This is Dana Perkins and you're listening to Switched on the BNAF podcast, and today we're going to talk about COP, not Climate COP and Baku Azerbaijan, but BIOCOP in Cali, Columbia. We've got Hugh Bromley, beanuf's head of Food, Agriculture and Nature and his team member Alistair Perty on the show today to tell us about the United Nations Conference on
Biological Diversity. They tell us what this summit is all about and what we can expect from the good to the bad, by sharing some of their predictions for this event in a research note titled Expectations from Biodiversity COP sixteen Cali Fauna Dreaming. We love a good pun in there. So if you're more familiar with Climate COP, you're not alone.
We'll go through some of the need to know definitions to get you familiar with the international agreements like the Global Biodiversity Framework and required homework in advance of COP sixteen by the parties attending, such as the National Biodiversity Strategies and Action Plans. Clients will be able to find this report at BNF go on the Bloomberg terminal, or at BNF dot com for public resources associated with international events such as COP sixteen, COP twenty nine, or New
York Climate Week. Head to about dot BNF, dot com, forward slash, bn EF dash climate dash action. This website contains public research on climate and nature as we publish reports. Now let's get to our conversation with Hugh and Alistair regarding BIOCOP. Hugh, welcome to the show.
Great to be back, Dana.
And Alistair, nice having you back to Thank you, Dana, nice to be here. We're going to talk about biodiversity COP today and we're going to use a lot of definitions because really that was the genesis of why we decided to do this show, is that there's so much conversation about climate COP and increasingly conversation about bio diversity COP.
And we wager that they're listeners out there who listen to this show who also want to know what the difference is and really what the aims and purpose of biodiversity COP is, especially with it coming up very shortly. So before we even jump in on the Conference of the Parties, which is what COP stands for, let's do some definitions on nature and biodiversity because I increasingly am seeing nature used as terminology within financial reporting. And then additionally,
biodiversity is another term that keeps coming up. So nature biodiversity, which one do you want to start with? But give me a definition.
Yeah, it's a really good point, Dan, and I think there's been quite a lot of confusion about this terminology, especially over the last year and within the financial circles. Generally we say nature when we're talking about all resources not made by humans that can be biotic things i. Living organisms, or abiotic resources non living things such as water, air,
and geology. Biodiversity is different. It's the variation in the type of species and think more biodiversity means more different kinds of living things and this can apply across species, habitats, and also genetics.
So at biodiversity cop they're focused specifically on biodiversity or does it bleed into this broader definition that is nature.
Essentially, biodiversity is one characteristic of nature. If we improve nature, if we make it more resilient, one of the things that we'll see is more kinds of species and more biodiversity. So yeah, the focus will be on biodiversity, but that's part of a bigger discussion on nature and the reason why This is so important for us as humans and for the business world is because this stack of natural resources provides ecosystem services. That's a flow of value that
we can generate. Many things from this covers regulating services, provisions, provisioning services, supporting services, and cultural services. Some of the more well known ones might just be the food that we get from nature, or it could be pollination services or water and air purification. We also derive intangible benefits, which is cultural appreciation on various other things like.
That pollination services. I mean you're literally talking about bees here. Yeah, we are exactly Okay, we're giving things very technical names. Here we go. So at Biodiversity Cup where when what's coming up?
Sure?
So bid Diversity COP kicks off later this month in Cali, Columbia. So really this comes nearly two years after a landmark agreement was reached at COP fifteen, which was in Montreal the end of twenty twenty two that led to the Global bio Diversity Framework, a set of principles. So Cali Columbia is really meant to be just a status check on how we're progressing on those that agreement and the set of targets reached in Montreal, rather than leading to any great breakthrough in new agreements.
And these CUP meetings are facilitated by the United Nations. But who really attends.
We know this time around there's around fourteen thousand delegates registered, so I imagine that's going to be a record, including a number of heads of state. I think this bio Diversity cop is really going to be the first we see
a really significant financial and corporate attendance and delegation. That was somewhat true in Montreal, probably for the first instance, but this is one where actually that we're seeing amongst our clientele much more interest in this space, especially given the challenges of attending Climate copp and Backwood.
