Transcript provided by Kensho.

Lindsey Hall: Hi. I'm Lindsey Hall, Head of Thought Leadership at S&P Global Sustainable1.

Esther Whieldon: And I'm Esther Whieldon, a Senior Writer on the Sustainable1 Thought Leadership team.

Lindsey Hall: Welcome to ESG Insider, an S&P Global podcast, where Esther and I take you inside the environmental, social and governance issues that are shaping the rapidly evolving sustainability landscape.

Esther, I'm going to take you back to the '90s for a moment and specifically to 1992. The Cold War had just ended. The Internet was barely a thing. Home Alone 2: Lost in New York was one of the most popular movies, and Nirvana was topping the music charts.

That's also the year that governments convened in Rio de Janeiro to discuss the intertwined challenges of climate change, desertification and biodiversity loss, what the UN describes as existential challenges to humanity. The result was 3 sister UN conventions. That's the UN Framework Convention on Climate Change or UNFCCC, the UN Convention to Combat Desertification or UNCCD and the Convention on Biological Diversity or CBD.

Esther Whieldon: The UN convenes a Conference of the Parties, or COP for short, for each of these conventions. In today's episode, we're focusing on that last one because the convention on biological diversity just wrapped up its COP16 gathering in Cali, Colombia.

As we'll hear today, this event convened governments from around the world and also had a big private sector presence. We'll hear how companies are starting to understand the links between nature loss and climate change.

And to learn how the nature standards and disclosure landscape is evolving, we'll talk to the sustainability standards organization, the Global Reporting Initiative, or GRI. We'll talk to big French bank, BNP Paribas, about some of the challenges and opportunities in financing nature, including biodiversity credits. We'll also hear about the data challenges from our colleague at S&P Global Sustainable1, and we'll look at another climate Conference of the Parties taking place in Latin America in 2025.

Lindsey Hall: First up, though, we're going to hear about the outcomes of government negotiations. We'll be talking to Astrid Schomaker, who is Executive Secretary of the Convention on Biological Diversity. Now the UN Secretary General appointed Astrid to run the body that supports CBD's goals, including COP gatherings.

And Astrid starts off by describing how the biodiversity COPs are changing. You'll hear her mention a goal to protect 30% of marine and terrestrial areas considered important for biodiversity by 2030. This is known as the 30x30 commitment, and it came out of the previous biodiversity COP in 2022, where negotiators reached a landmark agreement for nature called the Global Biodiversity Framework.

Astrid Schomaker: I think over recent years, the one on biological diversity has really gained in stature and attention as people become to realize that the loss of biodiversity is a very serious phenomenon, not just from the perspective of us losing iconic species like tigers and panda bears and others that are threatened, but also because there's an increasing understanding that this loss of species and the loss of diversity actually leads to a loss of ecosystem services, which are crucial for mankind survival in many ways and which also underpin our economies.

So intact biodiversity is needed in order to help fight back on climate change, in order to purify water and in order to guarantee food security in particular. So we need biodiversity, for example, for pollination. So just give you a few examples.

COP16 had an incredibly ambitious agenda, and we achieved lots of what we had set ourselves as an objective, but not everything. So quite a few, I would say, breakthroughs were achieved, and I can list a few of them, beginning perhaps with the agreement on giving a bigger voice to indigenous peoples and traditional and local communities because they have a lot of traditional knowledge that they can bring to the debate.

They have ways of interacting with nature and living together with nature without actually undermining its survival that are, I think, useful for the global community to look into. And that in many ways are then verified by modern science, which is basically say that what indigenous communities have known for centuries and practice for centuries is what modern science now tells us, is what we should know when we interact with nature.

So that was one important step forward. And another very important step forward and probably the most highly anticipated was an agreement on digital sequence information. So this is about companies using information from genetic resources which are mostly located in biodiversity-rich countries, themselves mostly in the global south. And they're using them to make products from that, cosmetics, for example, or others.

And the idea of this mechanism, which was agreed in principle 2 years ago, but now operationalized, is really to find a way of making sure that the benefits that companies accrue are shared with those that actually preserve the biodiversity for everybody's use.

As part of this new mechanism, a specific fund was set up, and that is called the Cali Fund. So companies in a number of sectors that are identified would be paying into this fund, and the fund would then be disbursing to countries that host this biodiversity in, again, a formula that was set out in draw terms and will need to be specified further as we go along.

Lindsey Hall: And for our listeners who might not be familiar with the term you used about digital sequence information, can you describe in a little more detail what should they understand about this?

Astrid Schomaker: Well, so basically, this is about the genetic information or the DNA that is sourced from plants or animals somewhere in the world that it is stored in public databases and used, but not used in terms of the physical sequence, but in terms of the digital imprint, if you want, of this information.

So we've had for a long time a bilateral mechanism that was set up for the physical transfer of genetic resources. But in a way, neuroscience has been moving on. And we're now working on the basis of digital sequencing information, which is much easier to obtain and more difficult to trace, in [some] ways. And that's why it was felt that we needed a different mechanism, and that is the multilateral mechanism, which we have now operationalized in Cali.

