Reference
Glossary.
Key terms for biodiversity finance and CSRD disclosure.
Additionality
A principle requiring that conservation outcomes funded by a credit or payment would not have occurred without that specific intervention. For a biodiversity credit to be valid, the ecological benefit must be directly caused by the financed activity — not a result that would have happened regardless. Demonstrating additionality typically involves counterfactual analysis against a documented baseline scenario.
Biodiversity credit
A market instrument representing a measurable, verified unit of biodiversity benefit generated by a conservation or restoration project. Credits are purchased by companies seeking to fund nature outcomes, and their credibility depends on robust ecological baselines, additionality, and independent verification. Unlike carbon credits, biodiversity credits are inherently local and place-based, which limits fungibility across geographies.
Biodiversity net gain (BNG)
A regulatory requirement that development projects leave biodiversity in a measurably better state than before. Introduced as a mandatory standard in England under the Environment Act 2021, BNG is calculated using a statutory habitat metric that quantifies area, distinctiveness, and condition before and after development. A minimum 10% net gain must be achieved on-site, off-site, or through statutory credits purchased from government.
CSRD
The Corporate Sustainability Reporting Directive — the European Union regulation requiring large companies to disclose detailed sustainability information, including nature-related impacts and dependencies. Adopted in 2022, CSRD replaced the Non-Financial Reporting Directive and mandates reporting under the European Sustainability Reporting Standards (ESRS), including the biodiversity-specific ESRS E4. All disclosures are subject to third-party assurance.
Double materiality
The CSRD principle that companies must assess sustainability both from the perspective of financial materiality (how nature risks affect firm value) and impact materiality (how the company's activities affect nature). A topic material on either dimension must be disclosed — it does not need to qualify on both. This dual lens distinguishes CSRD from investor-focused frameworks such as TCFD or TNFD.
DR E4-3
A specific disclosure requirement within ESRS E4 covering a company's targets related to biodiversity and ecosystems. Companies in scope must report the ecological baselines, metrics, and timelines underpinning their biodiversity commitments. DR E4-3 targets must be expressed in measurable terms and connected to the impacts and dependencies identified through the company's double materiality assessment.
Ecological baseline
A quantified description of the state of a given ecosystem or habitat before an intervention or development activity begins. The baseline establishes the reference condition against which changes — positive or negative — are measured over time. Its quality directly determines whether additionality claims and outcome assessments are credible, making robust baseline methodology foundational to any biodiversity market.
ESRS E4
The European Sustainability Reporting Standard on biodiversity and ecosystems, forming part of the CSRD framework. It requires companies to disclose their impacts, dependencies, risks, and opportunities related to biodiversity, covering terrestrial, freshwater, marine, and soil ecosystems as well as species-level indicators. ESRS E4 is structured around a value chain perspective and links directly to the Kunming-Montreal Global Biodiversity Framework targets.
Habitat corridor
A strip or network of land that connects isolated habitat patches, enabling species to move, disperse, and maintain viable populations across fragmented landscapes. Corridors are a priority metric in conservation planning because connectivity amplifies the ecological value of individual protected areas. Their presence or absence is increasingly tracked in both TNFD disclosures and ESRS E4 assessments.
ISAE 3000
The International Standard on Assurance Engagements applicable to non-financial information, including sustainability and biodiversity disclosures. CSRD requires third-party assurance under ISAE 3000 or equivalent national standards, beginning with limited assurance and transitioning to reasonable assurance over a multi-year phase-in. The standard applies to the processes and governance underpinning a disclosure, not only to the underlying data.
Kunming-Montreal Global Biodiversity Framework
The international agreement adopted at COP15 in December 2022 that sets global targets for halting and reversing biodiversity loss by 2030. Its headline "30×30" target — protecting 30% of land and ocean areas by 2030 — and associated corporate disclosure goals underpin much of the current voluntary and regulatory biodiversity market architecture. Target 15 specifically calls on large companies and financial institutions to assess and disclose their biodiversity impacts.
