The Global Biodiversity Framework: why aligning financial flows is key

1 April 2022

2022 will be a crucial year for the world to come together to tackle biodiversity loss. After two years of unfortunate delays due to the Covid-19 pandemic, COP15 is expected to conclude in China in the second half of the year. This session aims to seek agreement worldwide to accelerate action needed to safeguard nature by defining the Post-2020 Global Biodiversity Framework, or ‘GBF’, for the decade ahead – a stepping stone towards the 2050 vision of “living in harmony with nature”. The groundwork for this visionary framework continued to be laid with last month’s negotiations in Geneva set to continue in Nairobi in June.

The success of the GBF hinges on the alignment of financial flows with nature-positive outcomes. For this reason, UNEP FI and other partners have been working to help ensure that the critical role of private finance is reflected in the Framework. The current financing gap of around US$4.1 trillion poses a huge challenge to the implementation of the Global Biodiversity Framework. It reveals weaknesses in the global economy, as acknowledged by the latest publication of the Network for Greening the Financial System (NGFS), which shows that nature-related risks could have significant macroeconomic and financial implications. As a result, there have been calls for the financial sector to stop conducting business as usual.

In mid-March, UNEP FI worked with the Finance for Biodiversity Foundation, the Agence Française de Développement (AFD) and the Swiss government to bring financial institutions together with negotiators for a productive exchange. The session examined the wording which could yield the largest amount of funding for nature and deliver the best value-add outcomes for nature from the financial sector. Following an engaging discussion, many stakeholders were pleased to see this critical topic being reflected in the latest draft of the framework (Goal D): “public and private financial flows are aligned with [the 2050 Vision and the goals and targets of this framework][biodiversity objectives]”[1]. This updated wording on alignment of financial flows reflects the approach of the Paris Climate Agreement (Article 2.1c) which calls for “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” We are encouraged to see this language, and hope it is ratified later in the year by the global community.

Indeed, financial institutions can play a critical role in the global transition, and many have taken steps to do so through signing the Finance for Biodiversity Pledge, recognising the risks of ‘business as usual, and exploring the opportunities that a nature-positive economy presents. The financial sector, which is learning fast from climate and applying these learnings to biodiversity, can send encouraging signals to governments to evolve approaches, build economic incentives and accelerate the nature-positive agenda.

Following the session in Geneva, UNEP FI has compiled three key takeaways below:

  1. Addressing the loss of biodiversity is imperative to all stakeholders – policy makers and financial institutions alike. As all companies impact and are dependent on nature, biodiversity loss and the degradation of nature are creating significant risks for businesses and negative implications for long-term asset values. Therefore, all sectors of the economy, from farmers and manufacturers to banks and insurers have a mutual interest to ensure that appropriate language is embedded in the Global Biodiversity Framework. Panelists agreed that all parties should act on halting and reversing biodiversity in order to mitigate risks and ensure the global economy continues to have access to a broad and diverse array of natural resources, for the benefit of people and the planet.
  2. Alignment of financial flows to nature does not compete with resource mobilisation, but rather complements them. It means managing risks, impacts and dependencies, thereby making the whole economy stronger, in the interest of biodiversity and finance. It also means bringing more finance for nature through incentives such as acceleration funds and blended finance facilities, as well as official development assistance (ODA), to close the funding gap. Innovative financing mechanisms can also be part of the picture, such as a proposed levy on products derived from digital sequencing information based on genetic resources. Panelists voiced that the public and private sector should both endeavour to bridge the financing gap by re-directing financial flows to simultaneously eliminate negative subsidies, reduce harmful impacts on biodiversity and increase resources for positive solutions that help restore nature, such as upgrading tax systems to align with biodiversity goals. Encouraging financial flows to nature should also be a prioritised policy objective for governments and financial market actors.
  3. The Global Biodiversity Framework to be adopted later this year should maintain mention of private finance. Inclusion of private finance in the framework not only sends a strong signal to financial institutions to recognize the significance of the topic and start taking action, but it also helps them build the case for participating in the biodiversity conversation, increasing financial flows towards the protection of nature and biodiversity.  As the negotiation of the Global Biodiversity Framework continues, we hope to see more active involvement from financial institutions to gain a deeper understanding on the intersection between finance and biodiversity, and to re-direct financial flows to nature alongside policy makers.  

UNEP FI, as a long-standing partnership between the UN and the global financial sector, will continue to create opportunities for cross-sector partners to meet and work together on nature topics, as well as help the financial sector prepare for the framework and build capacity across their organisations. UNEP FI continues to create training, guidance and tools for financial institutions, including the Principles for Responsible Banking’s Guidance on Biodiversity Target-setting and the PRB Biodiversity Community, rapidly taking banks from theory to practice as well as innovative online tools to assess risks and exposure to biodiversity loss.  

[1] (bracketed text signifying where elements are still under negotiation) 

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