The lead up to the COP26 climate summit has been dominating headlines – with good reason – but the fate of the planet’s long-term health also hinges on another global conference series that’s already underway.
The biodiversity COP, formally known as 15th meeting of the Conference of the Parties to the Convention on Biological Diversity, recently completed its first phase in Kunming, the capital of Southwest China’s Yunnan province.
The first phase of the ongoing conference culminated in more than 100 countries pledging to “mainstream” the protection of habitats into government decision-making under the Kunming Declaration.
By signing up to the Kunming Declaration, the countries have committed themselves to flesh out the commitment with an implementation framework, with several draft targets and milestones on the table that will commit countries to the biodiversity equivalent of the 1.5 degree Paris Agreement.
Targets under review include protecting 30 per cent of land and sea areas, reducing invasive species spread by 50 per cent, reducing pollution to levels that are not harmful to biodiversity and halting the acceleration of extinction rates.
Emma Herd, who recently joined consultancy giant EY as Oceania, climate change and sustainability partner after leaving her position as chief executive officer of the Investor Group on Climate Change, says she’s observing a wave of activity in biodiversity and natural capital.
She says Australian investors are now rapidly turning their attention to biodiversity and natural capital risks and opportunities following strong shareholder pressure on climate. Shareholders now understand that biodiversity is a key to long-term business success and are increasingly asking companies to consider and account for these risks on their balance sheets.
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She told The Fifth Estate there’s been a coalescence of global frameworks and tools providing much needed cohesiveness to tackle the looming ecological threat, including the development of the Taskforce on Nature-related Financial Disclosures (TNFD) that, much like the TCFD for climate, aims to deliver a framework for organisations to report and act on evolving nature-related risks.
The problem with biodiversity and ESG reporting in general, Herd notes, is that there’s no standard measurement for biodiversity yet. There needs to be a cross-sectoral metric such as “CO2 equivalent” that’s used for climate change, she says. She hopes that the necessary metrics and data for managing natural capital will be easier to formulate now that there’s a climate change blueprint to draw on.
The business risk of biodiversity and nature loss is massive
The potential economic damage from biodiversity and nature loss is huge. More than half of the world’s economic output – US$44 trillion of economic value generation – is moderately or highly dependent on nature.
Primary industries, such as forestry, fishing and agriculture, will be some of the worst affected by biodiversity loss. Examples include ecosystem collapse leading to low wild fish populations, unhealthy bee populations jeopardising crop pollination and unhealthy soils affecting plantation yields.
Utilities such as hydro power can also be affected by deforestation in their catchments that affect water levels. Property can also be threatened by increased natural disaster risks stemming from loss of wetlands.
Then there’s the less obvious reputational risks of changing consumer preferences. Financial risks such as higher costs of finance and higher insurance premiums also go hand-in-hand with degradation of nature.
Ms Herd said that Australia faces challenges due to its reliance on the agricultural community, which will be greatly affected by ecosystem scarcity and biodiversity impacts.
The flip side are the opportunity to be seized as consumers demand more environmentally aligned products and services; action on biodiversity will keep customers happy.
Eva Zabey, executive director of Business for Nature, a global coalition of companies calling for governments to reverse nature loss, told US based Greenbiz that financial institutions now consider these risks in their portfolios.
“Right now, companies aren’t quite ready to make big headline commitments, but I could anticipate that coming. A number are working behind the scenes on understanding those risks, including natural capital risks, in their decision-making.”
She also noted that biodiversity loss and climate changes are best tackled in tandem rather than treated as an “either/or”.
“Nature is one of the key themes at COP26. There’s a lot of momentum around nature-based solutions to help tackle climate, which is great. And we always talk about the fact that nature is our biggest ally in tackling climate change.
“But at the same time, we won’t be able to reverse biodiversity loss without a stable climate.”
She also said funding is a problem.
“Nature can provide up to 30 per cent of the emission reductions that we need by 2030, but it only gets about 8 per cent of public funding. So, if we increase our investments in nature to tackle climate, that would be one of those classic win-win-wins.”