Understanding the EU's Approach to Biodiversity

The 27 member states of the European Union (EU) boast a rich diversity of ecosystems, which serve as habitats for a multitude of species. However, these ecosystems are facing increasing strain due to the twin pressures of environmental change and human activity.

In response, the European Commission has proposed a raft of new laws aimed at stemming the tide of biodiversity loss. These proposals focus on the rejuvenation of an array of ecosystems throughout Europe, ranging from forests and oceans to farmland and cityscapes. In this blog we will explore these different laws and approaches and what the EU is hoping to achieve.

The Nature Restoration Law

Slated for enactment in the third quarter of 2024, this regulation will usher in new measures to bolster the restoration of nature and biodiversity.

This legal measure, which bears similarities to the UK's Environment Act of 2021, is crafted with the ambition to ward off ecosystem breakdown and lessen the gravest effects of climate change and loss of biodiversity. It sets the ambitious target of restoring 20% of the EU’s land and marine areas by 2030, with a longer-term objective to nurse back to health all ecosystems in need by 2050. To that end, it lays down legally binding targets for the revival of nature across various ecosystems for each member state. The proposal encompasses a broad range of ecosystems and regeneration activities, such as rewilding, tree planting, the greening of urban areas, and the reduction of pollution.

This new legislation will require member states to develop national restoration plans and ensure the continuous improvement of diverse ecosystems. In tandem, there will be a significant boost in EU funding for biodiversity expenditure, including restoration, amounting to around €100 billion under the current Multiannual Financial Framework. Moreover, the Nature Restoration Law gives special attention to urban ecosystems, which are vital for the quality of life of city residents and are integral to sustainable urban development. Recognising the crucial role of green spaces and tree canopy in maintaining urban biodiversity, reducing pollution and enhancing the well-being of city dwellers, the Commission’s draft of the law establishes two main objectives for the member states:

No Net Loss of Urban Green Space and Tree Canopy Cover: This mandate requires that there be no net loss of urban green space and tree canopy cover in all cities, towns, and suburbs by 2030, compared to 2021 levels.
Increase in Urban Green Space: The Law also calls for a significant expansion in the total national area of urban green space in cities, towns, and suburbs. By 2040, this area should have grown by at least 3% compared to 2021 levels, and by at least 5% by 2050.

Member States will be required to devise national restoration plans and ensure the continual enhancement of diverse ecosystems. There are, however, allowances for exceptions in particular circumstances, such as acts of God, unavoidable habitat changes driven by climate change, or projects of paramount public interest that lack less detrimental alternatives.

This legislation builds upon existing laws and extends beyond the Habitats Directive and Natura 2000 protected zones to encompass all ecosystems. Additionally, it earmarks substantial EU funding for biodiversity expenditure, including restoration, amounting to around €100 billion under the current Multiannual Financial Framework.

As of June 2023, this legislation is at a pivotal crossroads in its negotiation process. Even though the Council has arrived at a general approach, Member States including Poland, the Netherlands, Italy, Finland, and Sweden have dismissed the proposal, while Belgium and Austria have abstained. The Council’s version, though ostensibly more ambitious than that of the Commission’s, is essentially limited to ecosystems in a poor state. Negotiations within the European Parliament have also been intricate, with a move to reject the legislation outright narrowly failing to secure sufficient support.

This intricate interplay of negotiations lays bare the challenges involved in reaching consensus on such a seminal and transformative environmental legislation. The outcome of these negotiations will profoundly influence the extent to which the EU can effectively address biodiversity loss.

The Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) has instituted the European Sustainability Reporting Standards (ESRS) across six domains: climate change mitigation and adaptation, water and marine resources, resource utilisation and the circular economy, pollution, and biodiversity and ecosystems.

The CSRD supersedes and broadens the Non-Financial Reporting Directive (NFRD) and obliges companies to furnish comprehensive information regarding their sustainability practices, including their environmental impact.

The CSRD widens the range of companies obliged to disclose sustainability information. By encompassing all large companies and all companies listed on regulated markets with the exception of micro-enterprises, the CSRD ensures that a substantial number of organisations are held to account for their environmental impact, including their effects on biodiversity. Another notable alteration is the depth and rigour of the reporting. The CSRD mandates that companies divulge information not solely on their policies but also on the actual impact of their activities on the environment. This includes disclosures on their supply chains, which often account for a significant portion of biodiversity impact.

Furthermore, the CSRD is in alignment with the European Green Deal, which aspires to render Europe the world’s first climate-neutral continent by 2050. Within this framework, the CSRD serves as a catalyst for companies to make a positive contribution to biodiversity. By being required to disclose their impacts, companies are incentivised to embrace more sustainable practices, which can aid in the conservation and restoration of ecosystems. This is particularly pertinent for sectors such as agriculture, forestry, and fisheries, which have a direct impact on biodiversity.

The EU Taxonomy Regulation

This regulation, already in force, establishes a clear framework for determining which economic activities can be deemed environmentally sustainable, though it is not obligatory. By defining what constitutes an environmentally sustainable investment, the Taxonomy Regulation ensures that capital is channelled towards activities that have a positive effect on the environment, including biodiversity.

The Taxonomy Regulation dictates that for an economic activity to be deemed environmentally sustainable, it must make a significant contribution to one or more of the six environmental objectives outlined by the EU. Among these objectives are the sustainable use and protection of water and marine resources, and the preservation of healthy ecosystems and biodiversity. This harmonisation of economic activities with environmental aims is expected to bolster biodiversity by encouraging sustainable practices in sectors such as agriculture, forestry, fisheries, and infrastructure development.

A distinctive aspect of the Taxonomy Regulation is the “Do No Significant Harm” (DNSH) principle. This principle ensures that an activity contributing to one environmental objective does not significantly impair any of the others. Fundamentally, the DNSH principle functions as a safeguard for biodiversity, as it precludes investments in activities that might have unintended adverse effects on ecosystems. Informed decision-making by providing investors with clear criteria for what qualifies as sustainable investments, the Taxonomy Regulation enables them to make informed decisions. Investors are increasingly mindful of the environmental impact of their investments and are on the lookout for opportunities that are in alignment with their values. This trend is likely to culminate in augmented funding for projects and initiatives that make a positive contribution to biodiversity.

The Taxonomy Regulation is anticipated to provide incentives for innovation in green technologies and sustainable practices. As companies and investors strive to meet the criteria delineated in the Taxonomy, there may be a surge in the development of new technologies and practices that are not only environmentally sustainable but also advantageous for biodiversity.

Other EU Measures

Among other proposals is a commitment to reduce the use and risk of chemical pesticides by 50% by 2030. This objective is not solely aimed at preserving the environment but also at safeguarding the health of EU citizens and agricultural workers who are directly exposed to these harmful substances. In line with the EU’s Biodiversity and Farm to Fork Strategies, this initiative is oriented towards bolstering the resilience and security of the food supply, both within the EU and on a global scale.

The Commission has also laid down specific targets that include reversing the decline of pollinator populations, increasing green urban spaces, enhancing biodiversity in agricultural and forest ecosystems, restoring drained peatlands, and converting thousands of kilometres of rivers into free-flowing water bodies.