In the current climate, with sustainability facing headwinds, I would like to recall why it is important to assess biodiversity and ecosystem risks – and how to get started in practice.
Enough bees to pollinate fruit trees are essential for growing fruit and producing fruit juices. A suitable climate, microclimate and enough water are needed to grow traditional Czech hops and brew beer from them. The landscape’s ability to dampen flood waves and regulate flows protects towns and businesses from flooding. Pharmaceutical production cannot do without genetic resources and the biodiversity of local plants. The recreational services of the landscape and nature, providing rest and leisure, are a necessary condition for tourism. Gravel pits, sand pits and mines for other minerals extract more efficiently when they do not disrupt the natural retention of sediments and the purification of water by the surrounding landscape.
These are a few Czech examples of the use of, and dependence on, ecosystem services and biodiversity. According to a 2023 study by the consultancy PwC, 55 percent of global GDP is moderately or highly dependent on natural ecosystems. That is why, in 2026, the World Economic Forum ranks biodiversity loss and ecosystem collapse second among the most severe global risks over a ten-year horizon, right behind extreme weather and critical changes to Earth systems.
If you believe your company belongs to the larger half of the world economy that is moderately or highly dependent on natural ecosystems, get started with assessing biodiversity and ecosystem risks.
The second reason is the legal requirements placed on a company or its value chain. Regulatory pressure on companies to disclose biodiversity information has decreased substantially. According to available information, under the rules in force after Omnibus I only 28 companies in Czechia will be required to publish a sustainability report. In addition to them, subsidiaries of foreign companies subject to this obligation will also need information about their supply chains. Financing banks already need information about risks and their management today, especially for larger companies in sectors with elevated biodiversity risks.
Omnibus I reduced the number of obliged companies by roughly 90 percent. For the 2027 financial year, companies that simultaneously exceed the thresholds of 1,000 employees and EUR 450 million in net turnover will be required to publish a report. These companies will be bound by the European Sustainability Reporting Standards (ESRS), which are currently undergoing revision and simplification. The draft standard published in December 2025 contains five consolidated disclosure requirements (E4-1 to E4-5):
E4-1 (Transition plan) – The company discloses the key features of a transition plan for biodiversity and ecosystems only if such a plan exists and has been made publicly available. The plan may also be part of a broader transition plan. The company is not obliged to create the plan.
E4-2 (Policies) – Policies must cover two specific areas: the traceability of products and raw materials with significant biodiversity impacts in the value chain, and the company’s own operating sites near biodiversity-sensitive areas.
E4-3 (Actions) – Companies disclose key actions and allocated resources. If they use biodiversity credits, they must state their purpose, financial effects, type and standards.
E4-4 (Targets) – Targets are disclosed in line with the general ESRS framework. The company must explain any use of biodiversity credits when setting targets.
E4-5 (Metrics) – Emphasis is placed on spatial anchoring. The company identifies the specific sites and biodiversity-sensitive areas where significant negative impacts occur, by name and type. Metrics are chosen according to the material sub-topic (drivers of biodiversity and ecosystem change, the state of species, the state of terrestrial, freshwater and marine ecosystems, and ecosystem services).
The draft simplified ESRS E4 applies a conditional approach – the obligation to report arises only where the assessment of impacts, risks and opportunities identifies a material topic. Companies for which biodiversity is not material need not apply E4 at all.
The draft drops the original E4-6 – Anticipated financial effects of biodiversity- and ecosystem-related risks and opportunities. ESRS E4 remains linked to climate change (ESRS E1), pollution (ESRS E2) and water (ESRS E3) and takes into account the Kunming-Montreal Global Biodiversity Framework (GBF).
For companies with fewer than a thousand employees, the European Commission recommends the voluntary sustainability reporting standard for small and medium-sized enterprises (Voluntary SME, VSME). In the area of biodiversity, disclosure requirement B5 of this standard requires only two data points to be disclosed. First, the number and area (in hectares or square metres) of sites in or near a biodiversity-sensitive area. And second, optionally, land-use indicators (total area, sealed area, nature-oriented area).
This standard also defines the maximum scope of data that can be requested within a supply chain, thereby protecting smaller suppliers from excessive requirements. There are significantly fewer data points than full ESRS E4 requires. A large company subject to mandatory reporting must therefore expect to obtain only basic spatial data from smaller suppliers, not detailed analyses of impacts and dependencies.
If a company is used to working with ISO standards, it can use ISO 17298, the first global standard for assessing biodiversity dependencies and impacts. It is designed to be compatible with both ESRS E4 and the methodology of the Taskforce on Nature-related Financial Disclosures (TNFD). It can thus serve as a methodological basis for companies that want to systematise their approach to biodiversity assessment – whether they report on a mandatory or voluntary basis.
Assessing biodiversity and ecosystem risks is not a one-off analysis but an iterative process. A recognised and accessible methodology is LEAP, developed by the aforementioned Taskforce on Nature-related Financial Disclosures.
The first step is spatial analysis: identify your own operating sites (production plants, warehouses, offices), sites in the value chain (raw-material suppliers, agricultural land, extraction) and their overlap with ecosystem risks – proximity to protected areas, areas important for biodiversity, or areas with water deficits or soil erosion. This step corresponds to the draft ESRS E4-5 requirement on localisation.
Practical tools
The company maps which ecosystem services its production depends on and what impacts it has on nature. The draft ESRS E4-2 requires policies to cover the traceability of raw materials with significant impacts in the value chain.
Dependencies on ecosystem services include, for example, the availability of fresh water for production, pollination in the agricultural chain, climate regulation and flood protection. Impacts include changes in land use, water and soil pollution, habitat fragmentation and the introduction of invasive species.
Practical tools
Not every dependency and impact is material. The key is to carry out a double materiality assessment, similar to the one used in ESRS:
Impact materiality: How severe and widespread is the company’s impact on nature? Financial materiality: What is the probability and financial impact of biodiversity and ecosystem risks on the company itself?
Risks to be assessed
Practical tools
The final step turns the analysis into action.
