Sustt: A new deal for nature, cost of climate disasters, key trends for 2023
World leaders set new biodiversity targets at COP15
What’s happening? Nearly 200 countries have signed an agreement at the COP15 biodiversity summit in Montreal. The deal aims to halt and reverse biodiversity loss by 2030. (The Guardian)
Why does this matter? The natural world is under immense pressure – experts believe that humans may have already triggered a sixth mass extinction event. A recent report by WWF found that wildlife populations have declined by an average of 69% between 1970 and 2018, while one million plant and animal species are facing extinction.
Halting and reversing the damage caused by centuries of urbanisation, unsustainable levels of resource extraction and pollution is viewed as an imperative to ensuring a sustainable future for humanity. It is also important for the economy – approximately 55% of the world’s GDP, equivalent to $41tn, is reliant on high-functioning biodiversity and ecosystem services.
The key points – This was the second stage of a two-part conference, with the first hosted virtually in Kunming, China, in 2021. The goal of COP15 was to adopt the Post-2020 Biodiversity Framework and set a number of ambitious targets to stop the ongoing destruction of natural habitats.
On 19 December, 196 parties finally agreed on the new Kumming-Montreal Global Biodiversity Framework (GBF), comprising a set of four overarching goals and 23 action-oriented targets. The most prominent one is called “30x30” and aims to conserve 30% of the world’s lands, seas and inland waters by 2030. Currently, only 17% of land and 10% of the ocean fall under some form of protection, leaving a sizable majority at risk.
Within the framework, an emphasis is placed on conserving areas with “particular importance for biodiversity and ecosystem functions and services” while “recognising Indigenous and traditional territories”. This has been welcomed by human rights groups and Indigenous activists, who were concerned about the impact of new conservation initiatives on local communities (an issue we have previously written about).
Other targets in the GBF to be met by 2030 include halving food waste, phasing out or reforming $500bn in environmentally-damaging subsidies each year and mobilising $200bn a year for conservation initiatives. The Chinese presidency also announced that the Global Environment Facility would set up a special fund, the Global Biodiversity Framework Fund, to support the implementation of the GBF.
Are there any shortcomings? While some have hailed the GBF as the Paris Agreement for biodiversity, there are still some weaknesses in the framework. To begin with, the framework is not legally binding. The GBF also does not set country-specific targets and has faced criticism for not including stricter goals. WWF’s UK chief executive Tanya Steele said the unambitious language in the framework’s overarching targets, for example on reducing extinction risks by 2050 instead of 2030, is unacceptable.
Another issue is the inclusion of the term “sustainable use” in the 30x30 goal. This means that the sustainable use of key ecosystems is permitted, assuming it is appropriate and in line with conservation outcomes. Some fear this will be used as a loophole to allow continued development in the world’s most precious ecosystems.
One party was missing – The US is the only major economy that has not signed the GBF since it is not a member of the UN Convention on Biological Diversity. The absence of a country that accommodates a range of ecosystems – from temperate rainforests and swamps to coral reefs – and is the second-largest emitter of greenhouse gases may limit the GBF’s ability to galvanise international action.
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Stat of the week?
The ten biggest weather-related disasters caused $168bn worth of damage in 2022.
Climate-related natural disasters are occurring more frequently and at greater intensity due to climate change. In the past century, for example, the frequency of natural disasters has?increased by more than ten times.
This increase is having a significant financial impact, causing an?estimated?$383 million worth of damage every day over the past decade. The consequences are felt across the globe with all of the world’s populated continents?featured on Christian Aid’s list of 2022's most costly disasters.?
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Bite-sized insights
Key trends 2023?
As we’re starting off the new year, we have asked our specialists what they believe to be some of the key trends in ESG in 2023. Here’s what they said:
?? Renewables will see faster growth – The energy crisis, triggered by Russia’s invasion of Ukraine, has rapidly accelerated?growth?in the renewable sector. According to a report published by the?International Energy Agency, the next five years will see renewable infrastructure grow as much as it did in the previous 20. By 2025, renewables will?overtake?coal as the greatest source of energy globally.
