To COP16 and beyond

The 16th meeting of the Conference of the Parties to the United Nations (UN) Convention on Biological Diversity (COP16) will take place in Colombia at the end of this month. This is the first biodiversity COP since the agreement of the Kunming-Montreal Global Biodiversity Framework (GBF) at the end of 2022. As such, the focus will be on resource mobilisation and the implementation of the GBF, a global agreement that aims to halt and reverse biodiversity loss by 2030, achieving a full recovery by 2050.

Ahead of the conference, countries will submit their National Biodiversity Strategies and Action Plans (NBSAPs), outlining the actions they will take at the national level to contribute to nature’s protection and restoration. This will pave the way for the future direction of travel for global policy to protect nature. Importantly, the strong interlinkage between climate change and nature loss will be a common thread throughout the conference, recognising that protecting and restoring nature is critical to achieving net zero and potentially setting the tone for further discussions at the 29th Conference of the Parties to the UN Framework Convention on Climate Change (COP29) due to take place next month in Azerbaijan.

What is COP16?

COP16 is the nature equivalent of the better-known climate COPs, and will take place later this month in Cali, Colombia. Unlike climate COPs which occur annually, nature COPs only occur every two years. Therefore, this will be the first biodiversity COP since the agreement of the GBF in 2022. The GBF is a global agreement, with the aim to ‘halt and reverse’ nature loss by 2030 and ‘restore harmony with nature’ by 2050, underpinned by four long-term goals through to 2050 and 23 action orientated targets for 2030. These include calls for enhanced disclosures, subsidy reforms, reductions in levels of pollution and greater protection of land and oceans. The GBF is for nature loss what the Paris Agreement is for climate change and aims to achieve global consensus on the urgent need to protect and restore biodiversity.

The agreement of the GBF was a key catalyst, putting nature firmly on the agenda for a variety of stakeholders, including corporates and investors, highlighting the risks associated with nature loss and guiding actions to start to address and mitigate these. With the overarching objective agreed, the focus of COP16 will be on resource mobilisation and the actions required to achieve the targets that underpin the agreement.

What has happened since the last biodiversity-focused conference, COP15?

Since COP15, momentum and interest around nature-loss has continued to build across a broad range of stakeholders.

“What gets measured gets managed” was a common phrase at COP15, with the Taskforce for Nature-related Financial Disclosures (TNFD), the nature risk reporting and disclosure framework, being heralded as a key driver of change at the company level. The TNFD subsequently launched late last year has seen strong momentum with over 400 organisations voluntarily committing to adopt the recommendations, and more to be announced at COP16. Furthermore, Europe’s Corporate Sustainability Reporting Directive (CSRD) went into effect this year, and as such many companies operating in the EU will need to disclose whether nature-related topics, such as biodiversity, water and pollution are material to their business, including their value chain. If considered material, additional disclosure requirements need to be reported alongside the financial statements.

As investors, we encourage corporate adoption of the TNFD recommendations to facilitate greater consistency and cross comparability of corporate disclosures on nature, which can in turn enable us to better understand the nature-related risks and opportunities associated with our investment decisions. As such, we have committed to be an early adopter of the TNFD framework and strongly support the framework being used to inform emerging standards, such as the evolution of the International Sustainability Standards Board (ISSB) disclosures.

To complement enhanced disclosures on nature, the Science Based Targets Network (SBTN) have now finalised their methodology for freshwater and land-based targets, enabling corporates to set science-aligned targets on nature and serving as a mechanism of accountability for the actions that corporates take to address their pressure on nature. The process was piloted by 17 companies this year. A subset of these companies is expected to announce their validated targets at COP16 and SBTN will be scaling to more companies next year.

In addition, investor engagement with companies on nature has accelerated, notably with the launch of Nature Action 100. The initiative has garnered support from over 220 institutional investors representing nearly $30 trillion in assets under management or advice from around the world. At COP16, Nature Action 100 will announce the results of their company benchmark that assesses corporate action and disclosures on nature to guide further investor engagement.

Why does COP16 matter? What's important for investors?

COP16 will mark an opportunity to take stock of the progress each nation has made in outlining their strategy to fulfil the objectives of the GBF, as demonstrated by the NBSAPs. NBSAPs are for nature what nationally determined contributions (NDCs) are for climate, with the major caveat that countries are legally obliged to submit NDCs unlike NBSAPs.

At the time of writing, 26 countries have submitted their NBSAPs1, although we expect this number to tick up as we approach the conference. However, to date, submissions have been “light touch”, and in the EU, progressive policy to address nature loss has faced significant backlash, resulting in policies being watered-down and delayed, most recently with the proposal for a one-year delay to the EU’s deforestation regulation. Therefore, at COP16, there will be a strong call for governments and policy makers to continue to enhance their NBSAPs. National nature plans need to include clearly defined targets and sector pathways to provide greater policy certainty on how key sectors can move towards nature positive practices. Without these, countries will struggle to attract the amount of private capital needed to enable the required level of resource mobilisation to make the transition happen.

We have engaged in over ten collective engagements with various sovereigns, through our membership in Finance for Biodiversity, in the lead up to COP16 to discuss implementation. For example, we are interested in what governments and regulators will look to implement regarding target 15 and nature-related disclosures, particularly given the level of voluntary adoption of the TNFD so far, and how they are looking at sector specific plans to meet the GBF, given nature is so sector and location dependent.

