Outcomes from the global 2024 UN Biodiversity Conference (COP16) event feed into global climate strategy and, in turn, local regulations. An overview of key finance and market related outcomes and what they mean for business.
The 2024 UN Biodiversity Conference (COP16) took place in Cali, Colombia late last month, with mixed results.
Outcomes from COP16 are being brought to nature related discussions at COP29 and integrated into the broader global climate strategy. As such, all businesses need to be aware of the developments.
The annual conference is the peak event for policy makers, local communities, businesses, investors and nature activists. Its aim is to lock in national milestones and commitments that will determine local regulation and the future state of nature.
Securing finance to protect and restore nature and biodiversity is a key objective of the COP process - and while important progress was made, the event also fell short of some expectations.
There is an urgent need to close the US$700 billion annual biodiversity finance gap through a mix of public and private funding.
So what progress was made?
In this article we outline the key finance and market related outcomes which emerged from COP16. Including:
One of the main expectations from the event were significant updates to individual countries’ National Biodiversity Strategies and Action Plans (NBSAPs).
All 196 countries were expected to submit implementation plans to be reviewed in terms of alignment with the Kunming Montreal Global Biodiversity Framework (KMGBF), as agreed in COP15. However, only 44 NBSAPs were received.
While 119 of the remaining countries also made progress, this was reflected only in revised National Targets (as opposed to detailed plans).
In other words while 60% of countries made progress around and towards their nature targets, only 22% have detailed plans create to align with the KMGBF.
This ambition is significant as the intent is for NBSAPs to be close integrated with National Determined Contributions (NDCs) – the climate targets which countries are due to update and submit by early 2025, in line with the Paris Agreement.
While the lack of current alignment to the global framework is disappointing the meaningful work is not limited to the COP process. Countries can continue progress in between the global conferences.
It is also encouraging to see a growing wave of biodiversity and nature related progress underway in the private sector. We report on this in our monthly market update – read the October ’24 edition here.
The Kunming Montreal Global Biodiversity Framework (KMGBF) estimates that there is a US$700 billion annual shortfall in funding needed to adequately protect and restore biodiversity.
The framework includes several targets to address the gap. These are captured in the table below along with an update on the progress made at the COP16 event.
This includes:
Drivers to further scale private sector participation are still missing from COP16’s outcomes. The slow progress against the KMGBF finance goals (outlined above) proves that public funds alone are insufficient to meet biodiversity finance targets.
Biodiversity markets are an important tool to support private sector finance.
Much of the investment currently allocated towards fossil fuels assets can be redirected towards biodiversity and climate solutions.
The image below illustrates the size of assets in biodiversity funds in contrast to assets in climate funds and fossil fuel funds in 2024.
Among the many types of nature finance markets listed in the UNEPFI report, biodiversity credits are identified as having experienced significant growth.
Even though these markets are a very early-stage instrument, biodiversity credits are acknowledged for their potential to scale positive biodiversity impact.
KMGBF target 19(d) recognises biodiversity offsets and credits as stimulating innovative methods of financing projects that can help direct private funds towards nature.
Here are some ways biodiversity credits can help to scale private capital to meet the KMGBF targets:
The table below outlines how these three benefits can be aligned to meet most of the KMGBF targets.
While COP16 may appear to have fallen short of many expectations, this underscores a crucial point: governments cannot tackle the immense challenge of this nature crisis alone.
The responsibility to safeguard and restore our natural world must be shared, and businesses have a pivotal role to play in leading this vital effort today. Nature-related compliance obligations are in early stages of implementation but are only expected to tighten and capture more businesses. The expectations of customer, staff and other stakeholders for nature-positive action is also on the rise.
Businesses can start by assessing their nature footprint and understanding their risks and opportunities when engaging with nature.
Nature and biodiversity are embedded in many ways in business operations, across various stages of our supply chains. Existing frameworks and guides such as Taskforce for Nature-related Financial Disclosure (TNFD), Global Reporting Initiative (GRI) and Science Based Targets Network (SBTN) are a good start to understand the requirements.
Key outcomes from Biodiversity COP16: What businesses need to know
Parties to the Paris Agreement are tasked with updating their national climate targets, policies and strategies to support global climate efforts. Australia has recently completed a draft of its revised plan. When finalised, it will have a cascading effect on businesses and individuals. We provide a summary of the proposal and discuss next steps.
