Campaign: ANCA

50% of the global economy is under threat from biodiversity loss

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  • Human activity is destroying biodiversity faster than ever before.
  • Almost 80% of threatened species are impacted by economic activity.
  • The COP15 summit has started work towards a new global pact on nature protection.
  • 5 key transformations can save the natural world and boost GDP by trillions of dollars.

Whether you live in a city, a rural area or by the ocean, it’s likely you have noticed a decline in biodiversity. Maybe fewer birds visit your urban feeders, larger mammals are less common in the fields and forests around you, or your catches on those fishing trips are getting smaller.

What we’re all witnessing is a potentially catastrophic loss of biodiversity on which entire ecosystems depend.

Global efforts to protect nature

In an ongoing effort to slow the destruction of nature, delegates at the 2022 United Nations Biodiversity Conference in Montreal, Canada, focused on reversing the rapid decline of animals, plants and insects. The conference, also known as COP15, worked towards a new global agreement to protect biodiversity.

In a strongly worded opening address, UN Secretary-General António Guterres told delegates that “humanity has become a weapon of mass extinction”. Guterres piled further pressure on attendees by describing the conference as “our chance to stop this orgy of destruction”.

The destruction to which Gueterres refers spans the globe and is happening on a massive scale. According to a UN Global Land Outlook assessment, more than 1 million species are now threatened with extinction, vanishing at a rate not seen in 10 million years. As much as 40% of Earth’s land surfaces are considered degraded.

Research by the International Union for the Conservation of Nature found that human activity for food production, infrastructure, energy and mining accounts for 79% of the impact on threatened species.

Human systems for food, infrastructure and energy are destroying biodiversity.

Human systems for food, infrastructure and energy are destroying biodiversity. Image: WEF/IUCN

Creating a nature-positive economy

Only by fundamentally transforming these systems can we shift from destructive human activity to a nature-positive economy. The World Economic Forum’s New Nature Economy Report II sets out a range of transitions that will reverse nature loss and pull us back from the brink. Without these changes, the world will suffer irreversible destruction of biodiversity that will have far-reaching impacts on the economy and all life on Earth.

The report delivers a stark warning about the risks we are creating by destroying nature, stating that “$44 trillion of economic value generation – over half the world’s total GDP – is potentially at risk as a result of the dependence of business on nature and its services”.

Biodiversity loss was ranked as the third most severe threat humanity will face in the next 10 years in the World Economic Forum’s Global Risks Report 2022.

Five key transitions in the global economy could have a dramatic impact in slowing the loss of biodiversity, while bringing trillions of dollars of new economic opportunities and creating more than 100 million jobs.

Five key transitions in the global economy could have a dramatic impact in slowing the loss of biodiversity.
Five key transitions in the global economy could have a dramatic impact in slowing the loss of biodiversity. Image: WEF New Nature Economy Report II

These transitions are:

1. Compact built environment

Higher-density urban development will free up land for agriculture and nature. It can also reduce urban sprawl, which destroys wildlife habitats and flora and fauna. Existing cities and settlements should be considered for strategic densification. Conservation-management projects should be established to protect biodiversity in areas that have been spared from development. This transition creates a $665 billion opportunity, with 3 million jobs created by 2030.

2. Nature-positive built environment

These built environments share space with nature. They are less human-centric, instead placing biodiversity at the core of project design. Infrastructure is located to avoid or minimize the destruction of nature, and all buildings are energy and resource efficient. Developments must include nature-friendly spaces and eco-bridges to connect habitats for urban wildlife. There’s a $935 billion opportunity in these built environments, and the possibility to create 38 million jobs by 2030.

3. Planet-compatible urban utilities

To stall biodiversity loss, we need utilities that effectively manage air, water and solid waste pollution in urban environments. In addition to benefiting nature, this will provide universal human access to clean air and water. Smart sensors and other Fourth Industrial Revolution technologies can transform urban utilities and make them planet-compatible. Creating them could deliver a $670 billion business opportunity and create 42 million jobs by 2030.

4. Nature as infrastructure

This transformation involves incorporating natural ecosystems into built-up areas. Instead of developments destroying floodplains, wetlands and forests, they would form an essential part of new built environments. This approach to development can also help deliver clean air, natural water purification and reduce the risk from extreme climate events. The business opportunity by using nature as infrastructure could hit $160 billion and create 4 million jobs by 2030.