In relation to the role of the finance sector, there are four goals in the GBF that specifically refer to the role of both public and private finance: targets 14, 15, 18 and 19. Collectively these goals relate to the role of policy, legislation, regulation, disclosures and the associated incentive mechanisms in redirecting financial flows away from activities that harm nature to those that contribute to its restoration and recovery.

Given the focus on the role of the finance, we expect strong attendance from the finance sector. Key areas of focus include exploring ways to improve financing towards nature-based solutions and the need to create new financing mechanisms to do this. Finally, resource mobilisation and just transition considerations remain central to the discussions, particularly as much of global biodiversity is situated within developing countries. We are therefore watching for country-level commitments and approaches to bridge the funding gap.

What is the read through to climate COP29?

The climate-nature nexus is well understood. We need nature to achieve global net zero greenhouse gas emissions and climate change is one of the key drivers of biodiversity loss. This relationship isn’t straightforward, there are trade-offs, but these issues should be addressed in tandem. For example, countries producing NBSAPs are encouraged to tie them to national net zero strategies and/or transition plans to ensure policy alignment in supporting more ambitious NDCs, and increasingly investment in adaptation as physical climate effects manifest.

This year, the COP29 presidency has included nature as part of the action agenda, with a focus on methane emissions from food waste and initiatives focusing on agriculture, food and water among the various additional climate actions. A positive outcome at COP16 should support further progress in these areas at COP29. However, the climate-nature nexus will really come to the fore as we head into COP30 next year, with all eyes on how Brazil and other countries can reduce deforestation to improve climate outcomes and benefit from market mechanisms that incentivise this.

The New Collective Quantified Goal (NCQG) is a key element of the Paris Agreement, designed to set a new financial target to support developing countries in their climate actions post-2025. Resolution at COP29 of the negotiations on the New Collective Quantified Goal that supports transition in emerging markets, growth in the Loss and Damage fund that supports adaptation and recovery, and progress on Article 6 of the Paris Agreement that aims to create a functioning market for state-to-state and state-to-business carbon trading would also create conditions for further substantial progress to be made at COP30 on nature-based solutions markets and nature-related credits.

Fidelity’s approach to addressing nature-related risks and opportunities

Nature is under intense and increasing pressure and we believe its loss is one of the most severe risks we face over the next decade2. All economic activity is in some way dependent on nature, but some activities are particularly dependent: it is estimated that more than 50% of global GDP is moderately or highly dependent on nature. Hence its continued decline poses material financial risks to the economy and financial markets.

At the end of 2023, we published our Nature Roadmap3 reflecting the evolution of our work to date, and the actions we are taking on nature-related risks and opportunities. We are engaging corporates on key nature loss drivers, including deforestation and water risk, and we are also members of Nature Action 100. Following the publication of this roadmap, we have committed to be TNFD early adopters and in 2025 we intend to produce a report aligned to the TNFD Framework. We recognise the role that investors can play to start to quantify and capture these environmental externalities, helping to nudge investee companies to reduce their pressures on nature and implement more sustainable and resilient operating models.
 

23 Global Biodiversity Framework Targets4 

  1. Effective management of land- and sea-use change, loss of highly important biodiverse areas close to zero by 2030
  2. Effective restoration of 30% of degraded ecosystems by 2030
  3. Effective conservation and management of 30% of land and 30% of oceans by 2030
  4. Halt human-induced extinctions and maintain and restore genetic diversity
  5. Sustainable use, harvesting and trade of wild species
  6. Mitigate or eliminate the impacts of invasive alien species, reduce the rates of establishment of invasive species by 50% by 2030
  7. Reduce pollution risks and impacts from all sources by 2030, reduce the overall risk from pesticides by half
  8. Minimise the impacts of climate change and ocean acidification on biodiversity
  9. Ensure sustainable use and management of wild species, while protecting customary use by Indigenous peoples
  10. Sustainable management of areas under agriculture, aquaculture, fisheries and forestry
  11. Restore and enhance ecosystem function through nature-based solutions and ecosystem-based approaches
  12. Increase the area and quality of urban green and blue spaces
  13. Fair and equitable sharing of the benefits arising from the use of genetic resources
  14. Integration of biodiversity into policies and development across all sectors
  15. Enable businesses to monitor, assess and disclose their impacts on biodiversity, particularly focusing on large and transnational companies
  16. Encourage sustainable consumption, including by reducing food waste by half by 2030
  17. Strengthen capacity for biosafety measures and ensure benefits-sharing from biotechnology
  18. Phase out or reform harmful subsidies in a just way, reducing them by US$500bn by 2030
  19. Substantially increase financial resources, mobilise US$200bn per year by 2030 from all sources, including US$30bn from developed to developing countries
  20. Strengthen capacity-building and technology transfer
  21. Integrated and participatory management, including the use of traditional knowledge
  22. Equitable representation and participation of Indigenous peoples and local communities
  23. Ensure gender equality in the implementation of the framework
     

Sources
1 Online Reporting Tool (cbd.int)
2 WEF_The_Global_Risks_Report_2024.pdf (weforum.org)
3 Fidelity-nature-roadmap.pdf
4 2030 Targets (with Guidance Notes) (cbd.int)