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Leaders address the critical state of nature and biodiversity at COP15

Global leaders from around the world came together for COP15 in Montreal, Canada, 7-19 December 2022, to create a plan to address the critical state of nature and biodiversity.
Forest and tree landscape texture background, Aerial top view forest, Texture of forest view from above.

Global leaders from around the world came together for COP15 in Montreal, Canada, 7-19 December 2022, to create a plan to address the critical state of nature and biodiversity.

Nature conservation is often viewed as the idealistic sibling of climate change, but in reality, the nature challenge presents an even greater existential threat than climate change. Described by UN Under-Secretary-General, Inga Andersen, as “death by a billion cuts,” nature loss has hit profound levels. Today, one in eight of the world’s 8 million plant and animal species are at threat of extinction. Resulting ecosystem degradation is affecting the wellbeing of 40% of the human population. The goals set out at the United Nations Biodiversity Conference (COP15) aim to guide global action in halting and reversing biodiversity loss.

One of the fundamental themes for the COP15 was the facilitation of financial flows towards investments that promoted nature positive actions and away from those that are harmful to nature. To achieve this, two areas were explored at length: the implementation of the Global Biodiversity Framework (GBF); and achieving the framework’s associated targets, which address the overexploitation of nature; mass extinction of species and loss of biodiversity; and unsustainable practices.

As outlined at the conference, biodiversity has declined significantly between 2011 and 2020, and none of the 20 targets set at Aichi Biodiversity conference in 2010 have been fully achieved. As such, decisions during COP15 on the shape a new framework would take were highly anticipated, ahead of the conference.

There were a number of well-received outcomes from the conference — with the headline being the 30x30 pledge, where countries have agreed to protect 30% of land and water by 2030.

This was a key ambition for the conference and 100 countries had already signed up to the agreement ahead of time. Achieving this goal by 2030 will include:

  • Restoring, maintaining, and enhancing ecosystems; this involves halting species extinction and maintaining genetic diversity.
  • Using biodiversity in a sustainable way, ensuring that species and habitats are in a position to provide for humanity.
  • Ensuring that the benefits of nature are shared equally and fairly while protecting the rights of indigenous people.
  • Financing and resourcing biodiversity and conservation efforts where needed.

Achieving a nature-positive world by 2030 requires an estimated minimum investment of US$200 billion per year. At the conference, the Global Environment Facility (GEF) agreed to establish the Global Biodiversity Fund to support the implementation of the Global Biodiversity Framework — this highlights the collective desire and global political support for timely implementation. Speed is critical when dealing with nature as the world reacts to changes in nature more rapidly than to changes in climate.

Much like the climate change initiatives of COP27, the private sector is fundamental to the success of this framework. As such, transparency relating to nature impact and dependency from companies will be crucial to understanding the risk and will ultimately play into the creation of parameters for investment.

Indeed, the architects of the new reporting framework, the Task Force for Nature-related Financial Disclosures (TNFD) also received a funding boost at COP15. The German government joined the governments of Australia, France, the Netherlands, Switzerland and the United Kingdom as a funding partner; GEF; and other organizations with a commitment of €29 million (US$30.8 million) over six years.

As well as targets relating to impacts on nature, the TNFD will build the target-setting framework for societal and economic dependencies on nature, incorporating both risks and opportunities. Target-setting has been led by the Science Based Targets Network (SBTN), which aims to ensure an alignment of standards and approach.

As the TNFD gains momentum, all industries will need to take note of their dependencies and impacts on nature. The TNFD is likely to follow the same journey as the Task Force on Climate-Related Financial Disclosure (TCFD), which started as recommendations and over time is being shifted by governments towards mandated disclosures. However, as was evidenced throughout COP15, the risk management and disclosure of nature-related risks is far more complex than that of climate-related risks. 

For some sectors, nature-related risk reporting is already embedded into their practices. During sessions and working groups, a number of existing reporting standards, benchmarking studies, and science-based research have been referenced — Global Reporting Initiative (GRI); World Benchmarking Alliance (WBA); and Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). To synthesize the reporting activity, the International Sustainability Standards Board (ISSB) will steer the development of the global sustainability standards and the “global baseline.”

There are also a number of tools in wide use, especially by financial institutions. These include ENCORE, a tool extensively used to assess corporate nature-related risks and opportunities, and IBAT, for location-specific assessments.

Moving forward, markets will see more momentum and acceleration in disclosures, as well as more alignment across standards and frameworks. Companies were recommended to start readying themselves for increased transparency in this space, and will need to build internal capabilities to keep pace with developments in nature-related disclosure.

Data will be key to disclosure, and as TNFD co-chair David Craig has stated: “The myth that there is a "lack of data" to manage nature dependencies and impacts is being broken.” Indeed, the issue is far from a lack of data, and is instead the disparate nature of the data. Some data identifies exposure, but doesn’t provide enough insight into the risk. A large portion of data has licensing issues, which throws up challenges when trying to standardize risk rating, as outlined during the TNFD Data Catalyst Initiative (DCI) panels.

There are challenges with modeling biodiversity, meaning that it is harder to use available data to create a nature “footprint” in the way we are used to with carbon. For example, forestation is well covered by satellite imagery, but this does not give an indication of soil quality. Also, it is harder to link nature impacts to specific activities. This causes challenges with both mapping data against specific users, and specifying materiality. To add to these issues, there are currently no means to aggregate data effectively.

Ocean health was also widely discussed as oceans present the greatest opportunity for reducing extinction risk outside of protected areas and the ocean is one of the least invested-in sustainable development goals. There was a strong push towards mandating data capture within the marine sector, particularly where vessels go through Marine Protected Areas. These potential cross-industry mandates were countered with fear of potential increases in litigation.

Moving forward, there will be a strong need for synthetization, particularly with regard to supporting mechanisms of finance. During both financial services panels, simplicity was the order of the day — especially with financial services being at such a nascent phase with nature-related risk. Still, the pace of nature loss meant that the next five years was the window of consideration for discussions. In line with aggregation of data discussions during COP15, there were calls from Justine Mariette of CDC Biodiversity for the sector to find a way to create a single score rating system that provided the ability to deep dive into areas of risk, where necessary.

A key takeaway was the level of onus that would need to be placed on the private sector to prepare for disclosure while financial services race to collaborate with ratings agencies and data providers, and prepare to use the TNFD to assess loan books and their own risks.