Later in the.
Year's one hundred and ninety six parties, which means regions countries are signatories of the Convention on Biological Diversity. They all send delegates to negotiate on many of the items up a discussion. Among these one hundred and ninety six parties, there's one hundred ministers for the environment from their respective parties, as well as twelve heads of states, largely from South American or Latin American countries.
So let's talk a little bit just while we're laying it all out at the beginning what the structure of these meetings really is. So you have those that are for the delegates and the official negotiations. So when we talk about the different things that are actually signed and the resolutions that come out of these meetings, there's one set of meetings, but then there's the blue zone and the green zone, and then people who are going to neither of the two. But we can leave that to
the side. The blue zone in the green zone, can you explain what the difference between those are.
That's such a good point because when I first standed this space, I was already confused by the difference. You hear it thrown around all the time, and you're like, what's the green, what's the blue. Blue is where all the official negotiation happens. That's where the plannary room is, where all the party's main delegates Are's where business happens.
There is some angio and civil society engagement there, but most of the non government, non official negotiations happens about forty five minutes away in the center of town in the green zone. Here a lot of private and public sector institutions have set up informal pavilions where there'll be debates, discussions, panels.
I think for.
Anyone who's attending CALLY this year, they'll be becoming aware of just how challenging the logistics is. Because normally the green and the blue zones are either adjacent or concentric to one another. Cally's looking different, CALLI. The green zone is downtown, the blue zone is a conference center. You know, normally twenty minutes out of town. We're told it will take forty five minutes to an hour. Given the number
of people visiting town. It's going to be quite a difficult cop to be present in and you know, to experience both zones, and I imagine you know certainly going into it, that's the logistics are looking challenging.
So you had mentioned this Kunming Montreal Global Biodiversity Framework referred to as GBF, and this was one of the really important things that came out of COP fifteen two years ago. Can you explain what's in that and why that was such a large agreement to come to.
Absolutely, the Global Biodiversity Framework is Nature's equivalent of the Paris Agreement. Here all those one hundred and ninety six parties came together and agreed essentially a ten year plan for biodiversity. It's the goals that we need to achieve by twenty thirty. That's twenty three targets covering a range of really important issues that we'll get into today, as well as four more high level fluffy goals living in
harmony with nature by twenty fifty. But these things won't be on the Khali agenda.
So the most notable of those targets and the headline coming out of Montreal was.
This thirty by thirty target.
So that's the target to restore thirty percent of all degraded ecosystems and conserve thirty percent of all inlead waters and seas. That's been collectively known as a thirty by thirty target.
But actually, to Alistairs point, there's twenty three.
Targets containing that part of us your framework, and Kelly is really a check in on all those targets.
So decisions are made at Biodiversity COP and goals are set, and goals are definitely a good way to reach for something in benchmark progress, But is any of it legally binding and how may that differ from how things take place at the climate focused COP meetings.
It's a really good point and it kind of explains why so little happened over the previous decade. The last version of the GBF was a different tenure plan which had twenty two targets, and they all failed. One of the reasons is that the biodiversity cop outcomes are not legally binding. Once countries or parties come back to their governments and ratify policies, then it becomes a legally binding issue, but there's no obligation for them to do that under any kind of legal framework.
In the run up to the Biodiversity cop taking place in Kelly, there was some paperwork to be done. So the part that are actually coming to the table we're meant to done their homework and submitted information. Can you talk about what that's called? So what those plans actually are referred to as, what's in them, and how we're doing on submissions and meeting deadlines.
That's a great question, is the essence of what this meeting is about. All of these one hundred and ninety six parties were required to submit updated and revised national biodiversity strategies and action plans, which is quite the mouthful. So we'll just call them national plans. The deadline for this submission is the closing ceremony of the Kali Proceedings.