5. Nature-positive connecting infrastructure

“Connecting infrastructure” includes roads, railways, pipelines and ports. Transitions in this area mean a change in the approach to planning to reduce biodiversity impacts, with a willingness to accept compromises when it comes to travel time and distance between departure point and destination. Building in wildlife corridors and switching to renewable energy in transport are key elements of nature-positive connecting infrastructure. The business opportunity here could peak at $585 billion, with the opportunity to create 29 million new jobs by 2030.

Time to make peace with nature

The outcomes of the COP15 biodiversity summit will shape the direction of humankind’s relationship with the natural world.

António Guterres urged delegates to overcome their differences and reach agreement on protecting nature, telling the conference: “it’s time for the world to adopt a far-reaching biodiversity framework – a true peace pact with nature – and deliver a green, healthy future for all.”

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Is nature-based investing ready for take-off in Africa?

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Thousands of delegates gathered for the 2022 United Nations biodiversity conference (Cop15) in Montreal in December, tasked with finding a pathway to halt the alarming decline in global biodiversity. The negotiations eventually produced a landmark agreement to protect 30% of the Earth’s land and oceans by 2030, along with a host of other targets to reduce the loss of biodiversity.

While the agreement was signed by national governments, private sector representatives were conspicuous by their presence at the conference. But financial institutions have increasingly been making commitments to protect and enhance biodiversity in recent years, giving rise to a plethora of new jargon.

“Nature-based investing” – where investors provide benefits to nature and ecosystems, alongside achieving a financial return – is the latest buzzword. At the heart of this approach is the acknowledgement that “natural capital” – in other words, the Earth’s biodiversity and natural resources – provides benefits, often defined as “ecosystem services”, to the human population.

Nature is clearly indispensable to many economic activities. In Kenya, for example, tourism is making rapid progress in recovering to pre-pandemic levels, when it generated over 8% of GDP, and the tourist trade depends heavily on the lure of the country’s wildlife. Threats to biodiversity and ecosystems in Africa and around the world are therefore an issue of profound importance for investors, as well as governments.

“We have been losing natural capital at such an incredible rate over the last 60 or so years, and the pressure from consumption and demographics is so huge, we are now at that point in time where there’s just not enough resources to go around,” warns Alejandro Litovsky, CEO of consulting firm Earth Security. “There’s a real question around the operating conditions for companies and assets that depend on the services that have been free for a very long time.”

The sixth extinction?

The gravity of the crisis facing nature has sometimes been overshadowed by the climate crisis (which is itself one of the main drivers of biodiversity loss). But the data on nature makes for grim reading. Over 6,400 species of animals and 3,100 species of plants in Africa are at risk of extinction, according to the International Union for the Conservation of Nature.

Globally, the scale of the disaster is such that many scientists argue that the Earth is entering its sixth period of mass extinction. This puts the current biodiversity crisis on a par with the asteroid strike that wiped out the dinosaurs 65m years ago.

The destruction of vital ecosystems across many parts of the world is the consequence of prevailing economic models prioritising short-term gain at the expense of long-term sustainability. “I spend a lot of time with African leaders,” says Kaddu Sebunya, CEO of the African Wildlife Foundation, “and they’ll tell you frankly that ‘the global economy doesn’t pay or reward me if I secure forests. But they reward me if I cut down the forest and export sugar.’”

But when habitats are lost or damaged, it is often humans who pay the ultimate price. The devastating mudslides that hit Freetown, Sierra Leone, in August 2017, killing over 1,000 people, were partly caused by deforestation on hillsides around the city. As the city grew, its surrounding hills lost much of the tree cover that had held soils together and provided a natural drainage mechanism.

In the aftermath of the tragedy, Freetown has become one of the pioneers of nature-based investing in urban areas in Africa, according to John-Rob Pool, senior manager at the World Resources Institute. Among other initiatives, the city is establishing a ‘water fund’ as a public-private partnership to protect nearby areas of forest that provide Freetown with its water supply.

Other African cities can benefit from following Freetown’s example, says Pool. “Nature-based solutions, when implemented and deployed properly, can be really useful in improving air quality, in reducing extreme urban heat, improving the quality and the supply of water, in reducing the risk of landslides and flooding, and so on.”

