Introduction

On Monday 19 December 2022 in Montreal, Canada, the 15th Conference of the Parties to the United Nations Convention on Biological Diversity ended, culminating in the adoption of the  “Kunming-Montreal Global Biodiversity Framework”, which sets out a series of global targets to address biodiversity loss and restore ecosystems by 2030.

In this article, we highlight key features of the Framework and other significant developments from the conference, and what these mean for Australian businesses.

What is the Biodiversity Conference Of the Parties?

Established in 1992 and with 196 current signatories (including Australia), the Convention on Biological Diversity (CBD) is an international treaty for the conservation of biodiversity, sustainable use of the components of biodiversity and the equitable sharing of the benefits derived from the use of genetic resources.

The Conference of the Parties (COP) to the CBD have since established a number of global protocols aimed at furthering these objectives, including the Cartagena Protocol on Biosafety which seeks to protect biodiversity from risks posed by living modified organisms, and the Nagoya Protocol, with sets out a legal framework for fair and equitable sharing of benefits arising from genetic resources.

At COP10 in 2010, the COP agreed on a Strategic Plan for Biodiversity for 2011-2020, which set out a series of targets aimed at (among other things) addressing the underlying causes of biodiversity loss, improving the status of biodiversity, and promoting sustainable use of biodiversity. Significantly, in a report published in 2020, the United Nations found that none of these targets had been achieved.

It is against this background that COP15 was tasked with finalising the post-2020 successor to the Strategic Plan. The conference took place in two parts, the first held online in October 2021 and the second from 7-19 December 2022 in Montreal.

What did COP15 aim to achieve?

Although the focus of this year’s COP was on finalising the successor to the 2011-2020 Strategic Plan and putting in place measures to galvanise urgent and transformative action by governments and civil society to halt and reverse biodiversity loss, other key priorities for the conference included increasing the voices of Indigenous Peoples and communities in dialogue over biodiversity knowledge and benefit sharing, and discussing how information from genetic sequencing can be more fairly shared. Alignment of financial flows with nature and driving finance toward sustainable investment was also a key discussion point.

Key outcomes from the conference

Adoption of the “Kunming-Montreal Global Biodiversity Framework”

The last day of negotiations saw parties finally agree on the successor to the 2011-2020 Strategic Plan, adopting the “Kunming-Montreal Global Biodiversity Framework” (Framework).

The overarching goals of the Framework envision that by 2050, areas of natural ecosystems will be substantially increased, biodiversity will be sustainably managed, that there will be increased equitable benefit sharing of genetic resource use, including with Indigenous Peoples and local communities, and that adequate means of implementation will be provided to close the biodiversity finance gap. The 23 targets in the Framework are geared toward achieving these goals, and include (among others):

• ensuring that the loss of areas of high biodiversity importance, including ecosystems of high ecological integrity, is as close to zero by 2030;
• ensuring that by 2030 at least 30 per cent of areas of degraded terrestrial, inland water, and coastal and marine ecosystems are under effective restoration;
• ensuring that by 2030 at least 30 per cent of terrestrial, inland water, and coastal and marine areas, especially areas of particular importance for biodiversity and ecosystem functions and services, are effectively conserved and managed;
• reducing the negative impact of pollution from all sources, by 2030, to levels that are not harmful to biodiversity and ecosystem functions and services;
• taking effective legal, policy, administrative and capacity-building measures at all levels to ensure the fair and equitable sharing of benefits that arise from the utilisation of genetic resources and from digital sequence information on genetic resources; and
• ensuring the full, equitable, inclusive and gender-responsive representation and participation in decision-making, and access to justice and information related to biodiversity by indigenous peoples and local communities.

Importantly, the Framework recognises the need to align ‘public and private activities, fiscal and financial flows’ with the goals and targets of the Framework, and to that end, sets out a series of targets geared toward enhanced private sector participation. We explore these below.  

(a) Aligning financial flows with implementation

The gap between current and required annual financing needed for biodiversity conservation is estimated at approximately US$700 billion.

