Does the loss and damage fund represent a new dawn in climate justice?

Sustainable Leaders | Global

By George Blake, Kingfisher Writer

Published December 23rd, 2022

An agreement reached at COP27 to establish a ‘loss and damage’ fund was hailed as ‘historic’, as industrialised countries finally acknowledged some responsibility for the climate disasters affecting developing nations. But should they temper their optimism? There are doubts the fund will bring in additional money.

After fraught and mammoth-long negotiations, a ‘historic’ deal was eventually reached at COP27 in Sharm el-Sheikh to establish a ‘loss and damage’ fund, which will see developed countries provide finance to developing countries affected by climate-related disasters.

Alok Sharma opened the COP27 conference following the UK’s presidency at COP26 in Glasgow. | UK Government / Flickr

Many developing countries hailed that this agreement marked a turning point in climate justice, feeling vindicated that developed countries were finally willing (at least somewhat) to acknowledge the damage caused by climate change and that they ultimately bear some responsibility.

However, while the immediate response has been one of jubilation and hopefulness from many, a lack of detail and binding commitments risks the ‘loss and damage’ fund becoming yet another aspirational but unachieved agreement.

The idea of ‘loss and damage’ is that poorer countries who bear little, if any, responsibility for climate change, should receive finance (essentially compensation) from richer polluting countries for the damage already being caused by climate change.

‘A ‘historic’ deal was eventually reached at COP27 in Sharm el-Sheikh to establish a ‘loss and damage’ fund.’

It has long been a demand from developing countries ever since the first climate negotiations summit back in Rio in 1992, but until now, no agreement could ever be reached.

The impasse was finally broken, partly due to several recent high-profile climate disasters that have highlighted that the impacts of climate change are already with us, particularly the devastating floods in Pakistan—which impacted over 30 million people and is set to cost at least $30 billion—and an unprecedented fifth failed rainy season leaving Somalia on the brink of famine..

The fact the conference was held in Africa—the most climate-vulnerable continent—also ensured that the topic of ‘loss and damage’ remained high on the agenda. These factors along with robust pressure/advocacy from the G-77 (plus China), a coalition of more than 170 developing countries, saw industrialised countries that traditionally blocked such proposals (principally the U.S. and EU member states) finally relent.

Recent floods in Pakistan killed over 900 people and affected over 30 million. | IRIN / Flickr

Developing countries rejoiced at the agreement. Sherry Rahman, for example, Pakistan’s climate change minister, hailed the agreement to rapturous applause across the conference hall, saying that ‘[the deal] is not about accepting charity. It is a down payment on investment in our futures, and in climate justice.’

While Molwyn Joseph, Minister of Health, Wellbeing and the Environment of Antigua and Barbuda, and chair of the Alliance of Small Island States, said ‘the international community has restored global faith in this critical process that is dedicated to ensuring no one is left behind.’ He added that the agreement is a ‘win for the entire world.’

However, despite the fact that an agreement being reached is positive, we have to remain realistic about what tangible benefits it could bring.

‘An unprecedented fifth failed rainy season leaving Somalia on the brink of famine.’

In reality, all the agreement currently stipulates is that the process of establishing a fund will begin. Over the next year, a ‘transitional committee’ consisting of representatives from 24 countries will develop and propose a series of recommendations that will be considered at COP28 in Dubai.

Critically, developed countries have ensured that any terms such as ‘liability’ or ‘compensation’ are not included in the text and that all contributions to the fund will be solely voluntary. It also remains unclear whether the fund will bring in any additional money, it is potentially more likely that existing adaptation money or aid will simply be shifted to this new fund.

Given that the infamous climate finance target of $100 billion for developing nations promised by wealthy countries back in 2015 was not reached, it is naive to believe that the establishment of this new fund will bring in vast swathes of ‘new’ funding.

No concrete details regarding the ‘loss and damage’ fund will be agreed upon until COP28 in Dubai, in November 2023. | Alexander Kluge / Flickr

Domestic pressures in wealthier nations may also limit public and political enthusiasm for what is essentially climate reparations (in blatant disregard of any semblance of climate justice), and could further restrict available funding. For example, the UK has cut its foreign aid budget indefinitely until domestic economic pressures ease.

Additionally, while developing countries may receive some ‘loss and damage’ finance, the amounts could be inadequate to cover all climate-related costs. It is estimated that it will cost $16 billion for resilient rehabilitation and reconstruction work in Pakistan alone following their devastating floods, this is just one event in a series of climate disasters that are only set to worsen.

‘It is naive to believe that the establishment of this new fund will bring in vast swathes of ‘new’ funding.’

A framework also needs to be established regarding who will receive funding and who will decide whether a prolonged drought is more urgent than a sudden flood event. It is not difficult to imagine competing claims quickly becoming mired in geopolitics.

Finally, there are questions around how money will be delivered. Will it be tied up within funding for specific resilient infrastructure projects? Will it be left to central governments to decide how best to spend it? Will local charities or NGOs receive funding? Or could the money be given directly to individuals and communities to spend how they see fit?

Somalia is in the midst of a brutal drought, with many at risk of famine. Would it take precedent over the recent floods in Pakistan? Would there be enough funds to give to both? Who would decide? These are just some of the unanswered questions regarding the new fund. | UNICEF Ethiopia / Flickr

So while current optimism is justified, a huge amount of work remains to ensure we do not repeat the mistakes of the past. Throughout the many iterations of climate COPs, there has been a myriad of funds established that have never reached the scale their main advocates wished for.

We will ultimately have to wait until COP28 to get more concrete details, and perhaps many years beyond that before we can truly judge its success. But one thing is for certain, COP27 has fundamentally shifted the debate around ‘loss and damage’, both within the sphere of political negotiations and in the public domain.

Now that a preliminary agreement is in place, richer nations will be subject to higher levels of scrutiny and are likely to find it more politically challenging if they fail to contribute additional funding.

Featured Image: Friends of the Earth Scotland | Flickr

Harvey F, Lakhani N, and Morton A. (2022) ‘COP27 agrees historic ‘loss and damage’ fund for climate impact in developing world.’ The Guardian. Available at: [Accessed December 8th, 2022]

Najam A. (2022) ‘COP27’s ‘loss and damage’ fund for developing countries could be a breakthrough - or another empty climate promise.’ The Conversation. Available at: [Accessed December 8th, 2022]

Najam A. (2022) ‘Welcome to the Age of Adaptation.’ Boston Globe. Available at: [Accessed December 8th, 2022]

Reuters. (2022) ‘Pakistan Floods Have Affected Over 30 Million People: Climate Change Minister.’ U.S.NEWS. Available at: [Accessed December 8th, 2022]

World Bank. (2022) ‘Pakistan: Flood Damages and Economic Losses Over USD 30 billion and Reconstruction Needs Over USD 16 billion - New Assessment’. World Bank. Available at: [Accessed December 8th, 2022]

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