An analysis on the funding arrangements for addressing Loss and Damage agreed at COP27

New Funding Arrangements for Loss and Damage: A Text with many Tactics

The decision on the establishment of ‘new funding arrangements’ for responding to as well as addressing loss and damages is a significant achievement at COP 27. Having a stand-alone L&D financing facility is indeed a great victory, however the decision text seems very tactical that requires a comprehensive understanding on its different elements and dimension. For instance, addressing L&D, which was the original wording in the Paris Agreement, has been segregated into ‘responding’ and ‘addressing’ wherein addressing will be followed by responding. Literally, responding to L&Ds is linked to averting and minimizing the risks of L&Ds. In terms of averting L&Ds, the decision text emphasizes keeping global average temperature rise to below 1.5 degrees C, meaning that the countries need to increase their emission reduction targets to comply the 1.5 degrees C goal. The other measure of responding to L&Ds include a number of ex-ante measures like Adaptation, Disaster Risk Reduction, Risk Transfer, Social Safety Nets, etc., most of which are in place or coming-up as potential means of responding to L&Ds. The previously ‘Insu-resilience’ and its current modified version ‘Global Shield against Climate Risks’ is a such one that has been launched by the G-20 countries at COP 27. 

The decision text acknowledges ‘limitation’ of the existing funding arrangements and ‘inadequacy’ of funds in terms of responding to L&Ds, therefore establishes a ‘new funding arrangements’ with new and additional resources. These ‘new arrangements’ will complement and include sources, funds, processes and initiatives under and outside the Convention and the Paris Agreement (decision para 2). This decision also requires further explanation on ‘new and additional’ and the ‘sources’. Worryingly, most of the measures for responding to L&D and funding outside the UNFCCC (e.g., Global Shield and commitments of Scottish and Danish governments) are not new and additional. Hence, the phrase ‘new and additional’ should be well explained by a transparent accounting and reporting system.

On legal issues, the decision included a footnote that reads: ‘these items and outcomes thereof are without prejudice to the consideration of similar issues in the future’.  This means that statements and decisions towards funding arrangements of L&Ds should be out of legal jurisdiction if Parties fail to comply with the decision made here. This might allow the Parties to stay non-committed in mobilizing/providing finances for addressing L&Ds, if they wish so. 

Yet, we are hopeful that the ‘Transitional Committee’ that has been established at COP 27 to operationalize these ‘new funding arrangements’ will look into the above issues and make the Fund fully effective for addressing L&Ds on the ground, while upholding the spirit of climate justice. 

Md Shamsuddoha
Center for Participatory Research and Development-CPRD
Dhaka, Bangladesh