Acknowledging the need to close this gap, the Framework calls for Parties to ‘substantially and progressively’ increase levels of financial resources from all sources, including domestic, international, public and private resources, to implement national biodiversity strategies and action plans. It also calls for at least US$200B per year to be mobilised by 2030. To achieve this, developed countries are asked to increase total biodiversity related international financial resources to at least US$20 billion per year by 2025, and at least US$30 billion per year by 2030.

Parties are also asked to leverage private finance, promote blended finance, implement strategies for raising new and additional resources, and encourage the private sector to invest in biodiversity, including through impact funds and other instruments.

Importantly, COP15 also saw the parties agree to establish by 2024 a new Global Biodiversity Fund to support implementation of the Framework. The fund will be established by the Global Environment Facility.

(b) Requiring disclosure of biodiversity-related risks

A significant inclusion in the Framework is a call for biodiversity-focused disclosure requirements. In particular, Target 15 asks parties to take legal, administrative or policy measures to encourage and enable businesses, and in particular, to ensure that large and transnational companies and financial institutions:

• regularly monitor, assess, and transparently disclose their risks, dependencies and impacts on biodiversity including with requirements for all large as well as transnational companies and financial institutions along their operations, supply and value chains and portfolios;
• provide information to consumers to promote sustainable consumption patterns; and
• report on compliance with access and benefit-sharing regulations and measures.

It is anticipated that over time, the adoption of such disclosure requirements will reduce biodiversity-related risks to business and financial institutions whilst also reducing negative impacts on biodiversity and increasing positive impacts.

This aspect of the Framework reflects growing regulatory and stakeholder demand for companies and financial institutions to assess, report and manage their nature-related risks, and recent efforts to facilitate this type of reporting. In particular, the Taskforce on Nature-related Financial Disclosures (TNFD) is developing a framework for organisations to report and act on evolving nature-related risks and opportunities, which will provide guidance and recommendations on the disclosure of nature-related risks and opportunities. Businesses may voluntarily choose to disclose their nature-related risks and opportunities in line with that guidance. Further, the International Sustainability Standards Board (ISSB) announced that it will release guidelines for transparency on biodiversity after the ISSB publishes its requirements for climate and sustainability-related disclosures in 2023.

(c) Eliminating subsidies for harmful practices, and incentivising sustainable use 

Encouraging sustainable consumption and reducing pollution and harmful practices are also key themes emerging from the Framework. Importantly, the Framework asks parties to identify by 2025, and eliminate, phase out or reform incentives, including subsidies, that are harmful for biodiversity in a proportionate, just, fair and effective way, while substantially and progressively reducing them by at least US$500 billion per year by 2030. Alongside this, parties also agreed to scale up positive incentives for the conservation and sustainable use of biodiversity.

Private sector initiatives

COP15 saw an unprecedented presence of business and finance sector participation, with investor groups calling for alignment of financial flows and mandatory disclosure, and the launch of a number of private sector initiatives.

The World Business Council for Sustainable Development announced that it is developing business guidance for actions to align strategies with the shared goal of a nature-positive planet by 2030. The guidance will provide a checklist of actions to assess, commit, transform and disclose performance. Meanwhile, NatureFinance announced the development of an ‘alignment tool’ which can track private and public financial flows to assess whether they are ‘nature positive’.

In addition, the Nature Action 100 (NA100) engagement initiative was ‘soft launched’, with at least 120 investors reported to be considering participating. Similar to the initiative Climate Action 100+ (CA100), NA100 aims to engage with 100 companies, deemed to have the highest impact on nature; encouraging them to track, and report on progress against biodiversity focused indicators; and to advocate for, and support, nature-focused policy change.

In market developments, the Biodiversity Credit Alliance (BCA) was launched during COP15, with the aim of defining and categorising biodiversity credits for the voluntary biodiversity market, identifying a set of universal principles that all biodiversity credit methodologies should achieve, and establishing a peer review mechanism for biodiversity credits. We note important parallels between the work of the BCA and work to enhance integrity in the voluntary carbon market. For example, the Integrity Council for Voluntary Carbon Markets (ICVCM), is due to release its core carbon principles (CCPs) and assessment framework later this year. This work will complement the work of the Voluntary Carbon Market Integrity Initiative (VCMII) which has recently published its Provisional Claims Code of Practice (Code) for public consultation. The Code provides guidance for ensuring integrity in both the demand for and supply of carbon credits.

