Posted: 07 Sep. 2023 5 min. read

Reporting on Nature: from global goals to local legislation, nature reporting requirements are becoming increasingly integrated

A new reporting target agreed as part of the Post-2020 Global Biodiversity Framework to halt and reverse nature loss is steadily being realised through a wave of international standards and associated national legislation.


At a glance

  • At the 15th Conference of the Parties (COP) of the United Nations Convention on Biological Diversity, parties agreed on the post-2020 Global Biodiversity Framework (GBF): an ambitious roadmap to halt and reverse global nature loss. The GBF includes Target 15, which calls on organisations to “regularly monitor, assess, and transparently disclose their risks, dependencies and impacts on biodiversity”.
  • Relevant to Target 15, there is a range of global frameworks and guidance that support organisations to report on nature.
  • The EU Corporate Sustainability Reporting Directive (CSRD) sets critical requirements in this context, and will become mandatory over a period of years beginning in financial year 2024 for all large and listed companies in scope. This will include disclosure of material impacts, risks and opportunities arising from nature-related issues.
  • As a key first step organisations should understand what nature-related dependencies, impacts, risks and opportunities are relevant to their circumstances. Then, based on considerations of materiality, they can assess how they will respond to and report on them. 
  • There are potential advantages for organisations which are prepared to move early in response to nature-related reporting. Increased transparency could better enable them to take advantage of nature-related financing and incentives; win market share with nature-positive products and services; and improve their strategy and transition planning to better respond to nature-related risks and opportunities.    

Target audience: This article is relevant for Chief Financial Officers, General Counsel, Chief Sustainability Officers, and those with responsibility for Nature/Environmental risk and reporting.


Target 15 and the growth of global goals  

In December 2022, leaders from around world agreed a new Global Biodiversity Framework (GBF) that aims to halt and reverse global nature loss by galvanising urgent and transformative action from governments, companies, financial institutions and civil society. The framework, agreed at the 15th COP to the Convention on Biological Biodiversity (not to be confused with the United Nations Framework Convention on Climate Change COPs that focus on climate change), sets out four key goals, and 23 targets for nature. These include the widely publicized “30x30 target”, which aims to ensure that by 2030 at least 30% of terrestrial, inland water, coastal and marine ecosystems are effectively conserved and managed.

Alongside government action, the GBF also recognises the importance of the business community and financial sector as economic enablers of the goals of the GBF. In recent years, the business risk posed by nature loss has become clearer – and more urgent – with World Economic Forum research finding that approximately half of the world’s GDP is dependent on nature. In addition, many financial flows continue to support activities that harm, rather than protect nature.  Target 15 of the GBF, which calls on companies and financial institutions to “regularly monitor, assess, and transparently disclose their risks, dependencies and impacts on biodiversity... in their operations, supply and value chains and portfolios,” responds to this growing urgency. Indeed, there have been increasing calls from the business community for mandatory nature-related reporting requirements.

The EU disclosure environment for nature 

The GBF is not a legally binding agreement, but each signatory to the Convention on Biological Diversity (all countries except the United States and the Vatican) is expected to contribute to reaching the goals and targets of the GBF in accordance with national circumstances, priorities and capabilities. Moreover, governments that have agreed to the GBF must commit to demonstrating progress towards meeting targets and updating their national biodiversity strategy and action plans (NBSAPs). One of the headline indicators for the NBSAPs is the number of organisations which are reporting the risks, dependencies and impacts of biodiversity. Target 15 makes it clear that governments which have agreed to the GBF should take policy and legislative measures to ensure organisations monitor, assess and disclose nature-related issues. 

Globally, we have increasingly seen the introduction of standards and frameworks that support with reporting on nature-related issues.  Frameworks such as the Taskforce on Nature-related Financial Disclosure (TNFD), which will be published in September, have been developed to provide an integrated framework for organisations and financial institutions to report on nature-related issues. The TNFD takes its inspiration and approach from the Task Force on Climate-related Disclosures (TCFD) and refers to the TCFD for specifics on wider nature-related climate mitigation risks and opportunities. Additionally, the TNFD has both informed and been informed by the development of reporting standards from organisations such as the International Sustainability Standards Board (ISSB) which would require disclosure of material information about nature-related reporting matters under its general requirements standards; and the  Global Reporting Initiative (GRI), which is developing its revised standards to include nature-related issues.

There are also significant developments in Europe. Under the Green Deal, the EU has moved towards implementing mandatory reporting and disclosure requirements for nature through a number of directives and regulations. For example, as part of the European Biodiversity Strategy 2030, the European Central Bank is already asking financial institutions to incorporate climate and nature-related risks into their risk management; and since 2021, under the Sustainable Financial Disclosure Regulation (SFDR), financial market participants have been required to disclose the adverse impacts of their investments on the environment and biodiversity. Reporting on all sustainability impacts, risks and opportunities including biodiversity and ecosystems, will become mandatory, if material, for all large and listed companies (large public interest companies with more than 500 people) beginning from the 2024 financial year under the Corporate Sustainability Reporting Directive (CSRD). 

Additionally, under the proposed Corporate Sustainability Due Diligence Directive (CSDDD) organisations would be required to undertake and report on due diligence in relation to biodiversity. Large companies would need to conduct due diligence on adverse human rights and environmental issues, and report on the outcome: adverse environmental impacts would include potential violations of the Convention on Biological Diversity. The CSDDD would be likely to apply to the largest organisations from 2027, however it is subject to agreement being reached between the European Council and the European Parliament. From 2025, under the Deforestation-Free Products Regulation, companies will be prohibited from selling certain products on the EU market, or exporting from it, unless a due diligence statement has been filed that demonstrates those products are deforestation-free. The European Commission will consider in 2027 whether this regulation should also apply to financial flows.