All of these plans should cover the twenty three targets contained within the Global Biodiversity Framework, and if done correctly in theory, it should be a big step forward in protecting and restoring nature globally. However, we've noticed that only twenty five countries have so far been able to submit those plans, but there is some silver linings within this. Among those twenty five countries, does the EU, China, Japan, and New Zealand and Australia submit their documents at the
Nature Positive Summit held in Sydney. The parties who have submitted documents to count for about half of global GDP and roughly a quarter of global landmarks, So there is progress from many of the higher income Global North countries, but still many laggots exist.
And while it's a significant share of GDP, it's worth pointing out that these u and negotiations are consensus space, so it actually actually you do need all one hundred and ninety six parties to agree on conventions or in agreements. Here, you don't need the multi A Smitt of plans necessarily, but it's an indication of the level of engagement amongst the various countries.
Many countries have been slow to submit their plans, and we've learned recently that the UK will not be able to submit it in time for the deadline. In Kuli, one of the reasons is they've undertaken a really deep there consultative approach. They've worked to really build out a long term biodiversity strategy, and of course that takes time because it is like a transformational economy wide issue.
Now in climate discussions, there's a lot of conversation around industrialized nations and their emissions, and you know, really focus on a few countries that actually have the vast majority of global emissions and then other countries that are in the process of industrializing. So emerging markets and developing economies is largely the term being used at present to define this group of countries and how potentially their emission targets
should be. Quite different from a biodiversity standpoint, you don't have that same developed and developing diconomy, but you do have vast amounts of biodiversity in certain parts of the world. So maybe Brazil or Indonesia. Is there a real focus on specific countries and which countries are really at the center of these conversations regarding what it is we're trying to preserve.
So similar to climate, much of global biodiversity is located in EMDs, and generally we see them pressing for compensation from the rich countries who have profited so much from it. But this club of developed economies is reluctant to what's required to these countries in order to rectify what's being taken. There's a two hundred billion dollar target to mobilize finance towards biodiversity in general, but there's also two specific targets
for international development finance. The first of those is mobilizing twenty billion dollars to emdas by twenty twenty five for biodiversity, and that follows through to twenty thirty with a thirty billion target for those countries.
One thing we've done for the past two years produce some funding priorities for where these funds, once raised, should be deployed.
We've we've done it.
This will be our third iteration that really releasing at Cali and really what we look at there is three indicators. The first being the presence of biodiversity. You know, where is biodiversity present that should be saved. The second is where is it valuable? So what are the ecosystem services, whether monetized or not by the broader economy. Where is biodiversity in nature delivering value? And the third being where
is it under threat? So that is where is their political instability or where are extractive industries large such that they pose a threat to nature? And we look across all of those metrics and wait, then we come to the conclusion that a lot of bio diversity five needs to be deployed, unsurprisingly in markets like Brazil, China, Indonesia,
DRC and Colombia and many others as well. And really that comes down to threat is high amongst a lot of these countries, but there is enough political stability such that the.
Funds aren't there should not be wasted.
The value varies greatly, and these are biodiversity hotspots.
Some of the more developed countries have effectively destroyed almost all of their biodiversity, so their presence score on that indicator is zero. So we look at the EU UK, almost no biodiversity remains.
Well, when we think about the Amazon people talk about it sometimes as the lungs of the earth. So there are shared resources that we should all care about, even though they may not from a government standpoint, be specifically one government's responsibility or another, which I suppose is actually the fundamental aim of having these meetings.
That's absolutely right.
So that's one conclusion we arrived through this value metric is that the value derived from ecosystem services transcend national boundaries. And actually what you send to find is that ecosystem service values tend to be higher across large land masses where biodiversity remains intact, and across large economies.
But actually value of ecosystem service is.
Getting many cases exceed the local economy the GDP of that economy, and that means that they are exporting value to the rest of the world that they're probably not paying for.
But that's why these negotiations are important.
So let's talk about that funding gap in some of the financial pledges the GBF or the Global Biodiversity Framework. Can we talk about how that is meant to be funded and how much money has actually made its way into the part.