Chinese minister of ecology and environment, Huang Runqiu (L), shakes hands with the DRC's environment minister, Ève Bazaiba Masudi at the 2022 UN biodiversity conference in Montreal
The Chinese minister of ecology and environment, Huang Runqiu (L), shakes hands with the DRC’s environment minister, Ève Bazaiba Masudi at the 2022 UN biodiversity conference in Montreal, Quebec. (Photo: Lars Hagberg / AFP)

Financing dilemmas

The 2022 UN biodiversity conference produced a historic agreement on biodiversity – but the conference concluded in controversial circumstances. In declaring the text of the agreement to be final, the Chinese president of the conference ignored the objection of the Democratic Republic of the Congo, which was continuing to seek additional financial commitments from wealthy nations.

“We didn’t sign the agreement,” Ève Bazaiba, the DRC’s environment minister, said. “It is not possible for us to implement it. We cannot accept the level of ambition without more finance.”

The UN Environment Programme states that the private sector currently provides only 17% of total investments into nature-based solutions. It estimates that total financing will need to more than double, to $384bn a year by 2025, in order to meet biodiversity goals.

The fact that financial institutions are lining up to express their enthusiasm for nature-based investing may be seen as an encouraging sign. Gautier Quéru, head of the Land Degradation Neutrality Fund, which provides long-term financing to projects that meet strict environmental and social standard, says Cop15 has brought “momentum” to nature-based investing.

“Public money will not be enough to meet the objectives,” he says. “We need the mobilisation of private sector actors, including finance and industry. And the good news is that at Cop15, the positive mobilisation of the business and finance sector was really striking.”

A natural fit?

While the availability of finance is one part of the challenge, investors also need to determine what, in practice, they can actually invest in when it comes to nature.

Devang Vussonji, a partner at consulting firm Dalberg, says that the difficulty of measuring and assigning value to different types of biodiversity is a major factor holding back investment in nature-based solutions in Africa.

“There’s a lot the market needs to figure out,” he says. “What do we value and not value?

“How do we set a price around it? How do you compare mangrove populations declining to elephant populations declining? How do you compare tropical areas to temperate areas and so forth?”

For many investors, a possible starting point is carbon credit schemes, which are designed to conserve or enhance forests that act as carbon sinks – theoretically enabling companies to offset emissions from other activities. Such schemes are mainly intended to contribute towards net zero targets, but nature is a possible added beneficiary.

“There’s now a recognition that if the carbon markets have proven themselves, are beginning to take off, there’s good demand for products as well as good supply of products, then the same can be replicated for broader nature-based investing as well,” says Vussonji. “The first of those opportunities we’re seeing is piggybacking on carbon credits, so as carbon credits are being created or being sold, other ‘biodiversity credits’ can be added on to them.”

While private sector finance has an indispensable role in conserving biodiversity in Africa and elsewhere, another essential element is coordination between the public and private sectors.

Sebunya emphasises that governments and NGOs must help provide a pipeline of projects that investors can adopt. Even where funds may be available from impact-focused investors, he says, “finding the bankable pipelines that are shovel-ready for investors is a huge, huge challenge”.

The African Wildlife Foundation, in an effort to meet this challenge, has been working with the Rwandan government on ways to support the mountain gorilla population in the country’s Volcanoes National Park. With the gorilla population expanding thanks to the success of recent conservation efforts, Sebunya says that thoughts are turning on how to expand their habitat.

One solution, he suggests, is encouraging local communities to grow bamboo – the gorillas’ favourite food – as a cash crop. This would potentially provide a win-win solution, allowing locals to generate income from selling bamboo to companies that could process the crop into various products, while providing a food source for the gorillas.

Will life find a way?

Conservation will have to compete with many other priorities in Africa, including the need to ensure a food supply for a human population that is set to almost double by 2050. “You do have that trade-off between protecting virgin nature and cultivating food for a growing population,” Litovsky acknowledges. Developing agricultural techniques that regenerate natural ecosystems will be “really quite fundamental” to Africa’s future, he adds.

Yet it is worth bearing in mind that Africa has in fact been more successful than most of the world in retaining its biodiversity up to now. The continent hosts around one-quarter of the Earth’s biodiversity. It contains the mighty Congo Rainforest, one of the “green lungs” of the planet. Its megafauna have remained relatively intact, thousands of years after early humans slaughtered the largest animals they encountered on other continents.

