In-depth CSRD analysis with a focus on biodiversity

Sustainability reporting is not only a mandatory requirement under CSRD, but also an opportunity for companies to demonstrate their commitment and responsibility for our natural environment. Operating sustainably is becoming increasingly important as a competitive advantage to continue attracting stakeholders. Conducting an effective and meaningful CSRD analysis to understand a company's impact on and dependence on nature is the starting point for long-term sustainability efforts.

In fall 2023, many companies have wrestled with their overall CSRD analysis or are in the start-up phase of the process. At Ecogain, we help companies meet the reporting requirements of the Biodiversity and Ecosystems Standard. Here we share methods, key concepts and how to conduct an in-depth CSRD analysis in accordance with EU requirements for those with a significant business impact in this area.

Dual materiality analysis: understanding impacts and dependencies

Dual materiality analysis is the starting point for sustainability reporting under CSRD and is a method for aligning strategies, policies, targets and monitoring with ESRS requirements. By mapping the impacts and dependencies of the business, potential risks and opportunities can be anticipated and interacted early on in the company's strategy and business model.

It takes into account two factors to be reported and assessed: understanding how the company's business activities affect the external environment and how the external environment affects, or risks affecting, the company's own development.

The essence of the dual materiality analysis is that it should cover the entire value chain of direct and indirect impacts related to nature to ensure transparency and effectiveness. A clear and structured framework for what should be assessed and presented in sustainability reporting is provided in ESRS 1 AR 16, (Sustainability matters covered in topical ESRS.

ESRS E4 - requirements for your work related to biodiversity and ecosystems

If you have conducted a dual materiality analysis and see that you have negative impacts on ecosystems and biodiversity, it is essential to consider early on the specific requirements set out in the Thematic Standard on Biodiversity and Ecosystems (ESRS E4). For example, negative impacts can result from construction or other development, and the purchase of materials such as metals, minerals, agricultural and forestry products - which in turn affect nature upstream in the value chain.

According to ESRS E4, there are 15 different aspects to be considered. The company's business model and strategy should be described and should be clearly linked to actions, targets and monitoring. To more precisely meet these requirements, you need to follow the guidelines for impacts, dependencies, risks and opportunities linked to biodiversity and ecosystems described in ESRS E4. By proactively and systematically following the guidelines, you ensure that you do not miss important aspects or requirements linked to the business in connection with sustainability reporting.

TNFD LEAP methodology for your biodiversity work

Ecogain helps companies meet the requirements for sustainability reporting related to biodiversity and ecosystems. We use LEAP, a methodology from the global framework TNFD that is well aligned with the rules and guidelines in ESRS E4. 

LEAP provides a qualitative, clear and objective process for identifying and assessing different aspects of sustainability. The ESRS also specifically refers to the TNFD methodology in the Application Requirements under IRO-1 of the thematic standards, including ESRS E4. Following these guidelines and using LEAP as a tool allows companies to create a more comprehensive and informed understanding of their impacts on ecosystems and biodiversity, which in turn enables companies to act more strategically and responsibly.

Next steps: Include nature in your sustainability strategy

Double materiality analysis, CSRD, ESRS and TNFD are areas that are relatively new to many companies. Some have already made a journey in terms of climate work, and now need to take the next step and include both their impact and dependence on nature - that is, a broader perspective on sustainability work. This is not only for their own operations - although the reporting requirements are more specific to their own sites - but also in the value chain.

Download: GUIDE: How to conduct an effective dual materiality analysis.

Don't miss the January 31 webinar with Ecogain experts Helena Granborg and Ylva Lundgren on Dual Materiality Analysis - how do you analyze your impact on and dependency on nature?