Climate-focused development banks neglect nature ahead of COP15
Local boy takes a break from diving in the sea at Serua Village, Fiji, July 14, 2022. As the community runs out of ways to adapt to the rising Pacific Ocean, the 80 villagers face the painful decision whether to move. REUTERS/Loren Elliott
What’s the context?
Development banks are paying far more attention to climate than nature, analysts say, calling for a sea-change at the COP15 biodiversity summit in Montreal
- Development banks urged to invest more to protect biodiversity
- Finance for poorer nations seen as key hurdle at Montreal summit
- Big banks urged to pay equal attention to nature and climate
KUALA LUMPUR, Dec 2 (Thomson Reuters Foundation) - The world's development banks could play a major role in protecting nature, but are largely ignoring biodiversity in a climate-led financing push, environmentalists warn, calling for action to fix the imbalance at this month's COP15 U.N. summit.
About 195 nations are tasked with finalising a new accord to halt and reverse damage to plants, animals and ecosystems at the Dec. 7-19 conference in Montreal, Canada.
The need for more financing for poorer nations, to help them meet new targets likely to be set at COP15, has long been a sticking point in the talks to hammer out a biodiversity pact, already hit by COVID-19 delays.
Multilateral development banks (MDBs) could do more in brokering an ambitious agreement on a new global biodiversity framework and implementing it, green groups said.
"MDBs are not where they should be. Their biodiversity portfolio is lagging behind their climate one," said Li Shuo, a policy advisor at Greenpeace China.
"Whether more MDBs can commit to allocate more resources to the nature protection agenda will be a key test of the success of COP15," he said in an interview.
Boosting conservation and management of natural areas, such as parks, oceans, forests and wildernesses, is seen as crucial to safeguarding the ecosystems on which humans depend and to limiting global warming to internationally agreed targets.
But forests are still being cut down - often to produce commodities such as palm oil, soybeans and beef - destroying biodiversity and threatening climate goals, as trees absorb about a third of planet-warming emissions produced worldwide.
Investments in protecting and better managing the world's ecosystems must reach $384 billion a year by 2025, more than double their current levels, a U.N. Environment Programme report said this week.
MDBs must prioritise green finance and incentivise private investment, especially in sustainable supply chains, it added.
Public development banks are owned by governments at international, regional and national levels, and their assets combined make up about 10% of global investment.
Most lend to nature-sensitive sectors - notably agriculture, mining and infrastructure - whose activities are often carried out in environments rich in biodiversity.
Researchers warned last year that lending by public development banks could destroy nature worth $800 billion annually, and urged greater transparency to reduce the risks.
European Investment Bank (EIB) President Werner Hoyer said last month he hoped the upcoming biodiversity summit would help MDBs accelerate their nature efforts.
An EIB spokesperson said the bank is committed "to protecting nature, forests and oceans", citing its support for the Althelia Climate Fund which invests in sustainable land use.
The Asian Development Bank, which will participate in COP15, has "long supported environmental sustainability", a spokesperson said, adding the bank had raised its climate finance goal for 2019-2030 from $80 billion to $100 billion - and expects a significant share to go toward nature investments.
Examples of MDB nature finance include a hydropower project in the Solomon Islands with a biodiversity protection plan, backed by the World Bank and others, and a World Bank project in Sumatra, Indonesia, to curb emissions from forests and peatland by promoting sustainable fishing and alternative livelihoods.
Earlier this year, the Climate Investment Funds, one of the world's largest climate finance instruments working with six major MDBs, launched a fund aiming to invest at least $500 million in protecting nature in developing countries.
Toerris Jaeger, head of the Rainforest Foundation Norway, said extensive funding was needed to protect remaining biodiversity hotspots - and MDBs have "a huge role" to play here, while ensuring their investments do not harm nature.
Very few development banks have policies that are in line with government commitments on biodiversity, he noted.
A year ago at the COP26 climate summit in Glasgow, a group of MDBs issued a statement recognising the importance of nature and pledged to co-operate on bolstering biodiversity protection.
Development banks, meanwhile, increased their climate-related financing by about a quarter to $82 billion in 2021, an October report by the lenders showed.
Margaret Kuhlow, finance lead at WWF International, urged MDBs to commit to step up their nature funding too, and align their investment approach with biodiversity protection, as they have promised to do with the Paris Agreement's climate goals.
"There is good momentum that needs to be paired with action to meet the moment," she added.
"This issue should be much higher on the agenda for all public development banks."
Turning big ships
Traditionally for MDBs, biodiversity has always been a backwater issue, said Rod Taylor, global director for forests at the World Resources Institute, a U.S.-based think-tank.
It is one factor behind the push at COP15 to set conservation targets that are as clear as the Paris pact goals for climate, he added.
"The MDBs ultimately get their marching orders from big things like that, that set the direction for them," Taylor said.
Efforts by business to push leaders to force large companies to assess and disclose their impact on nature by 2030 will also boost transparency on where investments are made, he noted.
"Things like that can turn these big ships around because you are pricing the impacts on nature into those investments," Taylor said.
Brian O'Donnell, director of the U.S.-based Campaign for Nature, said until recently, multilateral banks had been a "no show" when it comes to financing biodiversity and instead focused heavily on climate after waking up to its importance.
For every dollar of climate financing they provide, MDBs put up only one to two cents for biodiversity, which adds up to no more than $1 billion a year for nature protection in low and middle-income countries, he noted.
He urged the banks to start reporting on their biodiversity funding as they do for climate finance, while dramatically raising it to a similar level.
They can also catalyse other sources of finance by leading reforms in lending and investment practices to benefit nature, he said.
"Biodiversity has not been the priority that it needs to be for multilateral banks," O'Donnell emphasised.
(Reporting by Michael Taylor; Editing by Megan Rowling)
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