Reconvened COP16 agreement offers clarity on private finance’s role in nature

By Rebecca Delaney

March 10 - (The Insurer) - There is now “consensus and clarity” around the role of private finance in tackling ecosystem degradation, Aviva’s Thomas Viegas told Sustainable Insurer after an agreement at the reconvened COP16 to implement the Kunming-Montreal Global Biodiversity Framework.

The three-day meeting was held in Rome at the end of last month after talks stalled in Cali, Colombia in October 2024.

Delegates in Rome agreed on foundations for the implementation of the Global Biodiversity Framework, which was introduced at COP15.

As Sustainable Insurer reported at the time, several insurers (including Aviva, Scor, Axa, Tokio Marine, Sompo and MS&AD) were among the 150 corporate signatories that called on governments globally to adopt the framework.

The framework is based on a 2019 report by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services, which said that biodiversity loss must be halted and reversed by 2030. The 30x30 pledge under the framework aims to protect and manage 30% of the world's land, fresh waters and oceans by this deadline.

The agreements in Rome include a mechanism for planning, monitoring, reporting and review, as well as a resource mobilisation strategy under which parties will establish a permanent financial mechanism for the Convention on Biological Diversity, in line with Article 21 of the convention.

The resource mobilisation strategy identifies a range of instruments, mechanisms and institutions that could be tapped into to mobilise the funds required for implementation, including public finance from national and subnational governments, private and philanthropic resources, multilateral development banks and blended finance.

“It is extremely positive to see global agreement in Rome on key issues, such as resourcing and monitoring,” said Viegas, nature strategy lead at Aviva.

“This consensus and clarity helps support the ability of private finance to support the implementation of the targets, goals and ambition of the Kunming-Montreal Global Biodiversity Framework.”

He added that the health and resilience of nature and biodiversity has implications for physical assets insured by the industry, as well as investment decisions.

“Healthy ecosystems, such as forests, wetlands and reefs, act as natural defences against climate-related perils like floods, storms and droughts. These natural benefits influence risk and resilience, which matter to us as an insurer,” said Viegas.

A statement from Axa to Sustainable Insurer said that although the market for nature insurance products remains at an early stage, private investors confirmed at COP16 that insurance is needed in order to secure nature restoration projects.

It added that recent EU regulations will help support the continued increase of private investments in nature.

“The regulation combines an overarching restoration objective for the long-term recovery of nature in the EU’s land and sea areas with binding restoration targets for specific habitats and species,” said Axa.

“These measures should cover at least 20% of the EU’s land and sea areas by 2030, and ultimately all ecosystems in need of restoration by 2050. In this context, the insurance industry can bridge the ‘gap’ between the need and desire for financing ecological projects by de-risking financing opportunities.”

The insurance industry’s engagement with nature has increased over the past 18 months, although it has not reached the level of understanding and integration into business operations as climate and carbon emissions.

In June last year, the United Nations Environment Programme convened the first meeting of its nature-positive working group, which comprises 28 member organisations, including Aviva, Axa, Scor and IAG, as well as the three major Japanese P&C carriers and brokers Aon and WTW.

The group published its first guide in December 2024, calling on insurers to give greater consideration to nature-related risks across their entire underwriting portfolios.

The guide noted that, to date, nature-related impacts have been primarily assessed and addressed through the lens of investment and lending portfolios, rather than underwriting activities.

Sentiment expressed in the Convention on Biological Diversity’s report on the high-level segment indicates that the same level of interest is not shared across financial services.

“Experience had shown that market forces alone could not save humanity,” said the report.

“Financing projects according to their profitability meant neglecting important human considerations, such as the impact of climate change on Pacific or Caribbean islands, and the water shortages faced by many communities.”

It continued: “The greed underpinning current economic models had to be acknowledged and discussed in order to enable the transition to a more sustainable and efficient financial model based on public power and global democracy that put humanity above greed and private interests.”