COP16 – What Should Business Leaders Expect?

From October 21 to November 1, over 190 countries will convene at the sixteenth conference of the parties, COP16, for the UN Convention on Biological Diversity (CBD) to drive global action to protect the world’s natural resources. Held in Cali, Colombia, one of the most megadiverse and biodiversity rich countries, the theme of COP16 is ‘Peace with Nature’.

At the first biodiversity COP since the adoption of the Global Biodiversity Framework at COP15 in 2022, the focus will be on implementation, and advancing National Biodiversity Strategies and Action Plans (NBSAPs). Translating the tenets of the Kunming-Montreal Global Biodiversity Framework into national action will prove critical to make progress towards the headline target of protecting 30% of land and sea areas by 2030 and effectively restoring 30% of degraded ecosystems.

Alongside this, negotiations will centre around how best to invest and collaborate to drive resource mobilisation and technical cooperation as well as finalising multi-lateral mechanisms on fair and equitable Access and Benefit Sharing.

Much like the outcomes of the UN Framework Convention on Climate Change (UNFCCC) COP29, which will commence shortly afterwards in November in the petrostate of Azerbaijan, COP16 will prove to be a crucial moment for policymakers to address biodiversity loss and climate change as intertwined crisis.

Nature’s sharp decline means the stakes are too costly for inaction. In 2019, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) reported that around 1 million animal and plant species are now threatened with extinction.

The impacts on the global economy and society, health and food security are coming to bear witness more evidently each day. Research by the International Union for the Conservation of Nature found that human activity for food production, infrastructure, energy and mining accounts for 79% of the impact on threatened species.

Building on the starting blocks of COP15

The outcomes of COP15 and the signing of the Kunming-Montreal Agreement were hailed as pivotal for putting nature and biodiversity on to the global agenda for businesses and financial institutions.

In the last two years, the landscape has developed at pace in pockets across the world. As CEO of Natcap, Sebastian Leape works at the frontier of the corporate nature and biodiversity agenda. He observes change as a story of three parts. Europe, Japan and everywhere else. “In Europe, as a result of the Corporate Sustainability Reporting Directive (CSRD), thousands of companies are now starting to measure and report on biodiversity, water and pollution. Meanwhile in Japan, more companies have signed up as early adopters of the Taskforce for Nature Related Disclosures (TNFD) than anywhere else. In the rest of the world however, progress remains sporadic.”

Previous notions of limited access to data are dissolving as solutions scale. “Historically, there was a myth that we lacked the data to measure nature, because it is location specific with no single metric and technically more complicated that climate. That was front of mind in COP15. But the debate has moved on as more companies have published nature related disclosure with data available today. Now, the real gap is nature intelligence to align this data with frameworks like the TNFD, interpret it for your business and take action.” Leape argues.

Indeed, with access to a nature intelligence platform like Natcap, who recently secured $10 million in a Series A investment round, corporates are able to measure and act on nature impacts, dependencies, risks and opportunities with scientific data that was previously hard to obtain.

Eva Zabey, CEO of the global coalition Business For Nature, recounts how nature has secured a clear spot in the business agenda, “Since COP15, engagement from business and finance has given confidence to policymakers. The CSRD in the EU is a concrete application of how companies are discussing nature and biodiversity at a board level. It has become more material, more recognised and we’ve witnessed more recruitment of nature and biodiversity specific roles in companies.”

Another clear indicator of progress that Zabey refers to is the requests from corporates to become part of broader momentum. She cites the Business For Nature statement signed by 130 businesses with over $1.1 trillion in revenue, published ahead of COP16 calling on governments to accelerate action.

There are increasing levels of transparency too. Businesses across different sectors and of varying sizes are now sharing their nature strategies, driven by the Its Now For Nature campaign. This includes the likes of Decathlon, GSK and Kering Group.

Business priorities at COP16

Front of mind for corporate decision makers should be implementation, engagement with policymakers, credible and ambitious leadership, financial mobilisation and collaboration with all stakeholder groups.

Zabey is clear in her strategic advice for leadership teams. “Get your own house in order. Understand your impact and dependencies on nature, because it will ensure your business is more resilient and more successful in the future.” she stated.

There are numerous questions leaders should ask themselves, according to Zabey. Are we acting and implementing at the right scale and speed? How can we course correct? How can we demonstrate progress on the starting blocks set out at COP15?

From his work with Natcap, Leape puts forward several points for policymakers to address. The first is driving and advocating for clarity on transition pathways. “This is paramount because nature is so industry and location specific. Companies need clarity on what is expected of their sector to align with the global biodiversity framework and other nature related targets.” he commented.

“Bold adoption of nature reporting requirements will be another priority.” says Leape. This will directly address Target 15 of the Global Biodiversity Framework which requires large businesses and financial institutions to assess and disclose their risks, impacts, and dependencies on biodiversity by 2030.

Business For Nature drove progress on this at COP15 through the Make it Mandatory campaign. In this instance, over 400 business and financial institutions from 52 countries, with combined revenues of more than $2 trillion, helped convince governments to adopt Target 15. This marks an exemplary case on the power and influence businesses have on policymakers when they collaborate and rally together.

Zabey and Leape both underline the importance for governments to address and eliminate harmful subsidies in line with Target 18 of the Framework. The ambition is to reduce harmful incentives by at least $500 billion per year and scale up positive incentives for biodiversity.

