Returning from COP15 in Montreal, Carolin Leeshaa, Global Lead, Natural Capital & Biodiversity, KPMG International and Orlaith Delargy, EMA Lead, Nature & Biodiversity, KPMG in Ireland, share their thoughts on a landmark agreement reached.
After multiple delays due to COVID-19, 188 countries sealed a landmark deal to halt and reverse biodiversity loss by 2030 at the 15th Conference of the Parties (COP15) to the United Nations Convention on Biological Diversity (CBD), chaired by China and hosted by Canada from December 7 to 19, 2022.
The Kunming-Montreal Global Biodiversity Framework (GBF) has four long-term goals for 2050 related to the CBD’s vision to living in harmony with nature and 23 action-oriented targets, which come after 2 weeks of intense negotiations in Montreal, Canada. This agreement replaces the Aichi Biodiversity Targets set in 2010.
Among the 2030 targets, countries pledged to protect at least 30 percent of the planet’s terrestrial and marine areas, while also recognizing Indigenous and traditional territories.
A strong economy relies on healthy nature
The private sector presence and energy at COP15 was impressive. For the first time, business and financial institutions were really inside the ‘nature tent’. We expect that business has and will continue to move with agility on nature-positive ambition, action and accountability. Catalyzed by the Finance for Biodiversity initiative, 150 financial institutions representing US$24trillion called on world leaders to adopt an ambitious GBF — and the strong advocacy by business and financial institutions has certainly contributed to giving government the political room to land this GBF deal. Meanwhile, Business for Nature convened a coalition of 330 business and finance institutions from 52 countries, calling for the assessment and disclosure of impacts and dependencies on nature by 2030.
The crucial role of Indigenous People and Local Communities
The GBF acknowledges the important role and contribution of Indigenous People and Local Communities (IPLCs) as rights and knowledge holders requiring full and effective participation in decision-making. IPLCs make up just 6 percent of the global population1 yet are stewards of 80 percent of its land.2 Stewardship of and connection with nature has been ingrained in their culture for hundreds — often thousands — of years.
Delegates repeatedly emphasized the value of respecting these citizens’ rights and knowledge, which are likely to be crucial in the fight to protect biodiversity. Having been consistently subjected to mistreatment and land grabs, the world is waking up to the fact that their narrative is aligned with that of nature and a just transition.
Mobilizing the world’s financial and corporate resources
Financing biodiversity was another important discussion point given the massive funding gap, estimated at as much as US$800 billion per year up to 2030.3 Part of the solution involves redirecting financial flows toward sustainable investments and away from those that harm the environment.
It’s estimated that every year at least US$1.8 trillion is spent by governments around the world subsidizing activities that harm nature and wildlife and contribute to global warming. One of the agreements was to reform US$500 billion of these subsidies.4,5
And there has been a call for more financing from all sources, including domestic, international, public and private — particularly to help developing countries implement their commitments.
The private sector was heavily represented at Montreal and has made some active commitments. Finance for Biodiversity is one initiative for financial institutions to pledge ambitious action, which launched a new guide to help financial institutions integrate biodiversity. Meanwhile, a global investor engagement initiative called Nature Action 100 was launched, focused on driving greater corporate ambition and action to reduce nature and biodiversity loss.
Towards mandatory nature reporting
Target 15 of the agreement aims to ensure that large and transnational companies and financial institutions monitor, assess and disclose their nature-related risks, dependencies and impacts in their operations, but also in supply and value chains and portfolios by 2030. The International Sustainability Standards Board (ISSB) has confirmed that they’ll incorporate risk into the IFRS S2 Climate-related Disclosures standard and will consider the Taskforce on Nature-related Financial Disclosures (TNFD) framework, currently in development, as part of their incremental enhancements to the standards.
The TNFD enables companies and financial institutions to assess, manage and act on their nature-related impact and dependencies by integrating nature into governance, strategy, risk management and metrics, and target settings. Globally, there are already over 140 TNFD pilots underway.
The next evolution is getting nature on the balance sheet — something that many companies are only starting to think about. Natural capital accounting can help reveal how nature supports business activities and delivers tangible environmental and social benefits. These accounts can provide stakeholders with vital information to make better operational decisions, improve business resilience and allocate resources more effectively.
From good intentions to action
A recurring message from COP15 is that disclosure is not the end game in itself; it provides a foundation for making nature-related strategic, governance, operational and capital allocation decisions.
With this in mind, market participants are asking what “nature positive” means in practice, acknowledging that the transition will look different across industries and sectors. Several initiatives such as the World Economic Forum, the World Business Council for Sustainable Development, the Impact Mitigation and Ecological Compensation (IMEC) thematic group of the International Union for Conservation of Nature (IUCN) and the EU Business and Biodiversity Platform are working to develop principles that organizations can follow on this journey.
Nature and biodiversity “credits” will likely have a role to play in the road to nature positive and hold significant potential to increase the flow of finance to nature restoration and conservation projects. This was a hot topic at COP15, with discussions centering on how to establish and extend nature markets, ensuring measurability, trust and integrity and learning lessons from the carbon markets.
Attending COP15, it was hard not to feel the ambition of the attendees from government, corporations, financial institutions, and non-governmental organizations (NGOs). But to help ensure progress, we believe the global goals will need to be translated by national governments into national level goals and targets. In our view, implementation at the national level will therefore ultimately bend the curve on biodiversity loss.
From a business perspective, energy should be converted into formal strategic action — such as the TNFD pilots and incorporating nature into climate transition pathways, including setting of science-based targets (SBTs) for nature.
We left the conference with the hope of seeing a significant change in business, lending, underwriting and investment practices. According to the UN, about half of global GDP is dependent on the healthy functioning of the natural world.6 With the GBF now in place, and the right resources, we believe the 2030 biodiversity targets are poised to shift from a vision to a reality.