decisions, misallocated resources, and ineffective biodiversity strategies."

Once specific risks have been identified, their significance is assessed in the context of financial and impact materiality.

Materiality and Double Materiality Analysis

The materiality analysis aims to determine whether biodiversity is material for the company. As part of double materiality, as required by the CSRD, both financial and ecological impacts are considered to uncover biodiversity-related risks and opportunities. The GRI Biodiversity Standard also guides companies in identifying material biodiversity topics for disclosure.

The CSRD requires companies to check whether their sites are close to biodiversity-sensitive areas. Industries heavily dependent on natural resources or affected by deforestation generally have higher materiality. For example, the food and agriculture sector faces particularly high biodiversity risks due to land conversion and pesticide use.

For a sound analysis, companies should group subtopics to better understand cause-and-effect relationships. It is also important to apply fixed criteria for evaluating the size, scope, and reversibility of impacts. Thijs IJsbrandij, Senior Manager Nature Strategy at PwC Netherlands, points out:

"Few organisations have a complete quantitative overview over their biodiversity footprint."

Steps to Integrate Biodiversity into Your ESG Strategy

Step-by-Step Integration Guide

Start by raising awareness at the leadership level about the importance of biodiversity risks and opportunities. John Haugen, Principal & Client Director at Third Partners, sums it up:

"Biodiversity is critical to ESG strategy"

A helpful tool is the LEAP Assessment from the TNFD. This allows you to systematically capture biodiversity impacts, risks, and opportunities. Supplement this analysis by collecting biodiversity data from your suppliers. A standardized survey portal can provide valuable support here to gain a complete overview. The CDP Biodiversity Questionnaire is one such resource for supplier engagement and disclosure.

It’s important not to wait for perfect data before taking action. Wijnand Broer, Program Manager at PBAF, emphasizes:

"Biodiversity and climate are two sides of the same coin - they are not separate issues. 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"

These first steps lay the foundation for setting concrete, measurable goals.

Goal Setting and Implementation of Measures

After raising awareness and collecting data, it’s time to formulate clear goals and put measures into practice. The EU Taxonomy Regulation provides guidance for assessing the ecological sustainability of economic activities. Analyze what share of your revenues, expenses, and operating costs meet these criteria, and communicate the results. The Science Based Targets Network offers methodologies for setting science-based biodiversity targets aligned with planetary boundaries.

The Corporate Sustainability Reporting Directive (CSRD) requires large companies—those with more than 250 employees, over €40 million in revenue, or assets exceeding €20 million—to disclose their ESG factors. For example, Siemens Healthineers has defined SBTi targets to achieve carbon neutrality by 2030. Such approaches can also be applied to biodiversity goals by developing specific and measurable targets for issues such as land use, ecosystem services, or species diversity.

The German Supply Chain Due Diligence Act also requires companies to ensure human rights and environmental standards in their supply chains. This includes systematically identifying, preventing, and mitigating risks that could cause environmental damage or human rights violations. The German Federal Ministry for Economic Cooperation and Development provides guidance for compliance.

Collaboration with Stakeholders

Once clear goals are set, the next step is to involve all relevant stakeholders. Integrating biodiversity into ESG strategies can only succeed through collaboration with internal teams, suppliers, local communities, landowners, land users, and representatives from various economic sectors. Open dialogue between these groups—such as between farmers, conservationists, and authorities—is crucial for developing new approaches and strengthening cooperation. The UN Convention on Biological Diversity emphasizes multi-stakeholder engagement as a key success factor for biodiversity action.

A successful example of stakeholder engagement is the update of Germany’s National Biodiversity Strategy in 2020. The Federal Ministry for the Environment conducted qualitative interviews with 33 experts and a stakeholder workshop with 91 participants. Stakeholders from agriculture, forestry, marine and coastal areas, business, and urban development were involved.

Successful collaboration also requires directly addressing landowners and land users. Formats such as round tables, joint projects, or forest walks can be helpful. An innovative approach is local Green Deals, where all stakeholders contractually implement biodiversity-friendly measures.

Stina Warnstam Drolet, Head of Sustainability and Consulting at Oxford Analytica, also sees economic potential in integrating biodiversity:

"It's an opportunity to attract investment. It's an opportunity to attract employees and customers. It's an opportunity to target new markets. I think, increasingly, companies will see it in that light"

Tools, Metrics, and Practical Examples for Implementation

Key Tools and Metrics for Biodiversity Management

To successfully implement biodiversity management, precise metrics are needed to capture the impact of investments on nature. A common stumbling block for private investors is the lack of reliable data, which prevents them from investing in projects aimed at strengthening natural capital. According to The Nature Conservancy, standardizing biodiversity metrics is crucial for scaling up nature-positive investments.

The available tools can be divided into three main categories:

• Sector Screening: With ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure), sector-specific risks can be identified.
• Site Screening: Tools such as IBAT (Integrated Biodiversity Assessment Tool) and NBM (Nature and Biodiversity Metrics) help map geographic biodiversity risks and hotspots in business operations and supply chains.
• Assessment of Dependencies and Impacts: This includes specialized tools such as BFFI, BIAT, BIA-GBS, CBF, GBSFI, and GID.