Lindsey Hall: And can you help me connect the dots for the private sector and the business community that makes up a lot of our podcast audience, why is this digital sequence information relevant for them?

Astrid Schomaker: Well, it's relevant in the sense that many companies build their business model on this information. So they produce, let's say, cosmetics or pharmaceuticals or biotechnological products using that information, which in a way they've obtained for free.

And the idea is that the free access should be maintained because it's important that we can use this information, for example, for scientific advances. But on the other hand, this mechanism which you now have is voluntary. And the idea is that companies that have that free access should pay back to those that are often located in other countries and make many efforts to maintain the biodiversity on which their business models are based.

Lindsey Hall: Are there other outcomes from the negotiations, either formal outcomes or things that you observed more anecdotally that you'd like to share with our listeners?

Astrid Schomaker: Yes, quite a few. If I start maybe or continue on obviously with the formal outcomes, I think from our perspective, one also very important outcome is the one on so-called ecologically and biologically significant areas. So that is a big breakthrough for marine protection in the sense that we have now reached an agreement how these areas can be identified, and that is an important step to the future protection. And as you know, we have a goal of 30% protection of marine and terrestrial areas. So that was a very important step forward.

Another one that we think is really important was the whole discussion with which we started our conversation today, Lindsey, which was about climate change and biodiversity and how they interact and partly sort of telling us that we need to do more to operationalize these close links and make sure that we can bring forward action on biodiversity loss and on climate change in a more synergistic manner.

So meaning, for example, there is a call on us as the Secretary of the Biological Diversity Convention to work more closely with the climate change convention, for example, to see if we could have a joint work program. So it's about becoming more efficient and more effective in our actions and really validating these close linkages of these being 2 sides of crisis.

Just as important from our perspective was the fact that we had a vast mobilization of civil society coming together in Cali and just exchanging practical experiences on how they were doing, implementing the Global Biodiversity Framework.

And that was done, of course, in a horizontal manner. So we're looking at why did we not have more natural biodiversity strategy and action plans at this point or why had not all countries been able to put targets in place.

But we then also had more sectoral conversations like educators, for example, coming together and discussing how can they improve education across the board from children to lifelong learning to vocational training. So all of these are non-negotiated outcomes, but that are very important to actually move global biodiversity protection forward.

Lindsey Hall: It sounds like there was a lot that was achieved, like you said. I also understand that negotiations went on or talks went on until November 2 and then had to be suspended. Can you talk to me about some of the sticking points or challenges in negotiations and what was left on the table?

Astrid Schomaker: Yes, of course. And thanks for saying they were suspended. So we've been reading a lot in the press that the talks ended in chaos or in this way, and that is really not how we see these things. We were clearly running out of time. We were going beyond the midnight deadline of November 1. And at some point, a party asked us to check whether actually enough parties were in the room to take valid decisions. So that's what's called a quorum check.

And when the quorum check was done, we found that indeed, we did not have the required numbers of parties still in the room to move forward for the simple reason that parties had booked flights and then had to leave.

But at that point, indeed, in particular, 2 very important things were on the table on substance and at least one important administrative issue. But on substance, the big sticking point in these last hours was a discussion on resource mobilization.

As you would think as an observer of multilateral environment agreements, no finance is often the sticking point. And it was the same at this group. So the discussions here were mostly around the question whether or not this group should establish a new fund, which would be the overall financial mechanism or the overall finance fund for the convention.

And this was a strong demand from the countries of the Global South, who felt that with such a dedicated fund, we would hopefully be able to overcome some of the inertia we observed, so the slow influx of funding for biodiversity, whereas the Global North was in the majority arguing that we had just 2 years before at COP15 established an internal mechanism in the shape of the Global Biodiversity Framework Fund.

And the view was that fund, which had been operationalized quite quickly, should still be given a chance to show its value before we move on to discussion on setting up a new fund. So between those 2 perspectives on whether to set up a new fund now or whether to launch a process for this new fund or whether to have a broader discussion on governance arrangements with such a funds, those were the issues that were on the table at 6:00 and 7:00 in the morning on Saturday and on which we cannot reach agreement.

And linked to that was another decision, which is very important, and that was on the way we move forward towards COP17 in terms of monitoring, reporting and review because at COP17, we are supposed to take stock how far we have come in terms of countries implementing the Global Biodiversity Framework.

And for that, we needed to agree the modalities, basically. And these modalities were in the second big decision that was not adopted by the COP for the same reasons that I've mentioned before, so running out of time and no quorum.

And they were linked in a way because countries from the Global South were saying, "If we are not getting more funding, it's difficult for us to live up to all these commitments." So that's where we left it on Saturday morning, and we're now discussing with the presidency how we move forward on these issues.

Lindsey Hall: Are there any other key outcomes from COP16 that you think are important for people to understand?

Astrid Schomaker: Yes. So there was an important decision on health and biodiversity. So that's about more holistic understanding of how the loss of biodiversity is also a driver of health problems. So that was an important decision.

And then there are a couple of really important issues in the area of synthetic biology, but also in the area of biosafety. So basically, this is about making sure that synthetic biology or living modified organisms that are around and that are important in many ways, for example, because they are more drought-resistant varieties that are being brought to the market.

