Biodiversity, Corporate Risk and Responsibility: COP 15 and Beyond
At a glance…Biodiversity is becoming an ever-prevalent issue in business. This article contextualises this emerging trend in terms of its implications for corporate risk and responsibility. Contents:
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Introduction
Negotiators are heading to Montreal for another round of meetings in December 2022 (known as COP 15, Part 2) under the auspices of the international Convention on Biological Diversity (CBD). Their ambition is to try to conclude a much-needed international agreement to tackle the world’s biodiversity emergency.
This article explains the background to the pending negotiations and what can realistically be expected to emerge from them. It also explains why the global biodiversity crisis represents a clear threat and opportunity for clients across sectors and geographies, irrespective of the COP 15 talks.
As signatory state representatives state in the “Kunming Declaration” of 13 October 2021, there is “grave concern that the unprecedented and interrelated crises of biodiversity loss, climate change, land degradation and desertification, ocean degradation, and pollution, and increasing risks to human health and food security, pose an existential threat to our society, our culture, our prosperity and our planet.”
The same declaration called for “urgent and integrated action is needed, for transformative change, across all sectors of the economy and all parts of society, through policy coherence at all levels of government, and the realization of synergies at the national level across relevant Conventions and multilateral organizations, to shape a future path for nature and people, where biodiversity is conserved and used sustainably, and the benefits arising from the utilization of genetic resources are shared fairly and equitably, as an integral part of sustainable development.”
There is, however, a great deal of scepticism surrounding the efficacy of the CBD, its achievements to date and the prospects for progress at COP 15.
We will illustrate how emerging trends toward increasing biodiversity-focussed litigation, national and regional biodiversity-related regulation and voluntary initiatives in the corporate and financial world should be matters attracting significant boardroom attention now.
Convention on Biological Diversity (CBD)
Overview
The CBD is an international treaty for the conservation of biodiversity, sustainable use of the components of biodiversity and equitable sharing of benefits derived from the use of genetic resources.
The CBD was concluded in 1992 at the Earth Summit in Rio de Janeiro and entered into force in December 1993. In many ways it is the sibling convention to the UN’s Framework Convention on Climate Change (UNFCCC) of the same year. There are close practical connections between the two. The CBD currently has 196 ratifying parties and states (the Parties), the most notable absentee being the US.
The CBD addresses global threats to biodiversity and ecosystem services through scientific assessments, development of tools, incentives and processes, transfer of technologies and good practices and involvement of stakeholders including indigenous peoples and communities, youth, women, NGOs, sub-national actors and business.
The CBD has two “daughter” instruments: the 2003 Cartagena Protocol on Biosafety and the 2014 Nagoya Protocol on Access and Benefit-Sharing. Both are supplementary agreements to the CBD. They seek to protect biodiversity from potential risks posed by living modified organisms and share the benefits arising from utilisation of genetic resources in a fair and equitable way.
Implementation
The Parties to the CBD convene at plenary meetings roughly every two years, known as “Conferences of the Parties” or “COPs.” COPs look to agree approaches to implement the Convention and Protocols through negotiation of goals and priorities to achieve the CBD’s aims.
Article 6 of the CBD calls for Parties to, in accordance with their particular conditions and capabilities, “develop national strategies, plans or programmes for the conservation and sustainable use of biological diversity or adapt for this purpose existing strategies, plans or programmes which shall reflect, inter alia, the measures set out in this Convention.”
National biodiversity strategies and action plans (NBSAPs) go to the heart of the CBD in that they represent the individual Parties’ own interpretation of the CBD and its goals. Whilst the Parties negotiate and detail strategic plans to assist in implementing the spirit of the CBD, the NBSAPs directly reflect the Parties’ alignment. The NBSAPs will ultimately drive the changes required under the CBD.
