COP15 Finance and Biodiversity Day
On integrating biodiversity in financial decision-making, and aligning financial flows with the post-2020 Global Biodiversity Framework
1. Purpose of the Finance and Biodiversity Day
COP15 will include a dedicated full-day event on Finance and Biodiversity. This will provide a unique opportunity for the global financial community to engage in discussion, share perspectives, and communicate on their action, achievements and commitments related to the integration of biodiversity within financial decision-making.
The event will include plenary and break-out sessions with representatives from the breadth of the financial landscape – including policymakers and regulators, financial supervisors and central banks, public finance, and the various facets of private finance.
The discussions and debates will explore the relevant linkages between the draft post-2020 Global Biodiversity Framework (GBF) and the financial system and the economy, as well as a plan of action for supporting the implementation of the GBF. This will include particular focus on the enabling conditions, mechanisms, and opportunities for, the alignment of financial flows with the vision of the framework. This will be an opportunity for Negotiators at COP15 to interact with, and reflect upon on the roles and responsibilities of financial sector participants in implementing the GBF.
This event will also provide a forum for:
- Building alignment on the necessary content of the proposed post 2020 Global Biodiversity Framework for it to catalyze a transformation of the financial landscape and the global economy to protect, restore and make sustainable use of, biodiversity and natural resources.
- Sharing perspectives, insights, lessons learnt, amongst financial professionals and the representatives of society, on enabling conditions and solutions for investing into activities that reduce risks and impacts to biodiversity, generate positive impacts, and foster the sustainable use of natural resources.
- Exploring the linkages and synergies between climate action and biodiversity action, between net-zero pathways and pathways for achieving the 2030 targets and 2050 vision of the GBF.
- Communicating on commitments, initiatives, achievements, that contribute to the alignment of financial flows and mobilization of resources from all sources in support of the 2030 targets and 2050 vision of the GBF – including focus on policy making, financial supervision, repurposing of harmful incentives, investing into green assets, as well as reducing risks, impacts and dependencies in investments.
The event will also include breaks for networking, including a networking lunch hosted by Finance Montréal and a closing reception co-hosted by the United Nations Development Programme (UNDP).
The programme will include a dedicated plenary session for discussion with Finance Ministers, hosted by the World Bank.
2. On the critical relationships between biodiversity and the financial sector
Whilst human-induced threats to biodiversity have long been acknowledged, recognition started to grow only over the past two to three years that today’s alarming rate of biodiversity loss creates threats to society, the economy and the financial system. In early 2022, the World Economic Forum ranked Biodiversity loss as one in three top risks facing our society, alongside Climate Change and Extreme Weather events – those three risks being highly interlinked and amplifying each other.
Much of our economy is dependent on resources provided by nature – it is now well known that over $44 trillion of yearly economic value generation – more than half of the world’s GDP – relies on services that are provided by nature.
Given how nature underpins much of the global economy, and given today’s accelerating rate of nature loss, the value and resilience of financial assets – which ultimately rely on activities and assets within the “real economy” – are themselves at risk. Until recently, the destruction or use of nature – such as deforestation, natural habitat conversion, unregulated exploitation of resources – was not included in financial accounting or risk assessment approaches. Whilst this unfortunately continues to be the case in most economic sectors, ongoing initiatives are building the case, and proposing approaches, for recognizing the value of natural capital thus lost, as well as for accounting for the financial materiality of risks related to nature loss.
Sadly, vast public and private financial flows are still being targeted around the world to activities that either directly harm biodiversity, or apply insufficient safeguards to manage avoidable impacts onto biodiversity. For instance, in 2019, major investment banks provided an estimated $2.6 trillion (c. the entire GDP of Canada or the UK) in sectors which governments and scientists agree are the primary drivers of biodiversity destruction. Public subsidies harmful to biodiversity range from $345 billion in agriculture from 54 countries in 2018, to up to $542 billion in the agriculture, forestry and fisheries sectors only in 2019, not to mention an estimated $395-478 billion of subsidies to fossil fuel production. These figures dwarve the total amounts of financial flows into biodiversity conservation globally, which were estimated as between US$ 124 and US$ 143 billion.
According to the Panel of Experts on Resource Mobilization of the Convention on Biological Diversity (CBD) published in March 2022, “there are a range of estimates for the funds needed for the implementation of the post-2020 global biodiversity framework, whose level of ambition has of course not yet been finalized. […] estimates on future funding needs differ significantly, varying from lower estimates of US$ 103 billion to US$ 178 billion – solely to secure 30% terrestrial and marine protected areas by 2030 – to higher estimates of US$ 403 billion and US$ 711 billion annually.”
Financial institutions, like businesses, rely extensively on the services and resources provided by nature. At the same time, they play an important role in incentivizing activities that harm nature, when they could decidedly encourage activities that protect, regenerate, and make sustainable use of nature. Finance sector participants, from policy makers to public and private banks and investors, have a responsibility to support a shift in financial practices so that financial flows of all kinds support the vision of the post 2020 Global Biodiversity Framework.
3. Key topics
Key topics to be discussed during the Finance and Biodiversity Day include:
- Recognizing the importance of biodiversity and natural resources as a pillar of financial stability and the economy; exploring the role of financial policymakers and supervisors in reducing systemic risks for the financial system associated with the dual crisis of biodiversity loss and climate change.
- Mechanisms, instruments and opportunities for transforming the policy and regulatory environment to enable a shift in financial flows towards the protection, regeneration, and sustainable use of, biodiversity and natural resources.
- Action, commitments, opportunities for aligning financial flows with the post 2020 Global Biodiversity Framework, including the 2050 vision of « living in harmony with nature » and the 2030 milestone targets proposed in the GBF. This includes eliminating and repurposing harmful subsidies and other incentives, reducing biodiversity-related risks and impacts in investments, as well as mobilizing new resources towards biodiversity.
- Solutions for scaling-up the financing of activities that protect, regenerate and make sustainable use of biodiversity, as well as promote social development and equity, including support to nature-based solutions, innovative financial approaches, public-private partnerships, and the role of local communities and indigenous people.
- Exploring the Climate and Nature Nexus, synergies between the financing of biodiversity and the financing of climate change adaptation and mitigation, and leveraging on ‘net zero pathways’ to develop and set organizations onto ‘nature-positive pathways’.