Big victory: financing plan for species protection presented at the biodiversity summit

Big victory: financing plan for species protection presented at the biodiversity summit

Two years ago, after more than 190 countries attended a United Nations summit a historic promise had made to protect the world's biodiversity, the question arose as to whether they could keep that promise. At the recent meeting in Cali, Colombia, held over the past two weeks, arguments over conservation funding needs took center stage, with no significant resolution being reached.

However, there were also positive aspects. One success was that negotiators approved a contract that allows large companies to use digital genetic information from nature to be paid if it results in profit. For example, a highly profitable agricultural company in the UK could use a digital DNA sequence from a plant found in Brazil to improve a crop. Under the contract, that company is encouraged to contribute 1% of its profits or 0.1% of its sales to a fund that could help countries like Brazil pay for conservation.

The treaty seemed far-fetched before the summit this year. Civil society groups and researchers describe it as a decisive victory in the face of the rapid decline in global biodiversity.

“It is a voluntary mechanism, so it remains to be seen how we make it work and ensure that companies take action,” says Yadvinder Malhi, an ecosystem researcher at the University of Oxford, UK. “However, it is a great success and we must continue to build on it.”

Endangered species

Research published during the Cali Summit, the 16th Conference of the Parties on Biodiversity (COP16), highlighted the urgent need for action to protect biodiversity.

The International Union for Conservation of Nature, based in Gland, Switzerland, reported that more than a third of the world's tree species are threatened with extinction. The nature conservation organization WWF, also from Gland, reported that the average size of animal populations on Earth has increased over the last 50 years decreased by 73%.

“We are already at a tipping point and the changes in these ecosystems will be irreversible,” says Manuel Pulgar-Vidal, global head of climate and energy at WWF.

Still, many researchers were frustrated by the sense of stasis at COP16. At the end of the summit, only 44 of the more than 190 countries that signed the agreement to protect biodiversity two years ago had submitted action plans. Although around $163 million was pledged in Cali to protect and restore nature, this amount is far from the needed $200 billion per year to achieve the goal of protecting 30% of land and sea by 2030.

Since the federal states are not yet providing the necessary funds, the pressure to seek private financing is growing.

Pay for knowledge

Under the agreement to pay for genetic information from nature, also known as digital sequence information (DSI), highly profitable companies will be asked to contribute to the Cali Fund conservation fund. To access the funds, these companies must meet two of three criteria: They must have $20 million in assets per year, generate $50 million in revenue per year, or average $5 million in profits per year over the past three years.

“Traditional nature conservation is mainly funded by governments and foundations,” explains Amber Hartman Scholz, head of the Department of Science and Policy at the Leibniz Institute DSMZ in Braunschweig, Germany. “Now companies that benefit from biodiversity will be asked to pay.”

If countries create strong legal frameworks to ensure corporate compliance, economic models show the DSI agreement could generate between $1 billion and $9 billion per year, Scholz adds.

“It’s a step in the right direction,” says Nathalie Seddon, an evolutionary ecologist at the University of Oxford. She is concerned that the agreement does not require companies to pay into the fund and instead leaves it up to governments to ensure compliance. However, she points out a positive aspect: half of the Cali Fund has been reserved for indigenous peoples and local communities, who are often the custodians of vast, biodiverse areas. (Negotiators at COP16 also agreed to establish a subsidiary body for indigenous communities to represent their interests in future conservation decisions.)

The price of biodiversity

There was a lot of controversy about the discussions about another way to get companies to financially support nature conservation: the sale of biodiversity certificates.

The idea is that companies can purchase biodiversity certificates to improve their image, ensure their survival when they rely on nature-based products, and to offset any damage they cause to the Earth's species in their operations. These certificates would then be used globally for conservation projects.

During COP16, the International Advisory Board on Biodiversity Certificates (IAPB) — a group of 25 specialists from business, conservation and finance worldwide — published its guidelines to establish and expand the program. However, this publication met with criticism.

The plan was with carbon certificates that companies can purchase to offset their greenhouse gas emissions. Carbon credits became popular because of their potential compounds Human rights violations and generating profits for intermediaries who sell the allowances while at the same time failing to comply with emission reductions, criticized.

“Government investment is the only thing that dedicates significant amounts of money to conservation, and those efforts are being undermined by the sale of biodiversity credits that are complex, unproven and undemanded,” said Brian O’Donnell, director of the Durango, Colorado-based environmental organization Campaign for Nature.

According to one World Economic Forum December 2023 report If biodiversity credits gain traction as quickly as carbon credits, global demand could reach $2 billion by 2030 and $69 billion by 2050.

Simon Zadek, a member of the IAPB and executive director of NatureFinance — a non-profit organization in Geneva that seeks to increase the role of finance in conservation — argues that the “shame” of voluntary carbon markets offers lessons that make it possible to design a functioning market for biodiversity certificates.

The panel recommends that there should be no secondary trading in the market for biodiversity certificates, as is practiced by middlemen in the carbon market. Instead, the panel proposes a national model in which companies that harm nature are taxed by their government. Proceeds would be used to purchase national biodiversity certificates to fund 20- to 25-year nature restoration programs.

If the IAPB does not move forward with the creation of a market for biodiversity certificates, there is “a real risk” that private companies, including those already active in the carbon market, will act without oversight, warns Zadek. This would lead to a “mess”.