By Julie Gossen,
Responsible Investment Specialist


A last important and very promising agreement comprised in target 15 of the GBF is the inclusion of private finance as one of the solutions to fund the finance gap on nature. Governments will be required to “ensure the full integration of biodiversity and its multiple values into policies, regulations, strategic environmental assessments, national accounting, …“, and to ensure (through legal, administrative, or policy measures) that large and transnational businesses and financial institutions assess and disclose their risks, impacts, and dependencies on nature. This will apply not only to the operations of these transnational companies and financial institutions, but also to their supply and value chains and portfolios. In particular, the forestry, agriculture, and fishery sectors will be required to disclose and report on the dependencies and impacts on their supply chains, as over 75% of their supply chain’s gross added value is also highly dependent on nature. This enabling policy environment is expected to align private and public financial flows, and to support financial institutions in better managing risks and capitalizing on opportunities in their portfolios. There was much debate at this COP15 on whether the word “mandatory” should be included in the final text, and whether a reference should be made to an internationally recognized disclosure framework, but both were unfortunately left out. As financial institutions operate in an imperfect data environment, with multiple drivers rather than a single metric, there is currently no consensus on how to measure biodiversity or the impact on nature. However, there is hope that with the right guidance, actors will be able to use available data to make progress. The final draft of the Taskforce on Nature-related Financial Disclosures (TNFD), the nature version of the Taskforce on Climate-related Financial Disclosures (TCFD), will be published in September 2023 and may provide a necessary guiding framework for accounting for a firm’s impact on nature. However, before this can happen, it must be made mandatory by jurisdictions and adopted by businesses.

Percentage of direct and supply chain GVA with high, medium and low nature dependency, by industry

Source: World Economic Forum, 2020. Available at: link

On another positive note, a group of institutional investors announced the formation of Nature Action 100, the nature version of Climate Action 100+. This new global engagement initiative aims to mobilize investors to take urgent action on the nature-related risks and dependencies of the companies they own.

One surprise in the accepted framework is the lack of an explicit link between biodiversity protection and the fight against climate change. In fact, protecting biodiversity is closely connected to combating climate change, as biodiversity can provide one-third of the solutions to address climate change. Additionally, the target for the extinction of species has been reduced tenfold, and target 7 has been watered down but still includes a quantified goal: “reducing the overall risk from pesticides and highly hazardous chemicals by at least half by 2030”.

Now, attention must turn to the implementation of the framework at the national level across all sectors, as the success of this effort will largely depend on governments enacting it. Countries will be required to report every five years on indicators such as the percentage of land and sea conserved, and the number of companies disclosing their impacts and dependencies on biodiversity. Unlike the Aichi targets, countries have committed to publishing their biodiversity plans and strategies before the COP16, which will be held in Turkey in 2024.

The private sector, including financial institutions, also has a role to play in addressing these issues. By engaging with investee companies and demanding more comprehensive disclosure about the nature dependencies of their own operations and supply chains, financial actors can improve best practices of both corporations and countries.


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