COP15 – how does the new global biodiversity framework impact businesses?

COP15, the UN Biodiversity Conference, was held between 7 and 19 December 2022 in Montreal, Canada and, after lengthy debate and last-minute negotiation, an agreement was struck on the adoption of the Kunming-Montreal Global Biodiversity Framework (the Framework).

The Framework aims to foster collaboration to halt biodiversity loss and promote the equitable sharing of benefits derived from nature. It sets out a 2050 vision of society living in harmony with nature. In the shorter term, the 2050 vision is translated into a 2030 mission statement and 23 “action-oriented” targets. Alongside the Framework is a series of mechanisms which request countries to submit national reports on their monitoring of biodiversity targets. Many of the goals and targets in the agreement reflect the key biodiversity themes we drew out in our previous blog post published during COP15 (see here). While the targets are non-binding, they are likely to lead to national legislations implementing them and thus have direct relevance for companies.

Habitat loss, deforestation and land use

“Ensure that all areas are under participatory integrated biodiversity inclusive spatial planning and/or effective management processes addressing land and sea use change, to bring the loss of areas of high biodiversity importance … close to zero by 2030, while respecting the rights of indigenous peoples and local communities”

– Target 1

Natural, biodiverse habitats provide vital resources relied on by businesses across many sectors, from life sciences to manufacturing and adjacent industries such as automotive, consumer and retail. One of COP15’s headline targets is an ambition to protect 30% of the planet’s land and sea by 2030 (“30 by 30”).

A global 30 by 30 campaign had been underway for some time before COP15, building up momentum for the adoption of the target globally in Montreal. In particular, in June 2022, the High Ambition Coalition (HAC) for Nature and People announced over 100 countries, including the US, had joined the group of nations committing to 30 by 30. In the EU the commitment had already been put into concrete legislative proposals in the form of the proposed  Nature Restoration Regulation, published in June 2022 (see our previous blog post for more details here). Notably, however, the European proposals would set legally binding targets to cover only at least 20% of the EU’s land and sea areas by 2030 with nature restoration measures. Post-COP15, efforts are now underway (spearheaded by lawmakers from the Socialist & Democrats political group (see here)) in the European Parliament to raise the target to 30%.

Countries are requested to report on a variety of habitats, from forests to rivers to coral reefs. Forests are currently the focus of legislative attention in this space with EU and UK rules on deforestation-free products leading the way (see our previous blog post here). For other habitats, the most notable recent legislative initiative is the EU’s nature restoration proposal mentioned above, although similar legislation has been adopted at US state-level in Nevada and New York, and one might expect similar legislation to be proposed in more countries given COP15’s 30 by 30 target. If the trends seen in climate change are replicated in the biodiversity space, any such national legislative targets are likely to become focal points for stakeholders when engaging with companies.

While the immediate legislative attention is likely to remain on deforestation, the focus on other habitats and land use issues in the Framework could also lead to similar issue-specific measures being proposed or implemented, potentially touching on issues such as fishing, the protection of mangroves (given their importance for CO2 absorption) and pollution in rivers and lakes. For example, the UK Government has stated in its Environmental Improvement Plan 2023 (published on 31 January 2023) that it will “use domestic legislation to sustainably manage our fish stocks”. Similarly, the recent media attention on river pollution with PFAS, the so-called “forever chemicals”, following the publication of a European PFAS mapping project (see here), is already precipitating faster regulatory changes (see here for the European Chemicals Agency’s proposal as an example). In view of these possible regulatory measures to protect habitats, the transport, infrastructure, agriculture and farming (including fishing) sectors in particular are likely to be affected, given their dependence on lands, rivers and seas.

The Framework notably includes references to the rights of indigenous peoples and local communities and engagement with them in biodiversity efforts. Implementation measures could range from supporting indigenous and community-led conservation to strengthening legal protection available to indigenous peoples. On the former, the US Government’s America the Beautiful Initiative serves as an example. Announced in 2021, it focuses in part on supporting tribally-led conservation and restoration priorities, including through grants to tribal governments and organisations and strengthening the role of tribal communities in federal land management. On the latter, the draft EU Sustainability Due Diligence Directive (see our previous blog post here) would require consultation with stakeholders (including communities) when conducting due diligence and, notably, give affected persons the standing to bring civil claims for compensation, providing a potential means of redress for indigenous communities.

Pesticide 

“reducing the overall risk from pesticides and highly hazardous chemicals by at least half including through integrated pest management, based on science, taking into account food security and livelihoods”

– Target 7

Pesticides have become an increasing regulatory focal point in recent times (we covered the EU’s recent proposed Sustainable Use of Pesticides Regulation here). COP15 follows this trend in Target 7 with the accompanying monitoring framework requesting extensive reporting on pesticide use.

The target to reduce risk from pesticides by half by 2030 may prompt legislation at the national level seeking to ban certain high-risk pesticides or more closely manage the use of permitted pesticides (as seen in the EU’s proposal mentioned above). If that is the case, it will have a significant impact on the agricultural and chemicals sectors. It is, however, notable that, only a month after COP15, the UK Government approved for the third consecutive year the emergency use of thiamethoxam, a pesticide harmful to bees, showing that not all states are likely to take the same approach or move at the same speed.

Unlike the EU’s new proposed pesticide rules, which would set reduction targets for both the use and risk of pesticides, the Framework emphasises only the risk of pesticides. This may encourage some national legislators to take a risk-based approach, focusing their attention only on pesticides that are perceived to be particularly harmful rather than reducing pesticide use across the board. We will need to wait and see how policymakers interpret “risk” and if that could undermine the commitments made in Montreal.