Australia’s participation at COP15

Australia took a fresh and constructive approach to its engagement at COP15. Of note, Australia was one of a number of countries that joined the High Ambition Coalition for Nature, which will be working on the implementation of the Framework, and will join the Steering Committee of the Coalition.

Outside of negotiations, Australia signed an agreement with the US to measure the environment’s economic value and reflect it in national accounts and economic measures. Australia also agreed to join the Sustainable Critical Minerals Alliance, which is an alliance of Canada, the United Kingdom, France, Germany and the United States that is focused on preventing biodiversity loss, ensuring engagement with Indigenous peoples and phasing out emissions from the mining of critical minerals.

Australia also announced that it will host the 2024 global Nature Positive Summit, which will aim to promote private investment in environmental protection and increase international public finance for nature up to 2030. The Summit also aims to assist countries, in particular developing countries, to acquire the knowledge and tools needed to attract private investment in nature.

It is also significant that during the conference, the Federal Government delivered its long-awaited response to the statutory review of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act), announcing that significant reforms to the EPBC Act will be made, including:

• establishing an independent environmental protection agency;
• implementing numerous national environmental standards;
• creating a new data division to improve the availability and quality of environmental information;
• developing the regional planning initiative to enable better decision-making under the EPBC Act;
• reforming the offset arrangements to ensure they deliver nature positive outcomes and reduce delays;
• improving the national conservation planning framework; and
• increasing the role of First Nations partnerships.

In pursuing the legislative and policy actions to give effect to these reforms, Australia will also need to reflect upon how the targets in the Framework will be given effect domestically.

What does COP15 mean for businesses and the private sector?

The targets in the Framework, as well as the various initiatives launched by both the Australian Government and business groups throughout the conference, will hold important implications for the private sector.

Private sector commentators have welcomed the adoption of the Framework, and its inclusion of specific targets focused on business and on consumers. For financial institutions, the adoption of the Framework may lead to opportunities to engage with governments to increase financial resources for biodiversity, including through blended finance, impact funds, and through developing innovative financing instruments. For businesses, opportunities may arise from the call for parties to encourage private sector investment in biodiversity, and for parties to introduce incentives to encourage nature positive actions.

Further, the work of the BCA and increased global focus on the voluntary biodiversity credit market may open up opportunities for project developers, financiers, landholders and consultants alike to engage with this market. Efforts to create a national biodiversity credit market in Australia are already well underway with the Federal Government announcing their plans to establish a national voluntary biodiversity market and certification scheme as well as the recent launch of the NaturePlus Credit Scheme by GreenCollar.

There will be challenges too, particularly for resource-intensive businesses whose practices are not yet aligned with biodiversity conversation. The targets in the Framework will require parties including Australia to implement strong measures in coming years to halt biodiversity loss, phase out incentives for negative practices, and reduce pollution. It can be expected that there will be flow-on effects for business practices.

Further, the likelihood of countries introducing mandatory biodiversity risk reporting in coming years signals that businesses should start preparing to disclose these types of risks to their businesses and supply chains, and putting strategies in place to mitigate nature-related risks. While the Federal Government is yet to signal the introduction of a mandatory biodiversity risk reporting framework for Australian businesses, it is currently consulting on a mandatory climate-related financial risk disclosure framework (read more about the Consultation Paper in our article Government consults on mandatory climate risk disclosure framework). Businesses should keep a close eye on developments in this space, and be prepared for climate reporting frameworks to expand to require parallel biodiversity risk reporting.

As we look ahead to 2023, it will be important to keep watch as Australia and the global community get to work on implementing the targets in the Kunming-Montreal Global Biodiversity Framework, 2030 is not far away.

Authors: Ilona Millar, Emily Morison, Ashleigh McCoach, Brandon Zheng and Shanae Streeter