Loss and Damage Fund

Last COP27, countries all over the world decided to establish new funding arrangements for loss and damage. Part of this is the creation of the Loss and Damage Fund which is the result of the decades of struggle of the peoples and communities of the Global South for a dedicated fund that will address, avert, and minimize loss and damage.

But as the Loss and Damage Fund is still being deliberated and is yet to be operational, the peoples and communities of the Global South lay out their demands in the financial arrangements, governance, and principles that must be championed in and by the Fund–all based in climate justice and reparations.

In this briefer, the basics of Loss and Damage are explored, as well as the questions and answers regarding the principles and demands of the peoples and communities of the Global South on the Loss and Damage Fund and Loss and Damage Finance, in general.

A Loss and Damage briefer and our demands towards COP28

Critical Crossroads: Advancing Reparations through the Loss and Damage Fund

Loss and Damage:
An infographic

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1. The LDF serves as a financial intermediary fund (FIF) under the World Bank, which has a track record of financing over $3.8bn worth of fossil fuel projects in 2022 and continues to spiral the Global South into more debts.

2. Instead of being an independent fund under the UNFCCC, the LDF abides by the business model of an MDB notorious for imposing loans and conditionalities to Global South countries;

3. The LDF will be governed by a Board that is mostly composed governments of rich countries, similar to the World Bank’s governance structure; and

4. The LDF will course its finance through other multilateral development banks (MDBs) following the same profit-oriented operations.

Peoples and communities of the Global South have long been campaigning for an independent, democratically-governed, and non-debt-creating Loss and Damage Fund. If the US’ proposal gets adopted, the Global South will further spiral down into more debts; governments of rich countries will continue earning profit from the climate crisis through more “climate loans”; and the LDF will just be another fund that does not respond to the growing financial needs of the peoples and communities of the Global South.

During the last Loss and Damage Fund (LDF) Transitional Committee (TC) meeting held early this month, the United States (US) forwarded a number of proposals that are against the demands of the peoples and communities of the Global South around loss and damage, including the operationalization of the LDF. These proposals include:

We cannot allow the US, through the World Bank, to take over the Loss and Damage Fund!