Outcomes of the CBD process
Currently, the Parties are looking to conclude the CBD post-2020 Global Biodiversity Framework process (the Post-2020 Framework). The Post-2020 Framework is intended to be a strategic plan detailing steps to be taken through the remainder of the decade and beyond, to 2050. It will set out a plan to bring about a transformation in society’s relationship with biodiversity to preserve and protect nature and its essential services.
The Post-2020 Framework will - if agreement on it can be reached at or after COP 15 – be the third strategic plan negotiated by the Parties.
The First Strategic Plan was adopted in 2002 at COP 6, but detailed targets were not adopted until COP 7 in 2004. Only 76 Parties had NBSAPs by 2000, increasing to 132 by 2010. The implementation of the First Strategic Plan was however seen as a failure by 2010. The targeted “significant reduction of the current rate of biodiversity loss” was deemed wholly unsuccessful.1
The accepted reasons for this failure were the short time for implementation, funding limitations, failure to tackle underlying causes of biodiversity loss and underestimation of benefits provided to human well-being by biodiversity.
The second strategic plan, the Global Strategy on Biodiversity for 2011 to 2020, was adopted in 2010 at COP 10. It established five broad objectives and 20 Global Biodiversity Targets, known as the “Aichi Targets.” Since COP 10, 193 of 196 (99%) Parties have either updated or renewed NBSAPs, aligned with the Aichi Targets.2
Despite this effort not a single Aichi Biodiversity Targets was fully met by the 2020 deadline.3 This led conservationists to condemn nature protection efforts through the CBD as a “massive failure.”4
The Parties describe these past efforts to address global threats to biodiversity and ecosystem services as stepping stones toward an ultimate “2050 Vision” of a world "Living in harmony with nature." The 2050 Vision requires that by 2050 "biodiversity is valued, conserved, restored and wisely used in maintaining ecosystem services, sustaining a healthy planet and delivering benefits essential for all people."5
The previous strategic plans and, to a greater extent than desirable, the upcoming strategic plan focus primarily on slowing the loss of biodiversity via NBSAPs. Getting to a point of no net change and even net-gain of biodiversity is only envisaged for the subsequent phase of effort, taking place between 2030 and 2050.
The planned talks in Montreal, Canada in December 2022: The 15th Conference of Parties to the UN Convention on Biological Diversity (COP 15)
This background brings us to COP 15, the 15th plenary round of CBD meetings since the convention’s inception. COP 15 is the pending latest round of negotiations by the Parties.
Interrelationship with the Climate Change Convention
The CBD is closely aligned with the UNFCCC, with the 26th Conference of Parties (UNFCCC COP 26) held in Glasgow, UK. The CBD process follows a similar format. The UNFCCC and CBD COPs act as decision-making bodies that monitor and review implementation of the conventions.
UNFCCC and CBD COPs both involve meetings of countries where, after long preparations, joint agreements and declarations are devised. These agreements and declarations are translated into laws, regulations and policy before they reach citizens and businesses. The symbolic value can be much greater however, as shown at COP 21, which resulted in the Paris Agreement. We are still waiting for a COP with such impact and prominence for biodiversity.
Attention surrounding the negotiations and outcomes of UNFCCC COP 26 has been of major international significance. This is especially the case as UNFCCC parties failed to conclude a further binding agreement to combat climate change. This adds to the impetus on the Parties to conclude negotiations and agree the Post-2020 Framework at COP 15. This impetus is not least because the World Biodiversity Summit, a platform for global public-private partnerships to address the urgent need for biodiversity restoration through nature-based solutions and nature-positive investments organised by the World Climate Foundation, this year takes place on 15 November during the upcoming UNFCCC COP 27 in Sharm el-Sheikh, Egypt.6
Effect of COVID-19 on negotiations
Originally planned to have begun and ended in Kunming, China in 2020, COP 15 was postponed due to the COVID-19 pandemic. It was later split into a two-part event.
Part 1 was held virtually in Kunming in October 2021. Chinese President XI Jinping, other state leaders and the UN Secretary General made online presentations through which commitments to addressing the biodiversity crisis were reinforced. The Parties also held meetings on administrative and technical issues essential for the continuation of the operations of the CBD and the Protocols. A high-level segment focused on the development of the Post-2020 Framework was among the most important meetings held.
