Aligning Financial Investments with Global Biodiversity Goals: Insights and Urgent Reforms Needed for COP16

Aligning Financial Investments with Global Biodiversity Goals: Insights and Urgent Reforms Needed for COP16

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At a recent press conference involving major coalitions like the Forests and Finance Coalition and the Articulation of Indigenous Peoples of Brazil (APIB), experts emphasized the need to align global financial flows with biodiversity goals. They highlighted critical issues addressed in two new reports, “Banking on Biodiversity Collapse” and “Regulating Finance for Biodiversity.” This discussion underscores the necessity for financial regulations to support the Global Biodiversity Framework (GBF) ahead of the upcoming COP16 summit.

Financial Investments and Biodiversity:

In 2023, investments in environmentally harmful sectors amounted to $7 trillion, starkly contrasting with only $200 billion directed toward biodiversity conservation and restoration.This disparity highlights a critical gap in financial sector accountability and underscores the need for more stringent regulatory oversight.

Reports analysed activities of major financial institutions across key regions, including Brazil, Indonesia, China, the EU, and the U.S.Since the Paris Agreement, financial institutions have invested nearly $400 billion in companies that threaten tropical forests, emphasizing the failure of voluntary industry policies to prevent deforestation and human rights violations.

About Double Materiality: A Holistic Approach to Financial Accountability

Double Materiality is a critical concept for integrating biodiversity into financial regulations. It mandates that financial entities assess not only the environmental and social impacts of their operations but also how these factors can influence financial outcomes.

By adopting this approach, financial institutions can better manage risks associated with biodiversity loss and improve overall accountability.

The EU has adopted the double materiality principle, requiring disclosure of both environmental impacts of investments and potential risks posed by environmental factors on financial stability. This dual approach enhances transparency and risk assessment in financial reporting.

Global Biodiversity Framework (GBF):

The GBF was adopted during the fifteenth Conference of the Parties (COP15) to the Convention on Biological Diversity (CBD) following a four-year negotiation process.

The framework aims to achieve a world living in harmony with nature by 2050, supporting the Sustainable Development Goals (SDGs) and building on the CBD’s previous Strategic Plans.

30 by 30 Target; Protect 30% of Earth’s land and marine areas by 2030 to safeguard biodiversity, ecosystems, and ecosystem services.

Main Targets for 2030: The GBF outlines four goals for 2050 and 23 targets for 2030 to reverse biodiversity loss and promote sustainable practices.

Four Key Goals by 2050:

1. Protect biodiversity and restore degraded ecosystems to maintain essential ecosystem services.Emphasize critical habitats and biodiversity hotspots.
2. Ensure biodiversity is used sustainably, maintaining ecosystems’ ability to regenerate and support diverse life forms.
3. Promote the fair distribution of benefits from genetic resources, especially to Indigenous and local communities.
4. Foster change across sectors (e.g., agriculture, forestry, fisheries) for sustainable development.Integrate biodiversity into policy-making, planning, and economic decisions.

COP16 Biodiversity Summit:

Host City: Cali, Colombia

COP16 will be organized under the Convention on Biological Diversity (CBD), an international agreement first opened for signatures in 1992 at the Rio Earth Summit and ratified by 196 countries, making it one of the most globally embraced environmental treaties.

The United States remains the only UN member state that has not ratified the convention.

Primary Objectives of COP16

Accelerating 30×30 Targets: A central objective is to advance the “30 by 30” goal, which aims to protect at least 30% of global land and ocean areas by 2030, with a focus on biodiversity-rich regions. The plan also includes restoring 30% of degraded ecosystems on land and in marine areas by 2030, emphasizing urgent conservation action.

Implementation of the Kunming-Montreal Global Biodiversity Framework: COP16 will evaluate the implementation progress of the Global Biodiversity Framework established in 2022, which sets out 23 ambitious global biodiversity targets for 2030 across themes like habitat protection, sustainable use of resources, and genetic resource benefit-sharing.

About The Convention on Biological Diversity (CBD):

The CBD officially entered into force on December 29, 1993, with the first COP session held in 1994 in the Bahamas.

Secretariat Location: Based in Montreal, Canada.

Main Objectives:

• Conservation of biodiversity
• Sustainable use of biodiversity components
• Fair and equitable sharing of benefits from genetic resources

Supplementary Protocols:

Cartagena Protocol on Biosafety (2003): Addresses the safe handling, transfer, and use of living modified organisms (LMOs) from biotechnology, ensuring risk management for biodiversity and human health.

Nagoya Protocol on Access and Benefit-Sharing (2014): Focuses on fair and equitable sharing of benefits arising from genetic resource use, enhancing conservation and sustainable use of biodiversity while benefiting source countries.

Key Biodiversity-related reports highlighting the role of financial institutions:

Banking on Biodiversity Collapse: Released by the Forests & Finance Coalition in collaboration with organizations like the Rainforest Action Network (RAN), this report addresses the impact of financial institutions on deforestation and biodiversity loss.

It details how banks and investors continue to fund industries linked to high-risk commodities (e.g., beef, palm oil) that drive deforestation, particularly in tropical regions. The report calls for stronger regulatory measures to mitigate biodiversity threats linked to financial activities.

State of Finance for Nature 2023: Published by the United Nations Environment Programme (UNEP), this annual report examines investment trends in nature-based solutions.

It reveals significant funding gaps and stresses the need for increased private and public funding to protect ecosystems, especially to combat biodiversity loss and climate change. The report urges global coordination to achieve meaningful biodiversity and environmental goals.

Global Biodiversity Outlook: Issued periodically by the Convention on Biological Diversity (CBD), this report assesses global progress toward biodiversity targets, including the Aichi Biodiversity Targets.

It highlights ongoing biodiversity decline and underscores the urgency for global action to protect ecosystems and species.