FfB Responds to the EFRAG Consultation on Amended ESRS and Calls for Nature to Remain at the Top of Sustainability Agenda
On 29 September, the Finance for Biodiversity (FfB) Foundation submitted its response to the EFRAG Consultation on the Amended ESRS, developed in coordination with its EU Policy subgroup*. In its response, the FfB Foundation calls on EFRAG to ensure ambition and scientific rigour, insisting on the importance of a coherent narrative on biodiversity across the Standard. The goal of the FfB Foundation is to ensure that nature remains at the top of the European sustainability and economic policy agenda.
The key message in the FfB Foundation’s response is that biodiversity materiality should be more broadly recognised. Across the Standard, reporting should rely on the mitigation hierarchy’s sequencing, from avoidance and reduction of pressures on the environment, and their impacts on biodiversity, towards restoration and transformation of practices. The coherence of this narrative can be ensured via biodiversity targets and transition plans aligned with the mission of the Global Biodiversity Framework, and integrated with climate transition plans.
“We welcome EFRAG’s efforts to preserve ambition while simplifying sustainability reporting with the ESRS,” said Anita de Horde, Executive Director of the Finance for Biodiversity Foundation. “Our response to the consultation stresses the importance of coherence across environmental standards, alignment with the mitigation hierarchy, and a stronger recognition of biodiversity’s materiality as crucial for Europe’s economic stability and prosperity. Simplification must not weaken transparency or comparability; it should ensure that companies and financial institutions have clear, consistent and decision-useful data to drive the transition to a nature-positive economy.”
Ensuring the importance of Biodiversity reporting across the Standards
The Double Materiality Assessment’s comparability and scientific rigour should be reinforced to ensure biodiversity impacts get reported on – in terms of location, sector, stakeholder, and timeline screenings. It is also imperative that negative impact materiality reporting is clarified to ensure comparability, underpinned by a common understanding of key terms and guidelines.
The architecture of the Standard must ensure a coherent narrative on biodiversity impacts reporting. Aligned with the mitigation hierarchy, it should encourage starting from the reduction of pressures and their impacts on biodiversity, and progressing towards restoration and transformation, for the overall improvement of the state of nature. The analysis of dependencies should be clarified and harmonised across the Standard to be given the same level of importance as impacts, risks, and opportunities.
FfB welcomes the exception to the general rule regarding new datapoints, especially on including biodiversity transition plans, which will help to reinforce the coherence of the narrative on biodiversity across the ESRS. Biodiversity transition plans should align with the nature-positive goal timeline of halting biodiversity loss by 2030 and should be built in synergy with climate transition plans.
Safeguarding the ambition and coherence of the biodiversity narrative in ESRS E4
Biodiversity targets should go beyond land-use and restoration. They should rely on the mitigation hierarchy to avoid risks of adverse impacts, align with the ambition of the Global Biodiversity Framework, and seek additionality – compared to baselines and/or business as usual. The FfB Foundation highlights that Indigenous Peoples and Local Communities are only mentioned under “targets”, which are not mandatory to set.
The proposed priorities for biodiversity policies appear relevant, on product traceability and sensitive areas. The proposed types of metrics for biodiversity align with the market practices and recommendations identified by FfB. However, it could be relevant to keep examples of indicators in the Voluntary Guidance or even directly refer to the TNFD core global disclosure metrics.
The omission of key drivers of loss (climate change, pollution, and overexploitation of species) and habitats (freshwater) reveals an inconsistency across the environmental ESRS, despite the ESRS E4’s mandate to cover the drivers of biodiversity and ecosystems change, including the impacts on biodiversity and ecosystems resulting from climate change (E1), pollution (E2), water use (E3), and waste (E5).
Read the FfB EU subgroup’s response to EFRAG consultation on amended ESRS here.
* The submission to answer the EFRAG Consultation on Amended ESRS has been developed by the FfB EU Policy subgroup. To note, while this paper reflects a collective effort, not all contributors or members of the FfB Foundation necessarily endorse every view. The content represents a synthesis of perspectives from the subgroup members.