Evidence for the transition can be found around the world. In the UK, renewables and nuclear already dominate the energy mix, comprising 48.5%, compared with gas and coal at 40%. 2022 also saw a new?record?for UK wind power production. On the other side of the Atlantic, US President Biden’s Inflation Reduction Act has widely been received as the most?important?climate legislation in the country's history and includes a $370bn?investment?in renewables, carbon-free travel and clean technology tax credits.
?? Adapting to climate change – The multitude of extreme weather events observed across the world in 2022 has exposed the lack of effective adaptation measures, meaning that these will play a greater role – alongside climate change mitigation – in the future. At COP27, Egypt launched the global Adaptation Agenda with 30 targets to protect the most vulnerable communities by 2030, while countries hope to adopt a Global Goal on Adaptation framework at COP28 in Dubai. The idea is to establish an international adaptation goal to drive collective action, similar to the targets of keeping global average temperatures “well below 2C” and ideally around 1.5C.
At the same time, low-income countries are expected to keep pushing for more funding from wealthier nations. Setting up a fund for Loss and Damage at last year’s COP was an important first step, but world leaders still need to figure out the details – who contributes, who receives the money, and what will the new funding arrangements look like.
?? Focus on health equity – Health equity gained growing attention throughout 2022 and will remain a hot topic this year. Health care providers, insurers and other organisations are expected to come under growing scrutiny for how they address the issues that impact health outcomes for different populations. For example, New York's Department of Financial Services recently?issued?a mandatory information request asking insurance companies to provide details of the efforts they are making to gather race, ethnicity and language data, and of the programmes they have designed to improve health equity.
Meanwhile, a group of 35 investors managing $5.7tn formed an?alliance?called the Long-Term Investors in People's Health Initiative due to concerns that public health is not being adequately addressed as an ESG issue. Led by ShareAction, the group will put pressure on companies to focus on improving the physical and mental health of workers, consumers and communities. This month will also see the launch of the Health Equity Network, which has been created by the Institute of Health Equity in partnership with Legal & General. The UK-based initiative aims to encourage public and private organisations, community and voluntary groups, and individuals to share their work on health equity and engage with others with similar interests.
?? Growth in biodiversity-related financial products – Throughout 2022 there has been a growing focus on biodiversity-focused products from asset managers in response to increasing demand from investors. The likes of Gresham House, Jupiter and Aviva have all launched biodiversity products and the market is predicted to be worth $93bn by 2030, compared to $4bn in 2019, according to the Paulson Institute.????????????????
It is likely that this trend will continue and accelerate in 2023, particularly after COP15 where negotiators agreed that the finance sector must invest in ways to halt and reverse nature loss by the end of 2030. While there are currently 14 funds managing around $1.6bn with biodiversity-focused strategies, there are about 1,100 funds with $350bn in global assets that focus on climate,?according to?Morningstar. It seems likely that this will gap will narrow in 2023.
?? Rise in climate litigation – With the number of climate lawsuits filed globally more than doubling since 2015, environmental litigation is rapidly growing as a strategy to enforce greater climate action and responsibility from polluters. This trend is likely to continue in 2023. For instance, the outcome of an ongoing case led by a small-scale farmer against RWE, which seeks corporate compensation for climate impacts, could set a legal precedent. Future cases arguing for a clean and healthy environment will be bolstered following the UN General Assembly’s passing of a resolution stating that a healthy environment is a human right.
Alongside environmental groups and activists, engagement from climate-vulnerable groups including Indigenous communities, small island communities, youths and individuals in developing nations will continue to increase. In 2022, the Australian government lost its first climate litigation case for insufficient climate policy based on the cultural rights of Torres Strait Islanders. Additionally, more areas of the world are starting to engage in climate litigation – including Russia, which recently saw a group of local activists file its first ever climate lawsuit and demand stronger emissions reduction targets.
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