Submission to the Secretariat of the Convention on Biological Diversity Notification 2024-114

Financial mechanisms to facilitate monetary contributions to the Cali Fund

This submission was made in response to a notification by the Secretariat of the Convention on Biological Diversity (SCBD) requesting views on additional modalities for the multilateral mechanism for the fair and equitable sharing of benefits from the use of digital sequence information (DSI) on genetic resources, as adopted in Decision 16/2 of the Conference of the Parties in Cali, Colombia in 2024.

The response outlines ways in which different stakeholders could be engaged in the conversation to foster a collaborative environment and, ultimately, build a supportive ‘ecosystem’ to incentivise contributions to the Cali Fund — the key international mechanism that explicitly links the economic benefits industries derive from nature with its protection. Potential pathways to improve the availability and quality of sustainability data are outlined, followed by an exploration of how the financial community can actively engage with companies, encourage greater data disclosure, and integrate this information into their decision-making processes.

Key messages

Availability and quality of data

• There is currently no global enforcement mechanism for the contribution of DSI and little appetite for regulation around compliance. Existing reporting frameworks also fail to capture DSI, meaning there are transparency gaps about its usage at both the entity and government levels.
• Existing mandatory reporting standards, e.g. European Sustainability Reporting Standard E4, could provide insights into companies’ future DSI dependencies. The growing sustainability focus of the International Financial Reporting Standards (IFRS) could support mandatory global disclosure if DSI is recognised as a material financial factor for investors.
• Voluntary reporting standards like CDP could help to significantly enhance disclosure of DSI use by defining metrics and methodologies and integrating them into existing standards faster than through regulation.
• Integration into global economic reporting systems, such as the UN System of National Accounts, can also help to fill data gaps and increase transparency at the national level, while informing and guiding natural capital accounting for corporate entities.
• DSI’s economic value remains largely unaccounted for in national statistics and corporate reporting, making it difficult to assess its financial and policy implications. Natural capital accounting frameworks could more effectively capture this value.
• DSI information could be incorporated into assessments of nature-related issues following the approaches of the Taskforce on Nature-related Financial Disclosures (TNFD) and valuation approaches such as those of the Value Balancing Alliance.
• All companies in scope should either contribute to the Fund or publicly explain why they do not. A system of naming and shaming driven by non-governmental organisations (NGOs), media, and other private actors could help to drive compliance, while annual sustainability reports could be used to report contributions and disclose DSI users.
• Although not mandatory, the proposed annual contributions and sector identification in Decision 16/2 and its Annex establish a valuable benchmark, setting a precedent for industry accountability in biodiversity finance.

Incentivising contributions

• Lack of accountability weakens incentives for fair participation, while companies may resist if contributions seem like a financial burden rather than a strategic investment.
• DSI holds immense value for driving innovation in sectors involving drug discovery, proteins and other compounds. It can also train generative artificial intelligence (AI) platforms, which, in turn, could accelerate the exploration of existing and new genomes, viruses and enzymes.
• Since 2016, studies of vast tracts of previously inaccessible forests, caves and mountains in Colombia have increased the number of recorded species from 53,000 to 81,236 — 200 of which are entirely new to science — unlocking enormous opportunities.
• Economic studies assessing potential financial gains of leveraging DSI could encourage investors to proactively engage with firms on their use of DSI to encourage transparency and innovation.
• Tying Fund contributions to sustainable finance instruments such as green bonds could enable access to a broader investor base; better re-financing costs; and reputational benefits.
• The International Capital Market Association (ICMA) includes a category for ‘terrestrial and aquatic biodiversity conservation (including the protection of coastal, marine and watershed environments)’ under which Cali Fund contributions could be allocated.
• Raising awareness about the Cali Fund among independent Second Party Opinion (SPO) providers is important as they determine whether a bond framework meets market standards and investor expectations.
• The Fund, administered transparently by the UN and governments, offers a credible mechanism for biodiversity conservation financing, providing investors with greater certainty that contributions support impactful projects while mitigating reputational risks.