One important caveat to this target is the requirement for food security to be taken into account as part of any measures to reduce pesticide risks and it remains to be seen how legislators will balance these two issues. This is a difficult exercise as, on the one hand, some of the signatories to the Framework see a reduction in pesticide use as a threat to food security; on the other hand, many other stakeholders consider the continued use of pesticides as a principal factor in the reduction of soil health, which in turn poses serious food security issues in the medium term. With respect to the proposed Sustainable Use of Pesticides Regulation mentioned above, the European Council passed a decision in December requesting the Commission to conduct a complementary impact assessment on how the proposal may affect food security (see here) – how the EU takes this forward will be one to watch.

Consumption and food waste 

“preventing, reducing, and working towards eliminating plastic pollution”

– Target 7

“Ensure that people are encouraged and enabled to make sustainable consumption choices including by establishing supportive policy, legislative or regulatory frameworks, improving education and access to relevant and accurate information and alternatives, and by 2030, reduce the global footprint of consumption in an equitable manner, including through halving global food waste, significantly reducing overconsumption and substantially reducing waste generation”

– Target 16

In our earlier blog during COP15, we highlighted the recent policy initiatives to promote the recyclability of product materials and reduce waste, such as the EU’s Circular Economy Action Plan and Directive on single-use plastics.

Target 16 of the COP15 agreement signals strong international backing for such initiatives, with its vows to reduce the footprint of consumption and waste generation and, notably, a specific reference to reducing food waste. The target of reducing global food waste by half corresponds with the UN’s Sustainable Development Goal 12.3 which aims to halve per capita global food waste at the retail and consumer level and to reduce food losses along the supply chain. We may see other national legislators follow the EU’s lead as the Commission is already looking into measures such as legally binding food waste reduction targets and changing rules on date marking (“use by” and “best before” dates) which would be of particular relevance to the agriculture and retail sectors (see the EU’s dedicated webpage here).

The Framework puts forward the eventual objective of eliminating plastic pollution but refrains from setting quantitative targets. This stands in contrast to the attention plastic pollution has been receiving from policymakers and NGOs in the UK and the EU (see our previous blog post here on the EU’s proposal for a new Regulation on plastic packaging).

The general aim of Target 16 (to allow consumers to make sustainable consumption choices by improving their access to relevant and accurate information and alternatives) ties in with a similar aim in Target 15 to require businesses to “[p]rovide information needed to consumers to promote sustainable consumption patterns”. However, informed decision-making by consumers regarding sustainable consumption requires information to be accurate. So-called “greenwashing” – where a business gives a false impression, or is accused of providing misleading information, about the environmental impact of its products, services or business as a whole – is an increasing focus of regulators. For example, the UK’s Advertising Standards Authority and Competition and Markets Authority have both stepped up their scrutiny of greenwashing in recent years, including by publishing new guidance for green claims and expanding the scope of greenwashing investigations into the fast-moving consumer goods (FMCG) sector. The Framework’s targets may also translate into steps by governments specifically aiming to influence consumption choices towards sustainable alternatives, with a particular impact in sectors such as food, retail, fashion and electronics.

Due diligence and reporting

“Ensure the full integration of biodiversity … into policies, regulations, … strategic environmental assessments, environmental impact assessments and, as appropriate, national accounting, … across all sectors… progressively aligning all relevant public and private activities, fiscal and financial flows with the goals and targets of this framework.”

– Target 14

“Take legal, administrative or policy measures to encourage and enable business, and in particular to ensure that large and transnational companies and financial institutions:

(a) Regularly monitor, assess, and transparently disclose their risks, dependencies and impacts on biodiversity including with requirements for all large as well as transnational companies and financial institutions along their operations, supply and value chains and portfolios; …”

– Target 15

The last few years have seen a proliferation of legislation requiring businesses to assess and report on human rights and environmental issues in their own businesses and their supply chains. This trend was reflected in Target 15, which, in a move unusual for international agreements of this nature, unequivocally emphasises the role of multinational corporations and their supply chains and financial institutions and their portfolios in tackling biodiversity loss.

The Framework may prove to be an impetus for legislators to introduce supply chain due diligence and reporting obligations on companies, similar to the reporting obligations seen in the EU’s Corporate Sustainability Reporting Directive with respect to impacts on biodiversity and ecosystems. This will have significant implications for multinational corporations with complex, cross-border supply chains in industries such as automotive, consumer goods (in particular food and fashion), retail and life sciences.

Multinational corporations and financial institutions are far from the only businesses expected to adapt. Target 14 envisages the integration of biodiversity into policies and regulations across “all sectors”, including into national accounting rules. While details are necessarily lacking in this stage, if these measures are enacted in national legislation, all sectors will be required to adapt their practices to protect and restore biodiversity.

Comment

It will be interesting to see how policymakers and regulators convert the ambitions of COP15 into concrete legislative proposals. The EU, and to a lesser extent the UK, have already proposed legislation that aligns with the COP15 agreement, and which may encourage other countries to follow. Given the growing public interest in this area, we anticipate that the coming years will require businesses to keep a close eye on emerging biodiversity regulatory risks.

While this post has focused on potential legislation that might flow from the Framework, businesses should also expect a variety of stakeholders to leverage the Framework’s targets when engaging with businesses on environmental issues. NGOs and shareholders frequently cite international agreements and non-binding soft law instruments when engaging with companies on climate change, and it is likely we will see a similar approach with biodiversity.

Finally, while we have focused here on potential risks to business, the shifting legislative landscape will also provide opportunities for businesses that are proactive and incorporate biodiversity issues into their corporate strategies at an early stage.