The Montreal Moment – Biodiversity and Nature on Centre Stage

By Brian Hong
Published December 23, 2022 | 5 min read

The 15th UN Biodiversity Conference, COP15, was held in Montreal in December 2022. Widely regarded as the “Paris Agreement” moment for biodiversity and nature, nearly 200 countries agreed to the post-2020 Global Biodiversity Framework (GBF), outlining specific global goals for biodiversity protection to 2030, key among them to protect 30% of land and oceans by 2030, and a longer term vision for a nature positive world by 2050. A delegation from RBC Capital Markets attended COP15 and, for our experts, it was a seminal moment that has shifted the focus on environmental issues to include biodiversity and nature alongside climate at the forefront of global efforts. Here are our top takeaways:


1.The Biodiversity and Climate Nexus

An overarching theme of the conference was the deep interconnectedness of biodiversity, nature and climate. While direct human actions have been the largest driver of biodiversity loss to date, scientists predict that climate change will be the main factor for the remainder of this century. As biodiversity loss accelerates, our ability to mitigate climate change diminishes. Currently sequestering about a third of greenhouse gases emitted each year, nature can become an even greater tool in the fight against climate change if we reverse past damages and move towards a nature positive world by restoring the nature that we have lost.

To do this, there was broad recognition that we must leverage all of the progress and infrastructure that has been developed for climate action. This work is already underway, as can be evidenced by two of the major frameworks being developed. To aid companies in disclosing biodiversity risks and opportunities, the Taskforce on Nature-related Financial Disclosures (TNFD), which will publish its formal framework in Q3 2023, has been modeled after the Taskforce on Climate-related Financial Disclosures (TCFD). To help companies set targets akin to being net-zero by 2050 for climate, the Science Based Targets Network (SBTN), which will provide sector-based nature targets starting in Q1 2023, is modeled after the Science-Based Targets Initiative (SBTi).


2.Biodiversity and Nature Disclosures Have Arrived

During COP15’s Business Forum and Finance Day, no acronym was heard more often than ‘TNFD’. There was also broad speculation about whether the GBF would mandate companies to begin disclosing their biodiversity and nature related impacts. Building on this, Emmanuel Faber, the Chair of the International Sustainability Standards Board (ISSB) announced in the opening session of Finance Day that the ISSB would be integrating biodiversity into its standards and considering the recommendations of the TNFD. While the final version of the GBF softened the disclosure language to “encourage and enable, and in particular to ensure that large and transnational companies and financial institutions report their dependencies and impacts on biodiversity,” the message was clear that companies must get serious about biodiversity and nature disclosures now.

As conversations started shifting from if to when, the enormity of the task of reporting against as complex an issue as biodiversity and nature became more apparent. While climate change can largely be distilled into a singular metric, tonnes of carbon dioxide equivalent, there are currently over 3,000 metrics that companies can use to measure and report their biodiversity and nature impacts. This gave rise to the growing interest in the TNFD, whose Framework will provide detailed guidance for disclosing on these topics. Broad adoption of the TNFD seems probable, and with it, an ability to produce decision useful information on biodiversity and nature related risks and opportunities.


3.Sustainable Finance as a Key Enabler

COP15’s Finance Day was the first of its kind at a UN Biodiversity Convention, with representatives from banks, asset owners and managers, insurers and regulatory bodies from across the world. It was created in response to the estimated US$700BN in finance needed to restore nature globally and the recognition that the capital markets will play an important role in accelerating the flow of capital towards nature positive projects.

Many of the panelists discussed the urgent need to put a price and value on nature. For all of human history, use of nature and the many benefits it provides to humanity have largely been free and, because of that, nature has been taken for granted. Just as a price on carbon has been a catalyst to support climate action, a similar pricing of biodiversity and nature must also occur. This work has already started as evidenced during a session with representatives from nine finance ministries announcing work on Natural Capital Accounting frameworks that will add economic indicators for ecosystem services. Companies such as Natura and Kering also discussed their integrated environmental profit and loss accounting, which places a direct value on the nature that they use in their supply chains.

When biodiversity and nature have a monetary value, opportunities in sustainable finance can be unlocked to further accelerate support for nature positive projects. For example, asset manager Schroders announced it had partnered with Conservation International to launch Akaria Natural Capital, one of the first dedicated natural capital impact investment managers. The Nature Conservancy described its innovative Blue Bond debt conversion with the Government of Barbados in support of the nation’s commitment to conserve approximately 30% of its ocean and sustainably develop its blue economy. There were also discussions on how sustainability-linked financings can utilize metrics being developed by the SBTN such as amount of land conserved or regenerating degraded areas.

As a final example, there was broad discussion on the importance of scaling carbon markets to rapidly accelerate capital towards nature positive projects. Mark Carney commented in his opening address that if the scaling of the carbon markets can be done correctly and with integrity on both the supply and demand side, then it will have the potential to outweigh even public finance support for nature. One panelist remarked that in the near future, the value of the biodiversity co-benefit of a carbon offset will outweigh the value of the carbon itself.


4.Looking Ahead: Scaling Partnerships for Biodiversity Action

The deeper we immersed ourselves in COP15 the more complex the issues of biodiversity and nature became, especially when compared to climate. While climate is global in scale, biodiversity and nature tend to be much more local issues, with a greater number of environmental and societal dependencies that need to be considered. In recognition of this complexity, the need for partnerships and a more collaborative approach became increasingly apparent.

At the forefront of this was the need to formalize the roles and rights of Indigenous Peoples. While making up 5% of the global population, Indigenous people protect up to 80% of the world’s biodiversity and areas that are managed by Indigenous people tend to have far more biodiversity than other comparable lands. Yet, many Indigenous communities aren’t being recognized or compensated for the ecological value that they foster, again going back to the issue around a mispricing of the value of nature.

Another interesting trend was how many leading companies have turned to partnerships with NGOs to help develop their approach and strategies. Examples include asset manager Robeco’s partnership with WWF to build out their internal framework, and Kering and Mirova’s partnership with Conservation International on their Regenerative Fund for Nature. These partnerships are a result of the complexity of biodiversity and nature and a recognition of the leading knowledge and capabilities of NGOs in this sector.

We left COP15 with a deep appreciation for the issues surrounding biodiversity and nature and also an urgency and excitement to begin integrating this into our core businesses and supporting our clients. 2023 will be the year that many of these concepts will be put into action, with SBTN’s guidance on targets coming in the first half of the year followed by the TNFD’s disclosure framework launching in the latter half. We anticipate more innovative financial instruments will be brought to market including strong growth in carbon offsets that can provide an immediate source of capital to projects that support biodiversity and nature.

Brian Hong

Brian Hong
Vice President, Sustainable Finance