Biodiversity & Ecosystems

This standard outlines disclosure requirements concerning the company’s connection to terrestrial¹, freshwater, and marine habitats, ecosystems², and species. This includes biodiversity³ within and between species, across ecosystems, as well as their interactions with indigenous people and other affected communities.

The purpose of this standard is to help users understand:

1. how the company impacts biodiversity and ecosystems, including significant positive and negative effects, actual and potential impacts, and its contribution to biodiversity loss or degradation;

2. actions taken to prevent or reduce significant negative impacts, restore and protect biodiversity and ecosystems, and address risks and opportunities, along with the outcomes of those actions;

3. the company’s plans and ability to adjust its strategy and business model to:

   1. respect planetary boundaries related to biosphere⁴ integrity and land-system changes;

   2. align with the Kunming-Montreal Global Biodiversity Framework and its goals and targets;

   3. reflect key aspects of the EU Biodiversity Strategy for 2030;

   4. comply with the EU Birds and Habitats directives; and

   5. follow the Marine Strategy Framework directive.

4. the nature, scope, and scale of material risks, dependencies, and opportunities tied to biodiversity and ecosystems, and how they are managed; and

5. the financial impacts of these risks and opportunities on the company over the short, medium, and long term.

The disclosure requirements for this standard are described below.

(Expand each chapter to view more details)

CH 1. Strategy

DR E4-1 : Transition plan and consideration of biodiversity and ecosystems in strategy and business model

This disclosure requirement requires a company to disclose how its IROs and dependencies related to biodiversity and ecosystems influence and lead to changes in its strategy and business model. This provides an understanding of how resilient the company’s strategy and business model are regarding biodiversity and ecosystems, and how well they align with relevant local, national, and global public policy targets related to biodiversity and ecosystems.

The company should describe the resilience of its strategy and business model regarding biodiversity and ecosystems. This description should include:

1. an assessment of how resilient the current business model and strategy are to biodiversity and ecosystem-related physical, transition, and systemic risks⁵;

2. the scope of the resilience analysis, covering the company’s operations and its upstream and downstream value chain, as well as the risks considered;

3. the key assumptions made;

4. the time horizons used;

5. the results of the resilience analysis; and

6. the involvement of stakeholders, including, when relevant, holders of indigenous and local knowledge.

If this information is already disclosed in ESRS 2 SBM-3, the company may refer to the disclosure in that section.

The company may disclose its transition plan to improve and ultimately align its business model and strategy with the vision of the Kunming-Montreal Global Biodiversity Framework, its relevant goals and targets, the EU Biodiversity Strategy for 2030, and to respect planetary boundaries related to biosphere integrity and land-system change.

If the company discloses a transition plan, it may:

1. explain how it will adjust its strategy and business model to align with relevant local, national, and global public policy goals related to biodiversity, including the Kunming-Montreal Global Biodiversity Framework, the EU Biodiversity Strategy for 2030, and the EU Birds and Habitats Directives, as well as planetary boundaries for biosphere integrity and land-system change;

2. include information about its own operations and explain how it is addressing material impacts in its upstream and downstream value chain, as identified in its materiality assessment;

3. describe how its strategy interacts with the transition plan;

4. explain how it is addressing drivers of biodiversity and ecosystem impacts and outline mitigation actions, considering the mitigation hierarchy and any path-dependencies or locked-in assets linked to biodiversity change;

5. explain and quantify investments supporting the transition plan, referencing key performance indicators of taxonomy-aligned CapEx, and, where relevant, disclose CapEx plans according to the EU’s regulations;

6. if it has economic activities covered by biodiversity regulations under the Taxonomy Regulation, explain any plans to align those activities with the criteria set in that regulation;

7. explain the role of biodiversity offsets in the transition plan, including where they will be used, how much will be used in relation to the overall plan, and whether the mitigation hierarchy was considered;

8. explain how the transition plan’s implementation and updates are managed;

9. explain how progress will be measured, including the metrics and methodologies used;

10. indicate whether the administrative, management, and supervisory bodies have approved the transition plan;

11. indicate current challenges and limitations in drafting the plan for areas of significant impact and how the company is addressing these challenges.

