Anticipating private finance sector measures evolving from the Global Biodiversity Framework

Investors should invest in innovative financial solutions to address biodiversity risks and help mobilising the required US$200bn/year by 2030, according to Target 19 of the Global Biodiversity Framework (GBF).

This is one of three key recommendations of a technical report launched by the UNEP Finance Initiative (UNEP FI) Investment Leadership Programme, the Principles for Responsible Investment (PRI) and the Finance for Biodiversity (FfB) Foundation today.

“Importantly, Target 19 strengthens the business case for financial institutions to engage with policy makers and public financial institutions to incentivise private investment through concessional, patient and/or first loss capital, guarantees, and commercial or fiscal incentives for positive investment,” the report says.

The technical report, Stepping up on biodiversity: What the Kunming-Montreal Global Biodiversity Framework means for responsible investors, provides an overview of the goals of the GBF and how investors should implement them. It supports investors in managing associated risks and preparing for anticipated policy developments.

The other two key recommendations of the technical report are to integrate biodiversity into investment decision-making (Target 14) and to assess and disclose nature-related dependencies, impacts, risks and opportunities (Target 15).

In December 2022, at the 15th Conference of the Parties to the Convention on Biological Diversity (COP15), 196 countries adopted the Kunming-Montreal Global Biodiversity Framework (GBF). In the face of unprecedented biodiversity loss, the GBF provides a framework to achieve its overarching aim to halt and reverse nature loss by 2030.

David Atkin, CEO of PRI, said: “Private sector actors, including financial institutions, must play a key part in realising its apex target of ‘halting and reversing biodiversity loss’, by aligning their portfolios with the GBF goals and targets and shifting financial flows urgently towards a sustainable and just transition. The financial sector has a critical role in ensuring the stability of the economy by taking biodiversity into account in its financing, underwriting and investment decisions.”

Prior to COP15, 150 financial institutions, including banks, investors and insurers, representing over US$24trn in assets under management, signed a statement calling for an ambitious framework to be adopted at the conference.

The GBF contains four overarching goals to be achieved by 2050, underpinned by 23 action-oriented targets for 2030. These targets will be translated into national-level policy through National Biodiversity Strategy and Action Plan (NBSAPs) updates.

To meet the short timeframe of the GBF’s overall objectives, many countries are trying to move faster than the deadline for signatory countries to update their NBSAPs by COP16 planned for late 2024.

“Similarly, private actors can – and should – move rapidly to take action to align themselves with the goals and targets of the GBF, thereby anticipating upcoming regulatory shifts and building resilience and long-term value in line with other commitments, such as net-zero goals,” the report writes.

Meeting the ambition set out by the GBF will come down to how the goals and targets are interpreted at the national level and implemented by actors across society. Under another leadership programme, A Legal Framework for Impact, UNEP FI and PRI already provide policy guidance for how governments can unlock barriers for investing with sustainability impact.

Ahead of the national updates of the NBSAPs, the launched technical report guides the translation of the GBF goals and targets for investors.

Eric Usher, head of UNEP FI, said: “There is no net zero future without a reversal of biodiversity loss, as climate change and biodiversity are intrinsically linked. We have the full expectation that governments around the world will look to implement this landmark GBF and provide an enabling environment for better decision-making, including for finance.”

Anita de Horde, co-founder and coordinator at the FfB Foundation, said: “This technical report recognises that the private finance sector has an important role to play in reversing nature loss to put nature on a path to recovery and to ensure the future viability of our ecosystems. The private finance sector can do so by assessing its impact and dependencies and reducing negative financial flows. At the same time, the private finance sector is needed to bridge the funding gap on nature. Investments in nature restoration, conservation, and solutions for the sustainable use of biodiversity are vital. As voluntary action alone will be insufficient to change practices across the financial sector to protect and restore biodiversity at the rate and scale required, the FfB Foundation is actively working to support the implementation of the GBF at the national level.”

Please read the technical report here