While the outcomes of COP29 in Baku are still being evaluated and debated, it is worth flagging that many of the key themes were also debated at the 16th meeting of the Conference of the Parties to the Convention on Biological Diversity (COP16), which took place from October 21 to November 2024. This event, which took place in Cali, Colombia, focused on the challenges and opportunities around protecting biodiversity and encouraging a shift towards nature-positive finance.
It has become increasingly clear that biodiversity protection is not just for the benefit of the environment but is essential to support long-term economic interests. As highlighted by Shivin Kohli of the World Economic Forum during the Climate Governance Initiative's webinar at COP16, between 1992 and 2014 produced capital doubled per person, while natural capital per person declined by 40%. He explained that the challenge for business is clear, “we cannot continue to exploit nature for our gain. It is now too finite and too fragile for business-as-usual to continue.”
It is crucial then, that the corporate sphere incorporates nature-friendly practices within the heart of their growth strategies and the insurance industry especially can have an impact on supporting this transition. This year, according to Sara Orozco, Regional Coordinator for Latin America and the Caribbean at the Microinsurance Network (MiN) who attended COP16, discussions around inclusive insurance and its relationship with biodiversity held greater prominence than ever before. “Although the role of insurance in this context is still developing, its potential to close the biodiversity financing gap and offer solutions to mitigate the impacts of climate change is already being recognised. This represents a significant advance over past COPs, where insurance was not such a central issue.”
The role of insurance in biodiversity protection
Throughout all the events at COP16 the common theme was that the connection between finance and biodiversity is fundamental and strategic. And one of the key takeaways is that insurance can play a role in mitigating the risks associated with climate change and biodiversity loss.
During Orozco’s presentation at the Global Landscape Forum (GLF) Inspiration Hub, she highlighted how inclusive insurance can be an innovative solution to closing the growing biodiversity funding gap. In situations where governments and NGOs have limited resources to protect and restore vulnerable ecosystems - such as reefs and nature reserves - from natural disasters, insurance can step in. This places insurers as key partners in environmental stewardship by helping to incentivise sustainable practices.
To show this, she used the example of the Mesoamerican Reef policy (coordinated by the MAR Fund) and the impact of parametric insurance. Following Hurricane Delta in 2020, the policy paid out USD 850K to enable a rapid and effective response. “With this approach, I proposed integrating insurance into conservation strategies, developing products tailored to the needs of each ecosystem and fostering public-private partnerships to ensure biodiversity protection,” explained Orozco.
Setting the insurance sector up for success
And this highlights two important requirements for the insurance industry to be successful in its aims: innovation in product development and an integrated approach that involves all key actors, including businesses, governments, NGOs and civil society. These topics were also addressed during COP16.
For example, during Fasecolda's “Guardians of Biodiversity” event, the realisation that climate change and biodiversity loss represent significant risks to both society and insurers, led to discussions around how the industry should respond. Insurers are now taking an active role in biodiversity conservation by developing specific insurance products that protect ecosystems and financing projects that promote environmental sustainability. This requires the development of innovative products such as agricultural insurance that protects against natural disasters or insurance aimed at ecosystem restoration.
Whilst it is positive to see the insurance industry taking a leadership role in environmental conservation, there is still more to be done. According to Orozco, “I believe we will see an even deeper integration of sustainability into the insurance industry. As environmental regulations become more stringent and consumer expectations shift towards corporate social and environmental responsibility, insurers will need to be more proactive. This could include implementing policies that incentivise biodiversity conservation, as well as incorporating insurance clauses that support the transition to more sustainable business models.”
The theme of collaboration around an integrated approach was one of the key themes of the First Regional Roundtable on Sustainable Insurance for Latin America and the Caribbean. Here, the idea of blended finance - combining public and private capital - was identified as a way to help MSMEs access sustainable financing. The roundtable, which MiN took part in, also highlighted the importance of inter-institutional collaboration (including regulators, insurers and NGOs) as essential for designing scalable solutions that consider the regional context while promoting both financial inclusion and biodiversity conservation.
The collaboration between the United Nations Environment Programme Finance Initiative (UNEP FI), Seguros Bolivar and the MiN is a good example of the benefits that come from cross-sector collaboration. UNEP FI brings a global vision on sustainable finance ensuring compliance with international standards; Seguros Bolivar offers in-depth knowledge of the local market to facilitate implementation and scalability; and the MiN specialises in inclusive insurance solutions, ensuring that products reach vulnerable communities. As Orozco highlights, “This synergy facilitates the design of innovative products, such as parametric insurance and blended finance mechanisms, tailored to the needs of MSMEs in Latin America and the Caribbean and benefits biodiversity overall.”
Collaboration opportunities across sectors
These discussions presented several opportunities for MiN to collaborate with different players across the insurance landscape to develop initiatives and projects that help to support the most vulnerable communities whilst protecting biodiversity.
One of the most promising opportunities focuses on strengthening public-private partnerships by collaborating with governments, financial institutions and the insurance sector to design innovative products linking insurance solutions to biodiversity goals. For example, as Orozco explains, “insurers could work with governments to create nature-based insurance products that protect ecosystems while offering coverage to local communities. This would not only address environmental risks but also support financial inclusion by offering affordable insurance to vulnerable populations.”
An exciting new opportunity also emerged at COP16 around the potential to establish megadiverse countries, such as Colombia, Brazil and Costa Rica, as “biodiversity financial hubs.” This would involve developing innovative financial products that promote sustainability and resilience to climate change in a scalable way. By establishing a robust financial ecosystem - including insurance solutions - both the environment and communities will be protected whilst simultaneously promoting economic growth. According to Orozco, “The MiN could play a pivotal role in fostering dialogue between insurers and government stakeholders and creating frameworks that allow for investment in biodiversity-related insurance products.”
Continuing the conversation at COP29
The conversations held at COP16 this year highlighted three important lessons. Firstly, that nature-based solutions need to be sustainable, scalable and long-lasting if they are to make a significant impact. Secondly, the potential for "biodiversity financial hubs” presents an opportunity for megadiverse countries to exploit their natural resources within a controlled framework while fostering innovation in the financial sector. Finally, the only way to progress is to act.
And the topic of biodiversity protection featured prominently as part of the discussions and agreements made at COP29. From specific wind targets for biodiversity positive offshore wind projects that should be integrated into NDC mitigation pledges, to the launch of the Marine Biodiversity and Ocean Health Breakthrough Goal which aims to reduce the impact of the shipping industry on marine biodiversity by 50% by 2050.
The role of insurance was also highlighted at COP29, with the release of a new paper by the High Level Champions and Howden Group which demonstrates how the insurance sector can help accelerate decarbonisation and increase resilience. Additionally, conversations around climate-proofing SMEs and finding ways to finance and foster collaboration to address climate change through adaptation and mitigation in agriculture, showed the potential opportunities for inclusive insurance to make an impact.
Across all the conversations at COP16 and COP 29 this year, it’s clear that nature-positive strategies focusing on biodiversity are essential to protect the environment, society and the global economy in the long term. We cannot continue the status quo. And everyone has a role to play in this transition to more sustainable business practices, including the insurance industry. As Orozco highlighted, “the growing recognition of biodiversity as a critical element in climate action suggests that insurers will be increasingly expected to integrate biodiversity considerations into their risk assessment and underwriting processes.”
Above all though, it’s clear that the moment for talking is over. These discussions have shown us the different paths forward, but it’s time to turn ideas into action. We need to take decisive steps towards scalable, long-term solutions if we’re to make any headway in building a more resilient future that benefits the planet and society.