Welcome to Zero. I am Akshatrati today the forgotten crisis. Here on zero. We've dedicated a lot of time at covering COP twenty nine at the end of last year in Baku. We interviewed the heads of state, the CEO of Exonmobil, and even the COP thirty president, who by
that time hadn't been named as such. But there was another COP last year, COP sixteen, that focused on biodiversity in Cali, Colombia, where nations came together to try to figure out how to protect natural habitats, plant, animal species and halt the destruction of nature. If the climate crisis is a monster wave, the biodiversity crisis could be a Leviathan And unlike COP twenty nine, actually COP sixteen is
still not over. It ended before key agreements could be reached, and so talks are going to resume next week in Rome. I wasn't at COP sixteen, but my colleague Natasha White was high.
Actually I was, indeed, and thanks for having me Today.
We're going to talk a lot more about why these talks dragged on and what will happen in Rome. But Natasha tell me first, how was Cali CALLI.
So it's the capital of sugar cane in Columbia. It's sort of nestled between mountains and the sea, and it's also known to be the capital of salsa salsa dance, not the salsa sauce, and it's a really vibrant town. And this came through, i think to a great extent in the way that Columbia hosted the COP. It was really framed as the People's cop and the Green Zone.
So the area at these cops you have a blue zone where all the official proceedings take place and you need to have official access and it's much more managed. But then you also have a green zone where anyone can exhibit and the general public can visit. And in Cali, the green zone and the blue zone were apart, so the green zone was downtown. It was kind of in the center of the city. It had a sort of
festival street festival vibe. It was open from the morning to late at night, and there were live music events. There was salsa. Unfortunately I didn't make any of it. Well that's probably no bad thing. I can't dance, but it was a really vibrant, warm place to host it, and the cop itself was kind of nestled out of town in the foothills of some hills, so you had beautiful mountain backdrop to the conference venue and yeah, beautiful nature all around.
Well, you clearly got the better assignment here at Bloomberg because you also came to Baku and that place had no natural daylight, let alone all the beautiful mountains.
Yeah, it's true. In Baku, we kind of walked into a tent in a stadium. There was no natural light, there was no fresh air, there was nowhere to stand outside and get some daylight. In Cali, the tents were all separated, it was hot, you know, there was water features. It was just a much more kind of humane setting for a COP. There was an explicit choice, I think, to host the COP in this city because of its nature,
and you really feel it surrounds you. You know. We went out for dinner one night in the old town and we were sort of taken over by a cacophony of frogs while we were eating.
Well that's loud. I mean frogs I like, but I don't like the croaking. This sounds actually quite pleasant. Well, it seems like you had way more fun than we did at COP twenty nine. But biodiversity cops in general now have started to become bigger and are being given perhaps not as much importance as climate cops, but increasing importance.
And what happened at COP fifteen in Montreal perhaps made that happen because it was this big moment where one nineteen nations reached an agreement to preserve thirty percent of the planet's land and seas. Having that big goal set was important. But really just to understand what is at stake with biodiversity.
Well, I think if you start with the numbers, WWF does analysis which has shown that over the past five decades, over the past fifty years, the diversity of species has declined by I think around seventy five percent, which is massive. So that's the numbers. I think everybody everybody feels it, Like you know, in this country in the UK where we're both based, people commonly talk about the number of insects on their wind screens when they drive around in
the summer. And even I am in my mid thirties, like when I was younger, I grew up in the countryside, it was something I remember regularly not being able to wash the windscreen well enough to see where you're going and now it's just not the case. You know, over the over the summer, we had the windows open and the lights on and normally there'd be insects buzzing around them,
but there are none. So everybody recognizes this drastic loss in biodiversity, and this country, the UK, is one of the worst, but it's affecting every country in the world and that's what this Global bio Diversity Framework that was agreed in Montreal in twenty twenty two seeks to address. And so the kind of overarching goal of that, which is for twenty fifty, is for the world to be
living in harmony with nature. But underneath these broad goals there's a number of i think around twenty three targets which are a lot more specific. One of them is the protect thirty percent of land and sea, well land and water actually by twenty thirty. And so countries gathered in cop this year to look at the progress that they've made since that framework.