But as we all know, with these genetic variations or genetic modifications come risks and having a process that clarifies how these risks can be managed is very important on these issues they made a lot of progress at the COP.

There were so many practical discussions on how to implement the Global Biodiversity Framework and also the fact that there was a lot of business coming, attending the meeting, many more than we ever had before.

And to the extent that we could see they came less in order to lobby, but more in order to address the issue that you yourself mentioned in the beginning of our chat, which was saying we understand that we have to take action. We understand that our business models are not sustainable. We understand that our impacts on biodiversity, but also our dependencies are actually bigger than we may know, but we don't quite know yet how we can best measure that. And so there was a lot of discussion around that, and that was important. Likewise, we had a Finance Day and the finance sector coming together. 

And of course, it will be very important going forward and as companies are disclosing more of their biodiversity impacts and dependencies that the finance sector takes note of this disclosure and draw their own conclusions in terms of what are the business models that we want to focus on that we want to finance going forward.

And as part of this financing day, maybe just to also mention that we had an important session on pledging to the Global Biodiversity Framework Fund, in particular. So that raised well over $160 million from a set of donors. And we also had other sort of individual pledges from donors at this COP, which we all need to add up, which are coming together a lot more than what has been reported so far. 

Because the reporting so far has been exclusively focused on what is the new money coming into the fund, whereas we know in reality that most of the pledging from countries, but also from philanthropies, go into bilateral projects. So saying that the COP only raised $163 million is misleading because, in fact, a lot more money was raised. This is not to say that we don't need to accelerate the funding discussion and making available funds, but the picture looks better than has been basically described in the press so far.

Lindsey Hall: Okay. And let me ask a pretty basic follow-up question, if you don't mind. When you talk about those bilateral programs, can you give me just a couple of examples? Or can you help our audience understand what those look like in practice for anyone who might not be familiar?

Astrid Schomaker: Yes. So maybe to start with, there is often a reluctance by countries, but certainly also by philanthropy to pay into funds because in a way, the money disappears in the fund and then is being paid out without there being a direct link to the entities that have donated to the fund. And that makes it sometimes difficult for countries to mobilize money that goes into these funds. 

So when I speak about bilateral programs, what I mean is that, for example, the Bezos Earth Fund came forward and pledged, I think, more than $50 million at the conference. The European Union made various pledges to fund indigenous peoples and local communities or to work against illegal wildlife trafficking. 

There was also a big additional pledge for the so-called NBSAP Accelerator Initiative. NBSAP are the National Biodiversity Strategy and Action Plan. So that's our main implementation tool for the global framework. And Germany came forward, and I think there's a pledge of another, I believe, $40 million to that initiative. So these are a few examples.

Lindsey Hall: So you talked about the nexus of biodiversity and climate. And of course, when this episode airs, COP29, the UN's Climate Focused Conference, will be underway. What should our audience understand about the links between COP16 and how you're hoping to see that conversation carry forward to climate conversations happening in Baku, Azerbaijan?

Astrid Schomaker: Right. Well, what we're hoping is basically that this call from COP16 that the synergies between climate and biodiversity, but also biodiversity, climate and land degradation to certification need to be better recognized and that some practical consequences have to be drawn from that recognition. 

So at the level of COP Presidencies several weeks ago in New York, the COP Presidencies, Azerbaijan, Saudi Arabia and Colombia, launched something called the Rio Trio. And that was a call from the 3 presidencies of these 3 real conventions for more cooperations between them as presidencies.

And what we are hoping now on the basis of the decision on biodiversity and climate change that was adopted at COP16 is that this greater cooperation can be -- would not stop at the level of presidencies, but really reaches the implementation stage, so at the country level. 

So in a way that we find mechanisms to better support countries in their implementation of the different conventions and in bringing these implementation processes together. So to be more concrete, under the climate convention, for example, I think everybody has heard about the Nationally Determined Contributions that countries have to put together and now have to upgrade.

They also have National Adaptation Plans. There are Land Degradation Neutrality Plans that have to be drawn up under the certification convention, and we have our national biodiversity strategies and action plans under the CBD. And all these sometimes are funded through different streams with different agencies and sometimes are handled by different people in different ministries. And it seems to us that this is not the most effective way of going forward and certainly also a very burdensome way, especially for the poorest countries.

Lindsey Hall: Okay. Great. Well, Astrid, I've asked you a lot of questions. Is there anything I haven't asked about that you think is important for our listeners to understand about COP16?

Astrid Schomaker: Well, I think the thing we haven't really mentioned are 2 things. So one was the theme of the COP. It was called Peace with Nature, and that was a very important call for action, but also a call to see biodiversity in its broader context and to quote the UN Secretary General, who had said in 2020, “The world is at war with nature.” So the point that we are behaving and our economies are organized in such a way as if nature was dispensable commodity, we can forever take and extract more from nature, use more biodiversity without caring for how it's doing basically. I think it is a thing of the past. 

And the call from the COP and also from the high-level segment, which for the first time in the life of all our convention brought together several heads of state and government, was really want for this transformational change. So stop piecemeal action on biodiversity, but really look at a much more comprehensive way of reorganizing our economies.