Peter Giger emphasizes:

“Companies should develop metrics that assess the value of nature for their business and put these at the center of their decisions.”

For example, companies can measure water consumption in sensitive areas, affected species on the IUCN Red List, or the land area used, and make this data transparent. After selecting suitable tools, benchmarking approaches and best practices provide guidance on how to use these metrics effectively. The Business for Nature coalition offers case studies and benchmarking resources for companies starting their biodiversity journey.

Benchmarking and Best Practices

The “Guide on Biodiversity Measurement Approaches,” now in its third edition, provides practical methods for measuring interactions with biodiversity (Biodiversity Metrics).

The TNFD Framework (Taskforce on Nature-related Financial Disclosures) offers a clear structure for biodiversity reporting. It is based on four pillars: governance, strategy, risk and impact management, and metrics and targets. This framework is aligned with the TCFD and ISSB reporting standards, enabling companies to report in a standardized way.

A vivid example of regulatory requirements is the UK Environment Act 2021. It requires land use and development projects to achieve at least a 10% biodiversity net gain—measured using Metric 4.0.

Numerous examples show how these concepts can be implemented in practice.

Real-World Practical Examples

Several German companies have successfully integrated biodiversity aspects into their ESG strategies:

• Siemens AG invested over €650 million in CO₂ reduction measures and has reduced emissions by 46% since announcing its climate neutrality goal. In addition, the company sources 77% of its electricity from renewable energy (Siemens Press Release).
• The Mercedes-Benz Group achieved CO₂ neutrality at its vehicle production sites in 2022 and plans to reduce water consumption by 33% by 2030 compared to 2018. Strict standards for suppliers are intended to ensure that their supply chains are free from illegal deforestation (Mercedes-Benz Sustainability).
• Lidl reduced Scope 2 emissions by 97.4% by switching to green electricity. The company also offsets CO₂ emissions from certain products through investments in wind power and reforestation projects (Lidl Sustainability).

There are also inspiring international approaches:

• International Paper integrates ecological principles into land management by educating forest owners about bird protection practices (International Paper Biodiversity).
• Sodexo plans to make a third of its meals plant-based by 2025 (Sodexo Press Release).
• Google has developed the Earth Engine, a geospatial platform for better monitoring and managing ecosystems.

Another example from the financial sector: Four French institutions—AXA Investment Managers, BNP Paribas Asset Management, Mirova, and Sycomore Asset Management—are calling on ESG data providers to develop a tool that measures the impact of investments on biodiversity (Responsible Investor). Robert-Alexandre Poujade, ESG Analyst at BNP Paribas AM, puts it succinctly:

“We want to be able to differentiate between companies based on biodiversity criteria.”

These examples show that consistent integration of biodiversity goals can deliver not only measurable results but also economic benefits. With the right tools, clear metrics, and determined implementation, companies can achieve their goals while meeting regulatory requirements.

Meeting Regulatory Requirements and Leveraging Consulting Support

Key Regulatory Requirements

EU legislation forms the framework for German ESG strategies. The Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy Regulation are particularly in focus. These expand reporting obligations and will include small and medium-sized enterprises from 2026 onwards.

The German Supply Chain Due Diligence Act already requires companies to identify biodiversity risks in their supply chains and disclose them based on the principle of double materiality.

Additionally, the EU Deforestation Regulation (EUDR) tightens requirements. Its goal is to ensure that products consumed in the EU do not contribute to global deforestation. Companies must conduct risk analyses, collect geospatial data, and submit due diligence statements. Violations can result in fines of at least 4% of annual turnover (Euractiv).

The EU Nature Restoration Law sets binding targets for ecosystem restoration. Non-compliance can lead to legal consequences. In light of these requirements, the use of digital solutions is unavoidable.

Preparing for Regulatory Changes

The complexity of the EUDR shows that digital solutions are essential. Klaus Wiesen, supply chain expert, explains:

“Given the complexity, it’s clear that software is a must for implementation. This already applies to the LkSG, but even more so for the EUDR—digital tools are indispensable for implementation."

Companies should first identify all products covered by the EUDR and fully map their supply chains. The regulation covers raw materials such as timber, palm oil, coffee, cocoa, cattle, soy, and rubber, as well as their derivatives. It distinguishes between “operators” (companies placing products on the EU market for the first time) and “traders” (companies making products available on the EU market), which entails different obligations (European Bioplastics).

In Germany, the Federal Office for Agriculture and Food (BLE) is responsible for implementing the EUDR. Companies must collect geospatial and temporal data for production or harvest and conduct plausibility checks. Automated assessments help identify compliance risks with the EUDR and local regulations.

A solid roadmap should include plans for supplier engagement and IT solutions to ensure full compliance. The EU will also introduce a benchmarking system that classifies countries by risk level. To efficiently meet these requirements, specialized consulting can provide valuable support.

How Consulting Supports Your Biodiversity Strategy

Expert consulting makes it easier to comply with complex ecological regulations. Consultants develop industry-specific solutions to strategically implement ecological requirements. Compliance is crucial for the success of a comprehensive biodiversity strategy.

