The Kunming-Montreal Global Biodiversity Framework (GBF) aims to address biodiversity loss, restore ecosystems, and protect indigenous rights.
The plan includes measures to halt and reverse nature loss, including putting 30% of the planet and 30% of degraded ecosystems under protection by 2030.
This marks the largest land and ocean conservation commitment in history, and will have major positive impacts for wildlife, for addressing climate change, and for securing the services that nature provides to people like clean water and pollination for crop.
Countries also pledged to reform USD500b of subsidies that are harmful to nature, and to increase biodiversity financing to developing countries.
The framework also includes language to protect indigenous people, who have an outsized role protecting the world’s biodiversity.
Inextricably Linked
Climate change has become one of the most dominant topics in sustainability for investors, but one must not forget about biodiversity as well, which is inextricably linked with climate change.
As investor awareness of the risks and opportunities associated with climate change continues to rise, biodiversity should also rise in importance for investors.
Around half the global GDP is highly or moderately dependent on nature, and as a result, exposed to risks from nature loss. Here is just one small example: the worldwide loss of all pollinators (including bees, butterflies, moths and other insects) would lead to a drop in annual agricultural output of about USD 217 billion.
To reverse the decline in biodiversity by 2030, the Paulson Institute, The Nature Conservancy, and the Cornell Atkinson Center for Sustainability at Cornell University estimated in 2020 that globally, mankind needs to spend between USD722-967b each year over the next ten years[1], as seen in the exhibit below.
The Biodiversity Funding Gap
Source: Paulson Institute, The Nature Conservancy, and the Cornell Atkinson Center for Sustainability
[1] “Financing Nature: Closing the Global Biodiversiry Financing Gap”. 2020. https://www.paulsoninstitute.org/wp-content/uploads/2020/10/FINANCING-NATURE_Full-Report_Final-with-endorsements_101420.pdf
Not just governments
Current funding for biodiversity projects comes predominantly from governments. However, we expect businesses and investors to give greater focus to the value potential of biodiversity conservation, remediation and restoration over the next decade. This trend is a result of greater linkages to decarbonisation goals, increasing financial risks of negative biodiversity impacts on project approvals, and pressure from investors and other stakeholders on the back of engagement on the topic around COP15.
In the long-term, we see new revenue opportunities for firms that support future government and corporate commitments to protect and restore biodiversity and natural ecosystems.
Supporting biodiversity
In this section, we identify the types of companies that can profit from being competitively positioned to reduce biodiversity loss.
Testing and inspection companies
An increased focus on provenance and sustainability provides an opportunity for testing and inspection (TIC) companies in agriculture and food. The TIC companies are involved at multiple stages along the supply chain including downstream labelling regulation conformity and certification. These companies provide supply chains audits to ensure sustainable practices and traceability, both of which promote the safeguarding of biodiversity.
Testing equipment providers
At the same time, companies that provide instruments and equipment used in environmental testing should see greater demand. Monitoring contaminants in environmental matrices such as air, water, and soil, and expanding understanding of how these chemicals can affect human and animal health, is crucial and yet often highly challenging. As environmental contaminants become subject to increasing and stricter regulation, there is a growing need for analytical solutions that consistently produce high-quality data.
Engineering and consulting services
Engineering and construction companies that work closely with customers to solve complex environmental challenges are likely to see greater demand for their services as well. With the growing focus on ESG concerns, there is increasing opportunity in areas such as the electrification of transit. Some companies even offer a full suite of ecology surveys, mitigation design, supervision and delivery of mitigation and construction plans, and long-term planning to deliver biodiversity net gains.
Precision Agriculture
About 50% of the earth’s habitable land is used for agricultural purposes. Precision Agriculture optimises the use of fertilisers and pesticides, thus reducing the negative impact that these products can have on the environment. For example, variable rate fertiliser application, which is a precision agriculture technology, has resulted in the use of less fertilisers and pesticides.
Wastewater treatment/water technology firms
Higher standards of wastewater treatment have been linked to substantial improvements in the biodiversity of water bodies. A steady increase in both the diversity and abundance of freshwater invertebrates, which played a vital and varied role in an ecosystem’s food chain, has been shown to result from cleaner water that has less ammonia and higher oxygen levels.
Waste and plastic recycling/remediation services
Pollution materially impacts the healthy functioning of ecosystems. Based on current trends, oceans will contain more plastic than fish (by weight) by 2050. This poses a threat to marine life from ingestion, increasing risk of developing disease and impacting natural environments.
While reducing overall virgin plastic should be the primary aim, realistically society will be somewhat dependent on plastic for some time to come, partly because plastics provide many benefits to society such as contributing to reducing hunger and improving food security. That said, keeping a closed loop for plastics will be crucial. Waste management companies with plastic recycling infrastructure are central to achieving this.
The adoption of this bold global biodiversity framework that addresses key drivers of nature loss is vital to ensure the well-being of both our own health and that of the planet. Such nature-driven initiatives are critical to meeting the UN’s Sustainable Development Goals and keep global warming under 1.5ºC. The private sector’s anticipated participation in biodiversity conservation provides opportunities for greater community involvement in protecting the planet.