And the second very important point was it was the COP of the people. This is how Colombia named at the COP dela fuente. And what was meant by that was an unprecedented society mobilization. That was, for example, very visible in Cali itself where we had a so-called green zones. 

So there was a downtown area of workshops, exhibitions, discussion spaces and what have you, where I think more than 800,000 people passed through during the time of the COP. And this mobilization and this understanding that if we really want to hold and reverse biodiversity loss and use biodiversity sustainably, that all of us have to act. So governments, of course, in the first place because they have commitments, which they have to implement. 

But each and every one of us as consumers, as parents, as educators or companies and responsible corporate citizens, all of us need to take action and all of us need to integrate basically biodiversity more into our decision-making. And this sort of, in UN jargon, all of society approach, I think was really exemplified at the COP with so many people coming together and discussing and exchanging views.

Lindsey Hall: We heard from Astrid that COP16 brought together a lot of different stakeholders, including a big private sector presence. And she talked about the importance of disclosure and finance for those companies. Our next guests are going to speak about both of these topics. First up, let's hear how the topic of disclosure played out at COP16.

Andrea Pradilla: I'm Andrea Pradilla, I'm the Director of GRI in Latin America, and I've been leading our efforts for quite some time to try to get the corporate sector to report using the GRI Standards. And we focus on making sure companies can report on their impact in the society, the economy and the environment. We have the most users worldwide, and the same is true for Latin America.

Lindsey Hall: I asked Andrea about the conversation she had at COP16.

Andrea Pradilla: I think the key question or the key topic was, okay, now that we know this is an important topic, what should companies do about it? I think companies were just getting to understand the learning curve of climate change and now a new topic is brought to them with a new level of complexity. 

And I think what GRI was hoping to do was to provide a path that companies can follow to start taking care of the biodiversity-related impacts, but also be able to provide some data and some disclosure that's relevant for their stakeholders and for investors as well. So our key thing was to be able to share with different stakeholders, the role of the GRI standards in doing that and our recently launched standard GRI 101 on biodiversity, which provides a new set of disclosures for companies to be able to discuss biodiversity and discuss the impacts they're having in biodiversity, but also bring it back to the strategy of the company.

Lindsey Hall: Can you give us any kind of concrete examples, the conversations you're having or what you're hearing anecdotally from companies about how they're addressing these challenges?

Andrea Pradilla: Yes. I think the main component that came up was the need to have a good governance structure to be able to even talk about biodiversity within companies. The topic is a bit more complex than companies would expect. So this really requires a good governance structure that would allow to have those conversations in the first place. 

The next issue is to be able to identify the dependencies and the impacts they're having. So just to make it really clear, how am I impacting biodiversity, but at the same time, what sort of products or services in my company depend on my ability to use biodiversity and nature properly. And be able to identify that and be able to put it into words is certainly a challenge. They welcome, of course, the existence of frameworks and standards such as those from GRI, but that's still a challenge that they're facing.

And the main thing that came up from their responses was a bit of you just got to do it and learn by doing it. And I think that's quite a way to go with a new topic, just start doing it and be a pioneer. The key message across the panels was whatever pilot is available to companies to learn on this topic, you should jump and do it. Don't wait until all the answers are there, but really try to be a pioneer. 

And there was a third key challenge that I think could be -- you could identify with, and it's -- they have a lot of data, but sometimes it's really tricky to be able to organize the data and make sense of that data, and that's when technology. And in general, I think the use of artificial intelligence and that sort of thing is becoming a solution, but the main thing is still in the early stages.

Lindsey Hall: Okay. I'd like to get your sense of the landscape for where companies are on their journey towards measuring and managing some of these things that we're talking about. Because I know what our data shows, we recently at S&P Global Sustainable1 conducted some research into corporate commitments to protecting biodiversity and halting deforestation. 

We found that those kind of commitments are extremely rare. We also found that Latin America is the region with the highest share of companies making these commitments and Colombia was, in fact, the global leader in corporate commitments on biodiversity and deforestation. So yes, let me just pause there because I'd just love to hear your takeaways from conversations at COP and elsewhere. Where do the company stand on this journey?

Andrea Pradilla: I think I'm a bit biased because I'm in Latin America, so it's very central to the conversations. I just don't know if that's the case globally. I hope it is. But one of the other interesting things I saw at COP that caught my eye is you would see CEOs from all of the main companies in Latin America, not just speaking at panels, but staying throughout the entire event and taking notes. And I think that it may seem minor, but to me, it was just a major signal of their awareness in terms of how much they need to learn regarding this topic. So in the case of Latin America, I think we are at a unique crossroads when it comes to corporate sustainability.

We are perhaps one of the most biodiverse regions in the world, and we have lots of ecosystems that support not only the local economy, but also the global environmental stability like it is the case of the Amazon. So I think companies in the region are increasingly aware that protecting nature is directly tied to resilience and profitability. 