A company that chooses to disclose a transition plan may refer to the following targets from the EU Biodiversity Strategy for 2030:

1. reversing the decline of pollinators;

2. reducing the risk and use of chemical pesticides by 50%, and cutting the use of more hazardous pesticides by 50%;

3. ensuring at least 25% of agricultural land is under organic farming management, and significantly increasing the use of agro-ecological practices;

4. planting three billion additional trees in the EU, following ecological principles;

5. making significant progress in remediating contaminated soil sites;

6. restoring at least 25,000 km of free-flowing rivers;

7. reducing nutrient losses from fertilisers by 50%, leading to at least a 20% reduction in fertiliser use;

8. substantially reducing negative impacts on sensitive species and habitats, including the seabed, due to fishing and extraction activities, to achieve good environmental status.

If disclosing a transition plan, the company may also refer to the Sustainable Development Goals, particularly:

• SDG 2 - End hunger, achieve food security, improve nutrition, and promote sustainable agriculture.

• SDG 6 - Ensure availability and sustainable management of water and sanitation for all.

• SDG 14 - Conserve and sustainably use the oceans, seas, and marine resources for sustainable development.

• SDG 15 - Protect, restore, and promote the sustainable use of terrestrial ecosystems, manage forests sustainably, combat desertification, halt and reverse land degradation, and stop biodiversity loss.

DR related to ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model

The company should disclose:

1. a list of material sites in its operations, including those under its operational control. The company should disclose these locations by:

   1. identifying activities that negatively affect biodiversity-sensitive areas;

   2. breaking down sites according to the identified impacts and dependencies, and the ecological status of the areas (referencing the specific ecosystem baseline level);

   3. specifying the impacted biodiversity-sensitive areas, allowing users to determine the location and the responsible authority for the activities;

2. whether it has identified material negative impacts related to land degradation, desertification, or soil sealing;

3. whether its operations affect threatened species.

CH 2. Impact, risk and opportunity management

DR related to ESRS 2 IRO-1 : Description of processes to identify and assess material biodiversity and ecosystem-related impacts, risks and opportunities

The materiality assessment under ESRS E4 includes the company’s:

1. contribution to direct impact drivers of biodiversity loss, such as:

   1. climate change,

   2. land-use change (e.g., land artificialization), freshwater-use change, and sea-use change,

   3. direct exploitation,

   4. invasive alien species,

   5. pollution,

   6. others;

2. impacts on the state of species e.g., species population size, global extinction risk;

3. impacts on the extent and condition of ecosystems, including through land degradation, desertification, and soil sealing; and

4. impacts and dependencies on ecosystem services.

The description of the process for identifying material IROs and dependencies should include whether and how the company:

1. identified and assessed actual and potential impacts on biodiversity and ecosystems at its own sites and in the upstream and downstream value chain, including the criteria applied;

2. identified and assessed dependencies on biodiversity, ecosystems, and their services at its own sites and in the value chain, including the criteria applied, and whether this assessment includes disrupted or likely disrupted ecosystem services;

3. identified and assessed transition and physical risks and opportunities related to biodiversity and ecosystems, based on its impacts and dependencies, including the criteria applied;

4. considered systemic risks;

5. consulted with affected communities on sustainability assessments of shared biological resources and ecosystems, specifically:

   1. when a site or raw material production is likely to negatively impact biodiversity and ecosystems, identifying the specific sites or raw materials with negative or potentially negative impacts on affected communities;

   2. when affected communities are likely to be impacted, disclosing how these communities were involved in the materiality assessment;

   3. regarding impacts on ecosystem services that affect communities in its own operations, explaining how negative impacts may be avoided, and if unavoidable, disclosing plans to minimize them and implement mitigation measures to maintain the value and functionality of priority services.

The company may disclose whether and how it has used biodiversity and ecosystems scenario analysis⁶ to help identify and assess material risks and opportunities over short, medium, and long-term time horizons. If the company has used such analysis, it may disclose the following information:

1. the reasons for selecting the considered scenarios;

2. how the scenarios are updated based on evolving conditions and emerging trends;

3. whether the scenarios are informed by expectations published by authoritative intergovernmental bodies, such as the Convention for Biological Diversity, and, where relevant, by scientific consensus, like that from the Intergovernmental Science-policy Platform on Biodiversity and Ecosystem Services (IPBES).