“Africa today has abundant nature in many places and abundant natural resources,” says Litovsky. “If you think about those as an asset that can be monetised in a variety of different ways, as part of a long-term economic development model, then that can really create a very exciting prospect for how Africa can develop into the future.”

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Non-profit selected to help African central banks assess nature-related risk

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Financial Sector Deepening Africa (FSD Africa) will be quantifying changes in credit risk under different nature and climate scenarios for African central banks this year, the Kenya-based development agency’s director of risk, Kelvin Massingham, told Responsible Investor. 

Massingham was speaking to RI after FSD Africa was selected to deliver the UK government’s Nature Positive Economy programme, alongside the UNDP’s Biodiversity Finance Initiative (BioFin).

Established in 2012, FSD Africa is a non-profit company funded by the UK’s Department for International Development, which aims to promote financial sector development across sub-Saharan Africa.

The aim of the £7.2m Nature Positive Economy initiative, which was announced at COP15 in Montreal last year, is to support the transition of developing countries to nature-positive economies.

Massingham explained that FSD Africa will collaborate with six unnamed central banks in some of Africa’s largest economies and hopes to build upon work already done by the Dutch and French central banks.

Last year, the non-profit used publicly available central bank data to do nature stress tests for Zambia, Ghana, Kenya, South Africa, Egypt and Mauritius.

FSD Africa will also collaborate with the World Bank and BioFin to create a working group focused on central bank stress testing regarding nature, Massingham said.

In particular, it will centre on sharing learnings across geographies, creating knowledge briefs, and feeding into the work of global coalitions such as the Network for Greening the Financial System (NGFS).

As the group has not yet launched, no banks have formally joined.

FSD Africa also works with other players in the financial sector. It is currently conducting pilots of the Taskforce on Nature Related Disclosures (TNFD) with six entities in the banking and insurance sectors, and will look to increase that to 20 this year.

Massingham said: “During initial piloting of TNFD, when the financial institutions did their assessment, although they of course found nature to be a material risk for their portfolios, they all identified it as a major opportunity.”

Specifically, some banks are apparently looking at the potential for biodiversity bonds.

FSD Africa is also working with financial regulators in Kenya, Nigeria, Ghana and Egypt on how they can signal to their markets that nature-related financial disclosures are coming, in line with the commitment made by signatory countries in Target 15 of the Kunming-Montreal Global Biodiversity Framework.

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Africa’s carbon finance stream can be scaled up to $200 billion per annum – Osinbajo

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Nigeria’s Vice President, Prof. Yemi Osinbajo, said Africa’s share of the global carbon market can be scaled up massively to reach foreign direct investment (FDI) of between $120 to $200 billion annually.

The Vice President stated this during his keynote speech at the Rockefeller Foundation meeting in New York.

He identified a combination of capital flows, job creation, and the avoidance of long-term climate destruction as critical drivers of African leaders’ interest in supporting this effort.

According to him, Africa currently has only a small share of the carbon market. He explained the importance of this projected carbon finance stream, saying:

“For a continent that needs $240 billion annually in mitigation investment alone, this carbon finance stream could be the difference between transitioning and not (transitioning). As all of us in this room understand well, the priorities of the African continent are not just to act decisively on the climate crisis, but to also create significant growth opportunities for our young and growing population.”

“The investment required to advance the energy transition in Africa is huge. World Bank estimates suggest that Africa needs $6.5 trillion US dollars between now and 2050 for mitigation action alone to keep temperatures below 2 degrees of warming.”

VP Osinbajo also highlighted that the carbon market pipeline could create 30 million jobs in the next decade, with the potential to create more than 100 million jobs through climate-aligned projects by 2050.

Africa’s carbon markets: During his speech, VP Osinbajo noted that the rapid progress recorded in Africa benefitted from the support of a very engaged Steering Committee with the United Nations, Global Energy Alliance for People and Planet (GEAPP), USAID, and a range of other public and private actors, which resulted in the successful launch of the African Carbon Markets initiative (ACMI) in Sharm-el-Sheikh, Egypt during the COP-27 event.

“The strong commitment and presence from fellow African leaders demonstrate the willingness and leadership of Africa. We already have 7 African countries (Burundi, Gabon, Kenya, Malawi, Mozambique, Nigeria, and Togo) signed up to develop country carbon activation plans and over $200 million in advanced market commitments, which we must continue to further advance as this is going to be the critical driver of action on the continent.”

