Reflections on the 2025 WEF and the UN’s Biodiversity and Climate COPs
It’s deep into the European winter, meaning it is also time for the World Economic Forum’s glitzy Davos event. A coming together of powerful suits meant to give feelings of hope and achievement towards a better world. But for a sustainability professional like me it is also the end of the season of disappointments on the lack of progress being made to address global climate change and biodiversity problems. This lack is epitomised by the outcomes of the annual Climate and, more recently and more prominently, the Biodiversity COPs. It is also a time of the year when current plans are critically revisited, performance reviews are taking place, and strategies are devised and refined for the year ahead – obviously in the very real context of the news from the international policy arena.
If we examine the value of the outcomes of these high profile gatherings of policy- and decision-makers driving the global discussion on how to avoid dangerous climate change and the accelerating loss of biodiversity, there is only one conclusion: They ended like these gatherings have always ended in my experience (and I have been going to them for 20 years!). Some resolution on technical issues, many business cards exchanged, “Calls to Action” and recognition of the urgency to act by world leaders and – the ceterum censeo of these gatherings – much lamenting about how there is not enough capital committed to the necessary changes.
A great case in point is the call for more investment to scale up financing by the Alliance of Champions for Food Systems Transformation (which includes heavy-weights like Brazil and nature transition champions like Norway) at COP29 in Baku. The Alliance asks that the share of climate finance that goes to the agri and food systems complex (3.4% of an already insufficient total USD 1.46 trillion) be increased to be commensurate with the impact it has – roughly 25-35% (when added to the general call to mobilise at least USD 8 trillion per year on climate finance, this multiplies to a 50x increase). It is less clear who should mobilise these vast amounts of capital… for whom… and how such sums should be deployed.
This call is echoed in the similar statements made in Cali, on the occasion of the biodiversity COP16, by the market-led task-force for Nature related Disclosures (TNFD) encouraging more investment in preserving biodiversity.
And at the WEF, there was broad recognition that regenerative agriculture is a key solution to climate and food security challenges, but that it will really only take off if it is stimulated by de-risking the initiative through blended finance (led by the public sector), and the monetisation of instruments like carbon and biodiversity credits, which are sadly still too exotic (I intend to write more about the prospects of that being successful in another memo).
I DO recognise that it is important that, in an increasingly antagonistic world, these global discussions on some of the big questions of our time do continue, so please don’t mistake my somewhat resigned dismissal of their importance to appear that I think that the events are useless. Surely it is not less worthwhile for a couple of tens of thousands of people to gather to avoid climate change or to stop biodiversity loss than it is for a similar amount of people to gather at new tech gimmicks… the immense annual Consumer Technology Show in Las Vegas springs to mind. The issue is that the products on display in Sin City do find willing buyers – whereas that seems to be less the case in terms of the declarations emanating from the COPs or the WEF.
What is concerning for me is that the consistent lamenting about there not being enough money has been going in circles for years, devolving to calls for more public money. The fact is, whether you like it or not and whether you think priorities are misguided or not, there is simply a very limited willingness of politicians and governments to make available the necessary funds available from state coffers. In fact, that willingness has most certainly diminished in 2024 and looks to remain subdued for 2025… just look at the plans of the most recently (re)elected governments. Declarations – over and over again – that this funding is urgently and desperately required will not turn this trend – and I am astonished that so many people keep trying still.
There is also no realistic plan or strategy to pivot away from the public finance bread basket and be prescriptive – including through regulation -on the large balance sheets of the private sector in a way that would trigger the scale of private investment that scientists understand to be necessary to keep global warming within a safe enough boundary to which current life on earth can still adapt and survive. Nowhere is this more evident than the global South where the consequences of the warming that has already become inevitable are being felt.
In my opinion, the world should focus on the approaches that need neither more government money nor rely on regulation alone. In the absence of public spending or strong regulatory action requiring the private sector to step up, we should instead push forward aggressively with ideas that drive profit, the best known force for market action.
At SAIL Investments we define our investment strategies accordingly. In 2025, we are doubling up on our efforts to allocate capital towards the climate and biodiversity transition at scale – for now focused on transitions in emerging markets where the impact and need is the greatest.
Our sweet-spot for investment is where the success of a business can be linked to a transition towards operating sustainably. Those businesses can improve access to higher margin markets; improve their license to operate domestically and internationally in response to regulatory or market pressure; and – with growing importance –prepare for natural changes by becoming more accountable, resilient and productive. Together with our borrowers we design transition plans that are aimed to set them apart from, or indeed ahead of, their competition, improving their credit profiles and our investment products’ risk/return profiles.
In this way, we not only provide attractive risk adjusted returns to our investors, but our borrowers see the value for their businesses, and all the while this finance realises our objective of achieving the climate and biodiversity transition. It is the latter that is typically the focus for the crowds gathered at WEF and the COPs – but it does not excite the private sector much – despite (or because of) its benefits for the planet.
The private sector is capable of financing the much-lamented unmet expectations – but we require that meeting these expectations must create value for our investors so that they can pay out all of our pension and insurance claims. For our borrowers embracing the risk of upending what works today in favour of what will work tomorrow… any transition must enable a return on the financial (and non-financial) investment that they have made for that purpose – the rest is CSR and not sustainable.
SAIL’s approach to flexibly structure private credit fulfils these requirements for both investor and borrower. We have, with limited public capital, created a scalable and demonstrable proof of concept that businesses can – and are willing to – change, and that they can do so while paying their investors an acceptable and attractive return. I am convinced that this is – ultimately – where the bulk of the financing required will come from. It would be truly helpful if, instead of lamenting at a macro level about amounts of capital needed (but never materialising), the global business leaders, negotiators and politicians at these gatherings would rather focus on creating the right regulatory frameworks for unleashing this important private sector-led force. A good start would be to restructure agricultural subsidies and create tax incentives linked to known transition pathways, particularly incentivising long-term views of operating in the space.
At SAIL we already have a fantastic investor base that supports us in this view and which is fully motivated to see us scale up our investments into more borrowers whose sustainability transition drives business growth and resilience. That is how we will achieve real sustainable development.
By Michael Schlup, Chief Sustainability Officer, SAIL Investments