Was agrees and even at this cop in biodiversity finance was at the heart of the conversation. But what was the approach to try and raise money towards what clearly is a very important issue. Not just from a perspective of how humans should live on the planet, but also from the perspective of how do we sustain an economy where humans thrive because nature is so important to enable that to happen.
Yeah, So on the money, there's a seven hundred billion dollar per year financing gap that's been identified for tackling
this problem, and that's kind of split into two buckets. One, which covers around five hundred billion, is about redirecting harmful subsidies, so the money that governments pay to make cheaper things that destroy nature, so fossil fuel production, chemical agriculture, things like this, and the goal there is to redirect those subsidies from doing harm to things that do good, so regenerative agriculture or what's spink called the bioeconomy, basically business
that doesn't harm the planet. And then the other is the remaining two hundred billion is what needs to be raised in kind of new money from all sources, public
and privates. And that's where we see a lot of the kind of parallels in the climate space, I think, where it's about getting more grant money from governments, more concessional finance governments, and multi natural development banks and more private sectimoney invested in again things that aren't harming nature but instead are sensitive to it.
In the climate sphere, I think there is now a certain sense that has settled, and I'm not saying it's widely accepted and always consistent, but the fact that cleaner energy is cheaper than fossil fuels, that investing in clean energy is actually going to not just have an impact on carbon, but so many other things that all cannar that you know, the only way progress or economic progress could happen is through extraction, through perhaps some amount of
harm to the environment. Has been in some ways being broken in the climate sphere. Do you think that's been broken in the biodiversity sphere. Do you think people understand that it is actually possible to have economic activity that does not harm nature.
Well, I think the challenge of bio diversity and sort of nature loss more broadly, as it's extremely cross cutting right in some areas. I would say it's even more fundamental in the bi diversity space. If you look at agriculture, I think agriculture companies are not going to make any money unless they change a business model. So in that space it makes perfect business sense to manage the land in a way that nurtures nature so that nature can
go back, you know, in terms of production. In other areas, it's more challenging, I think, because the business model that we're we're used to is externalizing the negativities. You know, we dun't waste, we don't really recycle it or limit its production. And it's those business models where it's cheapest to behave in that way are the ones that really
need to fundamentally change. And that's structural and it's hard, and it's not just about moving subsidies but overhauling an entire way of functioning, which is a big challenge.
And so at this COP sixteen, what were the headline things on the agenda? And we know from headlines from stories you've written that largely it ended in failure. But let's just first go through what were things on the agenda and understand why it was classed as a failure.
What was on the agenda at the outset, which we identified as the most important one, was a stock take. So countries have to submit national biodiversity plans for how they are going to achieve the targets and the goals. As a global Biodiversity Framework and the deadline for doing so was the beginning of cop so by that measure, very few countries managed to submit their nb SAPs on time.
Some gave reasons for that, which was that they really want to engage, for example, indigenous peoples and local communities and defining these kind of cross cutting strategies. That takes time and it's not easy. But nonetheless they've had two years to do it and a lot of them most of them failed, So by that measure, it wasn't a
great success. The second big agenda item was a strategy, a resource mobilization strategy, so a way to raise this two hundred billion dollars per year from public and private sources to tackle nature loss. The third main agenda item was finding a way to collect and share the profits from companies that benefit from what's called digital sequence information
on genetic resources. And it's extremely technical, but in essence, what it's about is pharmaceutical companies, cosmetics companies, biotech companies, all of them make money out of products that are based on nature's genetics and that used to be a physical process. But in the day and age that we live in today, obviously a lot of that has become digitized. Yeah, so it's difficult for the countries that are home to
this diversity to benefit from it. So, for example, the venom of a lizard found in Mexico and the US inspired the blockbuster drug ozenpic for weight loss and diabetes. Well, Mexico may well not have been remunerated for the benefits that companies have accumulated thanks to it its biological genetic diversity. So the idea of this mechanism is to find a way to collect a portion of the profits or of the revenue of these big pharmaceutical biotech companies and share
them with the countries from which these resources come. It's not a kind of direct trade, but the idea is there'll be a kind of levy of one percent of profits or zero point one percent of revenue that will go into a fund, and then that fund will distribute money to countries that are rich in biodiversity to help
protect biodiversity. And those were the kinds of details actually that were ironed out during the cops and throughout the two weeks negotiators worked on this text, which one of you know, a veteran negotiator, described to me as the most complex item he's ever negotiated in his life. He kind of likened it to quantum physics, and you can imagine when you're talking about a voluntary mechanism to levy certain sectors globally through a United Nations mechanism to sort
of centralize money and distribute it. There's a number of questions there that are extremely difficult to iron out, and some were ironed out and some weren't. But that was a big focus of an event.
