News18 at COP28 | Summit Starts With Draft Text Proposing World Bank as Loss & Damage Fund Host – News18

The 28th United Nations Climate Summit (COP28) has begun in the UAE with a draft text decision on the much-awaited Loss and Damage fund on the table. The new text by the COP28 UAE Presidency, released just ahead of the opening plenary session, calls upon the developed countries to lead in committing finance to the crucial fund.

The much-awaited L&D fund was set up at COP27 in Sharm-el-Sheikh last year to support developing countries particularly vulnerable to adverse effects of climate change. After five rounds of rocky negotiations, the Transitional Committee (TC) met in Abu Dhabi and finally managed to agree on a set of recommendations that are expected to be at the centre of negotiations at the two-week long climate summit.

The overall language of the new text remains somewhat similar to the Committee’s recommendations. The eligibility for access to the fund is limited to “particularly vulnerable” developing countries as before. Nonetheless, the new document also urges developed countries to continue providing voluntary support for activities to address loss and damage, and invites them “to take the lead to provide financial resources for commencing the operationalization of the Fund”. No country, though, is legally obliged to contribute to the fund as of date.

Developing countries are confident that the hard-fought fund will get operationalized at COP28, but reiterate the need to enhance its financial scope and necessitate hundreds of billions of dollars annually. Experts say it is critical to establish a process to initially capitalise it and replenish it periodically so that those bearing the brunt of climate disasters are adequately compensated.

India also remains extremely vulnerable to impacts of climate change, and has continued to highlight the need for new and additional financial resources that are among the commitments and responsibilities of the developed countries under UNFCCC and the Paris Agreement.

WHO WILL HOST THE FUND?

Another crucial question is where the fund will be hosted. The Abu Dhabi committee agreed to invite the World Bank to promptly operationalize the fund as a financial intermediary fund for an interim period of four years. The World Bank is to be the trustee and host of the Fund’s Secretariat, much to the dismay of developing countries, who opposed it tooth and nail, but ended up “compromising” to reach some kind of consensus.

Now, the new draft decision suggests that “if the World Bank has not confirmed that it is willing to meet the conditions from developing countries within the next six months, then the Board will launch the selection process for the host country” this year and end at COP29 next year.

But climate activists say the new draft decision also falls short of fully addressing developing nations’ concerns, including the proposal to designate the World Bank as an interim host. “The World Bank has, in principle, agreed to the conditions proposed by developing countries, which include enhanced access and independent decision-making for the fund. It must be held accountable to revise its policies to meet these commitments and to effectively deliver finance to vulnerable communities and countries during its tenure. Any deviation from these commitments must result in the World Bank losing its role as the interim host of the new fund,” said Harjeet Singh, head of global political strategy at Climate Action Network (CAN) International.

NEW BOARD, FIRST MEETING BEFORE JANUARY 31

The proposed fund will be supervised by a 26-member Board with 12 developed and 14 developing countries headed by an Executive Director. The first meeting of the Board of the Fund is required to be held before January 31, 2024 once all voting member nominations have been submitted.

The Board can establish and apply its own eligibility criteria, but in current form, it allows all developing countries to directly access its resources, including through subnational, national and regional entities and through small grant funding for communities, consistently with the policies and procedures to be established by the Board.

The fund aims to provide finance for loss and damages incurred by developing countries due to climate change, such as sea level rise, displacement, relocation, migration, and the need for climate-resilient reconstruction and recovery.