“I think it’s an auspicious moment for Africa to be participating more fully in the global carbon market conversation, especially in the light of the slowing pace of green investment flows into the continent. The work several of us have done together in the past few months makes it clear that while other sources of flows are slowing down globally, carbon markets are growing rapidly,” Osinbajo said.

Advancing carbon markets: VP Osinbajo also spoke about the essence of collaborations in developing carbon markets on the continent. He said collaboration is a key to unlocking opportunities in Africa’s carbon markets. He said:

“One of the strong points of ACMI and the way we must structure it going forward, in terms of governance, is the flexibility to smoothly work with other initiatives, and there will be many others. Two days before the opening of Cop 27, Senator John Kerry and I had a conversation about the proposed Energy Transition Accelerator and we both agreed that once the details were worked out, we would work out a collaborative framework with ACMI.

“Carbon markets will play a critical role in the implementation of this (Energy Transition) Plan – in mobilizing the capital required to move to our net-zero economy-wide trajectory. I want Nigeria to have the first Carbon Markets Activation Plan.”

In his contribution, the US Presidential Envoy on Climate Change, Senator John Kerry, commended VP Osinbajo for his leadership on the issue of energy transition. Kerry said:

“We are grateful for the leadership of the VP, grateful for the reception you gave me on my visit to Nigeria. I am honoured to share the platform with you on how to move the African Carbon Market Initiative (ACMI) forward.

“It is possible to create a high-integrity carbon market in a way to address Climate Change and African Development aspirations. We are all joined together looking forward to developing the financing.”

In case you missed it: The ACMI is a new initiative that was launched during the conference of parties (COP 27) event held in Egypt. The ACMI will be led by a fourteen-member steering committee of African leaders, CEOs, and carbon credit experts. The ACMI aims to dramatically expand Africa’s participation in voluntary carbon markets.

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10 key takeaways from COP27 on nature’s critical role

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  • COP27 may be over but its impact will be felt for many decades to come.
  • Discussions highlighted nature’s pivotal role in tackling the climate crisis.
  • Here we reflect on 10 areas where progress is being made on climate action.

The implications of COP27 will likely be felt for decades to come, for better or worse. While a broad range of analysis has already been published on the ultimate outcomes of COP27, this summary includes reflections on how nature was the stand out topic at COP27 – here are the top ten takeaways.

1. Calls for structural reform of finance for nature and climate

It was impossible to pass a day at COP27 without having a conversation about finance – but finance means different things to different people. The breakthrough on loss and damage funding made the headlines, but this year there was much attention on structural reform of the financial system as well as the need to create innovative mechanisms that support nature and climate outcomes at national and ecosystem levels.

The Bridgetown agenda remained a central theme within these discussions. Before COP27, there was much focus on the need for financing adaptation measures – although in fact, very little progressed on this agenda from Glasgow. The multilateral development banks are also under scrutiny – sovereign bonds and sustainability-linked loans and bonds have been high on the agenda. Leading financial institutions from Japan to Norway to Brazil, all signatories to the Financial Sector Commitment on Eliminating Commodity-driven Deforestation have been moving forward with implementation through the Finance Sector Deforestation Action (FSDA) initiative.

FSDA members have published shared investor expectations for companies, and they are stepping up engagement activity and are working with policymakers and data providers. More broadly, the 10 point plan for financing biodiversity moved ahead at COP27 with a ministerial meeting between 16 countries representing five continents to set a pathway for bridging the global biodiversity finance gap – and looking ahead to the biodiversity COP15 in December 2020.

2. Biodiversity COP15 looms large

The biodiversity COP is usually a distant cousin to the climate COP, but in Egypt there was a considerable amount of attention on the need to create a “sister agreement” – a Paris moment for nature. The messaging that the climate and nature crises are deeply linked was made loud and clear at COP27.

On Biodiversity Day, the Paris climate champions urged leaders to step up action to address the accelerating loss of nature by delivering an ambitious biodiversity agreement at COP15 in Montreal. On the same day, more than 340 civil society leaders called on governments to prioritise the biodiversity COP, and a new survey from more than 400 experts from 90 countries revealed that a shocking 88% believe that the state of the world’s nature is “alarming” or “catastrophic and potentially irreversible”.

However, even though many countries were pushing for COP15 to be included in the COP27 text, the attempt failed – a disappointing outcome as net-zero emissions will not be enough to limit rapidly rising temperatures. Governments also need to halt and reverse biodiversity loss by 2030.