According to BNAF analysis, which is based on some very important reporting work done in twenty twenty and twenty twenty one, and since updated. There's approximately an eight hundred billion dollar annual gap. To meet the goals of the Biodiversity Framework, a trillion per year is required, but currently only about
two hundred billion per years flowing into biodiversity. The first step to address this is a target for twenty thirty requiring two hundred billion of annual flows, But there's issues here which countries should commit that in what form, What constitutes biodiversity finance. Should it be biodiversity related, should it be biodiversity specific. Every party to the CBD has their
own different view on this. So one weird thing we found is like, there is this two hundred billion dollars per year requirement contained within the GBF, but current annual biodiversity flows are about two hundred billion. So you could argue, if you were being cheeky, that that target has already been met, but it's so fluffy that this disagreement.
So with all of the submitting of paperwork in the run up to cop and discussions around which categories certain parts of biodiversity fit within, do you think that one of the benefits of these meetings has actually been better reporting and better measurement of what's actually happening around the world.
There's often this idea that there's a massive data gap of nature and biodiversity that's preventing action and preventing reporting. I think, you know, in our view, that's probably overstated. There is lots of data in this space. What's sometimes missing is the attribution or association of those nature metrics with the companies and even in some cases the jurisdictions or countries responsible for that natural resource that is impacting
or dependent on those resources. I think scale and completeness can be lacking, but regulative at developments, the EUGR being the EU Deforestation Regulation and CSRD is the Corporate Sustainability Reporting Directive supporting rapid development of private private sector data products, including what we're doing here at Bloomberg, and we're investing heavily in the space building out data sets and tools to associate those indicators such as bi diverse intactus, deforestation,
water scarcity with company operations and their supply chain dependency. There's also certainly data lacking around maritime. I think we're a bit naive here. When I look at maritime data, I think of the George W. Bush saying, I believe the human being and fish can coexist peacefully. We're kind of at that state where we know something exists there but don't know how to approach it.
There's a data problem, but.
Reporting is moving really quickly because of regulation, and it's supported by much more robust data.
So one of the things that we do headed into the COP meetings, whether their Biodiversity COP or Climate COP, is trying and give a bit of a scorecard to how we think things are going to go when it comes to negotiations across some of the main criteria of what's to be discussed at that upcoming meeting. So a
bit of a prediction, if you will. Headed into this biodiversity cup, we gave it a four point nine out of ten overall, so we'll just call it five, which I would say is not necessarily the most optimistic, But there were a couple of categories that actually did rank significantly higher. So why don't we go to some of those with monitoring frameworks? And this actually piggybacks onto what we were just talking about, which was, you know, data
and how we go about measuring things. That was one of those areas we actually saw a pretty high score, so it was eight out of ten. Why are monitoring frameworks getting an eight out of ten? And why is this potentially one of the bright spots in the upcoming Biodiversity Cup meetings.
Behind the scenes of these cop meetings there is intercessional meetings where all these parties negotiate through the year on difficult technical issues. One of them less headline grabbing than money of the others are these monitoring and report frameworks. And over the last two years the parties to the CBD have ironed out almost all the details behind the scenes, so essentially they'll be rubber stamping the final document with
only a few things to agree. Much of the architecture on reporting and monitoring was already built over the last ten years. While the twenty two itch targets were a complete failure with none of them being met, systems for parties to monitor biodiversity change and report their findings were set up well, so countries are well placed to agree on these things, so we're optimistic of a good outcome. Also, countries have nothing to lose. There's no point in disagreeing
on a monitoring framework. Much more important is actually implementing policies that achieve those goals.
So then let's talk about where the drama lies, the digital sequence information. Why is this likely to be really contentious?
Well, first, the digital sequence information or DSi is a terrible name. It should just be called genetic resources. This is acknowledged by people working in that field. It's just hard now to rename it. When we say genetic resources, we say information from plant animal genetics that are then
used in fields such as medicine or agricultural biotechnology. And it's a hugely profitable industry, with global revenues from DSi estimated at about one point five trillion per year, rising to almost two point three trillion by twenty thirty.
The reason we're unlikely to see any breakthroughs here is that there's really no reason for these companies to be paying. The world has a very Victorian attitude to generate material. These companies and countries can benefit from genate resources collected from poor countries.
