Introduction For years, climate change has dominated corporate sustainability agendas. However, biodiversity loss is emerging as an equally urgent crisis—one that poses significant risks to businesses, ecosystems, and economies. The Taskforce on Nature-related Financial Disclosures (TNFD) and the European Sustainability Reporting Standards (ESRS) E4 on biodiversity are reshaping how companies assess, disclose, and act on nature-related risks.
This article explores why biodiversity is becoming the “new climate” in corporate sustainability, what TNFD and ESRS E4 require, and how businesses can prepare for compliance, resilience, and leadership.
Why Biodiversity Matters for Business Biodiversity—the variety of life on Earth—supports essential ecosystem services like clean water, pollination, soil fertility, and climate regulation. According to the World Economic Forum, over half of global GDP (≥44 trillion) is moderately or highly dependent on nature. Yet, species extinction rates are 100 to 1,000 times higher than natural levels due to human activity.
Why Biodiversity Loss is a Business Crisis ?
Companies face three key risks from biodiversity loss:
- Physical Risks – Supply chain disruptions (e.g., deforestation affecting agriculture).
- Regulatory Risks – Stricter laws (e.g., EU Deforestation Regulation).
- Reputational Risks – Consumer and investor backlash against nature-negative practices.
Ignoring these risks can lead to financial losses, stranded assets, and increased cost of capital. According to a Harvard Business School (HBS) study, firms with strong environmental performance can benefit from lower financing costs and greater investor trust. Conversely, proactive biodiversity management can unlock opportunities in sustainable sourcing, green product innovation, and access to ESG-linked financing.
Business Case : Kering and Biodiversity Accounting Luxury group Kering has integrated biodiversity into its Environmental Profit and Loss (EP&L) account, measuring land-use change, water use, and ecosystem degradation across its supply chain. This enables risk quantification and transparent reporting, setting a benchmark for apparel and luxury sectors.
TNFD: A Framework for Nature-Related Disclosures Launched in 2023, the TNFD provides a voluntary framework for companies to assess and disclose nature-related risks and opportunities. Modeled after the Task Force on Climate-related Financial Disclosures (TCFD), TNFD helps businesses integrate biodiversity into financial decision-making.
Key Components of TNFD:
- LEAP Approach – A four-step process:
- Locate interactions with nature.
- Evaluate dependencies and impacts.
- Assess risks and opportunities.
- Prepare responses and disclosures.
- Disclosure Recommendations – Governance, strategy, risk management, and metrics/targets.
- Alignment with Global Standards – Works alongside Science-Based Targets for Nature (SBTN), CSRD/ESRS, and the Global Biodiversity Framework.
TNFD Explained: A Framework for Nature-Positive Reporting ? While voluntary, TNFD is already shaping investor expectations and regulatory thinking. Early adopters, especially in finance, agribusiness, apparel, and extractives, are positioning themselves ahead of future mandates.
ESRS E4 Compliance: What EU Companies Must Disclose on Biodiversity ?
ESRS E4: Mandatory Biodiversity Reporting in the EU Under the Corporate Sustainability Reporting Directive (CSRD), the ESRS E4 standard mandates detailed biodiversity disclosures for 11,000+ EU companies starting in 2024, with first reports due in 2025.
Key Requirements of ESRS E4:
- Impact & Dependency Assessments – Companies must disclose their biodiversity footprint across operations and supply chains.
- Policy & Targets – Must define clear biodiversity policies and science-based targets (e.g., no net loss of natural habitats).
- Site-Level Reporting – Specific data on impacts in high-risk ecosystems (e.g., deforestation, marine habitats).
- Value Chain Accountability – Extends to suppliers, especially in high-impact sectors like food, textiles, and mining.
Enforcement & Penalties Non-compliance varies by EU member state but may result in regulatory fines, investor divestment, and reputational damage. As ESG scrutiny intensifies, biodiversity omissions could also lead to exclusion from sustainable investment indices.
Side-by-Side: TNFD vs. ESRS E4
| Feature | TNFD | ESRS E4 |
| Nature | Voluntary | Mandatory in EU |
| Applies To | All companies (globally) | EU large & listed companies |
| Start Date | 2023 (framework launched) | 2024 (reporting starts) |
| Focus | Risk/opportunity integration | Regulatory disclosure compliance |
| Stakeholders | Investors, regulators | EU regulators, investors |
| Framework | LEAP, aligned with SBTN | CSRD-aligned standards |
Challenges: Biodiversity Data and Disclosure Tools Biodiversity data remains fragmented. Companies often lack geospatial or ecological insights needed for disclosure. Tools like ENCORE (Natural Capital Finance Alliance), IBAT (Integrated Biodiversity Assessment Tool), and the Global Biodiversity Score (by CDC Biodiversité) offer scalable solutions.
Role of Indigenous and Local Communities Both TNFD and ESRS emphasize engagement with Indigenous Peoples and Local Communities (IPLCs), who are often stewards of high-biodiversity areas. Respecting Indigenous rights is not only ethical but strategic, helping companies maintain social license to operate.
How Companies Can Prepare
- Conduct a Biodiversity Baseline Assessment
- Map biodiversity impacts across operations and supply chains.
- Use ENCORE or Global Biodiversity Score tools.
- Align Early with TNFD & ESRS E4
- Pilot TNFD’s LEAP approach.
- Integrate ESRS E4 metrics into sustainability and ESG reporting.
- Set Science-Based Targets
- Adopt SBTN or Nature Action 100 targets.
- Aim for net-positive biodiversity outcomes.
- Engage Stakeholders Transparently
- Collaborate with suppliers, NGOs, IPLCs, and ESG investors.
- Disclose TNFD-aligned biodiversity data alongside climate reports.
Conclusion: Biodiversity as a Strategic Priority Biodiversity is no longer just an environmental issue—it is a core business imperative. With TNFD setting global disclosure norms and ESRS E4 introducing legal obligations in the EU, companies must act now.
Those who lead in biodiversity stewardship will not only comply with regulation but also:
- Future-proof their operations
- Attract ESG-focused capital
- Enhance brand value
- Contribute to planetary resilience
- The message is clear: Biodiversity is the new climate, and the time to act is now.
- References
- World Economic Forum (2020). “Nature Risk Rising Report. “http://🔗 https://www.weforum.org/reports/nature-risk-rising-why-the-crisis-engulfing-nature-matters-for-business-and-the-economy
- Taskforce on Nature-related Financial Disclosures (TNFD), 2023 Framework. https://tnfd.global/
- European Financial Reporting Advisory Group (EFRAG), ESRS E4 Final Draft, 2023.
- Harvard Business School (2021). “Corporate Environmental Performance and the Cost of Capital.”
- Kering EP&L Report, 2022.
- Science-Based Targets Network (SBTN).
- Natural Capital Finance Alliance, ENCORE Tool.
- CDC Biodiversité, Global Biodiversity Score Methodology.
- Integrated Biodiversity Assessment Tool (IBAT).
- Nature Action 100 Investor Coalition.
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