3. Strong signs of political will for forests

The creation of the Forest and Climate Leaders’ Partnership (FCLP), announced at the World Leaders’ Summit, is being driven by the reality that there is no time to lose when it comes to halt and reverse forest loss by 2030, with the intent to demonstrate success by COP28. The leaders of the 28 – and counting – FCLP member countries serve as key actors in the partnership, and its ultimate priority setters.

The FCLP will hold regular meetings, including leader-level moments at the beginning of climate COPs to encourage accountability. Starting in 2023, the FCLP will also publish an annual Global Progress Report that includes independent assessments of global progress toward the 2030 goal, as well as summarising progress made by the FCLP itself, including in its action areas and initiatives.

The presence of Brazil’s president elect, Luiz Inacio Lula da Silva, put a spotlight on the Amazon at COP27 – with Brazil promising to prioritise stopping deforestation and offering to host COP30 in three years’ time. Also, an announcement by Brazil, Indonesia and the Democratic Republic of Congo – made in Indonesia ahead of the G20 – signalled their intentions to work together to protect their vast swathes of tropical forests, earning the nickname “the OPEC of rainforests”.

This chart shows the total hectares of forest that have been destroyed in different countries. Source: Statista.

This chart shows the total hectares of forest that have been destroyed in different countries. Source: Statista.

4. Implementation of forest pledges

Coming into COP27, there were clear signs that the global community is not yet on track to halt and reverse forest loss and degradation by 2030. Another UN-led report found that for 2030 goals to remain within reach, a one gigaton milestone of emissions reductions from forests must be achieved not later than 2025, and yearly after that, but that current public and private commitments to pay for emissions reductions are only at 24% of the gigaton milestone goal.

However, it wasn’t all bad news on the implementation front. Nature4Climate’s new joint commitment tracker found that 55% of the commitments tracked are demonstrating substantial signs of progress. There are also some bright spots to celebrate. For example, tropical Asia is on the path toward reversing forest loss by 2030: Indonesia’s deforestation rate dropped by 25% last year, and Malaysia also reported a fall of 24% in the pace of forest loss last year.

Forest pledges made in Glasgow at COP26 were also in the spotlight. In 2021, $2.67 billion was put towards forest-related programmes in developing countries – 22% of the $12 billion pledged at COP26, meaning that donors are on track to deliver by 2025. Private sector funds are also moving: for example, one year after launch, the IFACC initiative is scaling innovative financial mechanisms to help farmers without further conversion of the Amazon, Cerrado and Chaco ecosystems.

 

So far, commitments have risen from $3 billion to $4.2 billion and disbursements are expected to exceed $100 million this year. Similarly, the public-private LEAF Coalition has mobilised an additional $500 million in private finance, bringing a total of $1.5 billion in support of tropical forest protection. This is part of $3.6 billion of new private finance announced at the climate summit.

And exciting private sector initiatives worth noting include the launch of a new company Biomas (by Suzano, Santander, Itau, Marfrig, Rabobank and Vale) to restore 4 million hectares in the Amazon, the Mata Atlantica rainforest and the Cerrado. Also, 1t.org announced pledges from its first four Indian companies (Vedanta, ReNew Power, CSC Group and Mahindra) to join 75 other companies worldwide committed to planting and growing 7 billion trees in more than 60 countries.

5. Nature of negotiations

In the negotiations, nature-based solutions were included in the COP27 text for the first time, with forests, oceans and agriculture each having their own section. The Koronivia Dialogue – the track where food and agriculture is discussed at the UNFCCC – has finally been included in the text, but all eyes turn to COP28 for the focus required to truly transform food systems.

In the wonderful world of Article 6, things remain complex. Last year, at COP26 in Glasgow, countries decided on the basic framework of Article 6. Throughout 2022, countries have been focused on how to operationalise the Article 6 mechanism that allows countries to actually begin trading. In Egypt, the discussions were very technical – such as how registries are going to work, how countries will report on the trading, and what information should be submitted –with the aim of making things easy to track.

For nature, it was decided at COP26 that land use emissions were part of Article 6 – as it includes all sources and sinks. The focus in Egypt has been on article 6.4 – the mechanism for developing guidance on activities involving removals which includes reforestation, restoration, afforestation etc.