The company should specifically disclose whether it has sites located in or near biodiversity-sensitive areas, and whether activities related to these sites negatively affect these areas by causing the deterioration of natural habitats, habitats of species, or disturbing the species for which the area is protected.

When assessing the materiality of impacts, dependencies, risks, and opportunities, the company should consider the provisions in ESRS 2 IRO-1 and ESRS 1 chapter 3 on double materiality as the basis for sustainability disclosures, and describe its considerations.

The company should assess the materiality of biodiversity and ecosystems in its own operations and its upstream and downstream value chain. It may conduct this assessment following the first three phases of the leap approach i.e. 

• locate where in the company’s operations and along its value chain the interface with nature occurs (phase 1);

• evaluate dependencies and impacts (phase 2);

• assess the material risks and opportunities (phase 3);

• prepare and report the results of the materiality assessment (phase 4).

Phase 1 involves identifying relevant sites where the company interacts with biodiversity and ecosystems. To do this, the company may:

1. create a list of locations for direct assets, operations, and the upstream and downstream value chain related to its business activities. It may also include sites where future operations have been formally announced;

2. list the biomes and ecosystems it interacts with based on the identified locations;

3. assess the current integrity and importance of biodiversity and ecosystems at each location;

4. identify locations where the company interacts with biodiversity-sensitive areas;

5. determine which sectors, business units, value chains, or asset classes are engaging with biodiversity and ecosystems at these material sites. Instead of identifying these interfaces per site, the company may choose to list them by raw material procured or sold by weight in tons if this provides greater transparency.

In phase 2, to evaluate its actual or potential impacts and dependencies on biodiversity and ecosystems for relevant sites, the company may:

1. identify business processes and activities that interact with biodiversity and ecosystems;

2. identify actual and potential impacts and dependencies;

3. indicate:

   1. the size, scale, frequency, and timeframe of the impacts on biodiversity and ecosystems;

   2. the percentage of its suppliers’ facilities located in risk-prone areas e.g., areas with threatened species listed on the IUCN Red List, Birds and Habitats Directive, national threatened species lists, protected areas, the Natura 2000 network, or Key Biodiversity Areas;

   3. the percentage of its procurement spend with suppliers whose facilities are located in these risk-prone areas;

4. indicate the size and scale of its dependencies on biodiversity and ecosystems, including raw materials, natural resources, and ecosystem services. The company may use international classifications like the Common International Classification of Ecosystem Services (CICES) to support this.

In phase 3, to assess its material risks and opportunities based on the results of phases 1 and 2, the company may consider the following categories:

1. Physical risks:

   1. acute risks such as natural disasters worsened by loss of coastal protection from ecosystems, leading to higher storm damage costs, disease or pests affecting crops, species loss, and ecosystem degradation;

   2. chronic risks such as reduced crop yield due to loss of pollination services, scarcity or variability of key natural inputs, ecosystem degradation like coastal erosion, forest fragmentation, soil loss, and species loss;

2. Transition risks:

   1. policy and legal risks such as changes in regulations (e.g., increased land protection) or exposure to sanctions and litigation (e.g., pollution or violating biodiversity-related rights);

   2. technology: changes like transitioning to more efficient or less impactful technologies, lack of access to data, or new monitoring technologies (e.g., satellites);

   3. market: shifts in supply, demand, or costs of raw materials, especially those tied to biodiversity, or increased costs due to ecosystem degradation;

   4. reputation: shifts in societal, customer, or community perceptions due to the company’s role in biodiversity loss, violations of nature-related rights, or negative media coverage.

3. Systemic risks:

   1. ecosystem collapse risks i.e the risk of a critical natural system failing, such as the collapse of ecosystems leading to widespread losses;

   2. aggregated risk i.e. risks from biodiversity loss affecting multiple sectors, either within the company or across a portfolio;

   3. contagion risks i.e the potential for financial difficulties from companies failing to address biodiversity risks to affect the wider economy.

4. Opportunities:

   1. business performance i.e. enhancements in resource efficiency, product offerings, market access, capital flow, and reputational capital;

   2. sustainability performance i.e. opportunities for ecosystem protection, restoration, regeneration, and sustainable use of natural resources.

