ESRS E4 Biodiversity and Ecosystems: Sites, Value Chains, Metrics and Transition Plans

Educational material. It does not replace the applicable delegated act, national law, legal advice or an assurance conclusion.

Climate reporting can aggregate several gases into tonnes of CO2 equivalent. Biodiversity has no equivalent universal unit that captures every species, habitat, ecosystem function and dependency. A hectare of converted natural habitat, a decline in a threatened species population and a loss of pollination service are related, but they are not interchangeable.

Revised E4 therefore requires the undertaking to select metrics that are relevant to its material impacts and dependencies. The reporting architecture begins with locations and causal pathways, then uses a coherent set of pressure, state, service and response metrics. The objective is not to maximise the number of indicators; it is to make the material IRO understandable and traceable to management action.

Source anchor: revised ESRS E4 objective and interaction, E4-1 to E4-5 and application requirements; ESRS 2 GDR-P/A/M/T and SBM-3.

The site register should include coordinates, operational boundary, area occupied, surrounding area of influence, land or sea use, water interface, emissions and discharges, protected or biodiversity-sensitive areas, ecosystem type, threatened species information and relevant rights holders or communities. The area of influence may extend beyond the legal property boundary where pollution, water abstraction, fragmentation, noise, light, transport or other pressures affect nearby ecosystems.

Many undertakings have their most significant biodiversity impacts and dependencies upstream. Agriculture, forestry, mining, fisheries, construction materials, chemicals, energy, transport and land-intensive commodities can create impacts far from the reporting entity. The first-year value-chain map may use commodity, country, supplier tier and sector data. It should then prioritise material hotspots for more specific sourcing-region, concession, farm, fishery, mine or processing-site information.

Downstream exposure may also be material where products cause land or sea use, pollution, invasive-species pathways, resource extraction or ecosystem disturbance during use or end-of-life. The value-chain assessment should follow the business model rather than assume biodiversity is only an upstream procurement issue.

Protected areas and other biodiversity-sensitive areas are important screening layers, but they are not the complete materiality test. A site outside a designated area may affect a threatened species, a degraded but critical ecosystem, a migration route, a watershed or land used by Indigenous Peoples and local communities. Conversely, proximity to a protected area does not automatically establish a material impact without considering the activity and pathway.

Protected and conserved areas, including internationally, nationally and locally designated sites.

Key biodiversity areas, threatened species ranges, critical habitat and migration or spawning areas.

Ecosystem extent, condition, integrity, connectivity and fragmentation.

Water dependence, abstraction, discharge, pollution and coastal or marine interface.

Land- or sea-use change history, planned expansion and restoration commitments.

Indigenous Peoples, local communities, customary rights, ecosystem-service beneficiaries and grievance information.

Climate, invasive species, noise, light, transport and other pathways relevant to the operation.

An impact describes how the undertaking changes the state of nature or affects people through nature. A dependency describes an ecosystem service or natural input on which the business relies. Dependencies can become financial risks when the service deteriorates, access is restricted or the business faces transition pressure. The same activity can create an impact and depend on the affected ecosystem.

Dependencies may include water supply and regulation, soil formation and fertility, pollination, erosion control, flood protection, coastal defence, climate regulation, genetic resources and cultural services. The assessment should name the service, location, business process, criticality, substitutability, current condition and affected stakeholders. A generic statement that the company 'depends on nature' does not support a decision.

Financial effects should be mapped through ESRS 2 SBM-3. Current effects can include restoration expenditure, permit conditions, provisions or operational costs. Anticipated effects may include input scarcity, yield changes, insurance cost, supply interruption, capex, asset impairment, loss of licence to operate or revenue opportunities. The sustainability statement should not imply accounting recognition where the financial statements do not recognise the item.

The first pass can use sector, commodity and geographic screening. The next step is to rank hotspots using impact severity and likelihood, dependency criticality, financial exposure, stakeholder concern and the undertaking's leverage. High-risk deforestation commodities, a mine near critical habitat, a water-dependent factory in a degraded basin or a product linked to invasive pathways may warrant primary data and site-specific action.

The undertaking should document what it does not know. A value-chain estimate can be reasonable when primary location data are unavailable, but the model should not imply precision it does not possess. The evidence register should identify the proxy, source year, coverage, uncertainty, owner and action to improve traceability.

Figure 1. ESRS E4 location-to-value-chain biodiversity workflow. Original LRA practitioner visual.

E4-5 requires metrics related to material impacts and dependencies. The metric set should explain the causal chain. A pressure metric shows what the undertaking does; a state metric shows what is happening to nature; an ecosystem-service metric explains the dependency or effect on beneficiaries; and a response metric shows management action and progress. Not every material IRO needs all four categories, but relying only on activity or spend metrics is rarely sufficient to explain ecological outcome.

Hectares of natural ecosystem converted, disturbed, occupied or restored.

Volume or share of high-impact commodities by traceability and conversion-risk status.

Water withdrawal, pollutant loads, pesticide or nutrient use linked to a biodiversity hotspot.

Fragmentation, traffic, noise, light or invasive-species pathways associated with operations or products.

Number or area of projects applying avoidance, minimisation and restoration measures.