Part 2 was expected to be a face-to-face meeting, also in Kunming, but after several postponements and date changes due to the pandemic Part 2 was moved to Montreal, Canada and will take place in December 2022. It will likely be a combined in-person and online event. China, as COP 15 President, will continue to preside, with the logo and the theme of COP 15 maintained. China will also lead the facilitation of negotiations.
COP 15 objectives
The key aim of COP 15 is to try to agree the text of the Post-2020 Framework up to the year 2030, and set in motion the ambitious 2050 Vision.
Already two years late, the draft text of the Post-2020 Framework is still far from complete. The text is littered with square brackets where the Parties have not yet agreed wording. The fourth working group meeting to negotiate the Post-2020 Framework behind the scenes prior to the plenary meeting took place in Nairobi, Kenya in June 2022. It was meant to be the last, but so little progress was made that a fifth meeting will take place in December, just before COP 15 (Part 2).7
The latest draft of the Post-2020 Framework envisages four long-term goals for 2050 and 22 targets to achieve by 2030.8
The four goals focus respectively on conservation, sustainable use of biodiversity, fair benefit-sharing and adequate means of implementation through finance and technical capabilities.
The targets cover a wide range of topics, from expanding protected areas and reducing pollution to ensuring that food production is sustainable and phasing out nature-harming public subsidies.9
The Parties, international community, scientists and NGOs are divided about whether or not to have a top-level target to be achieved by 2030 such as an overall biodiversity status or global rate of extinction. It is believed by some that this would distract from the work of implementing the Post-2020 Framework and capturing the complexity of ecosystems and species with a single metric is impossible.
What to expect
Should the Post-2020 Framework be agreed at COP 15, it will result in a shifting of the goalposts for the Parties in terms of their NBSAPs. Existing national plans and programmes will need to be brought in line with the four long-term goals for 2050 and 22 targets to achieve by 2030.
Those plans will then be subject to a global analysis of the adequacy of their collective ambition over the course of COPs 16-19.
The way in which Parties will adapt and update their NBSAPs, and the tangible steps they will implement at local level, will vary drastically dependent on their particular conditions and capabilities. Ultimately the Post-2020 Framework will lead to gradual change in the Parties’ biodiversity policy landscapes over the course of the next decade to 2030 and beyond. So even if agreement is reached on the Post-2020 Framework at COP 15, there will be little to no immediate effect on business.
So why should your company pay any attention to this?
The relationship between business and biodiversity is intrinsically linked in many industries.
Direct impacts on biodiversity from industrial and business activity stem primarily from land use and waste generation that occur at the same time and place as the activities. This results in habitat loss and degradation, erosion, species loss, air and water pollution and soil and water contamination.
Indirect impacts from the habits of third-party suppliers in the sourcing and production of goods and services and disposal of products can also occur in different places and times. This makes them challenging to predict, identify, manage and control.10
To some extent these direct and indirect benefits are already regulated, in particular through environmental laws. Effective regulation of biodiversity impacts is however patchy and inadequate on a global scale.
It would be an understandable response to conclude that there must be more pressing and immediate concerns facing your business. Trying to guess what the possible impact might be of measures that may or may not be implemented in particular countries over a 10-to-30-year time horizon in the uncertain event that an agreement is reached at COP 15 is unproductive.
Such a reaction would, however, potentially be a significant mistake. The threats posed by the biodiversity challenge are underscored by the panic among the COP 15 negotiators, but their impact on your business is not dependent on the outcome of COP 15.
COP 15 will generate further, much needed awareness of the issue, and may in turn lead to yet further policy and regulation that will drive responsibilities and liabilities in this space. However, significant biodiversity-related risks, responsibilities and potential liabilities already exist for your company today. These threats and opportunities are only set to escalate in the near term regardless of what happens in Montreal in December.