DR E4-2 : Policies related to biodiversity and ecosystems

This disclosure requirement aims to provide information on the policies that the company has developed, to identify, assess, manage, and fix its key impacts, dependencies, risks, and opportunities related to biodiversity and ecosystems. These policies may be part of larger environmental or sustainability topics that cover various topics. This information should be inline with information disclosed in ESRS 2 - MDR-P (Policies adopted to manage material sustainability matters).

The company should explain whether and how its biodiversity and ecosystems-related policies:

1. relate to the common sustainability matters of this standard (see first paragraph of the previous section);

2. address its key biodiversity and ecosystem impacts;

3. address key dependencies, physical risks, transition risks and opportunities;

4. support tracking of products, components, and raw materials with significant impacts on biodiversity and ecosystems in the value chain;

5. focus on sourcing or consuming from ecosystems managed to protect or improve biodiversity, with regular monitoring and reporting of biodiversity changes; and

6. consider the social impacts of biodiversity and ecosystem-related effects.

The company should disclose whether it has adopted:

1. a biodiversity and ecosystem protection policy for its operational sites in or near biodiversity-sensitive areas;

2. sustainable land or agriculture practices or policies;

3. sustainable ocean or sea practices or policies; and

4. policies to address deforestation.

The company may also provide information on how its policies addresses the production, sourcing, or consumption of raw materials, specifically how they:

1. limit sourcing from suppliers who cannot prove they are not causing significant harm to protected areas or key biodiversity areas (e.g., through certification);

2. refer to recognized standards or third-party certifications monitored by regulators; and

3. address raw materials from ecosystems managed to protect or improve biodiversity, with regular monitoring and reporting of biodiversity changes.

Additionally, the company may explain how its policies helps it to:

1. avoid negative impacts on biodiversity and ecosystems in its own operations and throughout the value chain;

2. reduce and minimize unavoidable negative impacts on biodiversity and ecosystems in its operations and value chain;

3. restore degraded ecosystems or rehabilitate cleared ecosystems after unavoidable impacts; and

4. mitigate its contribution to major biodiversity loss drivers.

The company may disclose how these policies connect and align with other global goals and agreements, such as SDGs 2, 6, 14, and 15, or any other established global conventions related to biodiversity and ecosystems.

When disclosing how its policies address the social consequences of biodiversity and ecosystem impacts, the company may refer to the Nagoya Protocol and the Convention for Biological Diversity (CBD). It may also provide information on:

1. the fair and equitable sharing of benefits from the use of genetic resources; and

2. the free, prior, and informed consent for access to genetic resources.

When referring to third-party standards of conduct, the company may disclose whether the standard used:

1. is based on a scientific approach, realistic in addressing issues in different practical situations, and achievable;

2. is developed through ongoing consultation with relevant stakeholders, ensuring balanced input from all groups, with no group holding undue authority;

3. encourages continuous improvement, with meaningful targets and milestones to track progress over time;

4. is verifiable through independent bodies with rigorous, conflict-free assessment procedures that follow ISO guidelines or Regulation (EC) No 765/2008; and

5. follows the ISEAL Code of Good Practice.

DR E4-3 : Actions and resources related to biodiversity and ecosystems

The company should disclose its actions related to biodiversity and ecosystems, along with the resources allocated for their implementation. The description of key actions and resources should follow the mandatory content outlined in ESRS 2 - MDR-A (Actions and resources in relation to material sustainability matters).

The company may disclose the following information:

1. a list of key stakeholders involved , e.g., competitors, suppliers, retailers, business partners, affected communities, authorities, government agencies, and how they are involved, highlighting those positively or negatively impacted by the actions, including impacts or benefits for affected communities, smallholders, indigenous peoples, or vulnerable individuals;

2. if applicable, an explanation of the need for consultations and the importance of respecting the decisions of affected communities;

3. a brief assessment of whether the key actions may cause significant negative sustainability impacts;

4. an explanation of whether the key action is a one-time initiative or an ongoing practice;

5. an explanation of whether the key action plan is carried out solely by the company using its own resources or as part of a broader initiative to which the company significantly contributes. If part of a wider initiative, the company may provide more details about the project, its sponsors, and other participants;

6. a description of how the action contributes to system-wide change, particularly in addressing the drivers of biodiversity and ecosystem change, such as through technological, economic, institutional, and social factors, as well as shifts in values and behaviors.

