Cali Fund launches, calling companies to fund biodiversity protection

Last October, countries agreed to establish the Cali Fund, a blended finance experiment that takes contributions from companies profiting from the use of biodiversity’s genetic data to develop products such as pharmaceuticals, biotech, and cosmetics — and funnels the money back to biodiversity conservation with at least 50% going to Indigenous groups. The agreement was one of the few successes of last year’s United Nations Biodiversity Conference, or COP16. On Feb. 25, as delegates gathered in Rome to complete unfinished business, the fund saw its official launch. “Today’s launch is the culmination of multilateralism that delivers,” said the United Nations Environment Programme deputy executive director Elizabeth Mrema in a press release. “The ball is now in the court of businesses around the world. Those who pay into the Fund will go down in history as pioneers and will reap the benefits as the public increasingly recognizes the importance of giving back to nature.” The fund is unlikely to receive donations this week, according to the information officer of the Secretariat on the Convention on Biological Diversity, David Ainsworth, and the first announcements are expected in the spring. “There are a number of firms that are exceedingly close to putting forward contributions,” he said at a Tuesday press conference in Rome, adding that “many of them are biotech start-up firms.” Philanthropies are also expected to contribute to the fund. While donations are voluntary, the agreement in Colombia read that large companies “should” pay a small percentage of what they make — 1% of profits or 0.1% of revenue — for the commercial use of these genetic resources extracted from nature, officially called digital sequence information on genetic resources, or DSI. The fund is expected to raise up to $1 billion annually, which will go to conserving biodiversity by allocating the money based on the importance of a country’s biodiversity. However, there are still details to be ironed out when it comes to specific allocation and tracking impact. Half of the amount in the U.N.-controlled fund is expected to go to Indigenous peoples and local communities either directly or through national governments. It represents one of only a handful of examples of public policy attempting to leverage private investment. Traditional biodiversity funds rely heavily on government or multilateral grants, but the Cali Fund is designed to attract contributions from both public and private players — including governments, private sector companies that use genetic data, and multilateral organizations. The fund also creates a way to generate biodiversity finance by channeling monetary benefits from companies using DSI back to biodiversity-rich countries. Experts have noted that had such an arrangement been in place during the COVID-19 pandemic, a 1% contribution from Moderna would have been $30 million of the total $30 billion profit it made from selling vaccines derived from genetic data. Biodiversity funds also tend to focus on conservation efforts without directly addressing benefit-sharing. The Cali Fund hopes to ensure that local communities and biodiversity-rich countries receive financial returns from the use of their genetic resources. Lower-income countries have long criticized multilateral funds such as the Global Environment Facility, or GEF, for being bureaucratic and slow to disburse resources. The Cali Fund represents a new, more direct mechanism for biodiversity finance, bypassing some of these limitations — and it’s hoped that this will help countries access resources faster than they typically do. Susana Muhamad, president of COP16, said on Tuesday that at COP17, which is set to take place in Armenia in 2026, they will be working to simplify the bureaucracy for accessing this funding. The Cali Fund is not unique in employing this kind of blended finance mechanism. Other initiatives, such as the Green Guarantee Company and the California Rebuilding Fund, also use blended finance structures for sustainable ends such as green infrastructure and renewable energy. But it is the first to do so in support of biodiversity specifically. “The ball is in the hands of the companies,” said Muhamad. “Are they going to come forward to contribute? Are they going to enhance their brands? Are they going to contribute fairly?”