And while sustainability reporting has always been growing and Latin America, in particular, has been a big supporter of GRI and, in general, of international standards, I still think there is room to build maturity across sectors when it comes to biodiversity. We also decided to conduct an analysis of what was happening for listed companies in 3 of the markets, Colombia, Peru and Chile. And we found that 88% of companies do mention biodiversity in their reports. However, we try to see what is it that they're mentioning. There is still low levels of maturity when it comes to the commitments, as you just mentioned.

I do think COP will support the fact that we will see it more in the reports, but the challenge will be to see to what extent that translates into new objectives, new goals and new sort of understanding of what is the business contribution to biodiversity and at the same time, how that translates into risk or opportunities for companies. 

So on the one hand, I'm super happy that Latin America has been leading in those efforts. But on the other hand, I also think the companies need to be much more mature when it comes to the commitments. It's a process like it was with climate change. But at least in Latin America, biodiversity isn't just a checkbox for the region, but it should be the bedrock of our region's resilience and economic well-being.

Lindsey Hall: I asked Andrea whether she sees COP16 as a success.

Andrea Pradilla: You sometimes wonder, should we just go to those conferences? And there is lots of criticism as to whether they should even exist. But I think they’re such a unique opportunity to bring all of the actors together and really launch the conversations we should be having, but also trigger new ones. 

And I think one of the key things that came up is the need and the request a bit from private sector to have a more robust conversation around nature. [The] private sector did say it almost feels like 2 channels, one for climate, one for biodiversity, where the expectations are huge, but the opportunities to connect seem to be there, but no one is really connecting the dots. 

So I think that nexus was one of the main things that came up from the company side in terms of requests. And I think that will need to be listened to by standard setters, but also by policymakers. Companies need to have a structured approach to nature, and it cannot be, let's say, divided.

I think the second thing that came up very strongly was the need to talk about the social component of nature and biodiversity in general. I asked the companies in one of the panels, what would they expect their sustainability reporting to look like a year from now. And they all said something like, if anything, I would love to see more of the local community voices in biodiversity reporting and strategy discussions because as typical as it is, there is no biodiversity strategy if you don't take into account the local communities that will have to implement whatever strategy you put into place.

The third thing that I heard a lot throughout the conversations was the need to include supply chains, which is something we had already been discussing in the context of climate change, but it also came up quite a lot here. And I think it also connects with COP30 on climate being in Brazil next year as well. The need to connect those 2 things. So those 3 elements came up quite a lot in terms of the discussions that were happening.

The other side that I found to be quite successful is to see the investors side so committed in terms of the need to create new things to be able to support biodiversity conservation projects and ideas and the role between the 2 worlds, private sector and investors side, that standards and frameworks are playing. There was really a sentiment and a commitment in terms of how can we come up with metrics and standards and frameworks that really support this goal of reversing biodiversity loss.

Lindsey Hall: So we just heard how the standards and disclosure for nature came up at COP16, including the landscape for many different standards organizations. We're going to hear more about this and more about the role that finance played at COP16 from our next guest.

Sébastien Soleille: 'm Sébastien Soleille. I'm the Global Head of Energy Transition and Environment for the group BNP Paribas. That means that I'm co-leading a team of experts on all the ESG topics that are of some interest for our clients. And besides that, I'm also a member of the TNFD, the Task Force on Natural-Related Financial Disclosures.

Lindsey Hall: Like our previous guess, Sébastien pointed to the growing private sector presence at COP16. He also talked about the role of finance. Okay, here’s Sébastien.

Sébastien Soleille: We speak more and more of innovative finance because -- so there is a question of public finance, and it was one of the main topic of the official negotiations, but we need also money from the private sector. And we all know that financing biodiversity is quite complex. It's quite a challenge. So we have to find new ways of financing biodiversity.

For instance, biodiversity credits were quite a hot topic. So you identify projects that preserve biodiversity. And you generate credits with these projects corresponding more or less on the positive impacts of these projects. And then you sell these credits, for instance, to private companies that want to have a positive impact on nature.

For this, you have to define precisely what is a good nature projects because you can have good and bad nature projects, but you have to define precisely what is positive impacts and these kind of things. And if you do things correctly, you can generate biodiversity credits that are really positive for climate, nature and local communities, and whose impacts can be measured in a quite robust and transparent way. And then you can sell credits to any company. 

So we think that it's a very positive way to organize financial transfers from northern private companies to southern local communities that preserve nature. So we think that it's very important, at least to start financing to nature.

Obviously, it won't be enough in terms of financial elements, but I think that it's really a good start. And it can learn a lot to private companies and it can a very good way to start financing next year. And then we'll have to scale up this -- to scale this up and to go further. So for this, you can have impact investing. And for instance, we launched Blue Alliance, a loan facility dedicated to marine protected areas, which is -- so we aim to gather EUR 35 million for the time being on a few marine protected areas. 

And then still further on, biodiversity should be mainstream in traditional finance. So for this, we already work on green bonds dedicated to biodiversity, to SLL, so sustainability linked loans dedicated to biodiversity.