The company:

1. may disclose how it applied the mitigation hierarchy in its actions i.e. avoidance, minimization, restoration/rehabilitation, and compensation or offsets;

2. should disclose whether it used biodiversity offsets in its action plans. If so, it should provide the following information:

   1. the aim of the offset and key performance indicators used;

   2. the financial impact (direct and indirect costs) of biodiversity offsets in monetary terms;

   3. a description of the offsets, including area, type, quality criteria, and the standards the offsets comply with;

3. should describe whether and how it has incorporated local and indigenous knowledge and nature-based solutions into biodiversity and ecosystems-related actions.

The company may link significant monetary amounts of CapEx and OpEx needed to implement the actions taken or planned to:

1. the relevant line items or notes in the financial statements;

2. the key performance indicators required under article 8 of Regulation (EU) 2020/852 and Commission Delegated Regulation (EU) 2021/2178; and

3. if applicable, the CapEx plan required by Commission Delegated Regulation (EU) 2021/2178.

The company may disclose whether it considers an avoidance action plan, which aims to prevent harmful actions before they occur. Avoidance often requires a decision to move away from the usual project development path. An example is modifying a project’s impact on biodiversity and ecosystems to prevent habitat destruction and/or setting aside areas to conserve important biodiversity. Avoidance should at least be considered when there are biodiversity and ecosystem values that are particularly vulnerable, of high stakeholder concern, or where uncertainty about impacts or management effectiveness calls for caution. The three main types of avoidance are:

1. avoidance through site selection i.e. locating the project away from areas with significant biodiversity values;

2. avoidance through project design i.e. arranging infrastructure to protect important biodiversity areas at the site; and

3. avoidance through scheduling i.e. timing activities to align with species behavior patterns or ecosystem functions, such as breeding or migration.

CH 3. Metrics and targets

DR E4-4 : Targets related to biodiversity and ecosystems

The company should disclose the targets it has set to support its biodiversity and ecosystems policies and address its key impacts, dependencies, risks, and opportunities. The description of these targets should follow the mandatory content outlined in ESRS 2 - MDR-T (Tracking effectiveness of policies and actions through targets).

This disclosure should include the following information:

1. whether ecological thresholds and impact allocations to the company were applied when setting targets. If so, the company should specify:

   1. the ecological thresholds identified and the methodology used to determine them;

   2. whether the thresholds are entity-specific, and if so, how they were determined;

   3. how responsibility for respecting the identified ecological thresholds is assigned within the company;

2. whether the targets are informed by, and/or aligned with the Kunming-Montreal Global Biodiversity Framework, relevant parts of the EU Biodiversity Strategy for 2030, and other national biodiversity and ecosystem-related policies and laws;

3. how the targets relate to the biodiversity and ecosystem impacts, dependencies, risks, and opportunities identified by the company in its own operations and across its upstream and downstream value chain;

4. the geographical scope of the targets, if relevant;

5. whether the company used biodiversity offsets when setting its targets; and

6. to which layers of the mitigation hierarchy the target applies i.e., avoidance, minimization, restoration and rehabilitation, compensation, or offsets.

Measurable targets related to biodiversity and ecosystems may be expressed as:

1. the size and location of all habitat areas protected or restored, whether directly or indirectly controlled by the company, and whether the success of the restoration was or is approved by independent external professionals;

2. recreated surfaces (areas where management initiatives are implemented to create a habitat where it did not exist initially); or

3. the number or percentage of projects/sites where ecological integrity was improved (e.g., through the installation of fish passes or wildlife corridors).

DR E4-5 : Impact metrics related to biodiversity and ecosystems change

The company should report metrics related to its material impacts on biodiversity and ecosystems.

If the company has identified sites located in or near biodiversity-sensitive areas that it is negatively affecting, it should disclose the number and area (in hectares) of sites it owns, leases, or manages in or near these protected areas or key biodiversity areas.

If the company has identified material impacts related to land-use change or impacts on the extent and condition of ecosystems, it may also disclose its land-use based on a Life Cycle Assessment.

