COP16 on biodiversity: a crucial milestone in Cali to encourage investments in nature-based solutions

Article published in Le Temps, 13 October 2024.

As we approach COP16, which begins on 21 October, the need to incorporate nature-based solutions into global climate and biodiversity strategies has never been more urgent. The Global Biodiversity Framework adopted at COP 15 was a call to arms to step up the protection and restoration of ecosystems. However, the volume of investment currently stands at less than USD 200 billion a year, meaning that the public and private sectors must act fast to plug this gap. As the signatory countries prepare to report on the progress of their national biodiversity strategies and action plans, the COP16 discussions offer a unique opportunity to ally economic growth with responsible management of the environment.

Annual investment remains below USD 200 billion… To meet the global objectives agreed at the 1992 Rio Earth Summit, these investments need to almost quadruple by 2050

Investing in nature

The Global Biodiversity Framework adopted at COP 15 underlines the importance of protecting and restoring nature as part of the fight against climate change, desertification and biodiversity loss.

Nature-based solutions seeking to protect, restore and make sustainable use of the natural world need to be applied and reinforced in both the public and private sectors. However, the current level of investment in these solutions is inadequate. According to the State of Finance for Nature 2023 report produced by the United Nations Environment Programme, annual investment remains below USD 200 billion, with the private sector accounting for just 20% of this figure. To meet the global objectives agreed at the 1992 Rio Earth Summit, these investments need to almost quadruple by 2050.

Read also: Why nature is becoming a new asset class

With the aim of encouraging measures designed to close this gap in order to transform and reduce the negative impact of our actions on nature, the signatories are required to report on the progress of their national biodiversity strategies and action plans ahead of COP16. We expect discussions to focus on aligning these strategies with climate change programmes, and on recognising the role of businesses and the financial sector as key facilitators of the transition to a net-zero economy that is respectful of nature.

Nature-based solutions must be at the heart of these conversations. They are not only the most profitable way to tackle biodiversity loss and desertification, but can also contribute more than a third of the emissions reductions that are needed by 2030 in order to keep global warming below 2°C.

Clear incentives are essential to transforming agriculture, forestry and land use

The role of the private sector: from communication to action

As COP16 draws near, we need to reflect on how businesses and the financial sector can scale up and take part in the financing of nature-based solutions. There has been an uptick in the number of companies reporting information connected with their impact on natural ecosystems in 2024. However, this trend raises a critical question: once they have analysed and measured their negative impact, how can companies then transition their business models to make them simultaneously profitable and respectful of nature with a net-zero impact?

The circular bioeconomy is indispensable to achieving this. Implementing new vertically integrated business models would not merely allow capital to be redistributed within the agricultural production system. It would also allow agricultural workers to be remunerated fairly and receive training in new production practices that are economically, environmentally and socially sustainable.

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It is in this context that we expect certain sectors, such as food systems, to be at the heart of COP16.

Read also: Agriculture: how can we feed the population and protect the planet?

Clear incentives are essential to transforming agriculture, forestry and land use. These sectors together account for almost a third of our greenhouse gas emissions and are reliant on soil quality, with fertility degrading fast and steeply because of over-exploitation. Many agricultural commodities such as coffee and cocoa can be produced sustainably through nature-based solutions like agroforestry and the use of organic inputs. These nature-based production models could provide crops with negative emissions (addressing scope 3 emissions), without deforestation (addressing the EU Deforestation Regulation) and with greater resilience to climate change (making supply chains more resilient in turn).

Solutions specifically designed to transform value chains in the agriculture, forestry and land use sectors should interest large companies – initially those affected by nature-based solutions

COP16 provides a forum to explore how companies can integrate and fund nature. While there has been growth in nature-linked investment products, such as payments for ecosystem services and green bonds, we think solutions specifically designed to transform value chains in the agriculture, forestry and land use sectors should interest large companies – initially those affected by nature-based solutions. This will enable these markets to achieve the necessary scale.

This approach could open up new perspectives in sectors such as fashion, tourism and pharmaceuticals, and transform the way in which we produce bio-based materials. Cooperation between governments, businesses and financial institutions is indispensable to mobilising resources so as to plug the investment gap in nature and support a circular bioeconomy. COP16 offers a unique opportunity to step up our efforts to achieve a sustainable future by allying economic growth with responsible management of the environment through nature-based solutions and technologies.