6. Technology meets nature

In a similar way to finance, “tech” gets everywhere at climate COPs, although historically that is not really the case when it comes to nature – not this year however. In Egypt, the need for high-tech solutions for nature and climate challenges was a constant refrain. The role of tech in improving transparency and accountability in monitoring supply chains (and tackling deforestation) and also in enhancing the integrity of carbon markets was evident everywhere.

Notable developments include Verra’s partnership with Pachama to pilot a digital measuring, reporting and verification platform for forest carbon. A new Forest Data Partnership was announced by WRI, FAO, USAID, Google, NASA, Unilever and the US State Department. WRI’s Land and Carbon Lab was on show demonstrating the new frontier of measuring carbon stocks and flows associated with land use.

Nature4Climate demonstrated a beta version of its new online platform (naturebase) to help decision makers implement natural climate solutions. And the new Global Renewable Energy Watch – a partnership between The Nature Conservancy, Microsoft and Planet – was also demonstrated. Capturing this emerging trend, Nature4Climate and Capital for Climate launched a report on the size and potential of the whole “nature tech” market that was discussed at an event in the Nature Zone.

7. Food finally arrives on the scene

Food was on everyone’s mind at COP27 in Egypt – but for the first time, it also made it onto the main agenda – being recognised in the final text and also with at least five event spaces solely dedicated to food and agriculture.

Important developments included the Food and Agriculture for Sustainable Transformation Initiative (FAST) launched by the Egyptian COP presidency – a multi stakeholder partnership to accelerate access to finance, build capacity and encourage policy development to ensure food security in countries most vulnerable to climate change.

Also related to food, 14 of the world’s largest agricultural trading and processing companies shared their roadmap to 1.5℃ – to mixed reactions – with detailed plans on outlining how they will remove deforestation from their agricultural commodity supply chains by 2025.

8. An increasingly blue COP

Observers have expressed encouragement at this being “an increasingly blue COP”, with the ocean called out in the final declaration and the first ever ocean pavilion in the blue zone. Several declarations reinforced the recognition of the fundamental role of the ocean in the climate system.

The Egyptian presidency, Germany and IUCN launched the ENACT initiative (Enhancing Nature-based Solutions for an Accelerated Climate Transformation). The Mangrove Breakthrough was launched to protect 15 million hectares of mangrove globally by 2030. And the High Quality Blue Carbon Principles and Guidance were also announced.

9. Indigenous peoples and local communities

The critical role that Indigenous peoples and local communities (IPLCs) play as guardians of the forest is now firmly established and beyond question. At COP27, there was a polite but palpable frustration from IPLCs that climate funds are not reaching them. This massive deficit is increasingly being acknowledged by both by Indigenous and non-Indigenous actors, with a wide range of events dedicated to this topic.

While COP27 was a good space for Indigenous and non-Indigenous actors to share knowledge, to listen deeply to one another, to build relationships, it clearly can’t be the only space. While there are a number of encouraging signs of progress, including linking IPLCs with high-integrity markets, it’s clear the clock is ticking and IPLCs are getting impatient.

Clearly we must act with urgency, but it’s critical to take the time to build trust and mutual understanding, including absolute adherence to free, prior and informed consent protocols. This is necessary so that IPLCs can decide (or not) to participate in carbon markets with transparency, full understanding, and free consent. This takes time.

10. African-led initiatives take centre stage

While this was not the “African COP” that many hoped it might be, there were still a range of significant announcements coming out of Egypt that highlighted the continent’s potential as a natural capital powerhouse. These included the launch of the Africa Carbon Markets initiative, the Declaration for the Africa Sustainable Commodities Initiative, the launch of a $2 billion African restoration fund, a funding boost for Africa’s visionary Great Green Wall initiatives, and the announcement by the Global EverGreening Alliance and Climate Impact Partners of a new partnership to up to $330 million in community-led removal programs across Africa and Asia.

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African insurers pledge $14bn of cover to take up climate change fight

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This commitment comes as Africa continues to face irreversible loss and damage associated with global climate change impacts such as drought, flood and tropical cyclones.

With African nations being among the most exposed globally to the impacts of climate change and nature loss, Africa cannot continue to rely on international aid and developed world climate finance commitments to respond to climate catastrophes.

The ACRF will provide protection for the continent’s most vulnerable communities by providing $14 billion of climate risk insurance by 2030 to African sovereigns, cities, humanitarian organizations and NGOs.

