Policy Watch: Businesses Show Up at COP16, but Policymakers Struggle to Secure Financing for Nature

November 12, 2024 – The global biodiversity summit COP16, held last month in Cali, Colombia, drew over 3,000 delegates from corporations and investment firms—more than triple the attendance at COP15 in Montreal. Despite the strong corporate presence, many attendees left with a sense of disappointment as significant challenges remain in mobilizing the necessary financing for nature conservation. Nonetheless, there were some notable achievements that signal incremental progress.

Key Developments from COP16

One major outcome from COP16 was the establishment of a new subsidiary body aimed at giving Indigenous peoples, who safeguard approximately 80% of the world’s remaining biodiversity, a formal platform to present their perspectives and advise on future biodiversity summits. This initiative acknowledges the critical role Indigenous communities play in global conservation efforts.

Additionally, a new global financing mechanism—the Cali fund—was introduced. This fund will ask companies utilizing digital sequence information (DSI) from genetic resources, particularly in the pharmaceutical, biotech, and agricultural sectors, to contribute a portion of their revenues to support developing countries, Indigenous communities, and local conservation efforts. Clement Metivier, acting head of international advocacy at WWF, estimates that this mechanism could potentially channel up to $1 billion annually into conservation projects. However, he emphasized that the fund’s success hinges on governments making these contributions mandatory. Initially, companies are expected to contribute voluntarily, at rates of 1% of profits or 0.1% of total revenues.

“This could be an essential contribution to the global biodiversity framework,” Metivier remarked. “But it’s also a matter of fairness and justice.”

Despite these steps, there was a lack of consensus on establishing a comprehensive nature fund and ensuring that developed nations would fulfill their commitment to mobilize “at least” $20 billion annually by 2025 for developing countries. This pledge is part of the broader effort to address the $700 billion biodiversity funding gap. Data from the Organisation for Economic Co-operation and Development (OECD) reveals that in 2022, developed countries provided $12.1 billion in financial assistance, but only $3.8 billion of that was directly allocated to biodiversity.

Global leaders had previously committed to mobilizing $200 billion annually by 2030 to support national biodiversity strategies. Yet, in 2022, biodiversity-related financial flows amounted to just $26 billion, with limited involvement from the private sector and only $700 million contributed by private philanthropy.

The Urgency of Monitoring and Implementation

Another key unresolved issue at COP16 was the development of a monitoring framework to track progress toward the 23 biodiversity targets set by global leaders in 2022. Despite having two years to prepare, only 44 countries have submitted their national biodiversity strategies and action plans. This delay hinders alignment between policy and the necessary actions to meet the agreed targets.

“We cannot afford a repeat of the Aichi targets, where slow implementation mechanisms led to failure,” Metivier cautioned. “Immediate action is crucial, and financial support is key to enabling countries, especially in the Global South, to deliver on the global biodiversity framework.”

To address these shortcomings, the Convention on Biological Diversity (CBD) secretariat is considering convening an interim meeting in February 2025, possibly in Canada or Kenya, to maintain momentum rather than waiting for the next scheduled conference in October 2025.

Corporate Responsibility and Action

One positive outcome from COP16 was the record attendance of businesses and financial institutions, signaling a growing awareness of the need for corporate action on biodiversity. Eva Zabey, CEO of Business for Nature, stressed that companies should not wait for perfect regulations or data to begin their initiatives.

“There are no-regret actions that businesses can invest in immediately,” Zabey advised. “Companies should assess their material impacts and dependencies on nature and commit to measurable actions.” She noted that over 150 companies are preparing to set science-based targets for nature. Leading examples include luxury group Kering, which has adopted targets for both freshwater and land, and global pharmaceutical firm GSK, along with cement and materials company Holcim, which have set freshwater targets.

Business for Nature, alongside the World Business Council for Sustainable Development (WBCSD) and the World Economic Forum, has developed strategies to help companies integrate nature considerations into their operations. These strategies include sector-specific actions designed to cut through complexity and accelerate progress.

