COP16 (CBD - Convention on Biological Diversity) is fast approaching. Held between 21st October and 1st November, it will shine a spotlight on one of the most pressing environmental crises of our time: biodiversity. As governments, scientists, and stakeholders gather to discuss and push solutions for biodiversity loss, those in the SRI space are reminded how crucial the topic of biodiversity is to both the environment and the future of responsible investment.
What is COP16?
COP (The Conference of Parties) bring together world leaders, government representatives, scientists, and activists to discuss and negotiate international climate policies, with the goal of mitigating the effects of pressing environmental issues. From COP1 in Berlin 1995, these conferences have grown in number to focus on different issues, and reoccur annually.
COP29 (UNFCCC - United Nations Framework Convention on Climate Change), which begins on the 11th November 2024 and focuses on climate change, is separate from COP16. Often the most referred to conference of parties, COP29 aims to tackle climate change and evaluate the progress made by countries in reducing greenhouse gas emissions, adapting to climate impacts, and providing financial support to developing nations. Both conferences highlight the importance of coordinated global efforts, and run in parallel to one another, but focus on distinct challenges our planet faces.
COP16 (CBD) focuses on biodiversity, and will be based on the Kunming-Montreal Global Biodiversity Framework (GBF), which sets out ambitious targets to halt biodiversity loss by 2030. These targets include restoring 30% of our ecosystems, reducing pollution from plastic and the use of pesticides, and will discuss integrating biodiversity values into business practices, by making large companies monitor, assess, and disclose their impacts. These efforts are crucial in the face of unprecedented pressure of biodiversity loss, with over one million species currently at risk of extinction due to human activity.
Biodiversity and Responsible Investment:
Biodiversity loss not only effects the environment, but also the economy. Healthy ecosystems are essential for the food, water, and air we consume, which directly supports industries, such as agriculture and pharmaceuticals. Thus, the depletion of ecosystems could result in systemic disruptions across supply chains.
Additionally, biodiversity loss can lead to increased regulation, higher operational costs, and reputational risks for companies that fail to manage their environmental impact. For example, large corporations are now required to disclose their biodiversity-related risks and impacts under frameworks like the Taskforce on Nature-Related Financial Disclosures (TNFD).
As a result, investors, and in turn investment managers, should prioritise biodiversity-focused strategies as part of their sustainability investment goals. Why? Because, not only does it protect the planet, it will ensure long-lasting and secure investments.
As noted by the World Economic Forum, biodiversity loss represents one of the top threats to global economic stability. The responsible management of natural resources can ensure that companies continue to thrive in a future where biodiversity is a critical asset.
Moreover, COP15’s targets, such as the 30x30 goal (a target to conserve 30% of the planet’s land and oceans by 2030), calls for global action from the private sector to participate in nature-positive investments. Investment managers can play a significant role in these targets, by directing their client’s capital toward businesses that are leading in biodiversity preservation.
The bottom line is, biodiversity is a crucial pillar of sustainability that shouldn’t be overlooked by Investors or Investment Managers alike. COP16 offers a timely reminder of the urgent need to integrate biodiversity into investment decisions. By aligning portfolios with companies that respect and preserve ecosystems, investors can ensure that their financial gains contribute to a more sustainable and equitable world.
Additionally, by staying informed and actively participating in biodiversity-friendly investments, the SRI community can make a significant difference in halting the loss of biodiversity, and can advocate for a sustainable future.