BusinessGreen speaks to delegates at COP15 about how the dash for cash to protect biodiversity will impact investors and business
Finance and Biodiversity Day at the COP15 Biodiversity Summit got off to an explosive start yesterday morning, after developing nations walked out of talks on finance in the wee hours of the morning. As the convention centre cranked into life several hours later, the Summit's first ever 'finance and biodiversity' forum got underway, with Aviva, BNP Paribas, and Credit Suisse among the financial leaders to share podiums with government ministers, multilateral development banks, regulators, and NGOs seeking to tackle the complex question of how to drive more private funds towards nature protection.
Money is at the heart of the COP15 agenda and the global effort to ensure the parties signed up to the Convention on Biodiversity Framework agree to a new 10-year nature protection plan that finally serves to reverse global biodiversity decline. There is a widespread agreement a failure to come up with a credible financing plan in support of any targets agreed in Montreal will resign them to the same fate to the previous nature targets brokered by the Convention of Biological Diversity: failure.
Indeed, there is growing awareness across the business and finance sectors of their role as the financiers of a nature positive economy, given public budgets are already straining in the wake of the global economic downturn and fallout from the pandemic.
The private sector currently provides 17 per cent of the financing that goes towards nature protection, but economists have warned they will need to make up the lion's share of additional funding between now and 2030 if the gaping biodiversity finance gap is to be narrowed, nature is to be put firmly into recovery, and critical ecosystem services are to be restored to health.
As such, it is impossible to underestimate the importance of money to the Montreal talks. Dozens of countries have said they will not back any global pact on nature and its various provisions around pollution and nature protection without agreement on a new international financing commitment. Co-chair of the open-ended working group on the GBF Francis Ogwal conceded yesterday that the failure of the Aichi Targets for 2020 was largely the result of a dearth of pre-agreed funding plans.
But fears are growing that the talks could become deadlocked on the issue of funding, after reports emerged this morning that the French government is blocking proposals from developing countries for a new specific international fund for biodiversity and pressuring the EU to do likewise. The stance threatens to cause a major row, given a large group of developing and emerging economies have made the formation of a new "second generation fund" a major goal for the Summit. They argue a new fund specifically for biodiversity protection and modelled on the Loss and Damage Fund agreed at last month's COP27 Climate Summit is urgently needed of overarching nature protection targets are to be met.
However, on the side lines of the summit, some parties appeared to signal their readiness to work towards a deal on finance. For example, the German government announced it would provide €29m over six years to support the development of the Taskforce for Nature Related Financial Disclosures (TNFD) framework, a tool that will be critical in achieving the goals set out in Target 15 of the GBF around the mainstreaming of nature risk and impact reporting at large companies and financial firms.
And for its part, the UK announced the launch of a new programme designed to tackle the destruction of nature and biodiversity across sub-Saharan Africa, South-East Asia and South Asia. However, it did not commit any new money to the initiative, noting it would be funded through the UK's existing £11.6bn international climate finance budget. "We are using our Overseas Development Aid as a catalyst to unlock more public and private finance for nature," said Environment Minister Zac Goldsmith as he launched the fund at COP15. "We are beginning to see the commitments made at COP26 translate into actions. Countries, businesses, and financial institutions have begun the journey towards a nature positive economy."
However, among industrialised economies in particular there is also a growing consensus around the need to push biodiversity finance firmly out of the realm of its traditional home as a subset of aid policy and into the world of private finance.
Speaking to journalists yesterday, Florian Titze, policy advisor for international biodiversity policy at WWF Germany, said a comprehensive finance packaging would require both the minimisation of harm to nature and the amassing of more funds for the implementation of the framework. "We need to leverage all sources of finance, and that includes domestic, private, international, and public financing," he said. "The multilateral development banks and financial institutions must also do their part in contributing."
The growing consensus on the private sector's role in providing finance that can deliver international nature goals and cutting off funding flows to environmentally destructive activities has emerged as debate continue to swirl around the value of having corporate representatives at the summit. A strongly worded report from Friends of the Earth warned of "corporate capture" of the Convention of Biological Diversity, the UN treaty and organising body behind the COP, accusing businesses of lobbying for a weak outcome from the conference.
The summit has seen record attendance from companies and financial institutions. The CBD secretariat confirmed to BusinessGreen that 944 of 12,000 registrations at the summit had been registered in the business category. But they noted that these private sector actors were just one voice among many at the summit. "The CBD has a variety of mechanisms for engagement with a number of stakeholders and non-state actors: IPLCs, civil society, women, youth, business, subnational governments, faith-based organisations," they said. "Business is merely one of them."
