The third Preparatory Commission made real progress on the financial architecture of the BBNJ Agreement — but left some hard decisions for COP1 in January 2027.
The third Preparatory Commission (PrepCom III) for the BBNJ Agreement, also known as the High Seas Treaty, concluded in April 2026 with meaningful but incomplete progress on the institutional architecture, including on finance, needed to make the Agreement operational. A finalised memorandum of understanding with the Global Environment Facility, agreed terms of reference for the Voluntary Trust Fund, and the establishment of an ad hoc committee to design the new special fund represent genuine advances. But significant decisions remain bracketed, including for the COP rules of procedure and financial rules. At the closing plenary, the Alliance of Small Island States put it directly: negotiators left with less progress than the moment and ocean biodiversity demanded. With COP1 confirmed for January 2027, the next nine months cannot be wasted.
PrepCom III (23 March - 2 April 2026) was the last step in a decades-long negotiation process prior to the first Conference of the Parties (COP), now confirmed for January 2027. The BBNJ Agreement entered into force in January 2026, with 88 States Parties now agreed and with a governing body meeting now imminent, the pressure during Prep Com to lay solid financial foundations was acute.
The PrepCom process delivered in some areas and deferred in others, providing a complete list of draft decisions for the COP to consider at COP1. Certain key decisions remain in bracketed text, meaning that unresolved positions will need to be negotiated and finalised at COP1. The Alliance of Small Island States, in its closing statement, was direct: the session had produced less progress than the moment demanded, and too much of what consumed negotiating time had nothing to do with the ocean. That observation points to a structural geopolitical risk for the Agreement as it moves from negotiation into implementation, and it is the backdrop against which COP1's inherited finance agenda should be read.
Understanding what PrepCom III achieved requires a brief background in what the financial mechanism is meant to achieve.
The BBNJ Agreement establishes a financial mechanism under Article 52 with three distinct components. The Voluntary Trust Fund (VTF) supports representatives of developing States to participate in meetings under the Agreement. The Global Environment Facility (GEF) trust fund channels existing multilateral environmental financing to high seas programmes. The special fund, the most novel of the three, is designed (along with the GEF trust fund) to support developing State Parties to implement the Agreement, fund capacity-building and the transfer of marine technology, and support conservation and sustainable use programmes by Indigenous Peoples and local communities. See Financial Architecture of the BBNJ figures for more detail.
As each fund has different governance and operational requirements, PrepCom III was charged with advancing all three to a point where the PrepCom could provide draft decisions so that the COP1 could formally adopt the necessary decisions and begin operations as soon as possible.
The PrepCom approved a complete draft memorandum of understanding (MoU) between the BBNJ Agreement and the GEF Council, the foundational instrument defining how the GEF trust fund will operate and how the two independent bodies will relate to one another.
As the MoU has been inspired by precedent set in other GEF MoUs, such as the Minamata Convention, key provisions for the BBNJ Agreement include a commitment to avoid duplication and promote coherence across the funds in the financial mechanism, reciprocal representation between the GEF and the BBNJ Secretariat at relevant meetings, and a mechanism for the COP to request reconsideration of specific GEF project decisions it considers inconsistent with its guidance. The COP will also conduct periodic reviews of the financial mechanism, including the GEF trust fund, to assess adequacy, effectiveness, and accessibility of financial resources.
COP1 will need to formally adopt the MoU and request the GEF Council to do the same. Delegates have been discussing whether the MoU represents the correct degree of COP oversight over a body (the GEF Council) that operates outside of the BBNJ Agreement’s structure with its own governance structure and membership, adoption may not be a procedural formality.
The PrepCom adopted final terms of reference for the VTF to be adopted in COP1. They confirm that the VTF will support participation of representatives of developing States Parties, with particular attention to least developed countries, landlocked developing countries, and small island developing States, in COP meetings and their subsidiary bodies. Notably, this includes meetings of additional ad hoc groups, working groups, and subcommittees, subject to fund availability.
One of the questions that remains for COP1 to resolve is whether the fund would support one representative per State or at least one. The distinction matters, "at least one" opens the possibility of supporting larger delegations from States with fewer resources, which can significantly affect equitable negotiating capacity and balance.
The deeper question for COP1 will be how much developed States Parties choose to contribute as the VTF operates on voluntary contributions. How well it functions and the Agreement will uphold principles such as the full recognition of the special circumstances of small island developing States and of least developed countries, will depend on the political will of those States with the means to fund it.
The special fund is where PrepCom III made its most significant decision.
After two weeks of intensive negotiations, the PrepCom debated between two different modalities that could be used to operationalise the special fund between COP1 and COP2. Eventually, delegations agreed in its draft decision to recommend that COP1 to “establish a transparent, timebound and cost-effective ad hoc committee to assist in the operationalization of the special fund”. Once established at COP1, the committee “shall develop and recommend a constitutive document for the special fund” for consideration and adoption at COP2. This sets the initial timeline for special fund operationalisation to take at least another two years, as States seek to operationalise the fund as soon as possible, and find a home for the initial assessed contributions to be paid by developed States parties.
