Despite the collision of crises we witnessed in 2022 – COVID, conflict, inflation – momentum to protect and restore nature in the private sector continues to grow. The Biodiversity COP15 summit brought 2022 to a close by delivering the Kunming-Montréal Global Biodiversity Framework (GBF).
The GBF is an international policy agreement signed by 196 governments that will work towards achieving 23 ‘action’-oriented global targets by 2030 to achieve the ‘outcome’-oriented 2050 goals. The ultimate objective is to protect 30% of the world’s land, coastal areas, and oceans by 2030 (the 30×30 goal) and to mobilize at least USD 200 billion per year from public and private sources for biodiversity-related funding.
The agreement addresses the private sector directly in a number of the targets, calling on all businesses to take urgent action for nature. To cut to the chase, we have highlighted the targets most relevant to the private sector. These include many challenges and unfolding opportunities for market positioning, supply chain resilience and long term profitability.
Target 15: A call for nature-related corporate disclosure
Target 15 petitions the private sector to disclose risks, dependencies, and impacts on biodiversity through reporting. Though not mandatory, companies now have clarity on the path to take to start measuring and assessing their biodiversity impact. The good news is, there are a number of corporate reporting initiatives which already help companies to standardize biodiversity-related financial risks and opportunities on multiple levels. These include:
- The Taskforce on Nature-related Financial Disclosures (TNFD) seeks to promote reporting and action on nature-related risks to begin shifting financial flows towards nature-positive outcomes. The TNFD supports financial institutions to understand and ultimately mitigate their financial risk and biodiversity impact.
- The Science-based Targets Network (SBTN) devises science-based targets (SBTs) to reduce nature-related financial risks. The SBTN provides a holistic approach to reducing the risk of nature loss across four key areas: freshwater, biodiversity, land, and oceans.
- The CDP’s 2022 Climate Change Questionnaire supports businesses in their disclosure process, with a module on biodiversity reporting.
- The Climate Disclosure Standards Board (CDSB) has established guidance on the application of their framework, including disclosure as a distinct part of a company’s biodiversity journey
While all of this may sound daunting, companies evaluating their dependency on nature can drive, mobilize and motivate nature-related action. In turn, having more standardized accounting for biodiversity risks and dependencies can strengthen businesses to become trailblazers within their own sectors. For example, biodiversity and climate-related projects are being considered in the cocoa and chocolate sectors, whereas other parts of the beverage sector are not active yet.
Target 19: Filling the finance gap by investing in nature
The vast gap between how much is currently spent on nature’s recovery and what needs to be spent to secure our future is around 598-824 billion USD per year. We need to be spending around 0.5 – 0.8% of global GDP to begin making a difference.
Thanks to the agreements at COP 15, we now have clearer directions on how to raise these historic levels of finance for biodiversity: target 19. This target aims to direct a minimum of 200 billion USD per year by 2030 from public and private sources to support gains in biodiversity. It means companies can help close the finance gap by redirecting investments into harmful sources and support existing, results-based finance for nature. One such solution is using biodiversity credits.
Biodiversity credits have largely fallen under the radar. They open the door to financing projects that incentivize landowners to preserve and maintain their land. Projects such as the “Biodiversity Bank” of the Natural Reserve el Porveni and the Alicante River Canyon Wildlife Project demonstrate that biodiversity credits are a vital part of equitable biodiversity action.
Recognizing Indigenous rights: Target 22
Ensuring Indigenous people play a leading role in projects to protect and restore nature is the only way to ensure this work is sustainable. This target should be front of mind for companies to ensure their investments have the greatest impact and protect against reputational risk.
Indigenous people manage or have tenure more than one-third of the world’s intact forest and 80% of Earth’s known biodiversity. Protecting forests has been part of indigenous knowledge since time immemorial. However, continued marginalization has hampered the ability of Indigenous people to protect against immediate threats such as mining or agricultural encroachment. Target 22 seeks to reverse this trend by enshrining the involvement of Indigenous people in decision-making while respecting their cultures, rights over lands and resources throughout the process.
Taking the first step on corporate biodiversity action, together
The message from GBF is clear: ‘Business as usual’ is financially short-sighted and will no longer suffice. But the private sector has the opportunity to be a part of protecting and restoring biodiversity while improving their resilience to the effects of the climate crisis.
Companies should not tackle this challenge alone. Innovative partnerships and novel financing mechanisms, such as the Landscape Resilience Fund (LRF), already exist. The LRF, co-developed by South Pole and WWF, uses a blended finance approach that provides soft loans and technical training to climate-smart SMEs and projects. By bringing together private, public and philanthropic funding, the LRF seeks to scale these SMEs and projects in the global South and catalyze even more private investments.
Taking the first step, companies need to understand the impacts and dependencies on nature. From here, they must set clear, comprehensive targets to address their impacts and dependencies in the short and in long term. Only then will businesses’ begin measurably contributing to the 30×30 goal.
The bottom line is: accounting for nature now ensures all businesses’ futures. After all, there is no business on a dead planet. Every step in protecting and restoring biodiversity is a step toward greater long term profits and building a more resilient future for all.