Climate Summit COP26 Progress: Insights into the Development of Resilience and Biodiversity Strategies
In the historic COP26 conference, world leaders emphasized the critical role of nature-based solutions (NBS) in addressing climate change, biodiversity loss, and ecosystem service preservation.
For biodiversity, this focus means protecting and restoring natural habitats like wetlands, forests, and oceans, which serve as vital carbon sinks and biodiversity reservoirs. Effective NBS implementation requires respecting the rights of indigenous peoples, women, youth, and other vulnerable groups to ensure inclusiveness and justice in adaptation efforts.
The conference's vision includes the use of adaptation strategies to address both climate change and biodiversity loss. This recognition of the relationship between economics and biodiversity has been demonstrated by pledges made at COP26 for mobilizing finance towards nature-based solutions in vulnerable parts of the world.
In financial services, COP26's focus implies a growing expectation for investment and funding to support these nature-based climate approaches. The EU is advancing frameworks for biodiversity markets by 2027, proposing certification mechanisms for nature credits that encompass biodiversity and water-related environmental benefits.
Regarding business reporting, companies are increasingly expected to disclose their dependencies on and impacts to biodiversity systematically. This involves identifying their reliance on ecosystem services and the effects their operations have on natural habitats and biodiversity. Emerging frameworks like the EU’s nature credit certification, which include metrics for evaluating biodiversity-positive outcomes, suggest future standards for transparency and accountability in biodiversity-related reporting.
The Task Force on Nature-Related Financial Disclosures (TNFD) is formulating a recommended framework for biodiversity-related disclosures by corporate entities. If approved, companies will face increased pressure to report on their biodiversity impacts and reduce biodiversity risks. The findings of the TNFD may become law in future, similar to the Task Force on Climate-Related Financial Disclosures in the UK.
The UK government has begun requiring investment in natural capital for certain sectors, such as the transition period for introducing biodiversity net gain as a mandatory requirement for development applications. Countries including Germany, France, the UK, and the USA announced a $1.5 billion pledge to support the protection and enhancement of the Congo Basin forests.
At the world leaders' summit, 141 countries, collectively responsible for 90.94% of the world's forests, pledged to halt and reverse forest loss by 2030. World leaders at COP26 also pledged to deploy $1.7 billion before 2025 to support the advancement of indigenous communities' tenure rights and their role in safeguarding valuable forest areas.
Caroline Bush, associate director in our firm's environment team, expects increasing regulation in the area of biodiversity, presenting both risks and opportunities for businesses. A proactive approach by developers could lead to an opportunity to sell surplus biodiversity gain credits produced through mitigation schemes and increase the asset value of a development or project.
Investment in nature-based solutions is a unique opportunity for corporate entities, as government policy is likely to deploy finance to support sensitive ecosystems. Consumers and regulators will be examining the commitments of businesses in supporting and considering their impact on biodiversity.
References: 1. COP26 Official Website: https://ukcop26.org/ 2. European Commission: https://ec.europa.eu/info/publications/communication-biodiversity-strategy-2030_en 3. Nature-Based Solutions Investment Programme: https://www.iied.org/nature-based-solutions-investment-programme 4. The Economics of Ecosystems and Biodiversity: https://www.teebweb.org/
- The COP26 conference highlighted the significance of financial services, with an increasing expectation for investments and funding to support nature-based climate approaches, such as environmental-science projects aimed at preserving biodiversity and addressing climate-change.
- In the realm of business reporting, there is a growing demand for companies to disclose their dependencies on and impacts to biodiversity systematically, as new frameworks like the EU’s nature credit certification emerge, offering potential standards for transparency and accountability in the area of biodiversity-related reporting.
