Biodiversity: Relevance for Companies and Investors

The term biodiversity, or biological diversity, refers to the diversity of life on three levels: the genetic diversity within species, the diversity of species themselves, and the diversity of ecosystems and ecosystem functions.

The integrity of these complex, interwoven systems – along with all their ecosystem services – forms the foundation of life on Earth and, by extension, the basis for economic activity. The decline of this diversity, caused for example by changes in land use change, pollution, direct exploitation of resources, invasive alien species, or climate change, has direct impacts on the stability of ecosystems – and therefore also on supply chains, production security, cost structures, and business models.

Thus, protecting biological diversity is not only about preserving individual animal or plant species, but about safeguarding essential natural systems that make our lives and economies possible.

Ecosystem services are the benefits that nature provides to us humans. These include the supply of food, drinking water, raw materials, clean air, and fertile soils. They also encompass climate regulation, the storage of CO₂ in forests, wetlands, and oceans, intact water cycles, erosion control, pollination of crops, as well as bionics, medical active ingredients, health, and resilience to crises.

Although these services often do not appear on balance sheets and are taken for granted, they form the indispensable foundation of our lives and all economic activities – and therefore have enormous economic value. The impacts on and dependencies from ecosystem services are also reflected in the ESRS biodiversity standard E4 as a disclosure requirement for companies.

Companies whose business models rely directly or indirectly on natural resources – such as those in the food, textile, construction or chemical industries – are particularly dependent on ecosystem services. The loss of biodiversity increases the risk of production failures, supply chain disruptions or uncontrollable cost developments – with direct impacts on business viability and profitability. Thus, the protection of biodiversity is increasingly becoming a decisive competitive factor.

At the same time, expectations from legislators, investors and the public are rising. Regulatory requirements such as the CSRD call on companies to disclose their impacts on biodiversity – as well as their dependencies, risks and opportunities. Most recently, the Global Reporting Initiative (GRI) published an updated biodiversity standard, and the International Sustainability Standards Board (ISSB) is currently considering issuing a new standard on biodiversity, ecosystems and ecosystem services.

In addition, international frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD), which provides a practical framework for integrating nature-related risks into corporate strategies, and the Science Based Targets for Nature (SBTN), which supports the development of science-based targets and measures, are emerging.

The EU Biodiversity Strategy 2030 calls for binding measures to restore degraded ecosystems and for more effective protection of species and habitats – with direct implications for land use, supply chains and reporting obligations. The EU Deforestation Regulation (EUDR) also sets clear framework conditions.

As a practical guide on this topic, the DRSC and RNE published a detailed guide titled “Biodiversity Management for Supervisory Boards” in December 2024. It outlines how companies can protect biodiversity, meet regulatory requirements and ensure long-term competitiveness.

All these developments make clear that biodiversity is becoming increasingly relevant in corporate management. Meeting regulatory requirements is not just a matter of compliance, but also offers an opportunity to build trust with investors, lenders and consumers. Investors in particular are increasingly recognizing the need to account for biodiversity-related risks in their investment decisions. Therefore, despite current uncertainties regarding the planned changes to EU reporting obligations, it is worthwhile for companies to establish structures early on in order to create transparency and remain competitive.

There are many ways in which companies can contribute to the protection and promotion of biodiversity. First and foremost, it is important to identify, understand and assess their own dependencies, impacts, risks and opportunities related to biodiversity. This can be achieved through a comprehensive biodiversity analysis. On this basis, a strategic and effective biodiversity management system can be established.

Effective measures that companies can take include setting science-based biodiversity targets (e.g. using SBTN), introducing stricter sustainability standards and criteria for suppliers, engaging in partnerships with NGOs and research institutions, raising awareness among employees, business partners and customers through education and training, and integrating biodiversity into sustainability reporting – for example, under ESRS E4, TNFD or the voluntary VSME Standard. Above all, it is essential to take the issue seriously in all its complexity and to critically assess the effectiveness of every measure.

The loss of biological diversity affects not only ecosystems but also directly impacts raw material availability, production conditions and operating costs – and can therefore destabilize entire business models. At the same time, regulatory requirements for companies are increasing, as is the interest from investors, lenders and consumers in transparent sustainability reporting.

A systematic biodiversity management approach offers companies the opportunity to reduce risks, secure resources in the long term and position themselves competitively. Especially in an environment of growing expectations and limited resources, companies should build structures early on to understand, manage and report their impacts and dependencies. By integrating and disclosing biodiversity goals into corporate strategy and governance structures, companies not only contribute to the protection of biodiversity but also assume a key leadership role – and that is precisely what is needed to make biodiversity protection the standard rather than the exception in corporate practice.​