Analysis-Nature deal receives financial and business backing, but barriers remain According to Reuters

By Allison Lampert, Isla Binnie and Virginia Furness

MONTREAL (Reuters) – A landmark agreement to protect nature will put biodiversity on the to-do list for businesses and financial firms – creating some cumbersome administrative procedures but also creates new opportunities.

The Kunming-Montreal Global Biodiversity Framework, agreed at United Nations talks in the Canadian city, aims to establish ground rules to prevent and reverse destruction. ecosystems that support all life on Earth.

Attacked in the early hours of Monday morning, it sets goals that include protecting 30% of the world’s land and seas by 2030, as well as seeking $200 billion a year to pay for it, much of it. is from the private sector.

Governments pledged to cut at least $500 billion a year in subsidies that lead to biodiversity loss by the end of the decade and to subsidize conservation efforts more.

Among those wins, asset managers said, was a pledge to regulate public and private financial flows with the goal of reducing natural losses over the next decade, seen as key to freeing up flows. capital is much needed and encourages companies to invest in nature.

Another was to require companies to assess and disclose their impact and reliance on nature, even though the word “mandatory” was dropped from the final agreement.

“The reason this is so important, beyond the (target) 30 x 30, is that you’ll see regulation and legislation at the national level, which will be very positive for investors to identify businesses that are doing business.” monitor and assess their risk,” said Ingrid Kukuljan of Federated Hermes (NYSE:NYSE).

But in the absence of quantifiable mandatory goals, “this time around we really need to roll out,” added Kukuljan.

Anne Dekker, who works on environmental issues for BHP, the world’s largest mining company, added that a little language reduction won’t stop the change, in part due to pressure from industry experts. investment: “I think it’s going to happen.”

While protecting nature comes at a cost, companies that step up will attract more investors.

“The big losers across the board will remain ‘business as usual’,” said Franck Gbaguidi, senior analyst at Eurasia Group.

Among the sectors subject to the most tightening of rules and supervision are those with a large physical footprint, such as agriculture, as well as mining and energy or those that use hazardous chemicals. dangerous.

Referring to the agreed goal of reducing pesticide risks, CropLife International, a trade consortium whose members include BASF and Bayer (OTC:), said this goal can be achieved by Apply chemicals more precisely.

A body representing some of the world’s biggest miners, including Glencore (OTC:) and Newcrest, said the disclosure would lead to a level playing field between the sectors.

“It is important for people to have a clear understanding of how mining, agriculture, food, retail, oil and gas, it all is,” said Ro Dhawan, executive director of the International Mining and Mining Council. how our impacts and dependencies overlap.” Metallic (ICMM).

$30 BILLION 30

Negotiations were nearly derailed by disagreement over how – and how much – developed countries should pay for conservation in less developed countries. The final bill is calculated at $20 billion per year in 2025 and $30 billion per year in 2030.

Sophie Lawrence, head of management and engagement at Rathbone Greenbank Investments, said there were still “significant concerns” about whether this would be enough.

Countries including the densely forested Democratic Republic of Congo also have problems with existing environmental financing mechanisms, calling for something less bureaucratic.

While government pressure for more money will increase, the focus will now shift to asset managers and banks and the companies they fund changing investment decision-making plans and how fast capital expenditure.

The agreement encourages private investors to work more closely with public development organizations to increase financial flows for nature-friendly projects and to create more nature-focused market instruments. more, such as biodiversity credits.

Doing so will help close a big gap: the United Nations environmental watchdog recently said investments to better protect and manage nature need to more than double to $384 billion one year in 2025.

The scope for more money to move in retail funds is also huge. Data firm Morningstar shows just 907.6 million euros ($962.8 million) invested in the 10 largest equity funds it tracks in the name of biodiversity.

In the context of haste, some seem to need to be cautious given the current lack of consensus on the meaning of terms such as “intrinsically positive”, creating the risk of “greenwashing”, wherein Companies exaggerate the importance of their activities.

Tony Goldner, who leads a group that develops a framework for companies to report on the risks and opportunities associated with nature, said: “We all have to be very worried about nature becoming more active. become a new mediator for green cleaning.

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