What is the loss and damage fund supposed to be?

If its recent sixth Board meeting (B6) was any indication, the Fund for Responding to Loss and Damage (FRLD) still has way more questions to face than answers it is ready to give.

With loss and damage (L&D) effectively deemphasized among the COP30 Presidency's priorities per its fourth letter, the next Board meeting in October, which will also be held in the Philippines, becomes even more critical in providing funding for the most vulnerable countries and communities. 

The operationalization of the Barbados Implementation Modalities (BIM) dominated the discourse at B6. The USD250-million program of grants for "bottom-up, country-led, country-owned" approaches against L&D for these next few years effectively serves as a litmus test of whether the FRLD can be the unique entity as intended.

“BIM” of light?

The balancing act between urgency and diligence has been a running theme under the FRLD so far, and this meeting was no exception. Every aspect of the BIM was scrutinized by the Board and observers with this in mind during the three-day meeting - from the initial funding criteria and program cycle to designating national focal points and defining how direct budget support would function.

Many expected their disappointment with the BIM proposals by the FRLD Secretariat, which is clearly hindered by its small size and lack of technical capacity. Some of its presented strategies and standards resembled too much the existing ones under the World Bank, which is the interim Trustee of this Fund but is not supposed to influence its operationalization of the BIM or any other program in the long run.

Tensions steadily escalated throughout the three days, with a lack of transparency on the papers containing said proposals frustrating both Board members and observers. This culminated during the final hours on the third day, where the session had to be suspended due to disagreements among the Board members.

Ultimately, the Board adopted a few reports that are effectively mere formalities and postponed several decisions related to BIM and policies on stakeholder engagement to future meetings, citing the need for more consultations.

It is understandable that getting the FRLD running will be a tremendously difficult task. This entity was created to "fill in the gaps" in the current climate finance landscape, to show a different approach than what has been seen in the likes of the Green Climate Fund, the Global Environment Facility, and the Adaptation Fund.

It is also understandable that proposals on how to run the BIM might be based or modelled from existing processes in other funding facilities; after all, we often start coming up with solutions based on what we know. These also account for the geopolitical tensions, differing perspectives between the Board and civil society observers, and the current limitations of the Secretariat, especially with the dozens, if not over a hundred proposals to be sent by developing nations.

Yet if the FRLD will reference existing financing mechanisms when developing and executing programs, it must look into two things: what has not worked as much as what has worked, and the context with which it was created in the first place. Otherwise, BIM on its own accord would be regarded as a massive failure, and the FRLD itself is in danger of being just another black mark in climate finance.

It’s about the access 

We must remember that it is not about a lack of climate finance; it's the fact that there is more than enough, but they are largely inaccessible to those who need it the most.

Difficulty in accessing finance has been the biggest roadblock developing nations face in the global climate finance landscape. This is an even bigger issue for the most vulnerable communities, whose needs and concerns are not always accounted for by their respective national governments.

In a way, ensuring the inclusion of communities in developing country-led proposals to access the BIM as part of the funding criteria is a compromise born from all the previously-mentioned factors surrounding these discussions. 

But as many Board members prioritize the global implications, those of us who have directly engaged with communities know that previous funds and spaces in decision-making meant for them rarely makes it to them, due to bureaucratic inefficiencies by governments, international NGOs, or some other entities, or outright ignorance of their needs and concerns. 

Obviously, the vulnerable communities that would benefit from BIM not only would serve as model cases for the future of L&D finance, but also are more than deserving of this support. Every life saved, loss averted, and damage avoided counts, especially with global greenhouse gas emissions still rising.

Yet the bottomline is that USD250 million is simply not enough. Developing countries need billions every year in new, additional, predictable, and accessible L&D finance, not just under a billion in pledges. As long as polluters do not pay up, the most vulnerable will always be the ones to unjustly do so. 

On the road to Belem

With mostly procedural decisions made in the most recent iteration, the next Board meeting will directly address the short-term readiness and long-term sustainability of the FRLD. It is scheduled to launch the call for proposals to access the BIM and for the long-term resource mobilization strategy to be formally presented.

As one of the Co-Chairs expressed to close the third day of the meeting, three months is a short period of time for the Board to reach an agreement on unresolved details and for the Secretariat to efficiently deliver in a manner that involves all relevant non-government stakeholders. This is not to mention the preparations for COP30 in Belem that would serve as a backdrop for this engagement.

It took three decades of tireless campaigning by the most vulnerable to bring the FRLD to life. These next few months will determine just what it can truly be. 

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.