So usually these COP meetings come toward and end with all these countries negotiating and ideally coming to a consensus that signs off on some of the headline items in an agenda that happened at COP twenty nine with the three hundred billion dollar climate finance goal and the attempt to try and get the carbon markets through Article six to be working where countries could trade corbon credits. How did COP sixteen end.
Well, it ended over a couple of days, which I think is the first point. We were reassured in the run up that it's very unusual to go over time, and it ran over time and ended somewhat abruptly after a big success of signing off on a document explaining the ways to kind of operationalize this digital sequence information fund called the Cali Fund. That was a big success, and you had a kind of sentiment that, you know,
momentum was good and things were going well. And then they came to the resource mobilization strategy, and after some welcoming comments from developing countries, developed nations stood up one after the other and just said no, no, no, no, at which point I think Brazil intervened to ask if there were still because we were in an early hours of Saturday at that point, and some people had started to leave to get their flights, So are there enough
people in the room to make a decision. There weren't, and so the event ended abruptly and has been suspended and will be resumed next month in Rome, where they will iron out or try to iron out over two or three days, which seems rather short given the contentions the outstanding agenda items.
So this is unusual and rare, but it's not unprecedented. COP meetings of this kind, not just in nature or climate, but also in other types of big un bodies tend to have this option of suspending the COP and then restarting it in another place. Was there Seene that you remember that sort of like captured how it feels because obviously they spent two weeks that all these people from different countries, they really want an outcome and then they don't have it.
I think there are a few moments. One was the kind of emotive intervention from the Philippines talking about the urgency of what's being discussed when they were kind of the countries were arguing over some details of texts. You know, he mentioned that they've lost already recently a couple of species of birds to typhoons, which again speaks to the interconnectivity of climate change and nature lost issues, So that
there was that emotive intervention. And then shortly after an Australian negotiator had their heads in their arms and Suzanna Mohammad, the cop president, asked in plenary Australia, are you still awake? And then you had a standing ovation when they signed off the digital sequence information on genetic resources text and then suddenly this total collapse and again the moment that
stuck in my mind. After the kind of show of the whole event in Calle, you know, there was a big opening ceremony, there was real kind of energy throughout the event, the president just walked off the stage and it ended. There was no closing speech, nothing, It just collapsed and mohammed.
The Environment Minister of Columbia was the president of COP sixteen. Well, she was also quite active at COP twenty nine, and it felt to me that having seen what happened at COPS sixteen, she felt this urge to make sure that that kind of failure doesn't happen again, and she partly succeeded at COP twenty nine. But you know, we'll see what happens at the resumed COP and whether whether in Rome they come up with the items that haven't been agreed.
So let's take the big one, which is where develop country said no, no, no, What was that and how do you resolve that?
Yeah, So the crux of the issue in Cali was around the creation of a new fund. So as part of the resource mobilization strategy or the way to kind of collect developed country contributions, a fund was set up called the Global BIY Diversity Framework Fund, which is housed at the Global Environment Facility, which is based in Washington, DC.
It was a fit launched last summer August twenty twenty three, and developing countries basically see it as controlled by developed nations and they want a new fund that's overseen by the COP so the Conference of Parties so much broader representation instead, and developed countries on the other hand say that we've already got the GBFF, let's just focus on making it better. A new fund doesn't mean more money,
and they disagree basically. So there was a bit of a curveball in the sense that on Friday morning, so the day that the event was meant to wrap up, this fund wasn't really on the table. It was going to be discussed at a later date. Then I believe it was in the early hours of Saturday morning a new text got tabled and the fund was back in there.
