PARIS – Conceived at the 2024 Biodiversity COP, the Cali Fund was meant to raise billions of dollars for nature protection – but has so far collected only US$7,085 (S$9,060).
It is a sluggish start for a fund intended as a showcase for innovative financing that charges companies profiting from the use of genetic data derived from nature.
The trickle of money highlights the difficulties involved in mobilising money for biodiversity.
As a crucial UN biodiversity summit in Armenia running until Oct 30 discusses its future, here is a rundown on how the fund works and reasons for its lacklustre start:
How does the fund work?
Adopted at COP16 in Cali, Colombia, at the end of 2024, the fund began operating in February 2025.
It proposes the payment of 1% of the annual profits of pharmaceutical, cosmetics, biotechnology companies or firms specialising in animal and plant breeding, or 0.1% of their turnover.
In a preparatory document, its designers mentioned the possibility of recovering one billion dollars a year in light of the revenues of the sectors concerned.
However, so far only three companies have contributed: The British firms TierraViva AI (US$1,000) and Prozomix (US$5,000), and the Belgian company E-BIOM (US$1,085).
Two others have pledged an additional US$3,571.
What is its justification?
Digital sequence information (DSI) – data derived from genetic resources such as plants, animals, fungi, viruses and micro-organisms – is freely accessible in digital databases.
Companies draw on this biological heritage to turn it into economic value by developing a medicine, a cream, improving an agricultural plant and so on.
The Cali Fund is based on the idea that those who benefit from this information, directly or indirectly, should in return contribute to the protection of biodiversity and to the local communities preserving it.
The fund is not legally binding but it does invite states to adopt administrative, policy or legislative measures to encourage companies to do so.
Why are companies reluctant?
The main difficulty is the “mechanism still relies very heavily on incentives and voluntary contributions”, according to Juliette Landry from the sustainable development think tank IDDRI based in Paris.
“As long as these incentives are not strong enough and consistent across countries, a company may well ask why it should contribute when its competitors are not doing so.”
Pakhi Das, public policy adviser at the NGO Plant-for-the-Planet, said there were no countries currently with legislation incentivising contributions to the fund, nor are there any where such legislation is under discussion.
Beyond the challenge of drawing enough resources into it, another lies in the actual use of the money collected.
“The main hurdle that companies seem to be raising is ensuring there are safeguards in place for how their funding will be used,” said Vishaish Uppal, a director at WWF-India.
Companies also want to be sure that the Cali Fund’s internationally-accepted certificates – documenting receipt of payment for use of genetic resources – are also accepted nationally, to avoid paying twice.
What does the pharmaceutical industry say?
“The level of participation in the Cali Fund reflects ongoing questions about the design and implementation of the mechanism, rather than a lack of commitment to biodiversity,” said Guilherme Cintra, the director of innovation policy at the International Federation of Pharmaceutical Manufacturers and Associations.
“The current mechanism overlaps with existing law, relies on inaccurate assumptions about how data is used in the discovery of medicines,” he added.
Several major cosmetics companies did not respond to AFP’s requests.
Is success still possible?
The small amount collected “is not enough (on its own) to determine whether the mechanism is a success or a failure,” said Landry from IDDRI.
“In the coming years, the question will be whether governments manage to create the right conditions so that companies marketing products and services based on digital sequence information actually contribute to this mechanism,” she added. AFP