CSRD Biodiversity & TNFD Reporting: What Companies Need to Know

Biodiversity is no longer a voluntary disclosure topic. Under the Corporate Sustainability Reporting Directive, companies in scope must assess and disclose their dependencies and impacts on nature under ESRS E4. At the same time, the Taskforce on Nature-related Financial Disclosures (TNFD) is rapidly becoming the investor-facing framework of choice for nature-related risk reporting.

For sustainability teams, this creates a two-framework problem: a mandatory regulatory requirement (E4 under CSRD) and a voluntary but investor-expected framework (TNFD) that substantially overlap — but not perfectly. Understanding where they align, and where they differ, determines how much double-handling your reporting team faces.

What ESRS E4 Requires

ESRS E4 — Biodiversity and Ecosystems — is one of the five environmental standards under CSRD. Companies subject to double materiality assessment that identify biodiversity as material must report across four areas:

• Impacts on biodiversity and ecosystems: direct pressures from operations and value chain activities (land use, freshwater extraction, pollution, invasive species, climate change)
• Dependencies on ecosystem services: the services (water purification, pollination, raw material supply) that your operations and supply chain rely on
• Risks and opportunities related to biodiversity: how nature loss translates to financial exposure or commercial opportunity
• Targets and transition plans: specific, measurable commitments aligned with the Kunming-Montreal Global Biodiversity Framework (GBF)

The disclosure requirements include location-specific data for operations in or near biodiversity-sensitive areas, and extend into the upstream and downstream value chain where dependencies are material. This is substantially more demanding than most existing environmental reporting.

TNFD — The Investor-Facing Counterpart

The TNFD framework, finalised in September 2023, provides 14 recommended disclosures across four pillars: Governance, Strategy, Risk & Impact Management, and Metrics & Targets. It is built on the LEAP approach — Locate, Evaluate, Assess, Prepare — which guides companies through identifying their interface with nature, assessing dependencies and impacts, and preparing disclosures.

TNFD is designed to be interoperable with ESRS E4. The TNFD secretariat has published alignment guidance confirming that companies completing TNFD disclosures will have addressed a substantial portion of E4 requirements. The frameworks share the same foundational concept — that nature-related risks are financially material — but differ in structure and mandatory applicability.

For companies subject to CSRD, completing a TNFD-aligned assessment is an efficient path to meeting E4, since the LEAP methodology maps directly to E4's disclosure structure.

The Data Challenge

Biodiversity data is harder to collect than carbon data. GHG emissions have standardised emission factors and calculation methodologies (GHG Protocol, IPCC). Nature-related data requires location-specific analysis, ecosystem mapping, and value chain tracing that most companies have not previously done.

The key data inputs for both E4 and TNFD include:

• Site-level operational footprint: precise geographic coordinates of facilities and significant operations
• Proximity to protected or High Biodiversity Value (HBV) areas: using the IBAT (Integrated Biodiversity Assessment Tool) or equivalent
• Land use change history: particularly relevant for agriculture, forestry, and real estate-adjacent sectors
• Freshwater consumption and discharge: by location and source, not just aggregate volume
• Supply chain geography: where tier-1 and tier-2 suppliers operate, and what ecosystems they depend on

The ENCORE tool (Exploring Natural Capital Opportunities, Risks and Exposure), developed by UNEP WCMC and Global Canopy, is widely used for mapping sector-level dependencies on ecosystem services. IBAT provides the spatial biodiversity risk data layer most frameworks require.

Building Your Biodiversity Data Programme

Most companies approaching E4 or TNFD for the first time will need to build data collection capability from scratch. A pragmatic sequencing:

• Start with your operational footprint: map every facility to geographic coordinates and screen against biodiversity sensitivity databases (IBAT, Protected Planet)
• Apply ENCORE to identify your sector's material ecosystem service dependencies: this scopes the assessment before you collect any primary data
• Engage tier-1 suppliers on location data: you cannot assess upstream biodiversity impact without knowing where suppliers operate
• Use the TNFD LEAP methodology to structure the full assessment: it integrates with E4 disclosure requirements and produces output directly usable in both frameworks

For companies using a sustainability data platform, the data collection and documentation requirements for biodiversity reporting need the same audit trail as GHG data — source documentation, methodology notes, version history, and reviewer sign-off.

ESRS E4 vs. TNFD — Where They Align

Both frameworks require: materiality-based scope determination, location-specific impact and dependency analysis, value chain coverage, measurable targets aligned with the GBF, and governance disclosure (board-level oversight of nature-related risks).

The primary structural difference is that E4 is prescriptive about disclosure format (standardised data points tied to ESRS disclosure requirements), while TNFD is principles-based and offers more flexibility. Companies subject to CSRD should lead with E4 compliance and use TNFD alignment as a way to satisfy investor expectations simultaneously. The investment in structured data collection — particularly location data and value chain mapping — serves both frameworks.

Biodiversity reporting is still early-stage for most companies, but the data infrastructure requirements are significant. Starting the programme now, before CSRD enforcement deadlines, is the most cost-effective path. See CSRD reporting software for tools that support structured disclosure across all ESRS standards, including E4.

Nature and biodiversity reporting is one strand of a much broader regulatory landscape. For how CSRD and TNFD requirements fit alongside reporting rules in other jurisdictions, see our overview of ESG regulations by jurisdiction.