If the company has concluded that it directly contributes to the impact drivers of land-use change, freshwater-use change, and/or sea-use change, it should report relevant metrics that measure:

1. the conversion over time (e.g., 1 or 5 years) of land cover (e.g., deforestation or mining);

2. changes over time (e.g., 1 or 5 years) in the management of ecosystems (e.g., through intensification of agricultural practices, or the application of better management practices or forestry harvesting);

3. changes in the spatial configuration of the landscape (e.g., fragmentation of habitats, changes in ecosystem connectivity);

4. changes in ecosystem structural connectivity (e.g., habitat permeability based on physical features and arrangements of habitat patches); and

5. functional connectivity (e.g., how well genes or individuals move through land, freshwater, and seascape).

If the company has concluded that it directly contributes to the accidental or voluntary introduction of invasive alien species, it may disclose the metrics it uses to manage the pathways of introduction and spread of these species, as well as the risks posed by them.

If the company has identified material impacts related to the state of species, it may report metrics it deems relevant. It may:

1. refer to relevant disclosure requirements in ESRS E1, ESRS E2, ESRS E3, and ESRS E5;

2. consider population size, range within specific ecosystems, and extinction risk. These factors provide insight into the health of a species’ population and its resilience to both human-induced and natural changes;

3. disclose metrics that measure changes in the number of individuals of a species within a specific area;

4. disclose metrics on species at extinction risk that measure:

   1. the threat status of species and how activities/pressures may affect that status; or

   2. changes in the relevant habitat for a threatened species as a proxy for the organization’s impact on the local population’s extinction risk.

If the company has identified material impacts related to ecosystems, it may disclose:

1. ecosystem extent: metrics that measure the area covered by a particular ecosystem, without necessarily considering the quality of the area, such as habitat cover. For example, forest cover is a measure of the extent of a particular ecosystem type, without factoring in the condition of the ecosystem (e.g., it provides the area but does not describe the species diversity within the forest);

2. ecosystem condition:

   1. metrics that measure the quality of ecosystems relative to a pre-determined reference state;

   2. metrics that measure multiple species within an ecosystem, rather than the number of individuals within a single species, such as scientifically established species richness and abundance indicators that measure the development of native species composition within an ecosystem against the reference state at the beginning of the first reporting period, as well as the targeted state outlined in the Kunming-Montreal Global Biodiversity Framework, or an aggregation of species’ conservation status, if relevant;

   3. metrics that reflect structural components of ecosystem condition, such as habitat connectivity (i.e., how linked habitats are to each other).

When preparing the information required under this disclosure requirement, the company should consider and may describe:

1. the methodologies and metrics used, including an explanation for why they were selected, their assumptions, limitations, and uncertainties, as well as any changes in methodologies over time and the reasons for those changes;

2. the scope of the metrics and methodologies, for example:

   1. the company, site, brand, commodity, corporate business unit, or activity;

   2. aspects covered, as set out in paragraph AR 4;

3. the biodiversity components of the metrics: species-specific, ecosystem-specific;

4. the geographies covered by the methodology, and an explanation of why any relevant geographies were omitted;

5. how the metrics integrate ecological thresholds (e.g., biosphere integrity and land-system change, planetary boundaries) and allocations;

6. the frequency of monitoring, key metrics being monitored, the baseline condition/value, and baseline year/period, as well as the reference period;

7. whether these metrics rely on primary data, secondary data, modelled data, expert judgment, or a mixture of these;

8. an indication of which action is measured and monitored via the metrics, and how they relate to the achievement of targets;

9. whether the metrics are mandatory (required by legislation) or voluntary. If mandatory, the company may indicate the relevant legislation; if voluntary, the company may refer to any voluntary standard or procedure used;

10. whether the metrics are informed by or correspond to expectations or recommendations of relevant and authoritative national, EU-level, or intergovernmental guidelines, policies, legislation, or agreements, such as the Convention for Biological Diversity (CBD) or IPBES.

The company should disclose metrics that are verifiable and technically and scientifically robust, considering the appropriate time scales and geographies. It may also describe how its selected metrics correspond to these criteria. To ensure relevance, there should be a clear relationship between the indicator and the measurement’s purpose. Uncertainties should be minimized as much as possible, and data or mechanisms should be supported by well-established organizations and updated over time. Where data gaps exist, robust modelled data and expert judgment may be used. The methodology should be detailed enough to allow meaningful comparisons of impacts and mitigation activities over time. Information gathering processes and definitions should be consistently applied to enable a meaningful review of the organization’s performance over time and facilitate internal and peer comparisons.

