Target 19 of the KMGBF aims to direct at least US$200bn each year in biodiversity financing from public and private sources. This is timely, given the last few years have already seen increasing moves by major players to direct financial flows away from activities that are harmful to nature. 

Leading global institutional investors and asset managers have flagged biodiversity loss as part of their risk management frameworks and stewardship agendas, particularly in exposed sectors such as forestry, agribusiness, and mining and resources. Businesses that can demonstrate their nature credentials are therefore likely to not only enjoy increased business model resilience, customer brand and social license, but also increase their capacity to attract capital. This is beginning to play out in Australia, with several major lenders developing natural capital strategies, and investors looking to allocate capital towards protection and restoration of natural assets (e.g., water funds) and nature-conscious businesses (e.g., regenerative agriculture).

Key to achieving Target 19, however, will be increased public-private collaboration to develop financial instruments dedicated to the protection of nature (e.g., green and blue bonds), as well as to support markets around nature-based solutions. The Federal Government’s recently released Nature Repair Market bill is one such example of this collaboration. It seeks to make it easier for businesses (and other organisations) to invest in nature by establishing a market for the purchase and trade of biodiversity certificates. If implemented, the market would be the first of its kind to be nationally regulated. Innovative nature-related financing will also be on the agenda at the global Nature Positive Summit, which the Federal Government is hosting in 2024, which will bring together representatives from across government, business and environmental groups.

Leveraging momentum in recent years behind sustainability-related corporate disclosures, Target 15 in the KMGBF aims to ensure large and transnational companies and financial institutions regularly monitor, assess, and disclose their biodiversity-related risks, dependencies, and impacts. Business is already beginning to do so voluntarily. For example, a number of Australian organisations are currently piloting the Taskforce for Nature-related Financial Disclosures (TNFD), in advance of the final TNFD recommendations being released in September this year. Organisations are also preparing to align to the International Sustainability Standards Board’s disclosure standards (also set to be released in final version later this year), within which nature-related considerations are set to feature in future iterations. 

Importantly, governments are also considering mandating nature-related disclosures. Alongside its announcement late last year of consultations regarding mandatory climate disclosures, the Federal Government signalled that it is also paying close attention to the development of global standards on nature, which suggests that they too could be legislated in Australia in the not-too-distant future. 

While support for such disclosures is reasonably strong, some have expressed concerns about the feasibility and costs involved in assessing nature risks and opportunities across multiple sectors and geographies, including collecting reliable and consistent data. These are valid concerns, but not insurmountable. 

First, much of the work that organisations have begun in recent years to assess their value chains for sustainability-related risk (especially in relation to modern slavery and climate) can and should be leveraged for the purposes of nature-related assessments. Understanding location-based impacts and dependencies is a key step to assessing risk in relation to climate, nature and modern slavery (as well as other ESG-related issues). 

Second, the data challenge has been well recognised, and there are numerous public and private initiatives focused on improving the collection and provision (including publicly) of standardised data that supports corporate needs.

Finally, it is unlikely that there will be an expectation or requirement - at least not in the next few years - that organisations assess and make disclosures in relation to nature across their entire value chain. The TNFD’s LEAP framework provides guidance for organisations to prioritise aspects of their value chain, and further guidance on this is expected in coming months. 

Consistent with the view that sustainability should be considered holistically and as part of broader corporate strategy, organisations looking to advance their nature journeys must do so with a view to the linkages between nature and other priorities. This is necessary both to identify and take advantage of opportunities for synergies, as well as to be aware of and mitigate potential trade-offs. The two areas where this is particularly relevant are in relation to climate and First Nations engagement. 

There is increasing recognition that the nature crisis is inextricably linked to the climate crisis, and that addressing one cannot be done without also addressing the other. At a global level, nature-based solutions are estimated to represent over a third of the emissions reductions required to limit global warming below 1.5 degrees. At a corporate level, emerging nature solutions can form an important part of organisations’ strategies to reach their net zero targets. At the same time, there are trade-offs to navigate. Research by  S&P Global indicates that 29% of global mines located in key biodiversity areas are for energy transition materials. Businesses looking to accelerate their climate agenda must therefore do so with a view to nature, and vice versa. 

Similarly, engaging with First Nations as part of organisations’ nature journeys will be critical. This is acknowledged in both the KMGBF (Target 21), and the Federal Government’s Nature Positive Plan. Further, the 2021 State of the Environment Report highlights the particular importance of engagement with First Nations peoples to not only leverage and incorporate Indigenous knowledge regarding nature stewardship and strategy, but also to support broader Indigenous engagement objectives. A key challenge here will be navigating the potential mismatch between the time and resources required to meaningfully engage in dialogue, and the increasingly rapid pace of corporate decision-making. Deloitte’s recent joint paper with the World Economic Forum sets out a framework for organisations looking to embed indigenous knowledge into nature conservation efforts.