Loss & Damage Fund: Developed Nations Delaying Action and Undermining Climate Justice 

This article refers to developed and developing countries, as this is the terminology used for the Loss and Damage Fund. The categorisation is that set by the United Nations and is used in this article since it defines the structure of the Board for the Fund. However, it is important to recognise that these terms are contested and outdated [1,2], implying that there is one ‘right’ development pathway. These dichotomies often ‘pit’ countries against each other, reinforces racist hierarchies and fails to recognise that all countries are constantly developing. More inclusive terminology is needed in international development, and to avoid the perpetuation of injustice countries may be better grouped using evidence-based categories (e.g. by geographic location, or wealth) rather than generalised and stereotypical terms [3].

by Nicole Gray

Introduction

3.6 billion people across the globe are highly vulnerable to climate disasters [4]. Developing nations face greater risks from climate change and have contributed less to the problem; they are responsible for just 21% of historical carbon emissions [5, 6]. This figure falls when we consider colonial rule – as shown in Figure 1 [7]. While wealthy nations may seem to be reducing their emissions based on their declining territorial emissions, such figures hide the true state of affairs. When we consider their full carbon footprint, including offshore emissions (those associated with products and services produced overseas for said country) the story is rather different. For example, in 2019 high-income countries were responsible for 40% of global consumption-based CO2 emissions compared to 0.4% from low-income countries(mostly in the Global South) [8] . This glaring discrepancy exemplifies climate injustice and highlights the clear obligation of wealthy nations to tackle, if not lead, on tackling the climate crisis. Climate injustice is an ongoing and intensifying problem that wealthy nations have a clear responsibility to tackle, if not lead on. Yet their engagement and action regarding  the Loss and Damage Fund (hereafter L&D Fund), intended to tackle some of these problems, signals the  opposite.

Figure 1: Cumulative historical emissions from 1850-2023 accounting for colonial rule

L&D: a beacon of hope or the bare minimum?

After decades of efforts by  low and middle income countries (LMICs), the L&D fund, first proposed by Vanuatu in 1991, was finally agreed to  at  COP28 [9]. The Fund intends to address the adverse and unjust impacts of climate change that disproportionately burden developing nations. 

After thirty years of resistance from wealthy nations, many see the establishment of the Fund as a watershed moment. However, the fact that it took so long  to establish the fund is disappointing and indicative of  the insufficient attention and urgency wealthy nations pay towards issues of climate justice. Furthermore, the establishment of the Fund is not inherently a sign of change. The COP28 agreement mandates the election of a 26 member Board, and the first Board meeting was meant to be in January. However, developed nations have missed the deadline for electing their Board representatives, and thus no meeting has yet occurred. Was the COP28 agreement really a landmark achievement, or was it simply a tokenistic gesture  from developed nations who, rather than accelerating action, wish to maintain  business as usual for as long as possible?

There are also other issues with the L&D Fund. Firstly, it  barely scratches the surface in terms of  the finance that is needed. Pledges account for less than 0.2% of the losses (economic and non-economic) countries face from climate change and some of the pledges are not new but are simply existing climate finance repurposed for the Fund [10]. Secondly, it only addresses the financial implications of climate change; addressing loss of culture, heritage and other non-economic losses poses a greater challenge which the Fund does not account for [11]. Moreover, the Fund is being hosted by the World Bank, which has been criticised for lacking independence, indebting nations through its loan-based approach, and preventing communities from directly accessing funds [12]. Despite the opposition of developing countries to the World Banks involvement, developed countries claimed that their involvement was necessary to rapidly operationalise funds.. Ironically, it is now the developed countries that are delaying this ‘rapid operationalisation’ and leaving developing nations waiting.

Delay, delay delay

The COP28 agreement states that the Fund should be hosted by the World Bank for the first four years and governed by a 26-member board, with an election deadline of 31 January 2024. The Board’s  role – to fairly allocate and manage the fund – is critical, as there is a finance deficit and contestation on allocation principles. Yet, despite agreeing to the principles of the Fund at COP28, when the deadline for nominating Board representatives closed on the 31st of January not one developed country member had been nominated. 

A number of reasons have been suggested for the delay – contestation over the limited seats, debates over ‘fair burden sharing’ – but when asked to comment on the delay several countries rejected to comment [13]. More skeptical perspectives see the delay as ‘stalling’, prolonging the generation of profit from carbon intensive and nature destructive activities. Regardless of the true reason behind the delay, it is unacceptable.  Each delay by developed nations postpones the pursuit of justice that developing countries have been pushing for in climate negotiations since 1991, and even earlier in other domains. 

The need for reparation, now

The failure to elect the Board is estimated to cause a three to four month delay, and risks jeopardizing the negotiations, milestones and targets that need to be achieved by COP29. Moreover, climate vulnerable countries are already suffering. Since 1991, 79% of climate-related deaths have been in developing countries, as have 97% of the people impacted by extreme weather events [14]. With every delay these injustices intensify. Developed nations have more resources to cope with climate-related impacts and a responsibility to support vulnerable countries that are less well-equipped, due to their disproportionate contribution to climate change. However, their actions are misaligned with reparation. Wavering commitments and delayed action  are not limited to the Loss and Damage Fund. This wider picture demonstrates inadequate ambition and responsibility from developed nations, and shows how the wider landscape of inactionallows developed nations to keep profiting from carbon intensive activities at the expense of many developing countries [15]. 

What does this mean for leadership?

In addition to the huge responsibility developed nations have to operationalise the Fund, the stagnation of action demonstrates weak leadership from those most well-equipped to address sustainability issues. Ironically, it is often those less well equipped to tackle climate change that demonstrate the strongest climate leadership [16]. The L&D Fund is crucial to compensate climate-vulnerable nations, and the current deadlock speaks volumes about the authenticity of ambition displayed from developed nations. 

Future challenges

The failure to elect Board members, combined with the other aforementioned issues associated with the L&D Fund, is highly disappointing. Developed nations are failing to take responsibility for their actions and to demonstrate the ambitious leadership needed to truly help us come together to tackle the climate crisis. They have fallen at the first hurdle which, given the future challenges that actioning the Fund will face, is concerning. Even once the Board is elected, decisions need to be made on how to spend the funds, how to replenish the funds, and how to ensure pledges are followed through [17]. If developed nations cannot organise their representatives, can we really be confident that these challenges will be handled in a way that truly addresses climate justice? 

Conclusion 

In conclusion, there is an urgent need to establish a strong and ambitious Loss and Damage Fund to support those that are already disproportionately and unjustly suffering from the impacts of climate change. The Fund itself only addresses the economic dimension of this suffering, but would nonetheless be a good start and hopefully pave the way for greater climate justice in other arenas. However, the failure of developed countries to elect Board representatives for the Fund indicates their lack of willingness to take  responsibility for their contribution to climate change and their  insufficient leadership on climate-related issues. The question, then, is what will it take for developed countries to do the bare minimum, and more?

References 

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