If a metric corresponds to a target, the baseline for both should be aligned. The biodiversity baseline is a crucial part of the broader biodiversity and ecosystems management process. It is essential for informing impact assessments, management planning, as well as monitoring and adaptive management.

Methodologies to collect data and measure the company’s impacts on biodiversity and ecosystems can be divided into three categories:

1. Primary data: This is collected on-site through direct surveys and observations in the field.

2. Secondary data: This includes geospatial data layers that are overlaid with the geographic locations of business activities.

   1. species level: data layers showing the ranges of species can be used to predict the species present at various locations, such as operational or sourcing sites. The accuracy of these layers varies depending on factors like habitat availability. Information about the threat status of species and the activities that threaten them can indicate how business activities may be affecting species populations and their threat status.

   2. ecosystem level: data layers reflecting changes in the extent and condition of ecosystems can be used, including habitat fragmentation and connectivity.

3. Modelled biodiversity state data: Model-based approaches are used to measure ecosystem-level indicators like extent, condition, or function. These models quantify how various pressures impact biodiversity, based on globally collected data. The results of these models are applied locally to estimate the changes in ecosystem condition driven by company-level pressures.

An impact driver typically has three main characteristics:

1. magnitude e.g., amount of contaminant, noise intensity;

2. spatial extent e.g., area of affected land;

3. temporal extent e.g., how long the contaminant persists.

The company may disclose land-use metrics in units of area (e.g., m² or ha) using guidance from the EcoManagement and Audit Scheme (EMAS), including:

1. total land use

2. total sealed area

3. total nature-oriented area on site

4. total nature-oriented area off site

The company may disclose land cover change, which reflects the physical changes in the earth’s surface due to drivers like “habitat modification” and “industrial and domestic activities.” This represents how the physical properties of a specific location are altered, either by human activity or natural processes.

When reporting on impacts related to ecosystems, the company should also look at how ecosystems function, in addition to their size and condition. This can be done by using:

1. a measure that shows how well the ecosystem performs certain functions, like net primary productivity, which tracks how much energy plants store and make available to other species. This is a key function for ecosystems, and although it connects to factors like species diversity, it doesn’t directly measure them;

2. a measure that tracks changes in the population of species that are at risk of extinction.

DR E4-6 : Anticipated financial effects from biodiversity and ecosystem-related risks and opportunities

Finally, the company should disclose its anticipated financial effects of significant biodiversity- and ecosystem-related risks and opportunities. This should be in addition to the details required in ESRS 2 SBM-3.

This disclosure requirement would help users understand:

1. the expected financial impact of material risks linked to biodiversity and ecosystem issues, and how these risks might significantly affect the company’s financial position, performance, and cash flows in the short, medium, and long term; and

2. the expected financial impact of material opportunities related to biodiversity and ecosystems.

The disclosure should include:

1. a monetary estimate of the anticipated financial effects before considering actions related to biodiversity and ecosystems. If quantification is not possible without excessive cost or effort, qualitative information can be provided. For material opportunities, quantification is not required if it would result in information that doesn’t meet the necessary qualitative standards (see ESRS 1 chapter 2). The financial effects can be shown as a single amount or a range;

2. a description of the effects, the impacts and dependencies they are linked to, and the time periods in which they are expected to occur; and

3. the key assumptions used to estimate the financial effects, along with the sources of those assumptions and the level of uncertainty associated with them.

The company may assess which of its products and services are at risk in the short, medium, and long term. It should explain how these risks are defined, how financial impacts are estimated, and outline the key assumptions made in the process.

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Footnotes

1. Terrestrial: any inhabitant of the earth.

2. An ecosystem is a geographic area where plants, animals and other organisms, as well as weather and landscape, work together to form a bubble of life.

3. Biodiversity is the variety of animals, plants, fungi, and even microorganisms like bacteria that make up our natural world.

4. Biosphere is the part of the earth’s environment where life exists.

5. Systemic risk is the risk that a failure within a particular part of a system could trigger a chain reaction, leading to the failure of the entire system.

6. A scenario analysis is a ‘what-if’ analysis of the potential impacts from sustainability-related impacts, risks and assumptions, whereas a resilience analysis builds on this to explain the ‘so what’ i.e. it considers the implications of the analysis for the company’s strategy and its capacity to respond.