At no cost.
Really, what you have is companies that are basically privatized British museums of genate resources collected from other nations at various points in time.
So let's talk about some of the different groups that are coming together. So beyond those who are involved with the actual negotiations at the real center of the meeting, there are some other stakeholders that really want to have a voice there. Some of those are businesses as we were just discussing and what they're actually getting from nature
and biodiversity. And then there are Indigenous peoples who really do need to be represent and how is this being incorporated in and the term is Indigenous Peoples in Local Communities iplcs. How are they featuring at this year's.
Cop Indigenous peoples and local communities are the most effective custodians and stewarts of biodiversity, yet they're often excluded from negotiations or marginalized. One breakthrough in twenty twenty two in the GBF was to include them in negotiations and make
sure that marginalization didn't happen. But the issue is clouded by every representative of iplc's having a different view on how they should engage, what their representation should be, and that leads to protracted negotiations, limiting the chance of anything actually occurring. So participants in Cali will negotiate on behalf of IPLCS, A lot of opinions will be exchanged, but there won't be very much concrete progress on actual finance for iplcs or including them in negotiations.
So one of the things you said at the beginning of the show was that there is even more business interest on what's happening in biodiversity. Some might say that this is an acknowledgment of how important biodiversity is to everyone on this planet, businesses by extension, But really, how are businesses and companies and the financial sector really approaching this and how are they thinking about it? Basically, why are they showing up in person for this next set of CUP meetings.
Sure?
So, I think for many businesses, they started paying attention around the time of the Global Wide Diversity Framework, either they arrived in Montreal for the first time or they started paying attentions as soon as that agreement was reached. So both for business and financial institutions, I've kind of noticed these two or three stages of their engagement back then two years ago. You know, they were really attracted to the promise of the new financial products and markets
to support that nature restoration. There might be new revenue opportunities in this space. I think over the last twelve months or so, a lot of that attention actually shifted away from opportunities toward risk, and that's with the rise of the Task Force on Nature Related Financial Disclosures t NFD, CSRD and EEDR I mentioned before, and that pivot to
nature risk within their portfolio and their supply chain. I'm now starting to see science that they're starting to think about opportunities again, but this time it's within their portfolio.
So moving toward similar.
Framing to how we think about low carbon or climate finance and transition, where the bulk investment in that space involves doing less harm building solar instead of building fossil fuel plants. It's rather than undoing the harm through carbon removal. So actually in Knights you've got this discussion at the moment between nature positive activities, the equivalent of carbon removal and just doing less harm. And I think that that's where we're starting to say some more interest.
So since you brought up solar farms, this then brings up the important interplay between the climate and biodiversity COP and how these conversations are increasingly featuring at one another. At last year's Climate COP in the United Arab Emirates, there were dates that actually featured these same topics and additionally upcoming in Baku, Azerbaijan, there were days at the end of the agenda, so they're not in the first couple of days, but they are still featuring some of
these same topics. To what degree is their communication across these different parties and some degree of alignment.
The interplay between climate and nature is well understood by academics on the business world. There's some mutual dependence between nature and climate. When we have increasing climate change that reduces resiliency and biodiversity. Less biodiversity makes it harder for ecosystems to sequest the carbon So across different spheres of the economy and the academia, there is acknowledgment that there needs to begned more alignment between these two cops. However,
it's difficult in practice. The way the two conventions are set up makes it hard for them to integrate into one another. But there has been very high level engagement on this. There's a joint statement at COP twenty eight and the coming Montreal Biodiversity COP showing that we need more alignment between the two. The president of COP sixteen, who is the Colombian Environment Minister, has said that its termission to ensure that the outcome of this COP is
better alignment. However, we don't see any concrete outcome based on difficulties and integration.