At the same time, the Facility will include a donor-funded Trust Fund that provides premium subsidies, product development technical assistance and policyholder capacity building. The governance of the Trust Fund will be designed to allow swift response to opportunities.

Kelvin Massingham, Director Risk and Resilience, FSD Africa, said: “Mainstreaming resilience into Africa’s economic development is essential to secure future prosperity and sustainable growth. Now is the time for the African insurance sector to play the significant role it should in creating this resilience. The Nairobi Declaration on Sustainable Insurance’s proactive and market-based approach is exactly what we need, and the commitment today is a strong statement to work together to provide an African-led solution to loss and damage.”

Patty Karuihe-Martin, CEO Namib Re, commented: “Irreversible Loss or Damage refers to the calamitous impacts of climate change that cannot be circumvented by mitigation and adaptation alone. So apart from managing risk, crafting affordable risk transfer and risk sharing solutions through compliant, trusted and responsive Insurance and Reinsurance for such loss or damage for the developing countries is a crucial discussion; if not for unfailing and guaranteed resilience then at least to allow for decent work and dignified life to continue.”

Phillip Lopokoiyit, Group CEO, ICEA LION Group, added: “As private sector insurers, we have a key role to play in ensuring a sustainable future. Our priority lies in providing solutions that will support the resilience of our clients in light of the greatest challenge facing humanity. Coming together as signatories to support the set-up of the Africa Climate Risk Facility, will provide the necessary capacity needed by insurers to the solutions that will respond to climate risk.

“The commitment that we have made, as signatories, to underwrite $14 billion of cover for climate risks by 2030, will protect 1.4 billion people against floods, droughts, and tropical cyclones.This is indeed a testament of our quest to ensure that we contribute to the long term sustainability and economic resilience of our countries.“

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African insurers take up climate change fight with $14 bln pledge

Posted on by TIMOTHYRADIER

Summary

  • 85 insurers make pledge to extend climate cover
  • Comes as COP27 talks focus on issue of loss & damage
  • African Climate Risk Facility to cover 1.4 bln people

SHARM EL-SHEIKH, Nov 9 (Reuters) – A group of over 85 insurers in Africa has pledged to create a financing facility to provide $14 billion of cover to help the continent’s most vulnerable communities deal with climate disaster risks such as floods and droughts.

The commitment to create the African Climate Risk Facility (ACRF) was made on Wednesday during the COP27 climate talks comes as developing countries push their richer peers to do more to help them pay for the costs of responding to such events.

Demand for compensation for the “loss and damage” caused by global warming has long been rejected by wealthy countries, whose leaders are wary of accepting liability for the emissions driving climate change.

Africa, which accounts for less than 4% of greenhouse gas emissions, has long been expected to be severely impacted by climate change.

Against that backdrop, the African insurance plan is based around creating a scalable, local market-based funding tool to help countries better manage the financial risk of climate shocks and increase the resilience of its more vulnerable communities, the group said in a statement.

“This is the African insurance industry saying let’s come together and try and solve this ourselves,” said Kelvin Massingham, director risk and resilience at FSD Africa, one of the partners behind the launch.

“We have a massive risk gap in Africa and existing solutions aren’t working,” Massingham said. FSD Africa is a UK government-backed development group.

The ACRF will provide protection for 1.4 billion people against floods, droughts and tropical cyclones by providing $14 billion of climate risk insurance by 2030 to African sovereigns, cities, humanitarian organisations and NGOs, the insurers said.

The group is calling for $900 million in funding from development partners and philanthropies to support the project, much of which will go towards providing a subsidy on the cost of the premium to help governments and cities with limited fiscal resources buy the cover.

These donor funds will be held in a trust and managed by the African Development Bank.

“The facility will enable us to cover certain risks like floods, cyclones and droughts…and to help us mitigate the risks we face as underwriters dealing with these climate risks,” said Philip Lopokoiyit, chief executive at Nairobi-based insurer ICEA LION Group.

The insurance commitment is the first from the 85 signatories of the Nairobi Declaration on Sustainable Insurance, signed in April 2021 by the industry to support the U.N. Sustainable Development Goals.

The ACRF will provide a domestically funded alternative to global initiatives like the World Bank’s Global Risk Financing Facility and the Global Shield Financing Facility, a new funding facility that will help countries that suffer heavy economic loss due to climate change-driven disasters, announced by World Bank president David Malpass on Tuesday.

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