ESRS E4 - Protection of Biodiversity and Ecosystems in Corporate Strategy

What is ESRS E4, Biodiversity and Ecosystems?

ESRS E4 is the topical standard on biodiversity and ecosystems within the European Sustainability Reporting Standards (ESRS), which were drafted by EFRAG and adopted by the European Commission under the Corporate Sustainability Reporting Directive (CSRD). It addresses the impacts, risks, dependencies and opportunities that business activities have in relation to nature. The goal of ESRS E4 is to make companies identify, measure and manage their effects on biodiversity and ecosystems, and report on them transparently.

Like every topical ESRS, the E4 disclosures only apply where biodiversity and ecosystems are found to be a material topic in the company's double materiality analysis.

Key components of ESRS E4

ESRS E4 is built around several essential elements that companies need to consider:

1. Transition plan and resilience: how the company's strategy and business model account for biodiversity, including a transition plan compatible with halting and reversing nature loss where relevant.
2. Impacts, risks and dependencies: identifying how operations and the value chain affect biodiversity and ecosystem services, and how the business depends on them.
3. Policies, actions and targets: setting policies, action plans and measurable targets for conservation, restoration and the sustainable use of nature.
4. Metrics: reporting verifiable indicators on biodiversity and ecosystems, such as the extent of land use change or activities affecting protected and sensitive areas.

Biodiversity, ecosystems and the carbon footprint

Biodiversity and the carbon footprint are closely connected. Healthy ecosystems such as forests, oceans and wetlands act as carbon sinks, absorbing large amounts of carbon dioxide and helping to mitigate climate change. Activities such as deforestation and land degradation not only destroy these sinks but also release stored carbon, adding to global emissions.

ESRS E4 recognises this link and encourages companies to integrate nature into their climate strategy. When measuring a company's footprint, it is relevant to consider direct emissions (Scope 1), indirect emissions (Scope 2 and Scope 3) and the condition of the ecosystems that could store carbon.

How businesses affect biodiversity

Companies can affect biodiversity and ecosystems in several ways, including:

• Land use change and deforestation: converting natural habitats into farmland or built-up areas reduces nature's capacity to capture carbon.
• Pollution: emissions of greenhouse gases and other pollutants damage habitats and species, a topic that connects with ESRS E2.
• Overexploitation of resources: unsustainable extraction of natural resources can deplete entire ecosystems.

How to implement ESRS E4 in corporate strategy

Reporting under ESRS E4 calls for a structured approach:

1. Assess impacts, risks and dependencies: evaluate how activities and the supply chain affect and rely on biodiversity, identifying critical or sensitive areas.
2. Set objectives and metrics: define measurable targets aligned with international frameworks such as the Kunming-Montreal Global Biodiversity Framework and the Convention on Biological Diversity.
3. Integrate nature into strategy: embed biodiversity in the overall sustainability strategy and in action plans for restoration and sustainable practices.
4. Use reliable data and tools: support reporting with robust data management, and align with voluntary frameworks such as the TNFD (Taskforce on Nature-related Financial Disclosures).

The Omnibus simplification and ESRS E4

The EU is simplifying sustainability reporting through its Omnibus package. The substantive Omnibus I directive, Directive (EU) 2026/470, raised the CSRD thresholds so that fewer companies are in scope, while EFRAG is preparing a revised, lighter set of ESRS that reduces the number of mandatory datapoints by more than 60% and is expected to apply from financial year 2027, with voluntary early adoption. Until the revised standards are adopted, the 2023 ESRS, including ESRS E4, remain the legal reference for companies reporting under the CSRD.

Benefits of complying with ESRS E4

• Stronger reputation: a credible commitment to nature is viewed positively by stakeholders.
• Better risk management: understanding nature-related dependencies helps anticipate supply chain and regulatory risks.
• Access to finance: solid environmental performance can support access to sustainable finance.

How Manglai can help your company with ESRS E4

ESRS E4 brings biodiversity into the heart of corporate reporting, and good data makes it workable. At Manglai we help companies measure and manage their environmental data, calculate their carbon footprint across Scopes 1, 2 and 3 and prepare their sustainability reporting in line with the ESRS. Discover how Manglai can help you.