Biodiversity COP or Flop? What COP16 means for business

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Background

Just over a week ago the 16th meeting of the Conference of the Parties (COP) to the Convention on Biological Diversity (CBD) ("COP16") concluded in Columbia.

As we reported at the time, the previous biodiversity conference that took place in 2022 (COP15) was considered a success after nearly 200 countries signed the Kunming-Montreal Global Biodiversity Framework (the "Framework"). The Framework sets out four global, long-term goals for 2050, with twenty-three shorter-term targets ("Targets") designed to "halt and reverse biodiversity loss" by 2030 to help achieve the wider 2050 goals. The headline "30 x 30" goal is an agreement to conserve 30% of the Earth's land and seas by 2030, which has become a north star in terms of biodiversity ambition.

The aim of this year's COP16 was to progress implementation of the Framework by:

setting up a process to monitor and report on governments' progress against the Targets;
mobilising financial resources to enable successful implementation (including reform of environmentally harmful subsidies and to meet the commitment to mobilize 200 billion USD per year by 2030); and
finalizing the multilateral mechanism on sharing digital sequence information on genetic resources, including a global fund.

Businesses and financial institutions attended COP16 in much higher numbers than in previous years, leading some commentators to express optimism that businesses were beginning to recognise the critical role of nature when it has often been in the shadow of climate in terms of the global political agenda. A combination of regulation, increased disclosure obligations and investment opportunities are likely driving greater engagement with nature in recent years. The Glasgow Finance Alliance of Net Zero ("GFANZ") launched a consultation on a new framework for financial institutions to integrate nature into their net zero commitments during COP16, in conjunction with the Taskforce on Nature-related Disclosures (see section 6 below).

The setting up of a historic platform for Indigenous Peoples and Local Communities (providing a new permanent body to defend indigenous rights and share knowledge) was a clear win for the conference – important because indigenous people represent 5-6% of global population whilst stewarding at least 40% of standing intact nature (with some putting this figure as high as 80%). However, as has been widely reported since the conference's closure, COP16 has generally been viewed as more of a failure than a success story, with commentators suggesting the Framework itself is 'in jeopardy' after a failure to progress the financial and funding aims.

Why the focus on biodiversity?

Biodiversity remains the poor relation of climate change in many respects. Its interlinkage to the climate crisis is not always well understood. Political capital, resources and funding has been directed towards climate rather than nature. However, it is increasingly recognised that parallel action is needed to ensure nature and biodiversity impacts are better understood and accounted for both at a country and a business level.

The World Economic Forum reported in 2024 that biodiversity loss and ecosystem collapse is the third greatest global risk over the next 10 years. At the same time, it reports a dissonance between biodiversity risk perceptions of the private sector (longer term risk) and civil society and government (shorter term risk), "heightening the risk of missing key moments of intervention, which would result in long-term changes to planetary systems".

Countering these risks will require action, including "nature-based solutions" ("NbS") - those solutions designed to tackle multi-faceted issues (e.g. crop diversification enhancing both food security and biodiversity). NbS in some tropical countries have the potential to mitigate more than 50% of national emissions. They may also present significant economic benefits both from the perspective of cost avoidance (as an example, nature-based coastal defence projects are 2 to 5 times more cost-effective than engineered structures) and as investable projects when properly planned and managed.

Several of the Framework's Targets recognise the importance of NbS, to minimise the impacts of climate change on biodiversity and build resilience (target 8), restore, maintain and enhance nature's contribution to people (target 11) and enhance green spaces and urban planning for human well-being and biodiversity (target 12).

What were the other goals and targets set at COP15 (and reviewed at COP16), and why do they matter to businesses?

The goals and targets are designed to be implemented by the parties to the Framework (i.e. the countries that have signed up to it). Importantly for businesses, a number of the targets include actions that will have either a direct or indirect impact on businesses or the regulatory spheres in which they operate. The Framework requires that countries integrate biodiversity considerations into (among other things) their policies and regulations, planning and development, and environmental assessments/ impact assessments.

