Finance Central to COP16’s Roman Reboot
Agreement on funding and monitoring is seen as a crucial catalyst for channelling private capital to Global Biodiversity Framework goals.
COP16 will resume in Rome this week with negotiators aware of the need to resolve last November’s impasse to stimulate the flow of private investment toward nature and biodiversity restoration.
Parties failed to reach quorum in Colombia last year on key pillars designed to support the implementation of the goals of the Global Biodiversity Framework (GBF). Finalising both the GBF’s resource mobilisation strategy and its monitoring framework will therefore be top of the agenda at the summit, which is set to take place between 25-27 February.
“Finance is always the most difficult issue to resolve – [but it is] really important that all aspects of funding are agreed this week. It’s already 2025 and the GBF includes targets which must be delivered by 2030,” Bernadette Fischler Hooper, Head of International Advocacy at the World Wide Fund for Nature UK (WWF UK), told ESG Investor.
The resource mobilisation strategy is intended to secure US$200 billion annually by 2030 to fund biodiversity initiatives globally, while simultaneously reducing harmful incentives by at least US$500 billion a year by the end of the decade.
“The [strategy] should catalyse private finance for nature objectives, reform financial flows and incentives justly, and align the multilateral financial architecture to sustainability goals,” said Sylvaine Rols, Senior Specialist on Nature at the UN-convened Principles for Responsible Investment (PRI).
Existing sources of funding for the GBFs goals come from bilateral arrangements, private and philanthropic entities, and dedicated funds, such as the Global Biodiversity Framework Fund, which received over US$150 million in new funding pledges last year.
The role of the private sector in financing biodiversity and nature-related solutions should be more clearly defined within the strategy, according to Anita de Horde, Co-founding Executive Director of the Finance for Biodiversity Foundation (FfB).
“We [see] language on the alignment of public and private financial flows [as being necessary to] contribute to the goals of the GBF in the document,” she said.
In addition, it is hoped that parties will reach an agreement on the GBF’s monitoring framework, which will serve as a tool for measuring countries’ progress against its 23 targets.
De Horde emphasised the importance of agreement on “clear, science-based indicators” that allow financial institutions, businesses and policymakers to measure their contributions towards nature goals.
“The monitoring framework indicators, such as Indicator D3 [which specifically tracks private investment in biodiversity conservation] should be relevant to the finance sector, provide guidance for sectoral transformation, and be interoperable with climate finance,” added Rols.
Progress in Colombia last year included a long-awaited confirmation of ecologically and biologically significant marine areas (EBSAs) – which paves the way for a scientific and technical database to identify where to deploy marine protected areas (MPAs).
However, by the end of the 2024 talks, just 44 of 196 participating countries (22%) had formally submitted a National Biodiversity Strategy and Action Plan (NBSAP) outlining their contribution to the GBF.
Building blocks
Last year, governments did agree to establish the Cali Fund, which is expected to be formally launched this week.
The fund – which will operate on a voluntary basis – will ask entities commercially benefitting from the exploitation of genetic resources to contribute a percentage of their profits or revenues, which will then largely by channelled to developing countries and support the implementation of the GBF.
It builds on agreement at COP15 to establish a mechanism for more equitable sharing of the benefits of genetic information – known as digital sequence information (DSI) – from plants and animals.
“The Cali Fund is unique as it not only generates [voluntary] funding from the private sector, but it allocates half of this money to Indigenous Peoples and local communities,” said Fischler Hooper.
Alongside the negotiations, it is hoped that the fund will accelerate the alignment of finance flows with the goals of the GBF.
A UN Environment Programme report estimated that around US$7 trillion from public and private sectors is invested globally every year in activities that negatively impact nature. In contrast, private sector investment in nature reached US$102 billion by May 2024, an eleven-fold increase over two years.
Investors, governments and companies should look to address nature degradation and biodiversity loss as part of their efforts to mitigate the climate crisis, added Pavan Sukhdev, CEO of GIST Impact.
“Mitigation of climate breakdown can be most effectively achieved through use of nature-based carbon absorbing mechanisms, such as reforestation, restoration of mangroves and sea grasses,” he said.
“Conversely, the largest drivers of deforestation (in the Amazon, for example) are precipitation losses due to climate breakdown. Nature and climate responses go hand in hand – one cannot be solved without the other.”
Meaningful progress
Rising political friction – particularly between the Global North and South – is expected to be a major challenge for negotiating parties to navigate at the resumed negotiations, having contributed to the collapse of the COP16 plenary in Colombia.
“Political leadership on the climate and nature crises is massively weakening, right at the moment that science is telling us [the] financial system is on track for 3°C warming without urgent intervention,” said Julie McCarthy, CEO of Swiss non-profit NatureFinance.
The PRI’s Rols said a failure to address biodiversity issues would open the entire financial system up to significant risk over the long term.
“Investors, having signalled their intention and efforts in addressing biodiversity risk at a systemic level, require clarity and firm commitment from negotiators – in line with the need to facilitate an evolving enabling environment,” said the PRI’s Rols.
Susana Muhamad, Minister of Environment and Sustainable Development of Colombia and President of COP16, has said that securing adequate and predictable GBF-aligned financing is central to the presidency’s ongoing efforts. Since this statement, she has resigned as environment minister but appealed for permission to stay on as COP16 head.
“A larger stumbling block is going to be the question of what happens after 2030, in terms of nature-related financial architecture,” said WWF UK’s Fischler Hooper, noting that the GBF aims to halt and reverse biodiversity loss by 2030, with further planning needed to structure financing beyond the end of the decade.
“It’s going to be one of the most important hurdles for [negotiating parties] to overcome this week.”
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