With the stalled COP16 biodiversity talks about to resume, it's worth taking a closer look at just what it will take to close the yawning gap in the level of financial flows currently employed in activities harmful to nature, and those employed towards activities that maintain and restore it.
Stalled biodiversity negotiations
Towards the end of 2024, the 16th meeting of the Conference of the Parties (COP16) to the Convention on Biological Diversity (CBD) took place in one of the most biodiverse countries in the world, Colombia. This major event hosted a record attendance of around 23000 people, with 3000 representatives from the business community among them.
The goal of the COP16 conference was to ensure more meaningful action from governments and align public and private financial flows to halt biodiversity loss, which is a systemic risk to people, profit and planet alike.
However, the COP16 talks ultimately ended without agreement on financing by wealthier nations for action to maintain and restore nature in developing economies.
Overcoming the deficit in financial flows
To put the COP16 goals on financial flows into context, it’s important to reiterate that all economic activity imposes a negative impact on nature, through vectors such as consumption of resources, pollution and land use change. The negative impacts of these economic activities on nature can result in biodiversity loss. On the other hand, activities aimed at maintaining and restoring biodiversity can have a positive impact on nature, and act as a counterweight to the negative impacts of economic activity.
Success in this considerable task, means focusing on two tracks of effort.
First, and most important, both government and the private sector must stop financing economic activities that are outright harmful to nature. In practical terms, this means eliminating subsidies and investments in business activities that for example overconsume natural resources, or lead to irreversible pollution and destruction of natural ecosystems.
Secondly, it means scaling up new and additional funding for activities aimed at positive impact on nature, such as increasing funding for programmes to preserve natural ecosystems like forests and wetlands.
The crucial role of finance
The Global Biodiversity Framework adopted in Montreal at the previous COP conference in 2023 emphasizes the importance of raising finance for nature from all sources, including public and private. In Montreal, governments set a target of raising US$ 200 billion in annual financing for the protection of biodiversity between now and 2030, and reforming US$ 500 billion in economic incentives that are harmful to biodiversity.
It is widely recognized that there is a significant shortfall in financial flows into nature-positive investments. In 2022, nature-based solutions (NbS) financial flows amounted to US$ 200 billion. But these investments were overwhelmed by nature-negative payments of US$ 6.7 trillion.
COP16 witnessed several discussions about environmentally harmful subsidies, as a potential solution to meet the funding shortfall through reallocation rather than relying on new sources. Storebrand, through the Finance for Biodiversity Foundation (FfB), helped design some of these discussions before the conference, by providing clear policy recommendations to governments on alignment of financial flows and the range of financial instruments that can be used to finance nature. At the conference itself, these discussions were followed up with Ministers of Finance and International Development Banks. I was particularly encouraged to see the attendance of the finance ministers, as their presence implies that nature considerations are moving beyond the Environment and Agriculture Ministries.
Finance was the main point of contention at COP16: with deep divisions between developed and developing countries, agreement was unfortunately not reached between the countries on financing for nature. That gap creates uncertainty about the total level of financial support that will be available for biodiversity conservation, as well as the role of the private sector in contributing to these efforts. This February, in Rome, governments will resume discussions on this unresolved issue, aiming to bridge this gap by coming to an agreement.
However, progress was made in negotiations on sharing benefits from use of digital sequence information on genetic resources (DSI), which represent hopeful wins for nature. Furthermore, countries did manage to reach a consensus on a new benefit-sharing mechanism for genetic resources, known as the “Cali fund”. Businesses in sectors utilizing genetic resources (pharmaceuticals, cosmetics, agriculture) will be required to contribute a percentage of their profits or revenue to the Cali Fund. Although the nature of these contributions is voluntary, this might not be the case in the future.
Bold action must follow
Bold action is needed from governments in 2025, to ensure more meaningful commitments on national implementation; cuts to subsidies for harmful activities; and stimulus for positive activities. Furthermore, its vital that governments reach agreement on the outstanding items of the COP16 agenda, during the intercessional COP sessions that are scheduled to take place in Rome this February.
Accomplishing these initial actions could lay the groundwork for success at the follow-on event, COP17, which will be held in Armenia.