“The key message is clear,” Zabey stated. “Identify your major impacts and dependencies and take action. Refine your strategies as you go—there is no such thing as a perfect plan.”

However, the World Benchmarking Alliance found that only 5% of companies have evaluated their operational impacts on nature, and less than 1% understand their dependence on natural ecosystems. A report from CDP highlighted that while there was some improvement in nature-related reporting over the past year, fewer than 10% of companies assessed their dependency on biodiversity, and only half of those identifying risks related to water and forests included financial implications.

Financial Sector Involvement

Engagement from the financial sector also showed progress, albeit modest. Only 17% of banks and investors reported financing nature-based solutions, and 23% supported sustainable agriculture. Nonetheless, there were promising signs, such as the launch of a 100 million euro fund by 11 major French institutional investors. The Fonds Objectif Biodiversity aims to invest in companies that provide solutions to reduce biodiversity loss and in European small and medium-sized enterprises (SMEs) transitioning to sustainable practices. The fund will use CDP data to guide investments.

The Taskforce on Nature-related Financial Disclosures (TNFD) announced that over 500 businesses and financial institutions have committed to adopting its recommendations on reporting nature-related impacts and risks. The TNFD called on governments to mandate corporate reporting on nature dependencies to foster transparency and accountability.

Zabey pointed out that a significant gap remains between leading companies and the broader market but believes that policymakers have a crucial role to play in leveling the playing field.

“To make valuing nature the norm, we need robust policies,” Zabey said.

Legislative and Policy Challenges

One major piece of legislation designed to integrate nature considerations into business operations is the European Union’s Deforestation Regulation (EUDR). This law requires large companies trading in seven key commodities to ensure their products are not sourced from recently deforested areas or linked to forest degradation. However, the European Commission recently proposed delaying the implementation of EUDR by one year, pushing its start to December 2025. The European Parliament is expected to decide on the proposal this week.

Zabey expressed concern that such delays could disadvantage proactive companies that have already invested in supply chain traceability.

“A delay risks creating an uneven playing field,” she warned.

Metivier highlighted another pressing issue: the need to repurpose subsidies that are harmful to nature. At COP15, countries agreed to identify and phase out at least $500 billion per year in environmentally harmful subsidies by 2030. However, the topic received limited attention at COP16.

“Subsidies remain a complex and politically sensitive issue, but it’s crucial to redirect them,” Metivier said. “We need more political commitment to ensure that harmful subsidies are repurposed.”

Zabey noted that while subsidies have become a more prominent topic in business discussions, actionable policy is needed to drive real change. “Governments and companies need to map out which subsidies they receive and explore sustainable alternatives. It’s not just about cutting support; it’s about rethinking what better options are available,” she explained.

In the EU, for example, several countries provide tax incentives for fossil fuel use in agriculture and reduced VAT rates for fertilizers and pesticides. However, there are few concrete plans for reform.

Mainstreaming Biodiversity

COP16 did see some initiatives aimed at integrating biodiversity across government sectors. A coalition of 18 countries, led by Mexico and host Colombia, launched the Mainstreaming Champions group, designed to push biodiversity beyond environmental ministries and involve other governmental areas, including finance. Significantly, COP16 marked the first biodiversity summit where finance ministers were present.

“This inclusion is promising,” Zabey said. “It shows that the message about aligning climate and nature agendas is gaining traction.”

The urgency to integrate nature into climate commitments is growing. Experts are advocating for the inclusion of biodiversity in Nationally Determined Contributions (NDCs), which are due for submission in February. COP16 attendees and leaders in sustainability are calling on Brazil, the host of next year’s climate COP, to collaborate with future biodiversity COP hosts to promote unified strategies.

Looking Ahead

The spotlight now shifts to the upcoming COP29 climate talks in Baku, where global leaders will face pressure to make tangible progress on redirecting financial flows toward biodiversity. Additionally, with uncertainty surrounding a potential Trump administration and its implications for U.S. climate policy, the onus may fall on other nations to lead with renewed vigor and commitment.

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