The 16th Conference of the Parties to the United Nations Convention on Biological Diversity (COP16) concluded in the early hours of the morning on 2 November 2024, closing two weeks of negotiations in Cali, Colombia between representatives of 196 countries.
The road to Cali saw a significant focus on international initiatives to develop a framework for a global biodiversity market and the first tranches of funding for biodiversity restoration projects from the Global Biodiversity Framework Fund (GBFF). However, agreements could not be made on establishing a clear strategy for mobilising financial resources to achieve the 4 global goals and 23 global targets of the Kunming-Montreal Global Biodiversity Framework (KMGBF) or a monitoring framework to report and track against those goals and targets (see our Knowledge Insight here for further details on the KMGBF). Negotiations on these outstanding issues will reconvene next year in Bangkok, Thailand.
Setting the scene for the need to speed up implementation of the KMGBF, the United Nations Environment Programme launched its Protected Planet Report 2024 at COP16 – the first report to assess the global status of protected and conserved areas in light of the 2030 30% coverage target of protected and conserved areas under the KMGBF. The Report identifies that while progress has been made, with six years remaining to meet the KMGBF target, countries must collectively protect another 16.7 million km2 of land (an area nearly the size of Russia) and over 78 million km2 of marine and coastal areas (more than twice the size of Africa) by 2030. In this respect, much of the discussion at COP16 focused on how conservation and restoration at this speed and scale will be financed. However, negotiations on finance will have to be revisited at the intersessional meetings next year in Bangkok.
Significant progress was made in other areas, with countries delivering two new landmark agreements. One to establish a new Subsidiary Body to elevate and enable the full and effective participation of Indigenous peoples and local communities (IPLCs) in the COP. The other to establish the ‘Cali Fund’, a new multilateral benefit-sharing mechanism where users of genetic data from nature (known as digital sequence information (DSI)) could be required to contribute a portion of their revenue to the fund.
Below we analyse the key outcomes from COP16, consider progress towards nature positive targets, and highlight implications for business and policymakers.
Key takeaways
COP16 established a permanent Subsidiary Body on IPLCs under Article 8(j) of the Convention of Biological Diversity (CBD) and related provisions. Article 8(j) mandates parties to the CBD to ‘respect, preserve and maintain’ traditional knowledge, innovations and practices and encourages the equitable sharing of the benefits arising from the utilisation of such knowledge innovations and practices.
Since the establishment of the CBD in 1992, IPLCs have had an informal working group as part of UN biodiversity negotiations. The creation of this new Subsidiary Body seeks to ensure the full and effective participation of IPLCs under the CBD and will expand the role of IPLCs in biodiversity conservation negotiations.
Local communities are defined as groups of people who have a long association with the land or water they live on. The text also refers to the rights of afro-descendant people.
Importantly, countries adopted a decision to establish the ‘Cali Fund’, a new multilateral benefit-sharing mechanism where users of DSI could be required to contribute a portion of their revenue to the fund. This would only occur if a government introduced the rules domestically, noting that implementation of the Cali Fund framework is voluntary.
Under the agreed rules, entities that benefit commercially from the use of DSI (for example pharmaceutical, biotechnology, animal and plant breeding firms) and meet two of following three criteria will need to contribute 1% of profits or 0.1% of their revenue to the Cali Fund:
sales of more than USD 50 million (~AUD 75 million);
profits of more than USD 5 million (~AUD 7.5 million); and
USD 20 million (~AUD 30 million) in total assets.
The rules state that at least half of the funding must support needs of IPLCs as self-identified through arrangements with governments or liable entities.
National Biodiversity Strategies and Action Plans (NBSAPs) are the means through which the CBD’s goals and targets are translated into action at the domestic level – serving a similar purpose to Nationally Determined Contributions (NDC) under the Paris Agreement.
In the lead-up to COP16, countries were required to submit updated NBSAPs that demonstrate alignment with the 4 global goals and 23 global targets of the KMGBF. To date, 44 countries have submitted updated NBSAPs, equivalent to around 20% of all 196 CBD countries, demonstrating a significant shortfall.
Australia was one of the countries to submit a revised NBSAP – selecting six proposed targets to address critical issues, including to:
Protect and conserve 30% of Australia’s land and 30% of Australia’s oceans by 2030.