Negotiations around how to title the document notwithstanding, the constitutive document (e.g., other multilateral environmental agreements call this document a governing instrument or a type of charter) will determine how the fund will be governed, who can access it, on what terms, and with what oversight. Getting this right is not a technical formality; it is the design decisions that will determine whether the special fund becomes a meaningful tool supporting developing States parties or a mechanism that is nominally operational but underfunded, inaccessible, and difficult to use in practice. Poorly designed financial mechanisms under other multilateral environmental agreements have taken years to become functional, diverting energy and resources that could otherwise support practical conservation and sustainable use programmes. COP1 has the opportunity to learn from the establishment of previous multilateral funds, including the Cali Fund, and the use of transitional committees for the Green Climate Fund and the Fund for Responding to Loss and Damage.
The composition of the ad hoc committee generated significant discussion. The PrepCom settled on 35 members: 12 from developed States Parties (Western Europe and Others Group) and 19 from developing States Parties, including two from small island developing States, two from least developed countries, and one from landlocked developing countries. Two seats are allocated for Indigenous Peoples, selected from the seven Indigenous sociocultural regions, and two for local communities. Having learned from past processes, the committee will meet four times in person, with potential additional virtual consultations.
The terms of reference annexed to the draft decision require the constitutive document to address scope, governance structures (including trustee and secretariat), legal status, operational modalities, including access, financial resources, and the “ability to use innovative financial tools to leverage additional resources”; complementarity with other funds, reporting, accountability, review, and evaluation. That is a substantial mandate to deliver between COP1 and COP2, which will include significant discussion around the type of fund the special fund will become and the potential involvement of the private sector.
The COP draft rules of procedure and financial rules remained among the most contested elements of PrepCom III. Draft financial rules were finalised and will be sent to COP1, but key provisions remain in bracketed text as States were unable to reach a clear consensus.
Assessed contributions, the mechanism by which States Parties fund the Secretariat and core COP operations, generated notable discussion. These will be determined using the UN scale of assessments, adjusted so that no Party contributes less than 0.001% or more than 22% of the total. A specific cap was agreed for least developed country Parties, whose contributions will not exceed 0.01% of the total, currently leaving out Small Island Developing States from the cap.
Discussions on arrears remained unresolved, with States divided between punitive approaches and more supportive pathways. Although the mandate of a future finance committee was clarified during informal consultations, finding that it will play an advisory role on budget proposals rather than function as a budgetary chokepoint, much progress is needed to operationalise the future committee.
COP1 will need to resolve the outstanding brackets and formally adopt the rules. Precedents from other multilateral environmental agreements have shown that this is no easy task, and until it does, the COP cannot fully function as a governing body.
The final finance sticking point of the negotiations was around the COP rules of procedure and the establishment of the finance committee. There was a central question around whether or not the finance committee should act as a budgetary oversight body, with effective control of the budget, or as a finance advisory body, which would be limited to the functions identified in the Agreement, such as looking at resource mobilisation.
At the end of the negotiations, there was general agreement that the committee would keep only an advisory capacity, providing inputs for the budget proposal which would be prepared by the Secretariat.
A second issue was the composition of the finance committee, including contested discussion around dedicated seats for major contributors and categories of developing States (Small Island Developing States, or Least Developed Countries). As these remained unresolved, these issues were forwarded with brackets for consideration at COP1.
COP1, expected at UN Headquarters from the 11th to the 22nd of January 2027, will need to resolve the following:
Formally adopt the Memorandum of Understanding with the Global Environment Facility;
Establish the ad hoc committee on the special fund;
Adopt the Voluntary Trust Fund terms of reference;
Resolve outstanding bracketed text in the rules of procedure and financial rules, and adopt them;
Negotiate the functions and structure of the finance committee and establish the subsidiary body.
These are not administrative tasks. Each carries decisions about power, access, and accountability that will shape the Agreement's ability to deliver for developing States and ocean-dependent communities. The period between now and COP1, through intersessional work and informal consultations, will be important for narrowing the remaining gaps before Parties meet as a governing body for the first time.
The BBNJ Agreement is the product of two decades of negotiation and represents a significant advance in ocean governance. The financial mechanism is where that commitment will be tested. COP1 needs to show that the Agreement can deliver meaningful and equitable support to the States and communities that need it most.
The UNSW Centre for Sustainable Development Reform (CSDR) serves as Secretariat to the BBNJ Finance Advisory Group. The Advisory Group brings together global experts serving in their personal capacity to provide thought leadership on innovative financial mechanisms for the implementation of the BBNJ Agreement. Members represent diverse geographical and gender perspectives, with specialised knowledge in international finance, ocean governance, and environmental law.
At PrepCom III, AOSIS, the Permanent Mission of Singapore, and CSDR hosted a breakfast event to launch new research on the modalities for operationalising the special fund. The paper by Joe Thwaites & Steve Herz on behalf of the Advisory Group: Multilateral Environmental Agreement Funds' Transitional Committees and Open-Ended Working Groups is available on the CSDR website.
All research outputs from the Advisory Group are available on the BBNJ Advisory Group page on the CSDR website.
