COP15: a first-hand account and our top three take aways
The biggest biodiversity summit in history has delivered a new deal for nature. A number of Schroders experts were in Montreal for the event.
The headlines we have seen following COP15 synthesize the key conclusions of the summit – but sitting in darkened conference rooms and strolling around attendees’ stands, it felt different.
The outcome of COP15 should make financial regulators sit up and listen. The global deal for nature is a signal the financial community cannot ignore. But, to be honest, the agreed text is not the biggest or only thing to take away for me.
The full text is here. Catherine Macaulay, a sustainable investment analyst in our team who has been following developments from London, has summarised it here.
The “30 by 30” pledge is the central pillar to this agreement. It describes countries' agreement to protecting 30% of land and water by 2030.
There have been comments from global leaders describing the agreement as a “Paris moment” for biodiversity, implying a new level of ambition. Certainly the negotiators have secured a strong agreement that should maintain momentum in this area. This has already seen a sharp increase in social and political focus in the last few years.
But my take is that the bigger message was in the event itself. Close to 25,000 people went to Montreal to discuss biodiversity and push for action. This might be fewer than attended the climate-focused COP27 in Sharm El-Sheikh this year, but is the best-attended biodiversity conference ever – and by a wide margin.
A number of Schroders colleagues attended COP15 including, above and from left to right, Marina Severinovsky, Sarah Woodfield, Whitney Sweeney and Andrew Dreaneen.
COP15 felt like two conferences in one building. One conference was among political delegates, debating wording in draft text.
The other was among civil society groups, individual countries and businesses discussing their goals and the progress they have made.
COP15: our top take aways
1.Change may be bottom-up rather than top-down
We have become attuned to the principle that “change starts from the top”, so that a global agreement informs regional and national policies, which drive corporate change and investor focus.
In recent climate conferences, the reverse picture – of greater ambition from civil society and the private sector than from global leaders – seems replicated in biodiversity. Business representation in Montreal was extensive and vocal in calling for clearer policy and increased transparency. The EU, for example, has gone much further than any global agreement with its regulation on deforestation-free supply chains.
More than 300 global businesses – including Schroders – with more than $1.5trillion in combined revenues supported the Make it Mandatory campaign calling for biodiversity disclosures to be a requirement. More than 100 financial institutions – again, including Schroders – representing $19trillion of assets have joined the Finance for Biodiversity pledge.
2.Clearer action on biodiversity will need more specificity
There was a lot of talk of “nature positive”, or “urgent action to tackle the biodiversity crisis”, which lacks the clarity of action that comes with “reduce carbon emissions”.
Nature and biodiversity is effectively an umbrella term for a wide range of natural assets and benefits, many of which are being depleted rapidly and each of which requires a specific action plan (for example eliminating commodity driven-deforestation, something we have committed to across our business).
in future the biodiversity discussion is going to need to focus on specific aspects of the challenge, while also bringing clearer measurement and quantification of the performances of different companies, countries or portfolios.
3.The value of global agreements is in the action that follows
With hindsight, the Paris Agreement marked a turning point because it prompted national governments to take action. It was not so much about the wording of the agreement itself, in the first instance. At the time of its signing, less than a handful of countries had committed to reaching net zero emissions. Since then, national action has snowballed, so that 85-90% of the world’s economic output is generated by countries that have made that commitment.
Whether this biodiversity agreement has the same impact will become clear in the next few years. However, the need for urgent action is better understood than was the case for climate action a decade or more ago, and a path to action has been mapped out by climate initiatives and policies which should help accelerate progress this time.
COP15: in a nutshell
Something with the most direct implications for our business is the Task Force for Nature-related Disclosures (TNFD). It was talked about everywhere and is widely seen as an obvious extension of the Taskforce on Climate-related Financial Disclosures, the climate equivalent which has worked its way into regulators’ plans around the world.
I have said many times that nature risk is an integral factor to investment risk and returns, and there is a clear opportunity in aligning financial flows towards nature positive goals.
It looks very likely that businesses, including our own, will need to plan for nature-related disclosures in the coming years. This is something we see as critical – and will prompt real change.
It also struck me in the discussions and panels I joined that the work we have done to assess climate-related risks and ongoing work to strengthen that analysis, the engagement we have done with companies on the topic and our natural capital investment, already put us in a good place to act on what comes next.
Natural capital plays a vital role in our economy and society. Every economy and industry is directly or indirectly dependent on nature and its services. No business can afford to ignore its value.
Our Plan for Nature, published in November, is a statement of intent in accelerating a nature positive future. Our focus is on delivering on it.