COP16: A New Moment for Corporate Action on Nature

Context: COP16

COP16 concluded over the weekend in Cali, Colombia, following two weeks of events, speeches, and intense negotiations. Under the theme ‘Peace with Nature’, the conference set out to implement the Kunming-Montreal Global Biodiversity Framework (GBF), agreed to two years ago. That Framework, dubbed the ‘Paris Agreement for nature’, aims to halt and reverse nature loss by 2030, preserve 30% of land and sea this decade, and close the biodiversity finance gap – estimated at $700 billion per year.

The conference comes against a stark backdrop. Data shows that monitored global wildlife populations have seen a catastrophic 73% drop over the last 50 years, deforestation continues at a rapid rate, and we have collectively crossed six of nine ‘planetary boundaries’ – and are nearing the breach of a seventh.

In this context, the calls for action were firm. ‘The scale of the crisis has not yet been answered by the old institutions’, said Her Excellency Susanna Muhammad, Colombia's Minister of Environment and Sustainable Development. ‘The timing of the transformation and the scale of the crisis are not yet in sync’, she continued. ‘That’s the discussion we have to have with honesty.’ Meanwhile, Brazilian indigenous leader Txai Suruí challenged those in Finance and Biodiversity Day, ‘If you continue only thinking of profitability, you will destroy life. Finance life, finance water, finance clean air.’

Cali itself was a proud host, with a buzzing Green Zone welcoming 800,000 people to vibrant talks and cultural experiences. Local caleños and caleñas saw the summit as a moment to celebrate the region’s rich biodiversity, and a chance to rediscover the spirit of a city troubled by decades of drug-related gang violence.

The outcomes of COP16

Disappointment has been expressed at the negotiated outcomes of the summit. By the summit’s end, just 44 out of 196 parties – or 22% – had come up with new biodiversity plans that were part of the commitments made in Montreal two years ago. Countries did manage to agree to a new benefit-sharing mechanism for genetic resources, known as the ‘Cali fund’, and created a new permanent body for Indigenous Peoples, which will allow them to advise and offer their view at biodiversity COPs directly for the first time. Carbon Brief has an excellent detailed summary of the outcomes agreed upon.

Role of business of COP16

The business turnout – and indeed the overall turnout – at COP16 has set a new high watermark. Around 14,000 people attended, including >100 government ministers, several heads of state, and a strong corporate presence estimated at 3,000 delegates including many financial actors that sent delegations for the first time.

Central to the participation of business is the increasing realisation that nature loss poses a material risk to business value chains and investments, and that accepting that means getting to grips with nature issues. At centre stage is the food system, which is set for a transformation as significant as the global energy system.

Once again, global coalition Business for Nature played a significant convening role, alongside a substantial delegation from NGOs who support and partner with the business world on nature and biodiversity. The private sector’s involvement at COP16 was largely welcomed including by the leader of the conference, Astrid Schomaker, who said: ‘Those businesses who are here — it’s a bit different from the climate [COP]… They’re not chiefly here to lobby’. However, business was never going to be present without scrutiny, and corporate involvement continues to be under the microscope.

Implications for businesses on nature

At the centre of the Blue Zone was a striking Jenga-like sculpture representing the complexity,  interconnectedness, and precariousness of the natural world. So, too, the issues as they relate to business are multiple, sector- and locality-mediated, and complex. We saw seven dominant themes impacting business:

1. Forest protection and restoration is non-negotiable for stemming nature loss and achieving net zero, especially in key tropical biomes. With better data and monitoring, and the EU Deforestation Regulation (EUDR) – controversial and delayed, but not expected to go away – any company with a land-based value chain will be under increasing scrutiny to meet zero deforestation and land conversion targets.
2. Decisions around genetic data could have significant business impact, especially for the pharma, cosmetics, and agricultural technology sectors. It has been agreed that large companies ‘should’ pay 0.1% of their revenue or 1% of their profit into a fund compensating countries for the use of biological data. For now, this is on a voluntary basis, but reputational pressure may urge companies to comply.
3. Nature disclosure and strategy setting continue to build support responding to Target 15 of the GBF, which sets a course for mandatory disclosure from large businesses and financial institutions of their risks, dependencies, and impacts on biodiversity. TNFD, the sister framework to TCFD, now has over 500 signatories including more than 120 financial institutions, with the ISSB also exploring corporate reporting on biodiversity. Alongside this, a group of companies published nature strategies, with 3 firms – GSK, Kering, and Holcim – adopting science-based targets for nature, and ~150 more working towards them.
4. Attention grows on private finance for nature in response to investment risks and financing opportunities. Investor engagement on nature is accelerating, with complementary investor engagement initiatives such as UN PRI Spring and Nature Action 100 bringing leading investors to Cali to progress their stewardship agenda on deforestation, policy engagement, and other nature issues. At the same time, organisations such as BNEF and IFACC, Capital for Climate, and the UN Climate Champions argue that investment opportunities are increasingly possible, profitable, and emerging at scale. The great hope from the finance community is that national biodiversity and climate plans are developed by environment ministers hand-in-hand with finance ministers, so that they are genuinely investible and bankable.
5. There are early signs of getting to grips with ‘environmentally harmful subsidies’, aligned with the need to ‘reduce harmful incentives by at least $500 billion per year’. To meet this goal, businesses will increasingly be expected to understand their impacts and dependencies on nature, as well as the impact of often hidden subsidies that shape their value chains. The subject of an all-day session led by GEF, this is an issue some businesses, particularly those in energy and extractives, will work to get ahead of.
6. People are at the centre of action on nature, and Indigenous Peoples are the custodians of conservation – they were recognised as such by COP16 and given permanent representation in decision making on biodiversity. This new and formal recognition means there is a premium on businesses engaging with Indigenous Peoples and local communities through their value chain, whilst supporting a nature transition that’s fair and equitable.
7. Nature is now an expectation in climate transition plans, with new guidance from international standard-setters set to influence the next tranche of these plans, especially in industries such as energy and extractives with significant CO₂ and land footprints. The Glasgow Financial Alliance for Net Zero (GFANZ) launched a consultation paper ‘Nature in Net-Zero Transition Plans’ on voluntary guidance for financial institutions to better incorporate nature into strategic decision making. Meanwhile, the TNFD published guidance on nature transition planning for companies.