Biodiversity Assessment Guide

Overview

Biodiversity has moved from the margins of corporate sustainability to the centre of regulatory and investor attention. The Kunming-Montreal Global Biodiversity Framework (GBF), adopted in December 2022 by the parties to the Convention on Biological Diversity, commits them to conserving 30% of land, inland waters, and coastal and marine areas by 2030 and, under Target 15, to ensuring that large and transnational companies and financial institutions monitor, assess, and disclose their biodiversity risks, dependencies, and impacts. The Taskforce on Nature-related Financial Disclosures (TNFD) published its final recommendations in September 2023, providing a structured framework that mirrors TCFD's approach to climate.

The financial materiality of biodiversity loss is now well-documented. The World Economic Forum estimated in 2020 that $44 trillion of economic value generation — over half of global GDP — is moderately or highly dependent on nature and its services. Companies with operations or supply chains in agriculture, forestry, fisheries, mining, construction, and food processing face the most direct exposure, but virtually every sector depends on ecosystem services such as water purification, pollination, soil fertility, and flood regulation.

Regulatory momentum is accelerating. The CSRD requires companies in its scope to disclose on biodiversity under ESRS E4 when the topic is material, including impacts, dependencies, risks, and opportunities related to nature. France's Article 29 already mandates biodiversity strategy disclosure for financial institutions. The EU's Corporate Sustainability Due Diligence Directive (CSDDD) extends obligations to actual and potential adverse impacts on biodiversity throughout value chains; after the Omnibus I changes (in force March 2026), it will apply from July 26, 2029 to companies with more than 5,000 employees and more than €1.5 billion in net turnover.

Who Does It Apply To?

• CSRD-reporting companies required to assess materiality of ESRS E4 (Biodiversity and Ecosystems) and disclose if material
• Financial institutions subject to Article 29 (France), SFDR taxonomy alignment assessments, or TNFD-aligned disclosure expectations
• Companies in nature-dependent sectors — agriculture, food & beverage, forestry, mining, construction, utilities, real estate, and pharmaceuticals
• Organizations with operations or supply chains near sensitive ecosystems — protected areas, Key Biodiversity Areas (KBAs), high conservation value (HCV) lands, or water-stressed regions
• Companies seeking EU Taxonomy alignment — the Taxonomy's "do no significant harm" criteria include biodiversity protection requirements
• Extractive industries subject to environmental impact assessment (EIA) requirements and biodiversity offset obligations under national law

Key Requirements

1. Identify your organization's nature-related dependencies and impacts using the TNFD's LEAP approach (Locate, Evaluate, Assess, Prepare) or equivalent frameworks such as the Natural Capital Protocol.

2. Map operational and supply chain locations against biodiversity-sensitive areas using tools like IBAT (Integrated Biodiversity Assessment Tool), ENCORE, and the WWF Biodiversity Risk Filter.

3. Assess material biodiversity impacts across five key pressure categories: land/sea use change, overexploitation, pollution, invasive species, and climate change — aligned with the IPBES framework.

4. Quantify impacts and dependencies using recognized metrics. TNFD recommends core global indicators including total spatial footprint, extent of land, freshwater, and ocean-use change, pollutants and wastewater released, water withdrawal and consumption in water-scarce areas, and the quantity of high-risk natural commodities sourced. The Science Based Targets Network (SBTN) provides target-setting guidance for land, freshwater, and ocean systems.

5. Conduct a double materiality assessment covering both financial materiality (nature-related risks to the business) and impact materiality (the business's impacts on nature) as required by CSRD/ESRS.

6. Develop a biodiversity action plan with measurable targets following the mitigation hierarchy: avoid, minimize, restore, and offset — in that order of priority.

7. Disclose in alignment with TNFD recommendations across the four pillars: Governance, Strategy, Risk & Impact Management, and Metrics & Targets.

Timeline & Milestones

Months 1–3: Scoping & Location Analysis Map all operational sites, owned/leased land, and key supply chain sourcing regions. Screen these locations against biodiversity databases (IBAT, ENCORE, WWF Risk Filter) to identify proximity to protected areas, KBAs, and degraded ecosystems. Engage procurement teams to identify high-risk commodity supply chains (palm oil, soy, beef, timber, cocoa, seafood).

Months 4–6: Impact & Dependency Assessment Apply the TNFD LEAP approach to priority locations and value chain segments. Conduct site-level ecological assessments where warranted. Evaluate dependencies on ecosystem services (water provision, pollination, soil health) and quantify impacts using available data and proxy indicators.

Months 7–9: Target-Setting & Action Planning Develop site-specific and corporate-level biodiversity targets aligned with SBTN guidance. Prioritize actions following the mitigation hierarchy. Identify restoration opportunities and, where residual impacts exist, evaluate credible biodiversity offset programs (assessed against the Business and Biodiversity Offsets Programme's Standard on Biodiversity Offsets or equivalent standards).

Months 10–12: Disclosure Preparation & Integration Prepare TNFD-aligned disclosures. Integrate biodiversity considerations into ERM frameworks, procurement policies, and capital expenditure processes. Seek assurance where required under CSRD or desired for voluntary disclosure credibility.

Step-by-Step Compliance Roadmap

Step 1: Locate Your Interface with Nature

Use geospatial tools and commodity-flow analysis to map where your business interacts with ecosystems. This includes direct operations (facilities, mines, plantations, infrastructure) and upstream supply chains (raw material sourcing, agricultural commodities). TNFD's "Locate" phase emphasizes identifying biomes, ecosystem types, and the condition of nature at each interface point.