These requirements flow down to businesses in clear ways through the Framework's encouragement of participating countries to take legal, administrative or policy measures to incentivise and enable businesses (particularly large and transnational companies and financial institutions) to:

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 (see legal disclosure developments discussed below);
provide necessary information to consumers to promote sustainable consumption patterns (e.g. greenwashing and green product-related regulations in the UK and EU);
report on compliance with access and benefit-sharing regulations and measures, as applicable.

Generally speaking, to date in the UK and EU, active biodiversity-related legal considerations and restrictions have been focused on the areas of immediate biodiversity impact, such as development, construction and the operation of similar businesses with a direct environmental impact. Biodiversity protection measures are built into planning laws and restrictions, requirements to undertake environmental impact assessments and the more traditional operational and environmental permitting and licensing conditions.

However, with an increasing understanding of the crucial piece biodiversity plays in the wider operation of global food chains and economies and its interrelation with climate change, these traditional legal protections are increasingly recognised as not going far enough, fast enough.

Progress on National Targets and the publication of National Biodiversity Strategies and Action Plans (NBSAPs) – UK vs EU

To demonstrate that parties are taking the action needed to progress the targets they committed to in the Framework, countries are supposed to provide updates on their progress against their Targets and to publish their (pre-existing or newly developed) National Biodiversity Strategies and Action Plans ("NBSAPs") on a shared portal. As of 11 November 2024 119 parties had published national targets and only 44 parties had published NBSAPs in line with the Framework.

The European Union has submitted both its targets and NBSAP, with a handful of EU Member States (such as France, Luxembourg and Spain) following suit. The UK, on the other hand, is one of the Parties that has submitted national targets, but is yet to submit an NBSAP to the portal.

The EU's NBSAP is contained within its 'EU Biodiversity Strategy for 2030' (published in May 2020, no doubt informing the EU's position and recommendations across COP15 and 16). Progress against the goals set out in its 2030 strategy is being tracked by the Commission, with a summary of actions completed, in progress and delayed as follows:

50

Completed

44

In progress

10

Delayed

On the 18 January 2024, the UK's Office for Environmental Protection (created in November 2021 under the Environment Act 2021 with a mission to "protect and improve the environment by holding government…to account") found in its annual progress report that, of 40 individual environmental targets, including legally binding targets set under the Environment Act 2021, the government was only on track to achieve around 10% of them:

4

Largely on track to achieve

11

Partially on track to achieve

10

Largely off track to achieve

The OEP was not able to assess progress against a further 15 targets due to a lack of evidence.

In May 2024, the UK published a Biodiversity Framework in which it committed to filing its NBSAP. As noted above, it has yet to do so. However, under the new Labour government, nature recovery has been set as one of the five priorities for the Department for Environment, Food and Rural Affairs (Defra). The Government has also set out the measures it will take to meet its international obligations including its plan to review the current Environment Improvement Plan by the end of the year.

Where are the UK and EU focusing their efforts and how might this trickle down to corporate priorities and practices?

What else should businesses be thinking about on biodiversity?

Biodiversity Disclosures

Relevant in the UK and beyond is, of course, the International Sustainability Standards Board's (ISSB's) new sustainability disclosure standards (IFRS S1 and S2) and the direction of travel towards greater transparency on a wide range of sustainability issues beyond climate. Currently covering general sustainability (S1) and climate related disclosures (S2), a number of countries around the world are in the process of reviewing, endorsing and/ or mandating the use of these disclosure standards by certain businesses. While the disclosure standards do not currently include any specific disclosures for companies relating to biodiversity, ISSB confirmed in April 2024 its plans to research disclosures relating to biodiversity and ecosystems with a view to potentially developing topical standards with more prescriptive disclosure requirements, similar to the S2 climate standard.

Also relevant to this wider picture is the development of the Task Force on Nature-related Financial Disclosures ("TNFD"). In September 2023, TNFD published a set of disclosure recommendations and guidance for businesses to assess, report and act on their nature related dependencies, impacts, risks and opportunities. TNFD is the nature-related sister to the Taskforce on Climate Related Financial Disclosures ("TCFD") which has formed the basis of a number of laws mandating the disclosure by businesses of climate related information (including in the UK, the USA and it additionally is the basis for the ISSB climate-related disclosure standard). TNFD has seen some – but not yet widespread – adoption with around 400 businesses globally having committed to disclosure (around one third of which are financial institutions). In the UK, the pending (expected) integration of ISSB disclosures into law is perhaps curbing appetites for TNFD disclosures, when the shape of a future ISSB standard on biodiversity and the extent of any overlap with TNFD is not yet known.