SLL, it's a loan associated to a sustainable KPI target. And if the company achieves its targets, the weight of the loan decreases. So the company pays less for the same loan. So obviously, it's a clear incentive to the company to achieve its sustainable target. And these targets can be linked to nature and to biodiversity. Yes, there are many ways to finance biodiversity, but for the time being, the scale is not there -- unfortunately not there. So innovative finance was very present in the discussions. And -- but I think the most important point was the need for a common framework. So common framework, common language.

Biodiversity is a very complex topic. And we have to work on it collectively because not one single organization can sell biodiversity, obviously. So we have to work collectively with public authorities, private organizations, NGOs, indigenous people and local communities and so on. And we all have to learn to use the same language to describe nature biodiversity and these kind of things. And so we really need a common language, common framework of this kind of things. And that's really the first step, and it's really necessary, and it was at the core of many discussions at COP16.

Lindsey Hall: Can you talk to me more about the role specifically of BNP Paribas at COP16 for any listeners who might be wondering why is a big French bank at a UN biodiversity conference. Can you just help connect those dots for us?

Sébastien Soleille: Yes, sure. So I would say that we had 3 main goals for BNP Paribas at this COP. The first goal was to meet key stakeholders because you had many people from all around the world interested in biodiversity. It was very interesting for us to meet clients, to meet peers, to meet development banks, regulators, NGOs, scientists and these kind of things. And meeting these key stakeholders enable us to do several things. 

First thing, checking that what we do, BNP Paribas, goes in the right direction. And for instance, at BNP Paribas, a few years ago, so we made a focus on the soy and beef supply chains produced in Brazil and more specifically in the Cerrado region in the Amazon. And for both -- for our clients involved in both the supply chain, we decided that we will finance only the clients by 2025 that can prove us that they have a full traceability of this supply chain and that they have no deforestation in both the supply chains. 

So it means having quite a strong dialogue with these clients involved in the supply chain. And it means as well checking to what extent what we discuss with these clients means really something on the ground. So how can we check that there is no deforestation, how can we check that the traceability is robust enough. 

And for this, we have to meet scientists and we have to meet public authorities. We have to meet NGOs to check that, okay, what we decided is achievable, feasible, realistic, relevant and these kind of things. It's really the kind of things that we have to do to check that what we do is sustainable enough. So that was one point.

When we meet stakeholders, another goal is also to gather best practices. It's very important to discuss with people and to check with people, okay, what are the best practices on nature monitoring, how to gather data on nature, how to monitor progresses, how to monitor actions and these kind of things. So gathering best practices for this COP is obviously the place to be. And we know that in many cases, such best practices do not exist for the time being, which is a pity. But in such cases, it's very interesting to discuss with stakeholders to try and imagine innovative best practices.

And last but not least, another key goal for us was to identify key topics. So what are the key topics, what are the next challenge, what are the next things on which we should work more in the coming months. It's very important as well. So meeting key stakeholders, gathering best practices, identifying key topics, that was really what we wanted to do first and foremost in this COP.

Lindsey Hall: Sébastien just mentioned that best practices are not always in place. And in the interview with Andrea, I mentioned research that me and my colleagues at S&P Global Sustainable1 just published, showing that corporate commitments to protecting biodiversity and halting deforestation remain extremely rare. We'll include a link to that research in our show notes. 

So I ask Sébastien, if this finding aligns with what he's seeing.

Sébastien Soleille: Yes. Yes. Unfortunately, yes. Awareness is quite new for many companies and fighting deforestation is very tricky because in many cases, occurs all along the supply chain with many suppliers involved. And it's quite difficult, not impossible, but quite difficult to get the right traceability all along the supply chain and then to stop deforestation. 

So that's why for the time being, we work with a specific focus on deforestation in Brazil because it's obviously in terms of biodiversity, it's very impactful. And yes, since we have been working on this for quite some years, we really realize how challenging it is for all the actors involved in the supply chain, for instance, of soy and beef, to stop deforestation. So we try and accompany them as much as possible. But yes, it takes time. It takes resources, human and financial. We really have to do this, but it's not that easy.

Lindsey Hall: What do you think would need to happen? Or what would you like to see happen in order to address those challenges that you're describing?

Sébastien Soleille: I think we really need a common framework. So I can give you 2 examples. First example is the work done by the TNFD. The goal of the TNFD is to define recommendations, language, a common framework to make sure that private organization mostly can assess, identify, monitor their dependencies, their impact that risk and their opportunities relative to nature in a comparable way, in a robust and comparable way. And I think that it's very important because, for instance, when we, as a bank or as an investor, we discuss with our clients, with the companies in which we invest. It's very important for us that we can understand clearly what our clients, our investors tell us. Yes, to have the same language. So it's one side of this coin.

And another aspect of the common language is that, for instance, in BNP Paribas, we integrated biodiversity in the strategic plan of the group running from 2022 to 2025 and to monitor the progress of this strategic plan biodiversity. We define a KPI with a target. So it's the amount of support to our clients that preserve and restore biodiversity. And our target is to reach EUR 4 billion by 2025. So we already exceeded this target since we reached EUR 4.3 billion by the end of 2023. And the question here is what can we consider as something that preserves and restores biodiversity? So that's what -- we want to support this.