We have highlighted the regulatory initiatives that will become relevant in the coming years below:

For a more comprehensive overview of all the relevant regulatory initiatives see our attachment.


Spotlight on the CSRD and Target 15

A key consideration for organisations is the CSRD, the new mandatory corporate reporting requirement for the EU. The CSRD entered into force in January 2023, and organisations subject to the CSRD will be required to report according to the European Sustainability Reporting Standards (ESRS) beginning in 2025 for the 2024 financial year. To find out more about the progress of the ESRS package generally, see our recent blog unpacking the ESRS.

The ESRS package contains topical reporting standards that are relevant to the aim of Target 15, including on biodiversity and ecosystems (ESRS E4), pollution (ESRS E2), and water and marine resources (ESRS E3). While some disclosure under ESRS is mandatory irrespective of materiality, organisations will be required to report on their biodiversity related‑ impacts, risks and opportunities if they are found to be material (either from an impact or a financial perspective – otherwise known as “double materiality”).

If biodiversity is found to be a material topic for an organisation, it must make a number of disclosures including its own material impacts, risks and opportunities, and those connected to the organisation through its direct and indirect business relationships in the upstream or downstream value chain. ESRS E4 also directly refers to the GBF in a number of places, including as part of its objective to enable users of the sustainability statement to understand the “plans and capacity of the company to adapt its strategy and business model in line with the… vision of the Kunming-Montreal Global Biodiversity Framework, and its relevant goals and targets” (ESRS E4(1)(c)(ii)).

Importantly, the ESRS package has also been designed to be applied alongside  global standards and frameworks, in particular the ISSB and the GRI. Additionally, ESRS E4 incorporates reference to the TNFD LEAP approach (an integrated assessment process for nature-related risk and opportunity management

As such, the CSRD is consistent with Target 15and also supports interoperability with some of the existing frameworks and standards for reporting on nature.  


What does this mean for organisations?

Given the wide range of regulatory initiatives relevant to Target 15 - in particular the upcoming requirements of the CSRD - it is critical that organisations understand whether nature is a material topic for them, and if so, how they will manage and report on their nature-related dependencies, impacts, risks and opportunities. While the range of regulatory initiatives continues to create some challenges around current and future obligations for organisations, the interoperability of the ESRS with the global standards and frameworks means there are some clear initial steps organisations can consider.  

A key first step is for organisations to understand whether nature-related dependencies, impacts, risks and opportunities are material for them, for example by conducting a double materiality assessment.  Materiality assessments can be undertaken in line with the LEAP approach as set out by the TNFD, and referenced in the ESRS (Locate your interface with nature, Evaluate your dependencies and impacts, Assess your material risks and opportunities & Prepare to respond to nature-related risks and opportunities and report).

There are clear potential advantages for organisations which are prepared to move early on managing and reporting on their nature-related dependencies, impacts, risks and opportunities (including through the TNFD framework):

  • Reporting increases transparency and accountability, which may improve reputation and investor confidence. For organisations that are able to confidently report on their nature-related dependencies, impacts, risks and opportunities there is a potential opportunity to take advantage of nature-related financing incentives, and to win market share in nature-positive products and services. 
  • Improving the effectiveness of their strategy and transition planning, both in terms of compliance with other upcoming regulation such as the EU Deforestation-Free Productions Regulation and (potentially) the CSDDD and, but also to manage the risks posed by nature for their business better.   

For a full overview of nature risks for organisations and key action points, see our report Nature matters: the risks are here and now

This article was written by

Laura MacKay

Legal consultant, EMEA Sustainability Regulation Hub

Florence Arke

Senior Consultant, Risk Advisory

Daniele Strippoli

Partner, Deloitte Climate & Sustainability

Key contacts

Simon Brennan

Simon Brennan

Head

Simon Brennan leads Deloitte’s EMEA Sustainability Regulation Hub. Organisations are setting ambitious targets as they journey to become sustainable. The Hub is a source of critical insight and advice to support businesses to better understand and respond to new regulatory requirements, and to assess how best to transform business strategies and operating models.

Ramon Bravo Gonzalez

Ramon Bravo Gonzalez

Senior Manager

Ramon is Senior Manager at Deloitte’s EMEA Sustainability Regulation Hub. He has more than 15 years of experience in sustainability, economic analysis and public policy. Before joining Deloitte, he worked for Policy Navigation Group, a boutique consulting firm from the Washington, D.C. area, where he managed complex projects across a range of subjects for government, trade association, major corporate, academic, and non-profit organisation clients. These projects ranged from economic and policy analyses for advocacy, to regulatory impact analyses examining the changing nature of legislation and policy regulation. He was involved in a number of subject areas, including: regulatory burden of US federal agencies, economic evaluation of government programs, and economic analyses on the food industries, water regulation, energy efficiency and emerging chemical regulation. Ramon holds a Bachelor's degree in accounting and finance from the Universidad de las Américas Puebla (UDLAP), a M.Sc in Environmental Management and Policy at the International Institute for Industrial Environmental Economics (IIIEE) at Lund University in Sweden and a PhD in Management from the University of Glasgow. During his PhD Ramon was also a visiting scholar at Columbia Business School in New York City. Ramon has also served as an adjunct lecturer in advocacy, policy and marketing at the University of Glasgow’s Adam Smith Business School.