[INSIGHT] ESRS E4: What are biodiversity-sensitive areas and why are they important?

ESRS E4: What are biodiversity-sensitive areas and why are biodiversity-sensitive areas important?

Aug 25, 2025

1. Introduction

Biodiversity-sensitive areas are places that hold particular importance for ecosystems and species. They are either legally protected by governments or scientifically recognized as vital for biodiversity. For corporate leaders, understanding where operations intersect with these areas is critical to avoiding regulatory risks, reputational damage, and supply chain disruption.

This issue is now embedded in policy frameworks such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS), which explicitly require disclosure of company sites in or near biodiversity-sensitive areas.

By reading this article, you will learn:
✅ The definition of biodiversity-sensitive areas according to the CSRD
✅ Why biodiversity-sensitive areas matter for business
✅ Tools and data sources that help companies comply

2. The definition of biodiversity-sensitive areas according to the CSRD

Biodiversity-sensitive areas are broadly defined under two categories in ESRS E4:

Legally protected areas:
These include:
- Natura 2000 sites in the EU
- UNESCO World Heritage natural sites
- Ramsar wetlands (wetlands of international importance)
- Other areas protected under national or regional legislation
These are formally designated areas subject to legal restrictions, where corporate activity may be prohibited or tightly controlled.
Scientifically recognized areas of high biodiversity importance:
These include:
- Key Biodiversity Areas (KBAs)
- Ecologically or Biologically Significant Marine Areas (EBSAs)
- Ecosystems classified as threatened on the IUCN Red List of Ecosystems
- Habitats of species listed on the IUCN Red List of Threatened Species
These designations highlight places essential for the persistence of biodiversity, even if not formally protected by law.

Together, these categories ensure companies must consider both legally restricted zones and ecologically critical habitats when assessing impacts and disclosures.

3. Why biodiversity-sensitive areas matter for business

Biodiversity loss has become one of the most urgent global risks facing society and business. The World Economic Forum ranks biodiversity loss and ecosystem collapse among the top three most severe risks humanity will face in the next decade, with over half of global GDP (about $44 trillion) dependent on nature and its services. For companies, this means that protecting ecosystems is a core aspect of risk management and long-term value creation.

Companies face multiple types of exposure:

Regulatory and legal risk: Many sensitive areas are protected by law, restricting industrial or commercial activity. For example, EU law requires any project near a Natura 2000 site to undergo an Appropriate Assessment, with potential blocking of projects if impacts cannot be mitigated .
Reputation risk: Operations near iconic biodiversity sites (such as World Heritage Sites) can trigger significant public backlash and stakeholder opposition, harming brand value.
Operational and supply chain risk: Ecosystem degradation can disrupt natural services such as water availability, soil fertility, or fisheries productivity. Companies operating near sensitive ecosystems may also face operational restrictions or costly compliance requirements.
Financial and investor risk: Under the EU Sustainable Finance Disclosure Regulation (SFDR), investors must report on portfolio exposure to operations affecting biodiversity-sensitive areas . Companies with unmanaged impacts may face reduced access to capital or investor exclusion.
Dependency risk: Many sectors depend directly on ecosystem services safeguarded by sensitive areas, such as clean water, pollination, or genetic resources for pharmaceuticals.

4. Tools and data sources that help companies comply

Complying with these requirements requires reliable geospatial analysis. Several global tools and databases support companies in identifying biodiversity-sensitive areas:

Integrated Biodiversity Assessment Tool (IBAT): Provides authoritative data on protected areas (WDPA), KBAs, and IUCN Red List species. It can generate Disclosure Preparation Reports highlighting which company sites overlap or are near sensitive areas, and includes STAR metrics on species risk.
World Database on Protected Areas (WDPA): The official global dataset of legally protected areas, accessible through Protected Planet.
Key Biodiversity Areas database: Maintains global information on KBAs and the species or ecosystems that justify their designation.
EBSA repository: Hosted by the Convention on Biological Diversity, with maps of significant marine areas.
IUCN Red Lists: Cover both threatened species and ecosystems, highlighting sensitive habitats.