We want to support what our clients do on this to preserve and restore biodiversity. But telling really what preserve and restore biodiversity is not easy. And for this, the more we can get external framework, the easier for us it will be to identify clearly what can be considered as positive for nature. And so in COP16, there has been much very interesting and promising debate on what is nature positive. So there are several initiatives, especially one called the Nature Positive Initiative that try and define what is nature positive.

Lindsey Hall: Okay. So we need common language, common frameworks and definitions and KPIs as well to measure some of these issues.

Sébastien Soleille: Yes.

Lindsey Hall: Clearly, as you're describing, there's not yet an agreed-upon finalized definition for nature positive. But for our listeners who might be new to this term, can you just give them a general sense of what it means to be nature positive?

Sébastien Soleille: For the time being, the common definition but very broad definition is it's based on a baseline in 2020. So the aim is to stop biodiversity degradation and by 2030 to come back at least to the set of nature that was witnessed in 2020 and then to increase the biodiversity from this 2020 baseline. So it's a very broad definition. But what we need as a private organization is more definition on action by action, activity by activity, what does it mean? Because we agree on the common and the broad, very high-level definition. But what does it mean in practice, it's much more complicated.

Lindsey Hall: Okay. It sounds like you had a lot of conversations with a lot of different stakeholders while you were in Colombia for COP16. Can you take us a little behind the scenes, any particularly interesting conversations that you were part of or takeaways that you heard while you were there?

Sébastien Soleille: Yes. So one thing I particularly like in this kind of meetings, especially in COPs, is the meeting we can have with indigenous people and local communities, IPLCs, because honestly, it's not necessarily the kind of stakeholders that we international banks have the most relationship with because for many reasons. But we know that it's very important to discuss with them, to understand them, to know how we can impact them negatively and positively to increase, obviously, our positive impacts.

Lindsey Hall: We just heard how there's rising acknowledgment of the role indigenous peoples and local communities play in discussions about nature. We also heard about some of the challenges facing companies when they're creating strategies for nature. Our next guest talks more about both of these themes.

Here's my colleague, Divya Mankikar. Divya is Global Head of Strategy for Nonfinancial Corporates at S&P Global Sustainable1, where she's also served as an alternate member of the Task Force on Nature-Related Financial Disclosures, or TNFD. She starts off by describing some of the data challenges companies are facing.

Divya Mankikar: One thing that we did encounter repeatedly in different forums is the challenge that companies and investors and banks face when approaching nature and biodiversity, which is a little bit different from the climate lens, which is that the impacts and the dependencies are local. And therefore, asset-level data is really important for them to be able to think about a strategy and how to measure their impact or their dependence and then how to actually make progress in mitigating that impact.

When you invest in a portfolio, you often have access to some degree of data, particularly on where a company is headquartered. But you don't typically know where a company is operating. But we did hear from companies that this is really key in beginning the TNFD LEAP process. LEAP stands for locate, evaluate, assess and prepare.

And so to locate where the company's impact is and where it may be dependent on ecosystem services, they really need that asset-level data in order to start making progress. So we heard that frequently that different from a sort of carbon emissions lens where carbon emissions anywhere have a similar impact for nature and biodiversity, it's the other end of the spectrum where very specific localized information is really important.

Lindsey Hall: Divya said that private sector presence at COP16 that we've been talking about included companies of all sizes.

Divya Mankikar: I'm pleased to say that from the private sector participation side of things, it felt like it was way bigger and that there was even more engagement and not just from large companies, but from across the spectrum. So we had a lot of interesting conversations with start-ups who are doing some really innovative things in looking at technologies that can remotely sense data related to everything from soil health to different species, and then translating those through AI into applications for companies and investors and banks.

Lindsey Hall: Were there any conversations that you had, anything that really piqued your interest in terms of what some of these solutions will look like?

Divya Mankikar: Yes. So on the panel that I moderated at our S&P Global Sustainable1 Summit, we had a speaker who is in the biofuel space, another one who represents a pulp and paper company, and another one who represents a crop science company. And all of them were talking about different practices in Brazil, which are being implemented at scale and have the potential to limit impact on future deforestation because all 3 of them were talking about regenerative agriculture. 

So one example is using the same parcel of land for different crops and rotating those crops so that you increase soil health and you limit the need for going to expand the land use or deforest more land. The other was using waste products from agriculture development to turn into fuels.

And so there are all these different business practices that are actually thinking about how it's beneficial and more efficient to reuse land in different ways to regenerate the ability of the land to produce a product that the company wants to commercialize. But also, we heard from all 3 of them how they're involving indigenous communities and local communities in providing solutions and understanding those ecosystems better. 

So for example, one of the companies talked about having a conservation goal that for 40% of their land, they want to actually conserve that land. They're only developing 60%. And on the conservation land, they actually have an endangered species reintroduction target, which I thought was really cool that they are actually targeting and not like out to 2050, just in the next few years to reintroduce endangered species into these conserved lands to actually increase biodiversity. So we're hearing about these different sorts of business models and also different targets than I think we've heard previously coming out of companies.