LEAP framework
A four-step analytical methodology developed by the TNFD to help companies assess nature-related risks and opportunities: Locate the interface with nature, Evaluate dependencies and impacts, Assess material risks and opportunities, Prepare to respond and report. LEAP provides the structured process behind a TNFD-aligned disclosure and is designed to integrate with existing enterprise risk management systems.
Materiality assessment
The process by which a company identifies which environmental, social, and governance topics are significant enough to require disclosure. Under CSRD's double materiality approach, the assessment must consider both the company's impacts on nature and the financial risks arising from nature degradation. It must be documented, involve stakeholder input, and be subject to external assurance — its outputs drive which ESRS standards apply.
Nature-related financial risk
Exposure to financial loss arising from a company's dependencies on ecosystem services or its contribution to biodiversity decline. Risk categories include physical risks (ecosystem degradation disrupting supply chains), transition risks (regulatory or market shifts affecting nature-intensive business models), and liability risks from disclosure failures. Quantifying and disclosing these risks is a core purpose of both TNFD and ESRS E4.
NDVI
The Normalised Difference Vegetation Index — a satellite-derived measure of vegetation density and health calculated by comparing near-infrared and red light reflectance. NDVI is one of the primary remote sensing indicators used to track habitat condition, land-cover change, and restoration progress at scale. It provides a cost-effective, time-series-capable proxy for on-the-ground ecological survey data across large landscapes.
Outcome assessment
The post-intervention measurement of whether a biodiversity project has delivered its stated ecological goals. Unlike routine monitoring, outcome assessment is a formal structured evaluation that compares observed results against pre-agreed targets and baselines. It is typically required at defined intervals for credit issuance, investor reporting, or regulatory compliance under BNG and similar schemes.
Satellite monitoring
The use of earth-observation data from orbital sensors to track land cover, vegetation, water bodies, and species habitats over time. Modern biodiversity platforms integrate satellite monitoring to provide near-real-time, independently verifiable evidence for credit claims, CSRD disclosures, and investor-grade reporting at landscape scale. Sub-meter commercial imagery and open datasets such as Sentinel-2 have made large-area monitoring cost-effective.
Species indicators
Quantitative measures tracking the status or trends of selected species — such as abundance, distribution range, or population viability — used as proxies for broader ecosystem health. Both ESRS E4 and TNFD call for species-level indicators alongside habitat metrics, particularly for sectors with material land-use footprints. Key examples include the IUCN Red List Index and Mean Species Abundance.
TNFD
The Taskforce on Nature-related Financial Disclosures — a market-led initiative that published its final disclosure framework in September 2023, enabling companies and financial institutions to report on nature-related dependencies, impacts, risks, and opportunities. TNFD recommendations are structured around four pillars — Governance, Strategy, Risk Management, and Metrics & Targets — deliberately mirroring the TCFD climate framework to ease adoption. Over 400 organisations had committed to TNFD-aligned reporting by early 2024.
Voluntary biodiversity market
The ecosystem of buyers, sellers, and intermediaries transacting biodiversity credits and nature outcomes outside mandatory regulatory schemes. Unlike compliance markets such as BNG in England, the voluntary market operates through private standards, corporate net-positive commitments, and investor ESG requirements. Credit integrity is determined by independent standards bodies, and market conventions for pricing, verification, and equivalence are still maturing.
Wave 1/2/3 companies (CSRD)
The phased implementation schedule for CSRD reporting obligations. Wave 1 (financial years from 2024) covers large listed companies already subject to the Non-Financial Reporting Directive. Wave 2 (from 2025) extends obligations to other large EU companies meeting two of three size thresholds. Wave 3 (from 2026) includes listed SMEs and other entities; non-EU companies with significant EU revenues face CSRD obligations from 2028.
Further reading
Understanding CSRD biodiversity obligations
Our complete guide walks through ESRS E4, the LEAP framework, and double materiality — with practical guidance for Wave 1 and 2 companies.
Read the CSRD guide