For years, biodiversity was the topic covered in two paragraphs in sustainability reports. CSRD changes that fundamentally. Under ESRS E4, biodiversity is no longer an optional add-on but a structured reporting module with specific data points, measurable KPIs, and external assurance requirements.
For many companies, this is a new challenge: unlike CO2 emissions, which can be measured in tonnes, biodiversity is a complex system of ecosystem services, dependencies, and impacts that is hard to capture in metrics.
This article explains what ESRS E4 requires in practice, how companies should approach it methodologically, and how Dcycle structures the process.
Why biodiversity is not an abstract topic
Companies depend on nature, even when they do not see it. Pharmaceutical companies need genetic diversity for drug research. Food manufacturers rely on pollinators. Construction uses sand, timber, and stone from functioning ecosystems. Financial institutions hold credit risk in portfolios that depend on natural resources.
Biodiversity loss is therefore a systemic economic risk: when ecosystem services disappear, procurement costs rise, yields fall, and regulatory liabilities emerge. The World Economic Forum estimates that more than 50% of global GDP is moderately or highly dependent on nature.
TNFD as a standard for financial institutions: The Taskforce on Nature-related Financial Disclosures (TNFD) framework provides a complementary methodology to CSRD. While ESRS E4 structures reporting obligations for operating companies, TNFD is more oriented towards financial institutions and investors. Companies that implement ESRS E4 well already have most of the building blocks for TNFD-aligned reports.
What ESRS E4 requires from companies
ESRS E4 is structured into six Disclosure Requirements (DR), from strategy to concrete metrics. Companies are not automatically required to report on all data points: the double materiality assessment determines which biodiversity aspects are material for the company.
E4-1: Transition plan for biodiversity and ecosystems Companies must disclose whether and how they have developed a plan to reduce negative impacts on biodiversity. This includes timelines, responsibilities, and the link to corporate strategy.
E4-2: Policies related to biodiversity and ecosystems Which internal policies govern biodiversity management? Are there procurement policies for nature-critical raw materials? How are biodiversity risks included in investment decisions?
E4-3: Actions and resources for biodiversity Concrete measures the company implements: restoration projects, supplier certifications, site optimisations. Including the financial resources allocated.
E4-4: Targets related to biodiversity and ecosystems Measurable targets the company has set for biodiversity and progress against those targets. Links to frameworks such as Science Based Targets for Nature (SBTN) or the Kunming-Montreal Agreement are relevant here.
E4-5: Impact metrics for biodiversity and ecosystems Quantitative indicators on direct and indirect impacts: land use and land use change, water withdrawal in water-sensitive areas, pollutant emissions, invasive species in supply chains.
E4-6: Financial effects What financial risks and opportunities arise from biodiversity loss and nature dependencies? This includes physical risks (crop failures, resource scarcity) and transition risks (regulatory requirements, technology costs).
Materiality determines reporting obligation: Companies do not have to report on all six DRs if the materiality assessment shows that certain aspects are not material. Important: the decision to classify a DR as non-material must itself be documented and justified. A blanket statement of "not relevant" is not sufficient under CSRD.
Double materiality for biodiversity: how it works
The double materiality assessment for ESRS E4 has two dimensions:
Impact materiality: What material impacts does the company have on biodiversity and ecosystems? This includes direct impacts at company sites (sealing, water withdrawal, pollutant inputs) and indirect impacts through the value chain (deforestation by suppliers, land use change in sourcing countries).
Financial materiality: What financial risks and opportunities arise for the company from the loss of biodiversity and ecosystem services? Raw material scarcity, regulatory costs, changing consumer preferences, and reputation risks are included.
Methodologically, EFRAG guidance recommends the LEAP methodology (Locate, Evaluate, Assess, Prepare) for biodiversity assessment: identify sites with high biodiversity relevance, evaluate dependencies and impacts, derive financial materiality, and prepare the reporting structure.
Dcycle guides companies through the double materiality assessment for all ESRS topics, including E4 biodiversity. The platform documents your assessments in an audit-ready way and shows which Disclosure Requirements you must report on.