Lindsey Hall: And it sounds like also taking into account different or expanded groups of stakeholders, like you mentioned indigenous peoples and local communities, which that was a big focus of the global biodiversity framework that came out of COP15. And I would love to hear more. How did you hear indigenous peoples and local communities being discussed at COP16?

Divya Mankikar: I heard more acknowledgment that indigenous communities have a tremendous amount of knowledge that is important to respect and also can help companies actually achieve what they're trying to achieve, whether it's carbon reduction or species protection. One idea I heard that was very cool, I thought was there's a company developing a technology to listen to the forest and understand species abundance of different types of species. And doing so through this technology makes it feasible to cover a much larger area than if they were having to send people out into the field.

However, when they actually listened to the forest, there were so many different animals that they couldn't identify based on Western databases. And so they worked with indigenous communities to actually identify what those species were and to then implement strategies to continue monitoring the health of those species. And this is important for the company because they have both conservation goals and they have an acknowledgment of how they're dependent on ecosystem services. That was just one example. But really all of the companies that we spoke with were thinking about how to involve local communities as being part of the solution.

Lindsey Hall: We've heard Brazil mentioned a couple of times today. And to end this episode, I wanted to look ahead to the UN Framework Convention on Climate Change Conference of the Parties scheduled to take place in 2025. That's COP30, and it will take place in the city of Belém, which is the capital of Brazil's Pará State. Pará contains around 1/4 of the Brazilian Amazon. And during Climate Week NYC, Pará signed a $180 million deal to support its deforestation efforts. The deal was with LEAF Coalition, that's an international public-private initiative. I had a conversation about the deal on the sidelines of Climate Week NYC. I sat down with the CEO of Emergent, a U.S. nonprofit that coordinates the LEAF Coalition.

Eron Bloomgarden: My name is Eron Bloomgarden. I'm the CEO and Founder of Emergent, and we run the LEAF Coalition. The LEAF Coalition is an innovative partnership between the public and private sector to channel new sources of capital into forest protection and restoration. So that's why I've been involved in climate finance and carbon markets, and climate finance for, let's say, the last 20 years.

Deforestation is a source of emissions. A lot of people when you're in grade school, you understand -- I have a 9-year-old. So he understands that trees suck in CO2, and they breathe out oxygen, and we need them and they're a sink for carbon. And that's true. So we need that sink. We need trees in nature to bring in, to do what they do best, remove CO2 from the atmosphere. But also the active deforestation is a source of emissions, of greenhouse gas emissions. So people don't necessarily appreciate that 10% to 20% of emissions -- greenhouse gas emissions come from active deforestation.

And so why do we have deforestation? There's a lot of forces at work. But fundamentally, it's the incentives that are at play on the ground. So if a standing forest doesn't have value and you have people who are in economic hardships, then they'll look for whatever opportunity they can to exploit that forest. So if we can change the economic incentives on the ground, make forest worth more alive than dead, make ecosystems and nature worth more alive than dead, then we have a shot at maintaining those systems while also providing the communities with the economic development that they need.

Okay. So that's what we do. So that's the fundamental thesis. We committed to purchase $180 million of carbon credits from the State of Pará in Brazil, which is the largest Amazon state, represents 10% of the world's biodiversity and also the host of -- will be the host of COP30, which will be in Belém, which is the capital of Pará. So we're trying to showcase this transaction and what Pará is doing to reverse deforestation as a lighthouse and a showcase for replication in the road to Belém between now and COP30, which will be towards the end of next year.

And what we're doing with the State of Pará is we have this group of buyers in the LEAF Coalition, so 30 companies and 3 donor countries that have collectively committed $1 billion to the LEAF Coalition to purchase carbon credits that are generated from the act of reducing deforestation. 

So our counterparty in the transaction will be the State of Pará, the government of Pará. They have a plan to reduce deforestation, and they'll do lots of different things on the ground, i.e., that could include improvements in enforcing their existing laws, that could be creating new protected areas, that could be providing alternative livelihoods to people to take the pressure off the forest, that could involve new monitoring systems, et cetera, right? So they have a whole plan to reduce deforestation.

They implement that plan, that plan works, then we were able to verify that there have been reductions in deforestation. Those reductions can be turned into carbon credits, and then we'll pay the state for those credits. The idea is to create a virtuous circle where those payments change the incentives on the ground to make forests more standing than dead.

Lindsey Hall: So we've covered a lot of ground today, and thanks for sticking with us. We heard about the links between nature loss and climate change. We heard how companies are measuring and managing their nature risks and dependencies and about some of the outstanding challenges of doing so. 

We heard that standards organizations like GRI are increasingly incorporating biodiversity into their frameworks. And we heard about the role that the public and private sector will both play in finding innovative financing solutions for nature.

Esther Whieldon: We also heard that there is a rising recognition of the importance of including indigenous peoples and local communities in conversations. 

And we expect these conversations to continue as we take the podcast to Baku, Azerbaijan to cover the COP29 Climate Conference that is currently underway. So please stay tuned.

Lindsey Hall: Thanks so much for listening to this episode of ESG Insider. If you like what you heard today, please subscribe, share and leave us a review wherever you get your podcast. 

Esther Whieldon: And a special thanks to our agency partner, The 199. See you next time.

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