So the countries didn't really have time to go through the text, and the developing countries very much welcomed it when they go to that agenda item, but when it turned over to the developed nations one after the other, Candada, Japan, the EU and others just said no, no, no, And I mean an important point to highlight is that when the GBFF was formed, it was formed as a temporary stop gap solution to twenty thirty so from twenty thirty there is a question mark over where this money is
going to be collected, and what was proposed in the text was the last version of the text was that from twenty thirty a new fund overseen by the Copper set up. So I think it does speak a bit to the distrusts that was in the room, like the developing nations, I think were proposing a pragmatic solution that worked a little bit better from them in terms of representation, and it was just outright denied.
What do you think private markets can do to try and address this crisis and how does it fit in with their business model which is very clearly towards making money.
Well, I think the way in which it's broken down and the numbers and the text is quite a useful way of thinking about it. Five hundred billion needs to come from redirecting harmful subsidies, so you can think about that more broadly as limiting or impact on the plan and finding business models that are more well sustainable. The flip side of that is about how to raise this additional two hundred billion, and that's of course where private
finances is focusing its attention. These are opportunities to make money out of the problem, and there there was these cops are not really the forum for that, but of course there's plenty of side events where the private sector can participate. And there were two products, as it were, that were really prominent, I would say in CALLI. One is biodiversity credits, so the kind of equivalent to a carbon credit, where carbon credits are about offsetting your emissions.
There's a big debate in the bidiversity space about whether the buidiversity credits are about offsetting your impacts on nature or whether they're about making a positive contribution to projects that help protect it. But nonetheless these a tradeable instruments that are very controversial and was a big, big part of the proceedings there, to the extent that rooms were overflowing. I think every single day there was a side event
on bio diversity credits. A number of kind of guidance principles were launched to try to make sure the market doesn't fall down the same shortcomings as the carbon markets. At the same time, businesses were putching their ways of measuring and trading nature. And the other one was debt for nature swaps, which are deals where countries can refinance their sovereign debts on better terms and allocate the savings
to conservation projects. So this has been a model really spearheaded by the Nature Conservancy US nonprofit and Credit Sweese. But is now you know, witnessing a lot of competition from big global banks that ultimately can make a lot of money out of the fees that they get from structuring these extremely complex and bespoke deals. And some are also offering loans now and you know obviously making money
out of the interest on those. So those are kind of the two products I would say that are really in the eyes of wool Street when it comes to this issue, and.
They're both new instruments. You and I have covered carbon credits for a while now and to the extent where I actually am still very tired of covering them, but there is no way around covering them. Biodiversity credits, which you've covered also for some time. What are the pitfalls that are different from carbon?
Right?
In carbon the pitfall is you're supposed to actually offset for a ton of carbon and you want to ideally have it one to one. So if you're extracting fossil fuel from the ground, then you want to have that carbon go back into the ground, and typically that doesn't happen in biodiversity. How do you exactly do that? If you kill a bird that is extinct, now you can't offset that by bringing that bird back to life, right.
Yeah, So this offsetting credits debate is very contentious and people feel strongly, as they do in the carbon space, about both sides of the argument. So on the one hand, if you think about it, we are going to continue destroying nature in the future. We build homes, we build infrastructure, we build minds to fuel the energy transition, and that destroys tracks of land and everything that lives on it. So there's a group of people that think that offsetting
is fundamentally critical. You have to compensate for your impact, otherwise we're just going to have a downward spiral of loss. Obviously, there's a number of guardrails that can be put in place, and the people who back that generally I think promote, which is that it should be a regulated market with proper oversight. The offsetting should be done as local as possible and in as equivalent ecosystems as possible. So if you impact to wetland in Norfolk, you rebuild a Wetland
and Norfolk. I think people who think about this seriously, you don't really agree that a rainforest in Brazil can be offset with savannah in Kenya. The other side is that biodiversity offsetting is fundamentally flawed and given the complexities of nature and the challenges with measuring it, and the fact that there are no single units that there are for carbon, there's no one ton of carbon dirk side or greenhouse cash equivalent emissions, that there is a nature
that this is never going to work. So that's the offsetting debate, and then so out of that really has emerged the credits. They sit in what's called the mitigation hierarchy at the very end. So you know, you impact nature, you minimize your impact on nature, or you avoll your impact on nature, You minimize it, you restore it, you offset it, and then you invest in a bid diversity credit and you are nature positive, obviously ignoring the fact that you have to offset your nature to get to
the zero to become positive. So it's a very kind of theoretical debate that once you then look at the by side and the people who actually are going to be spending money on these instruments, whether there'll be any demand for credits rather than offsets, and what happened to the offsetting component. If these are any credits, and it
starts to kind of I think, fall apart. But there's also an international market for these emerging companies are beginning to trade them globally, so you will get a company with you know, supply chains in one area of the world or in one country, investing you know, in credits elsewhere. Obviously, I think the goal is to keep it as local as possible, but that's not how the market itself is
being set up. And I think, as we've seen over and over again, once you create a market, it takes on a life of its own, and if it's outside of regulated frameworks, then anything goes basically, and that's what we've seen in the carbon market, and I think that's the big risk for the biodiversity credits market, which is why there was such a focus on it in Cali.