There is additional guidance and metrics for financial institutions (including banks, asset owners and asset managers) and as noted above, TNFD, together with GFANZ, announced during COP16 the publication of a discussion paper on nature transition planning for corporates and financial institutions.

UK businesses with significant European operations may be preparing to make disclosures under the EU's Corporate Sustainability Reporting Directive, including the European Sustainability Reporting Standard E3 on biodiversity and ecosystems. However, given that such a disclosure would only be mandatory where the business considers it material, there is a risk that many businesses will continue to think of biodiversity and nature impacts and risks as somewhat removed from their business.

Biodiversity Action in the Value Chain

According to the World Economic Forum, over half of the world's GDP of value is generated in industries that are either highly or moderately dependent on nature and its services. According to the NbS Investment Platform Capital for Climate, transitioning to a nature-positive economy could create up to USD10 trillion in additional business revenue and cost savings and create nearly 400 million new jobs by 2030. While financial institutions may not directly feel biodiversity impacts, the investments which create their value almost certainly will. contribute to businesses' long term resilience (either alone, or within a wider value chain).

For businesses large enough to be in scope, the EU's Corporate Sustainability Due Diligence Directive ("CS3D") will require robust due diligence to identify a range of environmental impacts including those relating to biodiversity, and human rights impacts, which includes deforestation or environmental degradation which interferes with food production, access to clear water, sanitation or broader human wellbeing. The directive itself is pushing the boundaries of traditional legal principles usually set at Member State level. This includes by building in requirements that companies:

engage with stakeholders, including "national human rights and environmental institutions and civil society organisations whose purposes include the protection of the environment" as part of their due diligence processes; and
ensure that complaints can be made not only be persons impacted by the relevant adverse impact, but also by "civil society organisations that are active and experienced in related areas where an adverse environmental impact is the subject matter of the complaint".

By recognising that nature loss and damage can infringe human rights, the EU is opening the door to regulatory and civil actions and businesses even remotely linked to such action should be prepared for this. This phenomenon is already evident in France, where the national Duty of Vigilance Law (with similarities to CS3D) has given rise to, for example, a case against BNP Paribas for financing one of the world's largest beef producers linked to deforestation in the Amazon.

Biodiversity and business – what's next?

Presently, then, legally mandated action for businesses to take on biodiversity remains limited and targeted on those businesses directly involved in or linked to potentially impacting activities, such as developers and businesses relying on impacting activities in their value chain. For now, the status quo looks set to continue – e.g. with the EU's Deforestation Regulation targeting specific companies (whose supply chains involve raw materials and jurisdictions at a higher risk of benefiting from illegal deforestation) and the UK's Biodiversity Net Gain – pioneering in terms of actively requiring biodiversity improvement rather than prevention of further loss – targeting developers.

Going forward, the rise of legally mandated disclosures for financial institutions and corporates should give such businesses a better understanding of the actual and potential biodiversity impacts, risks and dependencies in their own operations and value chains. This greater understanding should then facilitate more effective identification and assessment of biodiversity-related business and investment opportunities (opportunities, more generally, being a key element of TNFD disclosures). If market and consumer pressure to act are ineffective, then it is likely that we will see further regulatory developments pushing from disclosure to action. As noted above, litigation will also play a role in filling the regulatory gap, potentially following the example of recent climate related case-law, with claimants seeking to hold businesses and directors to the targets they have signed off on in their nature-related disclosures.

Against this backdrop, businesses should be weighing these legal risk factors against more traditional commercial and financial ones to develop their strategies and to inform their communications on the same. At a time when increasing climate, carbon, ESG and now biodiversity data and metrics are being put into the public sphere, it's more important than ever that robust and verifiable data, recognised methodologies and clarity around limitations are used to help businesses avoid falling into legal (or reputational) difficulties.

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