Priority screening criteria include: proximity to protected areas, presence in biodiversity hotspots, sourcing of deforestation-linked commodities, dependence on freshwater systems, and operations in marine or coastal zones.

Step 2: Evaluate Dependencies and Impacts

For each priority interface, assess your organization's dependencies on ecosystem services and your impacts on nature. Use the ENCORE database to map sector-specific dependencies. For example, food manufacturers depend heavily on pollination and soil fertility; utilities depend on water regulation; pharmaceutical companies depend on genetic resources.

On the impact side, evaluate how your operations and supply chains contribute to the five IPBES drivers of biodiversity loss. Use life cycle assessment data where available, supplemented by site-level surveys and supply chain questionnaires.

Step 3: Assess Risks and Opportunities

Translate ecological findings into business-relevant risk categories: physical risks (loss of ecosystem services affecting operations), regulatory risks (new biodiversity regulations, permitting delays), market risks (shifting consumer preferences, commodity price volatility), and reputational risks (association with deforestation or ecosystem destruction).

Also identify opportunities: nature-based solutions for climate adaptation, regenerative agriculture programs that improve supply chain resilience, biodiversity-positive products that command premium pricing, and access to biodiversity-linked sustainable finance instruments.

Step 4: Set Targets and Act

Establish SMART biodiversity targets following SBTN's initial guidance for land and freshwater. Apply the mitigation hierarchy rigorously — genuinely unavoidable impacts should be the only ones reaching the offset stage. Common target areas include:

• No deforestation or conversion of natural ecosystems (aligned with the Accountability Framework initiative)
• Measurable reduction in water pollution from operations
• Hectares of degraded land restored or under active management
• Percentage of high-risk commodities sourced from certified sustainable supply chains

Step 5: Disclose and Report

Prepare disclosures aligned with TNFD's four pillars. For CSRD reporters, map findings to ESRS E4 disclosure requirements. Include governance arrangements for biodiversity, strategy for managing nature-related risks, risk management integration, and core metrics with year-on-year tracking.

Be transparent about data limitations and methodological constraints — biodiversity data is inherently more complex and location-specific than carbon data. Stakeholders and assurance providers expect honesty about uncertainty.

Common Pitfalls

Treating biodiversity as a carbon-copy exercise. The tools, metrics, and methodologies for biodiversity are fundamentally different from carbon accounting. Biodiversity is location-specific, multi-dimensional, and cannot be reduced to a single number. Organizations that try to apply their carbon management playbook without adaptation will produce misleading results.

Focusing only on direct operations. For most companies, the greatest biodiversity impacts lie in supply chains — particularly agricultural commodity sourcing. A company with pristine corporate campuses but palm oil, soy, or beef in its supply chain may have enormous deforestation exposure that site-level assessments will miss entirely.

Ignoring the mitigation hierarchy. Jumping to offsets or "biodiversity credits" without first avoiding, minimizing, and restoring impacts is not credible under any major framework. The mitigation hierarchy is foundational to TNFD, CSRD, and SBTN — treat it as non-negotiable.

Underestimating data challenges. Biodiversity data is patchy, location-specific, and often requires field surveys. Budget adequate time and resources for data collection, and be upfront about gaps in your disclosures. Perfection is not expected in early reporting years, but credible effort is.

How Council Fire Can Help

Council Fire brings cross-disciplinary expertise to biodiversity assessment — combining ecological science, geospatial analysis, supply chain intelligence, and financial risk modelling.

Our TNFD-aligned assessment process moves efficiently from location screening through to disclosure-ready outputs, integrating with your existing CSRD and climate reporting workflows (IFRS S2 or TCFD-based; the TCFD itself disbanded in October 2023). We help clients build internal capacity for biodiversity management rather than creating dependency on external consultants.

We also specialize in supply chain biodiversity risk — mapping deforestation exposure, designing commodity-specific due diligence programs, and supporting the transition to certified and deforestation-free sourcing.

FAQs

Is TNFD reporting mandatory?

Not yet in most jurisdictions, but it's moving that way. CSRD requires biodiversity disclosure under ESRS E4 when the topic is material, and TNFD's framework is broadly compatible with those requirements. In late 2025 the ISSB decided to develop nature-related disclosure requirements drawing on the TNFD's recommendations, with an exposure draft targeted for October 2026, and the TNFD is pausing new technical work to support that effort. According to the TNFD's 2026 status report, 802 organizations have committed to TNFD-aligned reporting. Early adoption positions you well for inevitable mandates.

How is biodiversity measured at the corporate level?

There is no single metric equivalent to tonnes of CO2e. Biodiversity measurement typically involves a suite of indicators: land use and land use change, ecosystem condition, species abundance (e.g., Mean Species Abundance — MSA), water quality, and habitat connectivity. TNFD recommends core metrics organized by pressure type. The field is evolving rapidly — expect metric standardization to improve through the late 2020s.

Do we need ecologists on staff?

Not necessarily, but you need access to ecological expertise — whether through consultants, partnerships with conservation organizations, or trained internal staff. For companies with significant direct land use (extractives, agriculture, real estate), having in-house ecological capacity is increasingly important. For others, a competent sustainability team supplemented by specialist advisors can manage the assessment process effectively.

What is the relationship between biodiversity and climate reporting?

They are deeply interconnected but distinct. Climate change is one of the five drivers of biodiversity loss, and nature-based solutions are critical for both climate mitigation and adaptation. CSRD requires separate disclosure under ESRS E1 (Climate) and ESRS E4 (Biodiversity), but expects companies to address interactions. TNFD is designed to complement TCFD, and many data collection processes can be integrated.