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Protecting nature with a Paris-style target is on hold once again

Insight / 6 Sep 2021

With the UN biodiversity summit delayed indefinitely because of coronavirus, it’s essential the pandemic doesn’t hold up action by financial institutions, corporates and governments. Biodiversity loss is a huge part of our climate problem, so never has action been needed more.

In the last few months alone, parts of Europe have seen their worst ever flooding. Record-breaking temperatures in Greece have led to wildfires that have decimated forests and natural habitats. Southern and Central Brazil is experiencing the worst drought in almost 100 years. This is climate change in action, and as last month’s IPCC report showed – climate change is caused by us and our economic decisions. Climate change is made worse by destroying nature. Forests, wetlands and savannahs regulate our climate. They also offer essential ecosystem services that our global economy directly relies on. 

COP 15, a global UN Summit on biodiversity, to be held in Kunming, China, was meant to deliver “urgent political action” to “transform economic, social and financial models” currently causing the destruction of nature. It was hoped it would do for nature what the Paris Agreement did for climate. Six years ago, Paris gave climate a target – cut emissions to keep the temperature rise to well below 2, preferably to 1.5, degrees Celsius. But that target is now on hold, once again.

Initially due to take place in May 2020, COP 15 is now delayed with no future date confirmed. But nature can’t wait. The nature crisis is as extreme as the climate one; they are inextricably linked and must be tackled together. More than half of global GDP is moderately or highly dependent on nature. That means nature loss has extensive implications for corporations and financial institutions.

Market-led leadership

The delay in global targets on biodiversity puts greater pressure on market-led initiatives and leadership from individual companies. There are positive signs of action. The establishment of the Taskforce on Nature-related Financial Disclosures (TNFD) is a giant step forward. Most financial institutions and corporations don’t know the financial risks associated with how their operations or investments impact or depend upon nature. For the first time, the TNFD will bring together companies, financial institutions and service providers – supported by technical experts, NGOs and governments – to develop a framework for reporting and acting on nature-related risks. A common reporting framework will improve transparency and give markets the data they need to take nature into account in their decision-making.

Investors are acting too. Norges Bank Investment Management (NBIM) is the largest single owner in the world’s stock markets as the manager of Norway’s sovereign wealth fund. Last month it asked companies that have an impact or dependency on ecosystems and biodiversity to “integrate these considerations in their governance structure, strategy, risk management, measurement and reporting.” The NBIM fund manages US $1.3 trillion in investments. Its guidance sends a signal to companies that leading investors will put increasing pressure on them to act on biodiversity.

BlackRock is also demanding companies do more to protect the environment from deforestation and biodiversity loss. In guidelines published in March, the world’s largest asset manager said it was ready to use its vote in shareholder meetings to stop damage to the natural world. In 2020, it backed a resolution at Procter & Gamble calling on the consumer goods giant to report on its efforts to reduce forest loss in its palm oil production. But BlackRock still has a way to go to show that it is implementing this approach across all of its operations. In this year’s Forest 500 report, the financial giant was called out for ignoring tropical deforestation in their public policies. It is yet to be seen if strong words on biodiversity translate to action in their boardroom.

Political leadership

While some organisations are demonstrating leadership on biodiversity, voluntary efforts from financial institutions and companies on their own will not be enough. Deforestation in the Brazilian Amazon is at its highest level in a decade. Each tree lost pushes the world’s largest rainforest closer to the tipping point when it ceases to become a carbon sink and turns into a carbon source itself. Healthy trees absorb carbon, but when they are destroyed they release it. Deforestation around the world accounts for nearly 12% of global greenhouse gas emissions. 

So political leaders must also show individual leadership; it is not sufficient to wait for a  global biodiversity deal to be agreed next year. Mandatory due diligence legislation in Europe, for example, is long overdue. 

Strong laws and targets by individual nations would show real leadership, yet EU proposals promised earlier this year have been delayed. Laws being debated in the UK currently don’t go far enough because financial institutions are exempt. The EU and the UK need their due diligence laws to set an example.

Ultimately, the biodiversity crisis will not be solved by companies, financial institutions or governments acting alone. This is why reaching a global biodiversity agreement matters. The IUCN congress in Marseille is a good place to start. Bringing together decision makers from government, civil society, indigenous peoples, business, and academia, it aims to drive action to conserve the environment. Then a Paris-style agreement in China at COP 15 would set the agenda for all national governments and could provide momentum and clarity for companies and financial institutions.

Last August, UK Prime Minister, Boris Johnson, called for an end to “the massacre of the forests.” Positive action at COP 15 would have helped point the world in the right direction towards that ambition. But while we wait for a Paris -style target for nature, companies, financial institutions and governments must take positive steps on their own.

Updated: May 2022

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