The implications of declining biodiversity and the CBD and COP processes are extensive and may well have an effect on policy landscapes and requirements in the jurisdictions in which clients operate in the long term, but as business leaders it is important to consider the tangible and realistic outcomes of these processes. Questions may be raised as to how beneficial these processes are, especially given the seemingly lacking progress toward any international agreement. It is, however, this slow progress and lack of robust international consensus on ensuring biodiversity net gain that may actually prove to be a catalyst for rapid change.
It is clear that national and regional initiatives are progressing the protection of biodiversity, for example, Europe’s Natura 2000 programme and the biodiversity net-gain provisions set out in the UK’s Environment Act 2021 (see below). In addition, choices in the financial sector have a great impact on business. If biodiversity is seen as a serious problem in terms of investment risk, a strong incentive for change will arise, as we are already seeing.
As part of our global coverage of COP 15, between now and the start of negotiations in Montreal, we will publish a series of more in depth articles exploring the following key areas of the interrelationship between biodiversity and business.
Just as we are seeing exponential growth in climate change litigation, we are also seeing growth in "biodiversity litigation."
As a result of increased scrutiny of both the dependencies and impacts of business on biodiversity and the increasing harms caused by biodiversity loss, businesses are becoming increasingly exposed to biodiversity-related litigation risk. The growing use of data from remote sensing and in supply chain management is facilitating a better understanding of where biodiversity loss is occurring and who may be responsible.
Cases are increasingly being brought on the direct impact of companies on ecosystems or particular species. These cases are often on account of the deprivation of related ecosystem services to communities or other companies that depend on them.
Litigation risks also arise from a failure to adequately or faithfully report on biodiversity-related risks, or misrepresenting nature-positive credentials. Cases can revolve around private or public enforcement of environmental laws or strategic/impact litigation to effect societal change.
In the years since the negotiation of the Paris Agreement the number of climate cases globally has more than doubled to over 2,000 in 39 jurisdictions. These cases are setting new precedents and inspiring other actors to use litigation as a tool in the global fight to mitigate and adapt to climate change.11
It is anticipated that biodiversity litigation will follow a similar trajectory. The impetus for biodiversity litigation is likely to increase should the COP 15 negotiations fail or under deliver, as activists and other stakeholders pursue the recognised tactic of using litigation to fill policy and regulatory voids.
Sustainability reporting and biodiversity
Mandatory non-financial reporting and sustainability due diligence laws are increasingly prevalent in the EU and many other jurisdictions. Larger entities are already legally obliged to publicly report on their ESG performance under such laws. Many other companies will become bound to do so in the near term (long before the effects of any agreement at COP 15 may be felt).
These duties extend beyond climate change mitigation and adaptation to include binding duties in relation to the reporting of management and mitigation of business impacts on natural capital and biodiversity.
The EU Taxonomy Regulation of 2020, for example, includes as one of its six environmental objectives the protection and restoration of biodiversity and ecosystems. Certain companies are already obliged to report under this regulation. All large EU-established entities satisfying two of (i) 250 employees, (ii) EUR40m turnover and (iii) EUR20m will also find themselves obliged to report from 2025.
The EU’s twin Corporate Sustainability Due Diligence (CSDD) and Corporate Sustainability Reporting Directives (CSRD) are also designed to tackle human rights and environmental impacts across value chains. This includes biodiversity matters. The CSRD will apply to the same entities and from the same dates as above, and whilst the CSDD has slightly different thresholds, it is similarly expected to start to apply to businesses from 2025/2026. Businesses are already taking steps to gear up for compliance.
Biodiversity and access to capital
Biodiversity loss can also directly impact businesses by disrupting their supply chains, increasing regulatory compliance costs and eroding social goodwill. Investors are already considering how to address biodiversity as part of their investment risk assessments. In many cases they are seeking to direct capital toward companies that can better demonstrate a nature-positive strategy, underpinned by robust, science-based targets.12
This means that there is a real risk of loss of access to financing for companies that cannot show a commitment to the global challenge of protecting and enhancing biodiversity.
