Posted on November, 02 2023

The setting up of a Loss and Damage Fund at the UN climate talks in Sharm El-Sheikh last year was the standout success of an otherwise underwhelming CO27. But with just weeks until COP28 in Dubai, the prospect of the fund being operationalized this year is slipping away – preparatory discussions in October collapsed over disagreements on technical issues.

The Fund was established to provide financial assistance to nations most negatively impacted by the climate crisis. Rapidly escalating climate-related disasters underscore the need for such a fund. In October alone, Cyclone Lola destroyed 10,000 households, roads, schools, and bridges in parts of Vanuatu; Cyclone Hamoon ravaged Bangladesh’s Cox’s Bazar leaving more than 40,000 people temporarily displaced; and a glacial lake outburst flood from the South Lhonak Lake, in India breached taking the lives of more than 40 people and destroying infrastructure including a hydropower dam.

The World Meteorological Organization estimates the impact of a half century of extreme weather events, turbocharged by man-made global warming, at a cost of US$4.3 trillion in economic losses, and caused over two million deaths. Similarly, the IPCC’s 2022 report on Impacts, Adaptation, and Vulnerability said that around 3.3 – 3.6 billion people are highly vulnerable to climate change, and around a billion people are at risk for disaster. 

A Transitional Committee set up to provide recommendations on the operationalization of the new loss and damage fund ended two weeks ago, with no consensus on the way forward. Another meeting has been scheduled in Abu Dhabi from 3 to 4 November as a last-ditch effort to try to reach consensus on the sticky points.

One of the main issues holding up progress is the divided opinion on who will host the Loss and Damage Fund. Developed countries are pushing for the World Bank to be the host, whereas developing countries are calling for a stand-alone host, which will be under the authority and guidance of the COP. 

In Abu Dhabi, members of the Committee must reach consensus on recommendations that ensure a fit-for-purpose Loss and Damage Fund. There is high expectations that the Fund will be operationalized by a decision at COP28. WWF submitted our recommendations for funding arrangements, where we say the committee must agree that:

1. The Loss and Damage Fund should be a standalone entity under the financial mechanisms of the UNFCCC. It should have its own governance mechanisms in place (i.e. Board, Trustee, Secretariat), and serve under the authority and guidance of the COP itself and the countries that have signed and ratified the Paris Agreement (CMA).
2. The composition of the Board should consist of representatives from five UN regional countries groups, representatives from Least Developed Countries and Small Island Developing State as well as civil society representatives.
3. A process to select the host for the Loss and Damage Fund and its secretariat should be launched.
4. Developed countries should be invited to pledge substantial new funding for the Loss and Damage Fund.
5. Loss and damage funding should be simplified and be directly accessible with grant-based financing for vulnerable developing countries.
6. A process should be launched to establish the arrangements for innovative sources of finance that go beyond public finance, such as financial transaction taxes, debt relief, aviation, and shipping taxes. 

What is absolutely clear is that the Committee members must put aside their differences and consider the greater good. Communities are being devastated, lives are being lost, and livelihoods are being destroyed. We cannot deny the most vulnerable communities the financial support they desperately need. We have no time to lose. We need a fit-for-purpose fund, and COP28 must deliver that.

For more information, contact Mandy Jean Woods mwoods@wwfint.org