You're right, we're going to see biodiversity in nature come up again in Baku, but I think even more so next year as we go into Brazil. Be thing for Brazil's likely the deforestation clearly relevant to this space. Brazil is the most valuable eco system service market in the world through resources like the Amazon Basin and the Atlantic forests, so there's going to be more discussion in this space
and convergence of issues. I think there is a propose out there to merge the COPS together, not sure whether how how far that will go. We also know that from a corporate reporting standpoint, these issues are likely to merge together. The TNFD will over time be integrated into global reporting standards.
So the Brazil Climate focused COP that will take place as the COP thirty coming up in November of twenty twenty five is definitely one that many in the climate space are thinking is going to have a much bigger impact. Will be halfway through this decade, headed to twenty thirty, where there are so many different benchmarks that people are
looking towards. Do you expect to see a similar important COP coming up next year in the biodiversity space or is there a year that we're looking towards where you anticipate a lot of this focus around twenty thirty Because we can't wait till we get there, we'll actually start to feature in this benchmarking will really take place in.
That you mentioned Baku, because early signs point to that also being the host of the next COP, which will be in twenty twenty six, COP seventeen. That will be much more meaningful and impactful than Cali's version because it's slated to be a global stock take. It will measure how far progress is on achieving the Global Biodiversity Framework goals, unlike this year where it's simply a status check. Where
are countries with their national plans? Who is submitted and who hasn't, how are our reporting frameworks and have we made any progress on finance? Those aren't concrete measurements of where we are on global biodiversity, just are we well prepared to start addressing it.
It's right around the corner. Both of you will be closely watching what happens during COP in Cali. Will you be there and what sorts of activities do we BNF have to play?
Yeah, we will be there, so both Bloomberg and BNF are sending a delegation there. We have a number of events and report releases planned there covering nature, risk, investment
opportunities in this space, biodiversity, finance, importance of water. We will have a WODE online hopefully by the time this podcast is listened to, but if not, email your BNF rep or BNF cop at Bloomberg dot net to find out more and enjoying those meetings, and we'll also be reporting on progress as it happens, so well to watch out for research both during and after biocop.
And Kelly, Well, let's close today's show with some facts that people just need to know in order to really be conversant in this space. What are some of the main things that come to your mind that you think everybody should know about biodiversity.
Anyone who spend time in this nature and biodiversity space, be they academics or business representatives, will have heard the phrase fifty percent of economic value generation is dependent on nature. But that's untrue. The actual statistic is fifty percent is moderately or highly dependent. We far prefer to say all economic value generation is to some extent dependent on nature
and biodiversity. We recently profiled a large cohort of agrifood companies and where they stand on nature and biodiversity, and the conclusion was quite surprising. Approximately ninety percent of them acknowledged biodiversity in that and you're reporting, while only ten percent to actually investigate the risks and opportunities that are associated with that.
So there's one more that I'd love for you to bring into the conversation, which I found really astounding and has gotten a bit of press the last couple of weeks. That's around biodiversity loss. Where are we at in terms of global biodiversity and wildlife populations.
One of the most famous statistics and ways of monitoring biodiversity loss is the Zoological Society of London and WWF Living Planet Index, and that shows that since a baseline year in nineteen seventy, average vertebrate species populations have declined by seventy three percent, which is an extraordinary reduction. One more concerning figure might be the newly released Planetary Boundaries Health check that was released at New York Climate Action
Week a couple of weeks ago. It founder of nine planetary boundaries, which are measurements to show whether Earth systems are able to continue at a healthy level. Six have been crossed, although it's almost seven now. That's extremely concerning for biodiversity loss and nature loss globally.
And where does that research come out of.
That research comes from Professor Johann Rockstrom at the Potstam Institute for Climate Impact Research.
If that is not a stark number to inspire some action and hopefully some very inspired conversations at Copp and KLi, I don't know what would Hugh Alstar, thank you very much for joining today.
Thanks title, Thanks Stana.
Today's episode of Switched On was produced by Cam Gray with production assistants from Kamala Shelling. Bloomberg NIF is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor should it be construed as investment advice, investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg ANNIAF should not be considered as information sufficient upon which to base an investment decision.
Neither Bloomberg Finance LP, nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this recording, and any liability as a result of this recording is expressly disclaimed