Late-night negotiations ended in agreement on a new Global Biodiversity Framework at COP15, the UN Biodiversity Conference, in a moment some have referred to as the “Paris for nature.”
The deal includes targets to protect 30% of the planet by the end of 2030, a requirement for governments to ensure that that large and transnational companies disclose their impacts on biodiversity, and the reform of $500bn of environmentally damaging subsidies.
Crucially, private finance is listed in the agreement as one of the solutions to fund the finance gap on nature, sending a strong policy signal to businesses and the real economy.
This follows the soft launch of Nature Action 100; a new investor-led corporate engagement initiative which will focus on companies deemed to be systematically important in reversing nature and biodiversity loss by 2030.
Reflecting on the announcement, Stephanie Pfeifer, IIGCC CEO said: “After attending the conference I’m really uplifted to see the Global Biodiversity Framework formally agreed by world leaders. Protecting nature and preserving earth’s natural capital is fast becoming a critical component of limiting the worst effects of climate change, and investors increasingly recognise the risks, and opportunities, this poses to their clients and beneficiaries.
As a founding member of Nature Action 100 we see both parallels and differences between nature and existing corporate engagement on net zero. With the support of this new international commitment we will work with our members and partners to leverage their knowledge and expertise, creating new pathways and indicators of success and mobilising the wider investment community to help slow and reverse nature loss.”
The key points at a glance
Long-standing responsible investors will be familiar with the uncertainty that comes with such a task – how can the sector quantify nature and companies’ impact on it to incentivise success?
The Kunming-Montreal pact provides much-needed guidance, and together with the Taskforce for Nature-related Financial Disclosures it may well form the basis of investor action on nature. The biggest points for investor consideration include:
Nature disclosures for businesses
Target 15 of the Kunming-Montreal pact requires governments to ensure that large and transnational companies disclose “their risks, dependencies and impacts on biodiversity”. For investors already mobilising efforts on the topic this represents an important and much-needed policy signal to the real economy.
For business leaders, Moody’s has described this as “the next frontier in company risk management.” Expect to see such more discussion throughout 2023.
Conserve 30% of earth by the end of the decade
The headline commitment for most – the final wording commits governments to conserving nearly one third of earth for nature by 2030 while respecting indigenous and traditional territories. The language emphasises the importance of effective conservation management to ensure wetlands, rainforests, grasslands and coral reefs are properly protected.
Investors will need more data and research to establish how this can be properly measured and reported as part of any target setting.
Reforming harmful subsidies
According to one study, the world spends at least $1.8tn (£1.3tn) every year on government subsidies that degrade wildlife and contribute to temperature increases. Seen by some as failure from last decade’s biodiversity targets, there will be significant scrutiny in the coming years as to how these funds can be reformed and redirected.
A shared risk
For those already getting to grips with the topic of biodiversity and nature, this agreement serves as a useful and important signal that change is happening. Now begins the more complex task of establishing conversations, pathways, and indicators to help measure and realise its ambitions.
The recent IIGCC AGM highlighted nature as a key focus for 2023 and we look forward to working with our members to support the development of this field.
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