Biodiversity and nature in the spotlight

The Kunming-Montreal Global Biodiversity Framework

After years of negotiation, nearly 200 governments agreed and signed the Global Biodiversity (GBF) at COP15 in Montreal in December 2022. The GBF presents a significant step forward towards the preservation of nature and biodiversity worldwide while recognising the need to align public and private activities, including through blended finance.

The core purpose of the GBF is to “halt and reverse” biodiversity loss. We consider that this amounts to global agreement that a nature positive approach is required, and we anticipate that this expectation will filter down to government and the private sector.

The GBF has four long-term goals for 2050, which broadly relate to ecosystem repair, maintaining genetic diversity, sustainable use of ecosystem functions and services, equitable sharing of benefits and the protection of traditional knowledge associated with genetic resources, and equitable access to means of implementation (including finance, capacity-building, scientific cooperation and technology transfer). While these goals are mostly general in nature, they include the following specific targets:

1. Halting human induced extinction of known threatened species, and by 2050 reducing the extinction rate and risk of all species tenfold; and
2. Progressively closing the biodiversity finance gap of $700 billion per year.
3. Targets 2 and 3: protection of 30 per cent of land, inland waters, coastal and marine environments by 2030, which will include the rewinding of environmental degradation through nature and biodiversity restoration.
4. Target 4: urgent action to halt human induced extinction of threatened species.
5. Targets 5, 9, and 10: ensuring sustainable management of aquaculture, fisheries, forestry, and sustainable harvesting and management of wild species.
6. Target 6: management of invasive species to reduce the rates of introduction and establishment by at least 50 per cent by 2030, and eradicating or controlling invasive species.
7. Target 7: reducing the negative impacts of pollution from all sources by 2030 to levels that are not harmful to biodiversity, in particular by reducing the release of excess nutrients to the environment by 50 per cent, reducing the overall risk from pesticides and highly hazardous chemicals by 50 per cent, and working towards eliminating plastic pollution.
8. Targets 14 and 15: integration of biodiversity values into law and policies across all levels of government and sectors, including measures to encourage and enable businesses to monitor and report on their risks, dependencies and impacts on biodiversity.
9. Target 18: the identification and elimination of financial incentives that are harmful to biodiversity. Specifically, such subsidies are to be reduced by at least $500 billion per year by 2030, starting with the most harmful incentives. Positive incentives for conservation and sustainable use of biodiversity must be scaled up.
10. Target 19: mobilising at least $200 billion per year by 2030 in public, private, domestic and international financial contributions for biodiversity, to implement National Biodiversity Strategies and Action Plans. This should include $20 billion per year by 2025 and $30 billion per year by 2030 in international finance from developed countries to developing countries.

Signatories to the GBF have also agreed to monitor and report at least every five years on indicators related to progress against the GBF's goals and targets.

Separate to the GBF, it was also agreed at COP15 that a Special Trust Fund would be developed to support the implementation of the GBF.

The full text of the GBF including all goals and targets is available here.

Australia announced at COP15 that it will host the 2024 global Nature Positive Summit in collaboration with Pacific Island countries. A key purpose of the summit is to promote private investment in the environment, and many of the world’ environment ministers are expected to attend. The host city and dates are yet to be announced.

Taskforce for Nature-Related Financial Disclosures

Established in 2021, the mission of the Taskforce for Nature-Related Financial Disclosures (TFND) is to create a risk management and disclosure framework for organisations to report and act on nature-related risks. The TNFD’s overarching aim is to support a change in global financial flows away from nature-negative outcomes, and towards nature-positive outcomes.

Like the TCFD, the TNFD format is modelled around governance, strategy, risk management and metrics. However, the TNFD has added specific nature and biodiversity considerations for companies when assessing nature related dependences, impacts, risks and opportunities. A key focus for companies is the location of their direct operations and that of their suppliers to determine their dependencies and impacts on ecosystem services, including the state of nature in these locations.

The TFND’s fourth and final beta framework was released earlier this week, which can be viewed in full for the first time. The final framework for market adoption is expected to be released in September 2023.

The TFND framework has three core elements: the core concepts and definitions; a risk and opportunity assessment approach (referred to as LEAP); and disclosure recommendations. 

The TNFD’s disclosure recommendations support integrated climate and nature disclosures, with a high level of alignment between the recommended disclosures of each framework. The TNFD framework uses the same four pillars of governance, strategy, risk and impact management, and metrics and targets as the TCFD. The disclosure recommendations are set out in full in Figure 1.⁷

Figure 1: TNFD Disclosure Recommendations

The TNFD’s framework addresses organisations’ direct, upstream, downstream and financed operations, which promotes holistic supply chain analysis. In addition to global disclosure metrics, core sector disclosure metrics are included, as well as draft guidance for four sectors: Agriculture and Food; Mining and Metals; Energy; and Financial Institutions.

We note that the TNFD framework draws from the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI) standards, and it is likely that the TNFD will also inform ongoing standard development by these bodies.

International Sustainability Standards Board will incorporate nature and biodiversity into future standards development

The International Sustainability Standards Board (ISSB) was formed by the International Financial Reporting Standards Foundation in 2021 to develop global standards for sustainability related disclosures. At COP15, the ISSB announced that it will begin to incorporate nature and biodiversity in future standards and developments. The ISSB has indicated that initial focus will be placed on building the links with the ISSB’s draft climate standard, including consideration of recent TNFD developments.

The two standards released by the ISSB for public consultation last year (‘S1 General Requirements for Disclosure of Sustainability-related Financial Information’ and ‘S2 Climate-related Disclosures’) seek to establish an internationally standardised and reliable framework for climate and other environmental, social and governance reporting.

Further information about these standards can be found here. The ISSB confirmed at their February board meeting that we can expect that these two standards will be finalised around June 2023.

Australia's Nature Repair Market

The Australian Government’s Nature Repair Market Bill (2023), which proposes a scheme to incentivise investment in nature restoration, was introduced to Parliament on 29 March 2023. The proposed Nature Repair Market will facilitate the trading of biodiversity certificates and will be overseen by the Clean Energy Regulator.

The Nature Repair Market Bill proposes to establish:

1. An independent expert committee to advise the Environment Minister on the ongoing integrity of the scheme;
2. Methodology determinations stipulating requirements for different types of projects;
3. Tradeable biodiversity certificates;
4. A public register of projects and certificates, which will record the status and ownership of certificates and set out key project details; and
5. An assurance and compliance framework aimed at ensuring scheme integrity.

Nature and biodiversity markets around the world have emerged partially in response to the need to bridge the gap in global biodiversity financing, particularly from the private sector. The Organisation for Economic Cooperation and Development (OECD) estimated in 2020 that the scale of global biodiversity finance was between USD $78-$91 billion, most of which arose from public funding.⁸ While estimates differ, the Nature Conservancy estimates that an additional USD $598 to $824 billion needs to be spent annually to reverse the biodiversity crisis by 2030.⁹