State metrics may cover ecosystem extent, condition, integrity, connectivity, habitat quality, species abundance, population trend, occupancy, threatened-species exposure or extinction risk. The method should define the reference condition, spatial boundary, survey or remote-sensing technique, frequency, seasonality and uncertainty. A biodiversity index should be used only if its components and interpretation are clear.

Where a material dependency drives the IRO, the undertaking may need metrics for service availability, quality and beneficiary impact. Examples include water-regulation capacity, pollinator abundance, soil organic matter, erosion control or coastal protection. The metric should connect the ecological condition to the business process and affected stakeholders rather than presenting a generic ecosystem-service score.

Response metrics can show coverage of traceability, avoidance, restoration, supplier corrective action, no-conversion commitments, ecological management plans, resources and target progress. They should not be presented as a substitute for pressure or state where an environmental outcome is material. Certification coverage, for example, is evidence of a management system, not conclusive proof that no biodiversity impact occurred.

Figure 2. Biodiversity metric architecture: pressure, state, ecosystem services and response. Original LRA practitioner visual.

Policies should address the material drivers and locations and, where relevant, traceability, responsible sourcing, no-conversion commitments, sensitive-site management, rights and stakeholder engagement. Actions should follow the mitigation hierarchy: avoid impacts where possible, minimise unavoidable impacts, restore affected ecosystems and address residual impacts with caution. The sequence matters because restoration or offsets should not be used to justify avoidable destruction.

Targets should specify the material IRO, location or value-chain boundary, baseline, target year, metric, method and expected outcome. A group-wide target such as 'protect nature' is not measurable. Stronger examples include zero conversion of natural ecosystems in specified commodity supply chains by a defined date, restoration of a specified area to a defined ecological condition, or improvement of a species or habitat indicator at a material site.

If offsets or biodiversity credits are used, the undertaking should explain the role, location, ecological equivalence, additionality, durability, leakage, rights and double-counting controls. An offset should not be presented as if it removes the underlying impact from the materiality assessment or substitutes for avoidance and minimisation.

Where Indigenous Peoples or other rights holders may be affected, free, prior and informed consent can be relevant under applicable law, standards or the undertaking's commitments. Engagement evidence should be proportionate and protect sensitive information. The reporting team should distinguish consultation, consent, grievance and remediation rather than treating attendance at a meeting as proof of agreement.

Revised E4-1 asks for the key features of a biodiversity and ecosystems transition plan where the undertaking has such a plan and has made it public. It does not create a requirement to invent a plan solely to populate the disclosure. If no public plan exists, the organisation should avoid implying that a collection of projects or a general environmental strategy is a formal transition plan.

The material biodiversity impacts, dependencies, risks and opportunities addressed by the plan.

The business-model and value-chain changes needed, including sourcing, locations, products and capital allocation.

The mitigation-hierarchy approach and how lock-in or future conversion is avoided.

Actions, resources, milestones, target metrics and governance accountability.

Key assumptions, data limitations, dependencies on suppliers, regulation, technology and stakeholders.

The relationship to climate, water, pollution, circular economy and affected-community strategies.

How progress and ecological outcomes will be monitored and the plan updated.

TNFD's LEAP approach - Locate, Evaluate, Assess and Prepare - can support the location-based identification and assessment of nature-related dependencies, impacts, risks and opportunities. It is especially useful for structuring geospatial screening, prioritising interfaces with nature and connecting dependencies and impacts to financial risks and opportunities. ESRS materiality, required disclosures and compliance conclusions still need to be determined under ESRS.

GRI 101: Biodiversity 2024, effective for reporting from 1 January 2026, provides impact-focused disclosures on policies, management, sites, direct drivers, changes to biodiversity state and ecosystem services. It can support the value-chain and impact side of an E4 data model. GRI and ESRS have different architectures and claims, so one disclosure should not be labelled compliant with the other without checking each requirement.

Meridian geocodes its own sites and maps the wetland site area of influence, wastewater pathway, water dependence, lighting and logistics. Ecological screening identifies a threatened bird habitat and seasonal water stress. Site validation confirms that night lighting and discharge quality are the most relevant pressure pathways. The group selects light-spill, pollutant-load, wetland-condition and bird-population monitoring metrics, linked to actions and a site target.

Upstream, the group screens commodity volume, sourcing country and conversion risk. Palm supply is highly traceable, while 35% of cocoa lacks farm-level origin. The group uses country/region proxies for the first materiality assessment, labels the uncertainty and prioritises high-risk suppliers for traceability and no-conversion evidence. It does not state that untraceable volume is deforestation-free.

Meridian has a public nature transition plan covering no conversion, supplier traceability, wetland impact reduction and restoration. The E4-1 disclosure describes the plan's key features, resources, dependencies and monitoring. TNFD LEAP supports the workflow, while GRI 101 supports impact and site disclosures; the company separately maps the exact ESRS requirements.

Why it is stronger: the wording identifies location and pathways, links E2 and E4, provides metric baselines, quantifies value-chain traceability and is transparent about proxies. It also distinguishes transition action from offsets. A complete disclosure would add the required policies, resources, targets, progress, methods and financial effects relevant to the material IROs.