Work towards zero new extinctions.
Tackle the impact of invasive species.
Achieve effective restoration of degraded terrestrial, inland water, and coastal and marine ecosystems.
Build a circular economy and reduce the impact of plastics on nature.
Embed climate change adaptation into decision-making to support increased resilience of biodiversity.
Separately, 119 countries submitted national biodiversity targets – policy measures and actions to help reach the 23 KMGBF targets. This reflects approximately 60% of the 196 CBD countries but is again a significant shortfall.
Countries attempted to decide on a framework to monitor progress against the KMGBF but COP16 was closed before an agreement could be reached. This will be a key item for discussion in Bangkok next year.
The proposed decision on resource mobilisation included a clear strategy for scaling up financial resources and to establish a new dedicated global financing instrument for biodiversity under the authority of the COP (separate to the GBFF). This was not accepted by developed countries and the decision on finance has been deferred for further consideration at COP17.
The GBFF therefore remains the primary international biodiversity finance vehicle. The GBFF – which exists under the Global Environment Facility and will be operational until 2030 – is focused on delivering finance to activities by eligible participants that could potentially deliver the most global benefits in biodiversity relative to an applicant country’s economic needs. Funding is based on a range of selection criteria, including whether the activities promote the purposes of the GBFF and implementation of the KMGBF, align with NBSAPs, demonstrate mobilisation of private sector and philanthropic resources, and engagement with IPLCs.
USD 163 million (~AUD 246 million) was pledged to the GBFF during COP16. So far, the GBFF has approved project preparation grants equivalent to nearly USD 110 million (~AUD 166 million) to support proposed activities in 24 countries across Africa, Asia, the Pacific and South America, including Cambodia, Fiji, Indonesia, the Philippines, Samoa and Tonga. At the time of writing, no Australian, private sector or philanthropic money has been pledged towards the GBFF.
The draft decision on resource mobilisation identifies several factors fundamental to diverting financial flows into positive outcomes for nature and biodiversity, including the need to encourage and enable business, and in particular large and transnational companies and financial institutions, to regularly monitor, assess, and transparently disclose their risks, dependencies and impacts on biodiversity (in line with Target 15 of the KMGBF). Nature-related disclosures and increasing transparency and accountability are fundamental to the nature positive transition.
In the absence of further guidance, there is a lot of work to be done to enable the COP to address the USD 700 billion (~AUD 1 trillion) nature finance gap and reduce harmful investments and subsidies (currently projected to be close to USD 7 trillion (~AUD 10 trillion) and dwarfing investments in nature-based solutions by at least 30 times) (see UNEP’s latest State of Finance for Nature Report here).
At COP16, the International Advisory Panel on Biodiversity Credits (IAPB), an independent initiative established in 2023 to facilitate the growth of high integrity biodiversity credit markets, launched the IAPB Framework to define, guide and encourage the development of high integrity biodiversity credits and credit markets. The IAPB Framework is made up of a set of High-Level Principles which serve as an overarching guide for biodiversity credit markets, and more detailed recommendations and guidance for market actors. The Framework emphasises the importance of ensuring verified outcomes for nature, equity and fairness for all, especially IPLCs, and transparency and good governance for markets, and includes guidance for market actors.
The High-Level Principles and guidance for market actors identified in the IAPBC Framework will be important for the development of a robust and high-integrity biodiversity credit market that can effectively contribute to the conservation and restoration of biodiversity, in alignment with global efforts under the KMGBF. The IAPBC Framework, together with the existing Biodiversity Credit Alliance Guidance, should be used as a framework for Australian companies to guide their participation in the biodiversity credit market and meaningful contribution to the conservation and restoration of biodiversity.
A key private sector development at COP16 was the launch of Verra’s new Nature Framework, pursuant to which projects can generate Nature Credits for verified nature restoration activities. Notably, Nature Credits would only be issued for verified improvements and outcomes for nature and cannot be used for offsetting. Currently, the Nature Framework only relates to restoration activities, but Verra has confirmed that it is working on a ‘nature stewardship certificate’ – a non-additionality based certificate focused on conserving and maintaining high integrity ecosystems. The Nature Framework is anticipated to drive critically needed investment in biodiversity conservation activities and contribute to Target 19 of the KMGBF, which calls for the mobilisation of $200 billion per year for biodiversity from all sources, including through biodiversity credits.
