In our ongoing blog series on the European Sustainability Reporting Standards (ESRS), today we focus on ESRS E4, which governs reporting on biodiversity and ecosystems. This standard will become increasingly important as the conservation of biodiversity and healthy ecosystems is critical to global sustainability.

What is ESRS E4?

ESRS E4 focuses on companies' disclosure obligations in relation to their impacts on biodiversity and ecosystems. Companies must describe how their activities affect these natural resources, what measures they take to minimize or prevent negative impacts, and how they adapt their strategies to maximize positive effects. The requirements cover reporting on actual and potential positive and negative impacts, measures to prevent and mitigate them, targets and financial impacts.

The role and importance of ESRS E4

Biodiversity and healthy ecosystems are essential for the stability of the global climate and the preservation of habitats. Nearly half of the world's gross domestic product (GDP) depends on biodiversity and intact ecosystems. The loss of these natural resources due to human activities such as climate change, pollution and land use change has far-reaching consequences for the environment and society. ESRS E4 aims to create transparency and encourage companies to adopt sustainable practices to halt biodiversity loss and protect ecosystems.

Disclosure requirements in accordance with ESRS E4

ESRS E4 is divided into various disclosure requirements and application requirements:

Strategy

• E4-1: Transition plan and consideration of biodiversity and ecosystems in strategy and business model
  Companies must disclose the impacts, dependencies, risks and opportunities related to biodiversity and ecosystems arising from their strategy. This includes assessing the resilience of the business model to biodiversity risks and disclosing a transition plan that aligns the company's strategy with international and EU strategies and targets.
• E4-2: Policies related to biodiversity and ecosystems
  Companies must disclose their corporate policies and strategies related to biodiversity and ecosystems. This includes linking biodiversity policies to the key drivers of biodiversity loss, ecosystem management and the traceability of products and raw materials in the value chain.

Management of impacts, risks and opportunities

• E4-3: Measures and resources related to biodiversity and ecosystems
  Companies shall describe measures to achieve biodiversity and ecosystem targets, including biodiversity offsetting measures, financial allocation of investments and application of the mitigation hierarchy.

Parameters and targets

• E4-4: Targets related to biodiversity and ecosystems
  Companies must disclose their targets related to biodiversity and ecosystems, including the application of ecological thresholds and the relationship to impacts and risks.
• E4-5: Impact parameters related to biodiversity and ecosystem change
  Companies must disclose metrics on their material impacts on biodiversity and ecosystems. This includes the number and area of sites in biodiversity-sensitive areas and the use of established data sources to measure these metrics.
• E4-6: Expected financial implications of material risks and opportunities related to biodiversity and ecosystems
  Companies must quantify and present the financial implications of biodiversity and ecosystem-related risks and opportunities.

Synergies with other ESRS topics

The management of biodiversity and ecosystems according to ESRS E4 is closely linked to other sustainability standards, which illustrates the comprehensive nature of the ESRS:

• Environmental standards: ESRS E1 (Climate Change), ESRS E2 (Pollution), ESRS E3 (Water and Marine Resources) and ESRS E5 (Resource Use and Circular Economy) all have points of contact with ESRS E4, as they cover the environmental aspects that have a direct or indirect impact on biodiversity and ecosystems.
• Social standards: ESRS S3 refers to the social impacts of environmental change, including impacts on local communities through biodiversity loss and ecosystem degradation.

Concluding thoughts

By complying with ESRS E4, companies can not only meet regulatory requirements, but also actively contribute to the preservation of biodiversity and healthy ecosystems. This not only strengthens the ecological balance, but also improves the company's long-term sustainability and risk management.

In future posts, we will explore more details on ESRS E4 and its specific requirements to help companies further optimize their reporting and sustainability practices. Stay tuned for deeper insights and practical tips to help you successfully navigate the challenges and opportunities of managing biodiversity and ecosystems