ESRS E4-4: Setting Targets
ESRS E4-4: Biodiversity and ecosystems targets
1. Introduction
In today's business landscape, companies are increasingly expected to play a role in preserving biodiversity and ecosystems. This means setting clear, actionable targets that not only align with their environmental policies but also address their impacts, dependencies, risks, and opportunities related to biodiversity. In this article, we’ll break down what companies need to disclose about their biodiversity-related targets.
How companies can effectively disclose this information will be covered in another article.
2. Targets
Targets are specific goals or objectives that an organization sets to achieve within a certain timeframe. These targets help guide the organization’s efforts and measure its progress. For example, a company might set a target to reduce its impact on land degradation by 30% over the next couple of years.
Companies must disclose the specific targets they have set for biodiversity and ecosystem conservation. These targets should reflect the company’s commitment to protecting nature and be aligned with broader environmental frameworks like the Kunming-Montreal Global Biodiversity Framework and the EU Biodiversity Strategy for 2030.
When companies set these targets, they need to consider various factors:
Ecological thresholds: Companies must explain if they have used ecological limits or thresholds when setting their targets, including how these thresholds were determined and allocated within the company.
Alignment with policies: Targets should align with international, national, and company-specific biodiversity policies.
Relevance to operations: Targets must be connected to the specific biodiversity impacts, risks, and opportunities related to the company’s operations, including its supply chain.
Geographical scope: Companies should disclose the geographic areas covered by these targets, particularly if they operate in or near biodiversity-sensitive regions.
Use of offsets: If the company uses biodiversity offsets to meet its targets, this must be disclosed, along with how these offsets fit within the broader strategy of avoiding, minimizing, restoring, or compensating for environmental impacts.
Companies must set and disclose specific targets related to biodiversity and ecosystem conservation, ensuring these targets align with global and national environmental frameworks. These targets should address the company’s ecological impacts, risks, and dependencies, and may involve considerations like ecological thresholds, geographic scope, and the use of biodiversity offsets.
3. Conclusion
Clear and transparent disclosure of biodiversity and ecosystem-related targets is vital for companies aiming to demonstrate their commitment to environmental sustainability. By setting and sharing these targets, companies not only show how they plan to manage their ecological impact but also how they contribute to global efforts in preserving nature.
In an upcoming article, we will explore how companies can report on these disclosures. Subscribe to stay updated.
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Relevant Standards
ESRS E2
Disclosure Requirement E4-4 – Targets related to biodiversity and ecosystems
29. The undertaking shall disclose the biodiversity and ecosystem-related targets it has set.
30. The objective of this Disclosure Requirement is to allow an understanding of the targets the undertaking has adopted to support its biodiversity and ecosystems policies and address its material related impacts, dependencies, risks and opportunities.
31. The description of the targets shall follow the mandatory content defined in ESRS 2 MDR-T Tracking effectiveness of policies and actions through targets.
32. The disclosure required by paragraph 29 shall include the following information: (a) whether ecological thresholds and allocations of impacts to the undertaking were applied when setting targets. If so, the undertaking shall specify: i. the ecological thresholds identified and the methodology used to identify such thresholds; ii. whether or not the thresholds are entity-specific and if so, how they were determined; and iii. how responsibility for respecting identified ecological thresholds is allocated in the undertaking;
(b) whether the targets are informed by, and/or aligned with the Kunming-Montreal Global Biodiversity Framework, relevant aspects of the EU Biodiversity Strategy for 2030 and other biodiversity and ecosystem-related national policies and legislation;
(c) how the targets relate to the biodiversity and ecosystem impacts, dependencies, risks and opportunities identified by the undertaking in relation to its own operations and its upstream and downstream value chain; (d) the geographical scope of the targets, if relevant;
(e) whether or not the undertaking used biodiversity offsets in setting its targets; and (f) to which of the layers of the mitigation hierarchy the target can be allocated (i.e., avoidance, minimisation, restoration and rehabilitation, compensation or offsets).