Governments reached an agreement at COP15 – Reaction Finance for Biodiversity Foundation
19 December 2022 – Today, governments reached an agreement on the Global Biodiversity Framework (GBF) at the CBD COP15 in Montreal. The Finance for Biodiversity Foundation is overall positive on the text and comments on the elements in the text that refer to the finance sector and businesses.
Anita de Horde, co-founder and coordinator of Finance for Biodiversity Foundation, said: “We are very happy that the Parties agreed on the importance of aligning private and public financial flows with the goals and targets of the Global Biodiversity Framework. This means that investments and financial activities by governments and the finance sector need to halt and reverse nature loss in 2030. Next to this, private finance is included as one of the solutions to fund the finance gap on nature and governments need to ensure that large and transnational businesses and financial institutions asses and disclose their impacts and dependencies on nature. Moreover, there is text on protecting or conserving 30% of all land and oceans by the end of 2030; this could potentially be the biodiversity equivalent to the 1,5°C goal”.
Sonya Likhtman (Federated Hermes Limited) co-chair of the Public Policy Advocacy working group of Finance for Biodiversity Foundation: “We welcome the adoption of the Kunming-Montreal Global Biodiversity Framework as a meaningful step towards reversing biodiversity loss and restoring nature. It sends a clear, strong message to all stakeholders, including the financial sector. Goal D requires the alignment of financial flows with both the 2030 targets and the 2050 vision, securing a focus on implementation in the short, medium and long term. This goal, along with several targets that reference private financial flows, provide the hook required to stimulate and scale up action from the financial sector. We are also pleased that target 15 requires governments to ensure that large companies and financial institutions assess and disclose their risks, impacts and dependencies on biodiversity throughout operations, value chains and portfolios. These parts of the framework closely reflect the position we have advocated for through the Finance for Biodiversity Foundation. Financial institutions have a critical role to play in halting and reversing biodiversity loss, so it’s brilliant to see this articulated in the agreement. All eyes must now turn towards implementation at the national level and across all sectors of the economy”.
Aligning private and public financial flows
The alignment of private and public financial flows with the goals and targets of the Global Biodiversity Framework is secured in target 14 of the text. “We have been pushing for this text in Goal D and in target 14 for 1,5 years now, because it can ensure that governments take the necessary actions to stimulate the financial sector to act on nature. An enabling policy environment that supports financial institutions in better managing the risks and capitalising on the opportunities in their portfolios is key. We saw that with article 2.1.c of the Paris Agreement which also had a reference to financial flows. We hope that this agreement will create the same incentive for financial institutions to align their portfolios with a pathway towards halting and reversing nature loss in 2030”, says de Horde.
Next to this, also the alignment of public financial flows is captured, requiring governments to identify, eliminate, phase out or reform incentives, including subsidies, that are harmful for biodiversity by 2025.
Assessing and disclosing impact and dependencies by businesses
We also stressed the need for strong references in target 15 to ensure that businesses and financial institutions will assess and disclose their impact and dependencies on nature. There was much debate between the negotiators on whether the word ‘mandatory’ should be in, and references to an international acknowledged disclosure framework were removed. However, wording on ‘ensuring’ policy, administrative or legal measures are still intact. This means that governments will need to have policies and regulatory frameworks in place to ensure that large and transnational businesses and financial institutions will assess and disclose their nature impacts and dependencies. “This is also good news for financial institutions that will need actual nature data from the corporates they invest in to better align their financial flows with the biodiversity goals and targets”, says de Horde.
Private sector resources
The GBF includes some strong text on increasing the level of financial resources for nature ‘from all sources’. This does not only mean that more money from developed countries will become available for protecting nature in developing countries. The text strongly also refers to leveraging private finance and promoting blended finance to raise new and additional resources for conservation, restoration and sustainable use of nature.