Among the issues businesses have been most vocal on is a campaign for mandatory nature-risk reporting to be required of large corporates and financial firms - set out in Target 15 of the draft GBF text. The measure is seen as critical lever that would provide global asset managers and other investors with the information they need to assess the impacts their portfolios have on nature and drive funding flows towards nature-positive businesses and projects.
At the time of writing, it is undecided whether the 'make it mandatory' call organised by business group Business for Nature will be reflected in the final version of the GBF. Discussions on Wednesday afternoon saw countries push back against plans mandatory nature reporting requirements on large companies, arguing UN texts should not be imposing legislation on countries.
The resistance to the reporting proposals has prompted significant consternation among observers, who have argued it is critical that rules around reporting are internationally consistent to create a level playing field for progressive firms and give investors the insight they need to bankroll the transition to a more nature-positive economy. There are also fears among some investors that without improved transparency around the nature-related risks businesses face they could unwittingly invest in companies that are facing the risk of significant losses as a result of the degradation of ecosystem services.
In what is believed by many to be a first in biodiversity negotiations, the closed door Target 15 talks are understood to have given the stage to a business leader, providing Eva Zabey, chief executive of the Business for Nature coalition, with the opportunity to urge countries squabbling over the mandatory element of the target to come together behind the target, arguing large companies wanted the measure.
Many insiders lauded the Business for Nature group's role at the event, claiming it marked a new frontier for progressive business engagement at biodiversity talks. One observer, however, took a more cycnical view, arguing the Nature for Business campaign's focus on 'mandatory' disclosures had diverted attention from the underpowered nature of Target 15. They said the current text's call for countries to "encourage and enable" instead of "require" firms to undertake nature risk reporting made conversations around whether disclosures would be "mandatory" redundant.
But Eliot Whittington from the Cambridge Institute for Sustainability Leadership (CISL) offered a more upbeat view, arguing there would be time to iron out complex questions on how to implement mandatory reporting once the measure had been agreed "in principle".
"There's a huge question about how we implement 'make it mandatory' and there will have to be nationally appropriate ways of doing that," he said. "But obviously what will be really useful is that we can make that a good, clear global system. Hopefully what we can get [at COP15] is an agreement of the principle and then we can build off that with very clear standards about how implementation can happen."
In the face of criticism of private sector engagement at COP15, several delegates told BusinessGreen that the strong business presence at the talks was a sign of a private sector increasingly engaged on the need to protect biodiversity, not of nefarious corporate meddling in talks.
"Business presence is really important," Tanya Steele, chief executive of WWF, told BusinessGreen. "Let's look at what we've seen in terms of the sheer scale of sign up at COP26 on net zero targets. Once businesses make those commitments, particularly to shareholders, the expectation is they must deliver on them. For me, for businesses to both start to look at these issues and consider what they need to do is a major step forward. I think we should encourage that."
Tony Juniper, the chair of Natural England, told journalists he was encouraged by the business presence of the summit, arguing a reckless underestimation of the value of nature was changing. "One of the things that I find very positive about this meeting is the extent to which there are hundreds of private sector companies and financial organisations here," he said. "The penny is dropping not only in governments, but in boardrooms around the world. Companies are now beginning to wrestle with how they can measure the impact of business activities and financial decisions on the natural world and are beginning to think through strategies for net positive business."
There are hopes the summit will see 'nature-positive by 2030' mainstreamed as a global policy objective, a target that would catalyse the adoption of the goal by non-state actors - much like the Paris Agreement's 1.5C limit has galvanised climate plans at companies.
"The good news is we have Paris Agreement as a real learning basis," WWF's Steele said. "But we are trailing. This summit is already two years late. We really have to accelerate action. And that's when clarity and ambition is going to be incredibly important, as well as the science-based [nature] targets the implementation mechanisms - they can all flow down and that gives businesses a chance."
Regardless on how the discussions on nature targets, funding or nature risk reporting play out, there is no doubt COP15 has marked a watershed moment for business engagement on biodiversity. There is also no denying that more and more businesses are awake to the fact that biodiversity loss presents a threat to their bottom line.
As WWF's Steele optimistically put it: "We're hearing the real clarion call for businesses, that they understand the science, they follow the science, they would really like some clear guidance so that they can actually set and trace the steps they know are going to need to be taken."
* This article was originally published here