Fiegenbaum Solutions offers companies specialized support in integrating biodiversity aspects into their ESG strategies. Consulting includes tailored solutions for CSRD and EU Taxonomy compliance as well as life cycle assessments (LCA) that make biodiversity impacts measurable.

Consultants continuously monitor legal changes and technical developments worldwide. They design concepts for implementing environmental requirements based on current and future laws, regulations, and standards. Services include environmental compliance, ESG consulting, process planning, and market analysis. Consultants can also act as external environmental officers in areas such as waste management, water protection, or hazardous goods management.

Success stories demonstrate the effectiveness of professional consulting: AFRY developed a biodiversity action plan for a European steel producer, including risk analyses, individual strategies, and alignment with responsible steel standards. For E.ON, AFRY assessed biodiversity risks in business operations and among suppliers and derived risk mitigation measures. The Nefco, the Nordic Green Bank, commissioned AFRY with a biodiversity pilot program to test best practices for small and medium-sized enterprises and meet growing biodiversity protection requirements.

Conclusion: Actively Addressing Biodiversity as an ESG Priority

As highlighted in the previous sections, biodiversity should be a central part of every ESG strategy. Globally, more than $58 trillion in GDP and over half the market value of publicly traded companies depend on it (WEF New Nature Economy Report).

Every year, biodiversity delivers around $500 billion in economic value—through essential ecosystem services such as water purification, disease regulation, and carbon sequestration (CBD Biodiversity Values). At the same time, the world has lost about 70% of its biomass over the past 50 years due to deforestation and industrial agriculture (WWF Living Planet Report).

A clear competitive advantage through action. Piia Pessala, Managing Director for Biodiversity at Sweco, emphasizes:

“Nature-positive business models could generate up to €10 trillion in new value, and integrating biodiversity and climate strategies could create 395 million jobs by 2030.”

Companies that put biodiversity at the core of their strategy can secure long-term advantages and sustainable value. According to McKinsey, integrating biodiversity into business models also helps mitigate regulatory, reputational, and operational risks.

The strategies and tools presented in this article provide a solid foundation for implementation. While assessing biodiversity is more complex than measuring CO₂ emissions, the necessary prerequisites are already in place. The TNFD and SBTN frameworks, for example, offer actionable guidance for companies at every stage of their biodiversity journey.

A look at Tesla shows the risks that can arise when biodiversity and resource issues are not sufficiently considered. The Gigafactory in Brandenburg caused production delays due to high water consumption in an already water-scarce region. The resulting costs amounted to $6 billion (Reuters). This example clearly demonstrates that ignoring biodiversity risks can have significant financial consequences.

German companies now face a pivotal decision: either act as pioneers or merely respond to regulatory pressure. Those who act early can use biodiversity as a strategic lever—to minimize risks, increase value creation, and ensure the long-term success of their business model.

FAQs

How can companies integrate biodiversity into their ESG strategy to meet legal requirements and leverage economic opportunities?

Companies can successfully embed biodiversity into their ESG strategy by first systematically analyzing risks and opportunities. There are tools and methods available to help you assess impacts on ecosystems and identify key areas for action. The TNFD LEAP approach and SBTN guidance are leading frameworks for this process.

It is crucial to define clear, measurable goals that are closely linked to your corporate strategy. These goals should comply with the CSRD and other regulatory requirements. In the long term, this will improve your risk management, strengthen stakeholder relationships, and enable you to develop sustainable business models that are future-proof.

When biodiversity is integrated into your reporting and operational processes, you not only meet legal requirements but can also gain a competitive edge and significantly expand your market position.

Which tools and approaches are best suited to assess and sustainably manage biodiversity risks?

Today, companies have access to a wide range of digital tools and approaches to systematically analyze and manage biodiversity risks. Established solutions include IBAT (Integrated Biodiversity Assessment Tool), which is based on globally recognized biodiversity data and enables rapid risk analysis. The WWF Biodiversity Risk Filter is also helpful, specifically developed to assess and manage biodiversity-related risks.

In Germany, the federal government offers its own Biodiversity Assessment Toolkit to help companies integrate biodiversity criteria into their strategies. In addition, geodata, satellite imagery, and monitoring technologies can be used to identify and monitor risks even more precisely. With these tools, companies can not only meet regulatory requirements but also make a sustainable contribution and create long-term value.

How can companies meet the biodiversity goals of the EU Taxonomy and strengthen their competitiveness at the same time?

To achieve the biodiversity goals of the EU Taxonomy while remaining competitive, a strategic and structured approach is essential. First, analyze how your business activities impact the environment and ensure they comply with EU standards. Next, it makes sense to measure key indicators such as revenue, operating expenses, and investment costs—in line with the requirements of the taxonomy. Finally, it is advisable to firmly integrate biodiversity aspects into your corporate strategy to reduce risks and unlock new opportunities.

It is equally important to continuously monitor regulatory requirements and adapt your reporting accordingly. Actively communicate your biodiversity measures to build stakeholder trust and position your brand positively. This approach enables you not only to meet legal requirements but also to achieve long-term growth and succeed in the market.