As the United Nations Climate Conference, COP28, kicked off in Dubai on November 30, 2023, it witnessed a significant development with the adoption of the decision to operationalise the Loss and Damage fund. This decision, which gained unanimous support from 196 parties, was a crucial step forward, especially seen as a victory for developing countries in the ongoing battle against climate change.
The initial capital for the fund is set at over $400 million, falling short of the estimated $400 billion required annually. This has raised concerns among experts about the long-term sustainability and viability of the fund in effectively addressing the impacts of the climate crisis.
The COP28 presidency, led by the UAE, played a pivotal role in securing financial contributions to the fund. The UAE pledged $100 million, Germany committed $100 million, the UK contributed £40 million, and £25 million for other loss and damage funding arrangements, the US provided $17.5 million, Japan pledged $10 million, and the EU committed €225 million. These financial commitments aim to assist poor and developing countries in coping with the adverse effects of climate change.
The World Bank is set to act as the interim trustee of the fund, endowed with the legal capacity to execute its roles and functions. The fund will specifically address the needs of vulnerable developing countries, focusing on both economic and non-economic loss and damage resulting from climate change, including extreme weather events and slow-onset events.
Purpose of the Fund
The fund’s purpose extends to financing various challenges associated with climate change impacts, such as emergencies, sea-level rise, displacement, migration, insufficient climate information, and the need for climate-resilient reconstruction and recovery. The text emphasises that developed countries are “invited” to make contributions while developing countries assert that the actual needs are closer to $400 billion per annum. All developing countries are eligible to directly access resources from the fund.
Despite the unanimous adoption of the decision to operationalise the fund, there were reservations from the US and developing countries. The US insisted on clarifying that contributions to the fund are voluntary while developing countries expressed concerns about weak funding arrangements that undermine the historical responsibility of rich nations.
UNFCCC Executive Secretary, Simon Steill, addressed the disparities in contributions, stating that more pledges are expected during the leaders’ summit on December 1 and 2. The decision to operationalise the fund, despite initial objections, reflects a historic agreement, according to Avinash Persaud, a developing country negotiator and special climate envoy to Barbados PM Mia Mottley.
Union Environment Minister Bhupender Yadav hailed the decision as a landmark in addressing the impacts of climate change. The COP28 presidency, represented by Sultan Al Jaber, emphasises the focus on translating visions into practical actions and highlights the importance of the Global Stocktake (GST) in the process.
As the Loss and Damage Fund takes shape, concerns about its long-term sustainability persist. Harjeet Singh, head of global political strategy at Climate Action Network International, emphasised the need for a robust system integrated with the Global Stocktake and the new climate finance goal to ensure a meaningful outcome.
While Loss and Damage pledges are welcomed, Grace Ineza, Global coordinator of Loss and Damage Youth Coalition, stressed that the ultimate goal is a financial mechanism ensuring developing countries have access to adequate, grant-based, and additional finance to address loss and damage on the ground. The responsibility now lies with affluent nations to meet their financial obligations proportionate to their role in the climate crisis. The operationalisation of the Loss and Damage Fund within a year of its establishment marks a crucial milestone, but addressing underlying concerns remains imperative for its effectiveness in the global fight against climate change.
