The biodiversity review that matters most will happen in the credit committee

The UN Biodiversity Conference in Yerevan, Armenia, held from 19 to 30 October, brought the world its first global review of progress under the Kunming-Montreal Global Biodiversity Framework. Adopted in 2022, the framework sets 23 targets for 2030.

The evidence presented around the review, however, exposed a persistent gap between commitments and implementation: according to the United Nations’ assessment ahead of the talks, fewer than half of the national targets assessed by countries were on track.

Gaps in funding, institutional capacity and monitoring continued to constrain delivery. In her address to COP17, IUCN Director General Grethel Aguilar reinforced the warning that the world was not on course to halt and reverse biodiversity loss by 2030.

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For South Africa, the practical lesson is that biodiversity must influence economic decisions, including those made by financial institutions. A credit committee can examine a borrower’s cash flow, collateral and repayment history and still overlook a material exposure: the condition of the catchment that supplies its water, the soil that supports its crops or the landscape that attracts its visitors.

These are not abstract risks, for agriculture depends on functioning ecosystems; mines and manufacturers need reliable water, while tourism relies on wildlife and healthy landscapes.

When those systems deteriorate, businesses can face higher operating costs, disrupted production, lower revenues and declining asset values. In other words, these pressures can ultimately affect their ability to repay debt.

Biodiversity loss is therefore a credit story, a supply-chain story and a jobs story. Treating it solely as a reputational concern leaves a significant gap in risk management.

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Three targets in the global framework explain why finance is central to the response:

• Target 19 concerns mobilising funding. It calls for at least US$200 billion annually for biodiversity by 2030 from all sources. Within that total, specified international financial flows to developing countries should reach at least US$20 billion annually by 2025 and US$30 billion by 2030. The 2025 milestone has passed. South Africa warned ahead of COP17 that international biodiversity finance remained below the level required.
• Target 18 concerns reforming harmful incentives. It calls for their elimination, phasing out or reform, including subsidies, reducing them by at least US$500 billion annually by 2030 while increasing positive incentives. Financing restoration becomes harder when public incentives continue to reward environmental damage.
• Target 15 concerns assessing and disclosing nature-related impacts and risks. It calls for government measures to encourage and enable businesses to assess and disclose biodiversity risks, dependencies and impacts, including requirements for large and transnational companies and financial institutions. Capital allocation cannot adequately reflect exposures that remain unexamined.

The implication is broader than raising more conservation funding. It is about changing the incentives and investment decisions that shape the wider economy.

Read: Biodiversity finance options grow, but pace of investment still slow

South Africa’s contribution in Yerevan highlighted an important qualification: the form of finance matters as much as its volume. In his statement on 28 October,

Deputy Minister Narend Singh called for adequate, predictable and accessible funding, including public, grant-based and non-debt-creating support.

Protecting biodiversity that benefits the wider world, he argued, should not deepen developing countries’ debt burdens.

That has a practical implication for South African nature finance. Commercial lending has an important role, but it cannot meet every conservation need.

Some activities generate revenues capable of servicing debt, while others deliver benefits shared across society and require public funding, grants or concessional support.

Ecological need does not automatically create a bankable transaction. Restoring a wetland may benefit many downstream users while one organisation carries the cost. Benefits may take years to emerge. Projects may lack a dependable revenue stream, sufficient scale or clear arrangements for allocating risk.

Discussions convened by the African Development Bank at COP17 addressed these barriers through project preparation, stronger investment pipelines, blended finance and cooperation among development banks.

They also highlighted a regional investment plan spanning five countries in the Zambezi region. For South Africa, the lesson is to invest in the work that happens before a funding application reaches a bank: feasibility studies, ecological baselines, community engagement, delivery arrangements and credible revenue models.

Guarantees and concessional funding can then help allocate risks that commercial lenders cannot carry alone.

Read: Africa finance firms form alliance to tackle biodiversity crisis

Better information is equally important: at Nedbank, our work to assess nature-related dependencies and impacts in selected lending portfolios has reinforced the need to look beyond conventional financial information.

Using ENCORE and an approach adapted from the Taskforce on Nature-related Financial Disclosures’ LEAP framework, we have examined how sectors depend on ecosystem services and exert pressures on nature.

The value lies in how this information informs decisions. For example, when an assessment identifies a client’s dependence on a stressed catchment, it should prompt questions about business resilience. How secure is the water supply? What investment could improve water efficiency or reduce pollution? Could catchment restoration help protect production and surrounding communities?

The answers to these questions should inform client engagement, financing assessments and investment planning. A completed disclosure is useful when it supports a better decision.

Community involvement in conservation

Another relevant lesson from Yerevan concerns participation. Coverage of WWF’s review across 16 African countries highlighted examples of community conservation and restoration alongside persistent implementation gaps.

For South African projects, community involvement should influence ownership, governance, employment and benefit-sharing from the outset. Local knowledge and long-term stewardship are essential to making conservation endure.

Fairness also extends to the commercial use of genetic information. South Africa used its COP17 statement to call for the full operationalisation of the Cali Fund, including priority access for developing countries, community representation and support for capacity-building and technology transfer.

For a country with substantial biological wealth, this is a development issue. The value derived from genetic resources should help support conservation, scientific capability and the people who steward those resources.

The debate about reforming the COP process will continue. Business and finance already have decisions they can act on.

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Companies should identify their most material nature dependencies and impacts, assign clear responsibility and connect their findings to procurement, capital expenditure and financing.

Government should align environmental objectives with the incentives and policies shaping agriculture, mining, infrastructure and other sectors. Financial institutions should use nature assessments to strengthen risk decisions and help develop credible investment opportunities.

COP17 brought renewed scrutiny to the distance between global ambition and delivery. The next test for South Africa will be whether that scrutiny changes budgets, projects and transactions.

A disclosure can explain how much a business depends on a river. Success will be measured by whether that river, and the businesses and communities that rely on it, are more resilient in 2030 than they are today.

Brigitte Burnett, executive head of sustainability, Nedbank.