COP16: Why is COP16 relevant for business?

What will happen at COP16? 

Key agenda items for COP16 include:

• reviewing the state of implementation of the Global Biodiversity Framework;
• reviewing alignment of governments’ National Biodiversity Strategies and Action Plans with the Global Biodiversity Framework; 
• further developing the monitoring framework and advance resource mobilisation; and
• finalising and operationalising the multilateral mechanism on the fair and equitable sharing of benefits from the use of digital sequence information on genetic resources.

What is the Global Biodiversity Framework?

The Global Biodiversity Framework recognises the interconnection between biodiversity and business as it identifies the need for collective conservation, restoration and sustainable use of nature including biodiversity to halt and reverse its loss or degradation. Nature refers to everything that forms part of the natural world, including biodiversity. Biodiversity, an aspect of nature, is the diversity of all living organisms, in all its forms. Similar to the Paris Agreement which codifies collective efforts to limit the effects of climate change, the Global Biodiversity Framework sets 4 long-term goals for 2050 and 23 action-oriented targets for 2030, including to achieve ’30 by 30’ – that is, the protection and conservation of 30% of the world’s land and marine ecosystems by 2030.

The four long-term goals aim for:

• the integrity, connectivity and resilience of all ecosystems to be maintained, enhanced or restored;
• biodiversity to be sustainably used and managed;
• monetary and non-monetary benefits of genetic resources to be shared equitably;
• adequate means of implementation (e.g. financing, capacity-building) to fully implement the Global Biodiversity Framework to be secured and equitably accessible.

From a business perspective, some of the key targets are categorised as ‘tools and solutions for implementation and mainstreaming’, and include:

Nature, biodiversity and companies - the Australian Context

Biodiversity poses a severe global risk and yet the links between this risk and business performance is not always obvious. However, the rapidly evolving regulatory, market and litigation developments increasingly indicate that biodiversity-related risk is a key consideration in all sectors and markets. In Australia, there is a growing expectation that companies identify and manage their impacts on the environment (climate, nature and biodiversity) and address this developing risk with sound navigation of the related environmental, social, financial, regulatory and reputational consequences.

We explore two key reasons why biodiversity exposures matter to business – (i) disclosure obligations and (ii) strategic alignment. 

        a. Disclosure 

Target 15 of the Global Biodiversity Framework intends for governments to take legal, administrative or policy measures to encourage and enable business (in particular large and transnational companies and financial institutions) to monitor, assess and disclose their risks, dependencies and impacts on biodiversity throughout their operations, supply and value chains and portfolio.

We expect that government action towards this target will increase pressure on business to act on biodiversity protection and better monitor and report on progress. This expectation is consistent with the growing prevalence of reporting frameworks. Implementation of efficient data-collection systems regarding biodiversity will be a critical step.  

The EU's Corporate Sustainability Reporting Directive (CSRD) and accompanying European Sustainability Reporting Standards (ESRS), now both in force, already require companies in scope to make disclosures on their risks, opportunities and impacts in relation to material sustainability matters, including material biodiversity and ecosystem-related matters. Similarly, the EU’s Corporate Sustainability Due Diligence Directive, approved earlier this year, requires large companies domiciled in the EU and foreign companies generating significant revenues in the EU to carry out due diligence to avoid adverse environmental and human rights impacts, including the erosion of biodiversity, and to ensure accountability in case of actual adverse impacts caused.

In September 2023, the Task Force on Nature-related Financial Disclosures (TNFD) (the biodiversity equivalent of the climate change TCFD) released its final recommendations which are set to become the best practice expectation on biodiversity risk reporting for large businesses. 

Notably, these TNFD recommendations seek to operationalise Target 15 of the Global Biodiversity Framework, encouraging and enabling businesses to assess, report and act on their nature-related dependencies, impacts, risks and opportunities. Jurisdictions including the UK, Australia, Canada, US and Japan have each disclosed an intention to incorporate the TNFD framework into the domestic corporate reporting obligations.  Significantly, the TNFD goes a step further than the TCFD, requiring businesses to not only report on the financial impact of nature-related risks on their business, but also their impact as a business on nature and biodiversity. This presents an additional challenge for companies to ensure they have adequate systems and processes in place in order to assess their risks and opportunities and meet reporting obligations.

        b. Corporate and government strategic alignment 

In response to both global and domestic developments, Australian laws on biodiversity are evolving, and companies must keep attuned to the risks posed by the ever-changing regulatory landscape.

Ahead of COP16, all countries including Australia will be required to submit a revised or updated national biodiversity strategy and action plan (NBSAP). Australia's Strategy for Nature 2019-2030 is the overarching framework for all national, state and territory and local strategies, legislation, policies and actions that target nature. Australia’s NBSAP has been criticised for a lack of measurable targets and meaningful implementation mechanisms.¹ On 14 March 2024, the Australian Government opened Consultation on updating Australia’s Strategy for Nature. Consultation closed 4 April 2024. Come October, the updated NBSAP could impose a more stringent framework for safeguarding Australia’s nature and biodiversity. 

In October 2022, the Australian Government committed to national targets in line with the Global Biodiversity Framework, which were reaffirmed in November 2023 and June 2024. Australia’s environment ministers have published a communique, setting ’30 by 30’ as a key national target, namely to protect and conserve 30% of Australia’s landmass and marine areas by 2030.

We are already starting to see the Global Biodiversity Framework’s influence on policy development and decision-making, including for financing, monitoring, reporting and best practice operations. The Australian Government is expected to continue consultation on Stage 3 of the Nature Positive Reforms. We expect there will be ongoing debate on both Stage 2 and Stage 3 reforms, which may be influenced by the outcomes of COP16.

While reporting on nature and biodiversity isn’t yet a specific legislated requirement under Australian law, we expect nature-related disclosures to closely follow the mandatory climate reporting regime. Nature and biodiversity risk that represents a material financial risk to a company should already be on the Board’s agenda, however we anticipate that the increasing focus on natural capital accounting as part of risk assessment may assist companies to test the scope, and outcome, of their approach to nature and biodiversity. Companies and directors should carefully consider the impacts and dependencies of nature and biodiversity and what that means for their business. This is increasingly relevant in light of recent litigation and shareholder activism related to nature and biodiversity.