And can you give me an example of what a biodiversity credit looks like, because some are clearly selling already.
So England last year brought into force what's called Biodiversity net game, which is an offsetting mechanism. Infrastructure developers and home builders are required to compensate and find ten percent on top, so one hundred and ten percent compensates for their impacts. And that means there's a number of developers across the country now that are taking over degraded land and restoring it and creating the difference between the starting point and the restored point. They pay packages a credit
and they sell it as an offset. So I went to visit. I went to visit last year a small field called Puddington Moor in Devon in the southwest of England, which was a field of pumpkins, I think or swedes. It was a swede field, so it had been run by a farmer that was supplying supermarkets. It had been just pummeled with fertilizer and over farmed really for decades. And so this young couple bought it. They took out a mortgage to buy it. They are going to restore
it to the indigenous what's called calm grassland. The difference there between the starting point so the endpoint, is what creates the bio diversity credits which are sold to companies that operate within that area and need to compensate for their impacts. Another example which is going to be pitched
as a credit instead of an offset. I went to visit an estate in Yorkshire where again they've got a segment of land that's been destroyed by years of intensive agriculture and they're going to restore it to what's mostly wetlands in that area. And they're marketing those credits to
companies globally. So anyone who has an interest in nature, or perhaps as a part of their supply chain in the UK, or for some other reason, wants to invest in these credits, they can buy these credits and claim to have made a nature positive investment.
After the break, what we can expect when COP sixteen resumes in Rome next week. And if you've been enjoying this episode, please take a moment to rate and review the show on Apple Podcasts and Spotify. It helps other listeners find the show. As with all our reporting, Natasha, this seems to be a pretty messy place to be and perhaps that's why our reporting is valuable. But coming back to COP despite the sense that it is not the place that solves all problems, it does create the
space for solutions. What is going to happen in Rome, and then what happens in COPS seventeen, which is supposed to be in Armenia next year.
Yeah, So in Rome they're going to address the agenda items that were left unresolved. The big one there is the resource mobilization strategy, but they're also going to be discussing ways to monitor progress because at the moment that's not actually very clear about how they can monitor and report on progress against the Global bid Diversity Framework targets. So on the resource mobilization point, I think the fund
is still very much on the table. So that would be three days of intense negotiations around that item which led to the collapse of CALI. So yeah, we'll see that, and then looking forward to COP seventeen in Armenia, the focus there is again going to be a review of progress towards the implementation of the Global bio Diversity Framework.
Because all these countries that were supposed to bring a plan for biodiversity not and maybe they will between now in COPS seventeen.
I think the expectation is that more countries will come out with more national bi diversity action plans and that there'll be more specific and developed there's also targets within those and what will hopefully be agreed in Rome is a way to monitor progress and that will all be taken together in Armenia next year to assess progress.
More broadly, this was fun, Natasha, Natasha, There's a lot of other coverage, so you should check out her stories, which will link in the show notes. Thanks, thank you, thank you for listening to Zero. And now for the sound of the week. That's the sound of Indigenous musicians back at the opening of cop sixteen in Kelly. If you like this episode, please take a moment to rate and reveal the show on Apple Podcasts and Spotify. Share this episode with a friend or with someone who is
going to roam for work. You can get in touch at zero port at bloomberg dot net. Zero's producer is Mike Lera. Bloomberg's head of podcast is Stage Boum and head of Talk is Brendan Yunan. A. Theme music is composed by Wonderly Special thanks to Shan Chan and jessicab I am a Stuart back up