With COP16 firmly underway this week, the urgency to integrate nature-based solutions into global climate and biodiversity strategies has never been clearer.
The Global Biodiversity Framework, established at COP15, calls for robust action to protect and restore ecosystems in addressing climate change and biodiversity loss. Yet, with current investments falling short at $200bn per year, both the public and private sectors must act swiftly to close the funding gap. As nations prepare to unveil updated National Biodiversity Strategies and Action Plans, this week’s discussions at COP16 present a pivotal opportunity to align economic growth with environmental stewardship.
See also: ESG Out Loud: How we can invest in nature to transform the economy
Investing in nature
The Global Biodiversity Framework, agreed at the UN Convention on Biological Diversity (COP15) in Canada, emphasises the importance of nature protection and restoration in addressing climate change, desertification, and biodiversity loss.
Nature-based solutions, which are actions to protect, restore, and sustainably use nature, must be integrated, and scaled in both the public and private sectors. However, current investments in nature-based solutions are insufficient, and the limited utilisation of these solutions threatens global efforts to reverse the impact of climate change and mitigate the loss of natural habitats in the most biodiverse parts of the world.
These issues remain at the very top of the agendas of policymakers, industry representatives and indigenous communities; embracing the role of nature-based solutions presents a valuable opportunity for these stakeholders. The United Nations Environmental Programme indicates in the State of Finance for Nature 2023 report that annual investments total $200bn, of which the private sector represents only 20%.
These investments need to nearly quadruple by 2050 to meet the global targets agreed on the Earth Summit in Rio de Janeiro in 1992 regarding limiting climate change, protecting land and sea, and achieving land degradation neutrality. We need a fundamental system change, covering the entire global economy, if we are to channel the necessary investments into nature and climate.
Countries are expected to publish updated National Biodiversity Strategies and Action Plans at COP16. These are intended to encourage societal action to protect nature, close the investment gap, and eliminate incentives that are harmful to the environment. In this context, we anticipate that discussions at this week’s conference will focus on aligning these strategies with the climate change and desertification agendas, as well as recognising businesses and finance as key enablers in transitioning to a net-zero and nature-positive economy.
Private sector role: Driving action
During the week, it will be essential to reflect on how businesses and finance can scale nature finance and leverage opportunities to close the nature finance gap.
Over the past year, there has been a rise in corporate adoption of mandatory nature regulations, with this trend leading to important considerations regarding how to connect these assessments with the transition to nature-positive and net-zero business models.
The circular bioeconomy is emerging as a key framework for developing these pathways while incorporating social considerations. It transcends traditional extractive linear models of production and consumption and, positively, is being gradually embraced by numerous industries and businesses as one of the most tangible solutions for achieving targets under the Paris Agreement. This theme will be a focal topic at climate COP30 in Brazil next year, with inaugural sessions already confirmed for this week’s COP16.
In this context, we also expect that sector-specific issues, such as the transition of food systems to a net-zero and nature-positive business model, will remain central at COP16 and the climate change and desertification conventions.
Agricultural and food system models are at risk of becoming unsustainable. Cocoa and coffee crops are good examples of where transitions can have nature-positive outcomes, as well as clear economic upsides. These crops are typically monocultures: they face resilience issues as a result of climate change and are more likely to have limited yields over time. Investing in the deployment of nature-based solutions in these farmlands can transform them into more productive, resilient, and biodiverse ecosystems. In particular, coffee plantations can become carbon sinks rather than sources of carbon. Higher yielding, more resilient crops will also benefit local communities that farm the land, providing a more consistent source of income over time.
Clear incentives are crucial for transforming the forestry, land use and agricultural sectors, as well as the production of related commodities, which are responsible for a significant proportion of global greenhouse gas emissions and environmental degradation. These commodities can be sustainably produced using nature-based solutions such as agroforestry and organic inputs.
Disruptive economics to preserve the environment
This week, we anticipate discussions on how corporates will integrate and finance nature to unlock the transition to a circular bioeconomy across several different sectors.
Although there has been an increase in nature investment products, such as payment for ecosystem services and green bonds, we believe that new and innovative products specifically tailored to transform the value chains of the forestry, land use and agricultural sectors value chains, will likely attract the interest of large corporations. These are the natural buyers of nature-based solutions, achieving the scale needed in nature markets.
If successful, this approach could unlock opportunities in sectors like fashion, tourism, and pharmaceuticals by transforming how we produce bio-based materials. It will unlock opportunities across public and private markets, and will enable investors to innovate their product offering further to capture the opportunities that will become available as totally new asset classes emerge.
Collaboration among governments, businesses, and financial institutions is essential for mobilising resources to close the nature investment gap and foster a circular bioeconomy. Ultimately, COP16 represents a pivotal opportunity to enhance our commitment to a sustainable future by integrating economic growth with environmental stewardship through nature-based solutions and technology.