This is highlighted by the work of organisations such as the Taskforce on Nature-related Financial Disclosures (TNFD), which represents financial institutions, corporates and market service providers. The TNFD aims to develop and deliver a risk management and disclosure framework for organisations to report and act on evolving nature-related risks. The ultimate aim is to support a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.13
Similarly, the Climate Disclosure Standards Board (CDSB) is an international consortium of business and environmental NGOs committed to advancing and aligning the global mainstream corporate reporting model to equate natural capital with financial capital.14 Companies are offered a framework for reporting environmental information, including biodiversity information, with the same thoroughness as financial information.
Such tools help investor decision making and efforts to influence corporate behaviours, thereby having a material impact on the allocation of capital.
Biodiversity and urban planning
Concerns regarding the biodiversity crisis pervade many disciplines and industries, one the most notable being urban planning. As a particularly destructive practice, development has enormous implications for the protection and promotion of biodiversity because it can directly affect habitats of native species.
This is reflected in national laws, such as the UK Environment Act 2021, which introduced a new mandatory requirement for developments to start with an assessment of the biodiversity value of the plot. This must be prior to development and a plan must be submitted to the local authority providing for a minimum 10% biodiversity net gain. This ensures the development project will not result in a net loss or degradation of habitat.
Biodiversity in urban planning can also be used as a tool to address some of the major problems related to the planning of modern cities. This means identifying, from the planning stage, mechanisms that enable the challenges of environmental transition to be addressed in the development of cities and in construction work.
The tools and areas of intervention include increasing green areas, connecting ecological corridors, reducing consumption of natural resources, contributing to improving atmospheric emissions, ensuring hydrogeological balances, providing habitat and nesting places for native species, and so on. All serve to ensure preservation and improvement of ecosystems and their biodiversity value within the build environment.
Final thoughts
It remains uncertain whether an impactful agreement will be achieved at COP 15. What is certain is that the biodiversity crisis will continue to have an ever-increasing impact on businesses across the globe.
This translates into direct risks to business operations and, moreover, increasingly stringent demands from financiers and investors, customer awareness and various forms of biodiversity litigation that will more than fill the gap left by COP 15.
DLA Piper is uniquely placed with a global presence and leading track record on sustainability and ESG to assist clients in this area.
Reach out to any of the authors to discuss how we can help you on your biodiversity and ESG journey.
1 Global Biodiversity Outlook 3 (GBO-3), 31 May 2010.
2 UN Environment Programme, Parties that submitted an NBSAP following the adoption of the Strategic Plan for Biodiversity 2011-2020, including the Aichi Biodiversity Targets.
3 Global Biodiversity Outlook 5 (GBO-5), 18 August 2020.
4 Patrick Greenfield, World fails to meet a single target to stop destruction of nature - UN report, The Guardian (15 September 2020).
5 UN Environment Programme, Convention on Biological Diversity, COP 10 Decision X/2 Strategic Plan for Biodiversity 2011-2020.
6 World Biodiversity Summit - Sharm el-Sheikh.
7 UN Environment Programme, Negotiation of Global Biodiversity Agreement will Resume at Special Three Day Meeting in Montreal, Dec. 3 - 5, Immediately Prior to COP15, Dec. 7 - 19.
8 UN Environment Programme, Open-ended Working Group on the post-2020 Global Biodiversity Framework, Post-2020 Global Biodiversity Framework.
9 China Dialogue, Will 30×30 reboot conservation or entrench old problems?
10 International Finance Corporation, The Relationship of Business to Biodiversity
11Commonwealth Climate and Law Initiative, The emergence of foreseeable biodiversity-related liability risks for financial institutions: A gathering Storm?
12 EY, Why biodiversity may be more important to your business than you realize.
13 Taskforce on Nature-related Financial Disclosures.
14 Climate Disclosure Standards Board.