Zabey notes that “At least $1.8 trillion each year flows to subsidies that are harmful to the environment. Regardless of whether they are intentional or not, it remains a huge elephant in the room.”

Investors’ role in supporting nature-positive transitions at COP16

Nature-related financial risks have significant implications for the financial and investor community. In the U.K. alone, research from the Green Finance Institute highlighted that damage to the natural environment is slowing the economy with an estimated 12% reduction to GDP in future years. This would have a larger impact than the Covid-19 pandemic or global financial crisis.

Addressing this damage at COP16 will be paramount. How can investors support businesses that are undertaking nature-positive transitions in a bid to contribute to the Global Biodiversity Framework?

Investors have the opportunity to allocate capital in different ways to incentivise companies in how they manage nature and biodiversity. Leape argues that “The biggest asset owners have a huge role in setting standards and expectations for companies.”

What are investors anticipating from COP16? In recent times, Lombard Odier Investment Managers have dedicated efforts to understanding nature-related opportunities, further highlighted by the appointment of Marc Palahí, to chief nature officer.

Laura Garcia Velez, nature specialist for Lombard Odier zoned in on Target 15, “We would like to see the development of new mechanisms which enable further nature disclosures’ outcomes with the required global investments for biodiversity, Target 19.”

Target 19 commits governments to mobilise $200 billion per year, by 2030 and is inclusive of $30 billion in international finance.

Velez observes that “The successful connection between these two targets will enable corporates to transition towards business models anchored in nature-based solutions, while simultaneously mobilising the scale of investments needed to develop robust nature markets and finance large-scale biodiversity conservation and restoration efforts.”

“As investors, we want to see evidence of momentum to bridge the nature finance gap, specifically through the mobilisation of investments to transition businesses to nature positive models.” she adds.

Positively, new research published by UNEP FI highlights that private finance for nature has grown from $9.4 billion to over $102 billion in the last four years, helping to bridge said gap. The opportunity is significant as UNEP FI projects that that $1.45 trillion could flow into nature finance by 2030.

But, Velez points out that whilst there has been an increase in nature investment products such as payment for ecosystem services, green bonds, biodiversity offsets and credits, “We need to see new and innovative products specifically tailored to transform the value chains of sectors especially those in forestry, land and agriculture.” she notes.

The necessary steps investors and financial institutions should take to prepare for outcomes at COP16 include developing expertise in biodiversity assessment and integration into investment decision-making, preparing for disclosure requirements related to impacts and risks as well as exploring opportunities in nature-based solutions.

The hurdles to overcome at COP16

Orchestrating the effective implementation of the Global Biodiversity Framework is no small feat. Governments hold significant responsibility in enforcing the necessary policies, legislation and incentives for businesses. Business For Nature’s policy recommendations spell out the key hurdles that must be overcome, touching on protection, restoration, valuation and commitment, amongst others. “We need more government dialogue and resolution.” affirms Zabey.

A second sticking point surrounds resource mobilisation and support, looking at how wealthier countries can support the more vulnerable. This element of negotiating justice runs parallel to areas of historic contention at COP27 surrounding the Loss and Damage Fund.

Elsewhere, when it comes to NBSAPs, Governments have an uneven track record on fulfilling commitments. Research has demonstrated that it is easy to make the case for protected areas like national parks and threatened species, whereas the less effectively implemented commitments centre around pollution, production and consumption and traditional knowledge. Addressing inconsistencies across different targets might prove to be another challenge.

According to Leape, companies are not openly discussing how they will contribute to NBSAPs because governments are not yet speaking about them publicly. “Whilst nations don’t have to officially submit these until 2026, the early signals appear shaky, only 12 of the 196 nations had submitted these plans.” he commented.

Zabey underlines the importance of overcoming delay in any form, “We cannot wait for perfection in business and government action. CSRD or the U.K.’s Net Biodiversity Gain Policy offer different signals to drive internal decision making that accelerates real action.” She asserts that “Leaders need to act like they are in crisis management plan.”

Translating ‘Peace with Nature’ into business practice

If COP16 is to hold true to its label as the ‘peoples COP’, there must be an unwavering focus on Indigenous Peoples, local communities and those must vulnerable to the biodiversity crisis both on land and at sea.

Host country Colombia is home to over 90 Indigenous Groups, according to the UN Refugee Agency, and represents 3.4% of the total population.

Businesses have much to gain from interacting and engaging with these communities. Zabey believes “They are planetary stewards. Organisations should focus on how concretely they can integrate Indigenous Peoples’ knowledge, science, wisdom and guidance into their own decision making”. Avoiding tokenism and trust building will prove critical.

Leape furthers this, sharing his past experience from COP15. “These communities have a unique perspective and interaction with nature, which is deeply integrated into their everyday lives. They are often on the frontlines, fighting against the most egregious biodiversity loss, like deforestation.”

The runway to COP16 provides business leaders with the opportunity to demonstrate their commitment to nature and biodiversity, through the implementation and sharing of nature positive strategies and advocacy for policy at a global level. Approaching conversations about trade-offs and the necessary transformations of financial systems will be important. Zabey finalises “There has never been as a big a momentum to protect nature across all parts of society. COP16 will provide us with a moment to re-energise and demonstrate we are clearly out of the starting blocks, acting on nature.”