What does this mean for business and the private sector?
Since the adoption of the landmark KMGBF in December 2022, nature and biodiversity issues have continued to grow in prominence in the public eye. Governments and policymakers across the world, including in Australia, have initiated a range of ‘nature positive’ reforms that seek to evolve approaches to regulating and valuing nature and biodiversity. These reforms span across environmental markets, corporate disclosures, fund and investment management, and planning assessment and approval pathways, and have significant implications for businesses and their boards.
The private sector is already widely engaged with the challenges of addressing biodiversity loss and improving natural capital stocks. However, with the rate of reform and implementation of nature-positive agendas likely to continue to speed and scale up, the private sector should be live to significant developments on the horizon, particularly how governments translate the KMGBF into national action.
With the last year in mind, we see the following as key implications and trends for the private sector:
Benefit-sharing for DSI use: Business that use genetic data from nature (known as digital sequence information (DSI)), particularly across the biotechnology, pharmaceutical and chemical industries, will experience the most material impacts where national governments implement the Cali Fund rules domestically. These businesses would benefit from engaging with the Taskforce for Nature-related Financial Disclosures (TNFD) framework and the sector specific guidance for their industry to better understand their dependencies on DSI and potential exposure under Cali Fund implementation laws and policies. This new development is an example of the increased crystallisation of government and corporate responsibility towards nature and biodiversity conservation.
Nature-related financial disclosures: The continued implementation of the KMGBF by governments will present new challenges for businesses seeking to manage their activities and keep pace with expanding corporate reporting and disclosure requirements.
Global frameworks for biodiversity and nature-related risk are coming, with the International Sustainability Standards Board (ISSB) working on disclosure standards for biodiversity, ecosystems and ecosystem services, based on the TNFD Framework. The EU is already requiring large EU and non-EU entities captured by its Corporate Sustainability Reporting Directive to begin reporting against the European Sustainability Reporting Standards in the current financial year. These standards include disclosure on biodiversity, ecosystems, water and marine resources, pollution, and circular economy impacts.
These frameworks will inform the approaches of Australian governments and regulators (such as the Australian Securities and Investments Commission), particularly in light of the potential for the Federal Government to incorporate nature-related disclosures into domestic regulatory frameworks based on international best practice in the medium-term. A nature-related financial disclosure framework in Australia could complement the new mandatory climate-related financial disclosures framework by requiring liable entities to submit a biodiversity or nature statement as part of its annual sustainability report, in addition to the ‘climate statement’.1 Therefore, Australian companies should be live to significant developments on the horizon and company directors and executives should begin engaging internally to ensure that their organisation’s strategy and risk assessment framework sufficiently addresses nature-related risks, opportunities and dependencies.
Transition planning: Pressure is on business to reflect nature-related considerations in investment decisions, transitional plans and sustainability target setting. During COP16, TNFD announced the next wave of its early adopters and guidance on preparing nature transition plans. We are seeing a growing appreciation of the impacts and dependencies organisations have on nature and biodiversity and understanding key risks and opportunities and the role of long-term planning will be key to business sustainability and success.
Investor, shareholder and consumer expectations: As part of the movement towards increased transparency and accountability on nature-related risks, opportunities, impacts and dependencies, there are a growing number of reports of nature-related shareholder resolutions being filed at AGMs around the world. Often these resolutions have been supported by institutional investors, signalling that nature-related shareholder activism will likely influence the broader investment ecosystem over time. We note that some of these resolutions led to commitments from the company to disclose ahead of the AGM. This is a trend we are expecting to reach Australia in future AGM seasons.
Financing for biodiversity activities: Investing in activities that prevent the decline of, restore or maintain biodiversity (including those that generate biodiversity credits) are becoming an essential element of sustainable business practices. This is supported by disclosure requirements, investors and shareholder expectations, meaning that the value proposition for these opportunities is growing. Channelling investments in biodiversity activities (including those that generate biodiversity credits) can be used to address material nature impacts dependencies, risks and opportunities identified within an organisation’s value chain, or to make contributions to nature improvements beyond an organisation’s value chain (e.g., to fulfil voluntary nature positive commitments) See the World Economic Forum’s High Integrity Biodiversity Credits Guide here).