Request a demoWhat data companies need for ESRS E4
The biggest practical bottleneck in implementing ESRS E4 is data collection. Much of the relevant information is not held in central systems.
Site data: Location of operating sites in relation to protected areas (Natura 2000 sites, IBA bird protection areas, Ramsar wetlands), Key Biodiversity Areas, and water-sensitive zones. GIS data and public database queries are the starting point.
Land use data: How much land does the company use, in what condition, and how has it changed? For companies in agriculture, forestry, or construction, this is a central data point.
Supply chain information: Which raw materials come from nature-critical regions? For sectors such as food, textiles, mining, or wood products, sourcing origin is decisive.
Water withdrawal and discharge: Volume and location of water withdrawal, especially in water-stressed areas. Connection to existing Scope 3 water data or ESRS E3.
Certifications and frameworks: Existing sustainability certifications (FSC, RSPO, Rainforest Alliance) already provide much of the biodiversity information needed and can be included directly in ESRS E4 reporting.
From footprint to positive impact: the handprint
An important shift in ESRS E4 compared with earlier sustainability reports: it is not only about reducing negative impacts, but also about positive contributions to biodiversity.
Companies that actively invest in nature restoration, introduce regenerative sourcing practices, or pursue nature-positive site development can report these measures in a structured way and communicate them as a strategic competitive advantage. The concept of the “handprint”, meaning measurable positive impact, is gaining importance in investor and customer conversations.
The EU Biodiversity Strategy 2030 sets concrete targets: 30% of land and sea areas under protection, restoration of degraded ecosystems, reduction of pesticide use and light pollution. Companies that link these targets to their own measures position themselves as credible actors in the nature-positive transition.
Discover how Dcycle helps you implement ESRS E4 in a structured way: from materiality assessment through data collection to CSRD-compliant reporting.
Book a free demoFrequently asked questions (FAQs)
Does ESRS E4 apply to all CSRD-obligated companies?
ESRS E4 is a topical standard that is generally relevant for all CSRD-obligated companies. Whether a company must report on individual Disclosure Requirements depends on the outcome of the double materiality assessment. Companies with no material impacts on or dependencies from biodiversity can classify certain DRs as non-material. This assessment must however be justified and documented. In practice: companies with sites in or near protected areas, nature-intensive supply chains, or high water consumption almost always have material biodiversity topics.
What is the difference between ESRS E4 and TNFD?
ESRS E4 is the binding EU standard for CSRD-obligated companies with a focus on reporting and disclosure. TNFD (Taskforce on Nature-related Financial Disclosures) is a voluntary framework primarily oriented towards investors and financial institutions and offers a risk-based perspective on nature-related financial risks. Both frameworks use similar concepts, especially the LEAP methodology. An ESRS E4-compliant report provides a substantial part of the information needed for TNFD.
Which quantitative KPIs are required under ESRS E4?
ESRS E4-5 requires metrics on direct impacts classified as material for the company. Typical indicators include: sealed area (in hectares) and land condition by natural state, water withdrawal in water-stressed areas (cubic metres), land use change compared with the base year, share of procurement from high-risk regions for deforestation or species decline. Companies with nature-positive measures can additionally report restoration areas and ecosystem recovery rates.
How do I start a biodiversity assessment if I have no experience?
The most practical starting point is a site analysis: check whether your operating sites are in or near protected areas or Key Biodiversity Areas. Public GIS tools such as the IBAT biodiversity atlas or the EU Natura 2000 viewer support this. In a second step, identify your nature-critical supply chains: which raw materials come from nature-critical regions? Dcycle guides you through this process in a structured way and shows which data points are relevant for your specific business model and sector.
How are ESRS E3 (water) and ESRS E4 (biodiversity) connected?
Water and biodiversity are closely linked: water withdrawal in water-stressed regions is often also a biodiversity risk. ESRS requires coherent reporting across all E standards. In practice, this means water withdrawal data collected for ESRS E3 flows directly into ESRS E4 metrics. Dcycle covers both standards on one platform and prevents duplicate data collection.
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