What’s new in the climate finance arena?

During the second meeting of the Board of the Fund for Responding to Loss and Damage held on July 9, 2024, the decision was made to designate the Philippines as the host country of the Board.

The meeting, which took place on July 9-12 in Songdo, Korea, marked the second gathering of the Board of the Loss and Damage Fund (now officially known as the Fund Responding to Loss and Damage, FLD).

The establishment of the FLD took place at COP27 and was put into operation at COP28 after years of advocacy by developing nations. The fund’s board, responsible for initiating the fund’s activities, now consists of 26 members representing 14 developing and 12 developed countries, with co-chairs from France and South Africa. Despite Pakistan’s status as one of the most climate-vulnerable nations on the Global Climate Risk Index by Germanwatch, it could not secure a position on the board. However, there is an opportunity to join the board when alternate members are rotated, contingent upon the availability of existing Board members.

Initially, three global entities, UNDP, UNFCCC, and GCF, form the interim secretariat of FLD until the World Bank takes over, demonstrating its ability to meet a set of conditions established at COP28. However, it is yet to be determined whether the accreditation process for the fund will mirror the meticulous and comprehensive process of the Green Climate Fund (GCF) or if it will be streamlined and easily accessible to those in need. Initial discussions suggest that UN bodies and certain global entities have received, or may already possess, accreditation to the funds. Further details are expected to emerge, ideally before the third meeting in Azerbaijan.

To date, a total of 19 countries have committed $792 million, with the government of Korea pledging $7 million during the second meeting of the board in Songdo. While the pledged amount may appear insufficient compared to the needs of vulnerable countries and the expectations of developed nations, it is essential to monitor the evolution of the fund in the upcoming years.

There was a consensus among members on the importance of adopting a country-programmatic approach based on the national response plans of vulnerable nations. The developing ‘parties’ advocated for direct access modalities, including direct budget support, while the developed [nations] remained focused on a broader range of instruments and underscored the importance of safeguards and fiduciary standards. Additionally, although not initially on the agenda, discussions on the upcoming NCQG negotiations overshadowed the actual agenda during the second meeting.

During the board meeting, the members also decided that a resource mobilization strategy would be agreed upon by the end of 2025. Additionally, the responsibilities of the executive director, yet to be appointed, encompass mobilizing billions of dollars envisaged for FLD.

Alongside the FLD developments, some significant developments have taken place in the realm of climate finance in the global arena in the past few weeks. During the 39th Board meeting of the Green Climate Fund (GCF) held in Songdo, Incheon, Republic of Korea, over one billion dollar funding decisions were made on 17 new projects in 35 developing nations. The decision expands GCF’s portfolio to 270 projects to an expected total of $58.7 billion, including $14.9 billion in committed GCF funding. Pakistan has also been awarded $9.8 million in its project titled ‘Integrated climate risk management for strengthened resilience to climate change in Buner and Shangla Districts of Khyber Pakhtunkhwa Province, Pakistan.’

Similarly, Azerbaijan, the host country of COP29, has introduced the Climate Finance Action Fund (CFAF) to support climate initiatives in developing nations. The CFAF will receive funding from fossil fuel-producing countries and companies involved in oil, gas, and coal, with Azerbaijan being one of the founding contributors. The initial fundraising target is set at $1 billion, as the president-designate of COP29 urges potential contributors to step forward with climate finance.

All these developments on climate finance fronts lay responsibility on vulnerable countries for readiness on their part. They need to initiate robust efforts to bridge data gaps, assess the conditions of vulnerable communities, and develop response plans – both for rapid and slow-onset events. The efforts must include assessing economic and non-economic losses and damages experienced by the communities.

The countries also need to assess the quantum of climate-induced migrations and displacements and suggest clear plans for dignified human mobility, relocations, or migration in cases of temporary and permanent loss and damage’. The governments need to integrate protection schemes in the development plans and come up with evidence-based concrete requests for financial instruments and support – all this holds true for Pakistan.

At this point, the FLD is still in its inception phase with its discussions intensely focused on setting up policies and processes rather than the substance of what it will do. Pakistan must push for its name to be added to the particularly vulnerable list of countries; this will create an opportunity to support inclusion in rapid disbursement modalities. This is also critical for the government, ahead of the 11th Technical Expert Dialogue (TED) and 3rd Ad hoc Work Programme (AHWP) on the New Collective Quantified Goal on climate finance (NCQG) scheduled to be held on September 10-13 this year, to have a dedicated focus on how the needs of the most vulnerable groups, such as children, youth, women, people with disabilities and displaced people will be considered and addressed through the NCQG – including impacts and their role as stakeholders.

It is also crucial to understand the trajectory of FLD events discourse. An annual high-level dialogue on the coherence of L&D funding arrangements is set to be initiated at the COP29 in Baku. However, the inaugural high-level dialogue is scheduled in the first half of 2025, providing the vulnerable and other stakeholders to periodically engage and raise concerns.

The next meeting of the FLD Board is to be held on September 18-20 in Baku, Azerbaijan where Pakistan can put forward its case for membership along with concrete proposals for finance. We need to grab our piece of the climate finance pie. This requires deep knowledge, exact cognizance of happenings at climate fora, the right people for the right job, and a strong will by the decision-makers to serve the people of Pakistan.

The writer is a climate governance expert. He tweets/posts @razashafqat and can be reached at:

razashafqat@yahoo.com