Dubbed the ‘finance COP,’ COP29 in Baku next month will see countries grapple with the finer details of the long-awaited loss and damage fund. This crucial initiative, established to compensate low-income nations for climate-related disasters, could begin disbursing funds as early as 2025.
The road to operationalizing the fund has been long and challenging, but significant strides have been made. A board has been appointed to oversee the fund, a host country has been chosen, and the Philippines has been selected as its institutional home. Ibrahima Cheikh Diong, a seasoned financial expert, was appointed as the fund’s executive director at a pre-COP meeting in late September, solidifying the fund’s leadership structure.
Crucial groundwork has been laid to enable funding disbursement in 2025, paving the way for the first time for vulnerable countries to receive financial assistance for climate-related damages. “This breakthrough in Baku marks a crucial step in enabling action on climate change,” COP29 president-designate Mukhtar Babayev said in a statement. “This is a truly historic day, years in the making, that has required determination from so many and an unwavering focus on the needs of those on the frontlines of the climate crisis.”
The COP29 presidency has expressed its commitment to working with countries that have pledged contributions to convert those pledges into tangible funds, ensuring that those most affected by climate change receive the support they urgently need.
The fight for an operational loss and damage fund has been a long and arduous one, with African countries, climate justice activists, and less-developed nations leading the charge for decades. The call for assistance for countries suffering catastrophic losses due to climate change has been met with resistance from wealthier nations, reluctant to shoulder the responsibility for their historical greenhouse gas emissions.
The groundwork for the fund was laid at COP27 in Egypt in 2022, where a landmark agreement was reached to establish a fund to help developing countries offset the damage from climate-related disasters. This historic decision was followed by a wave of pledges, totaling over $700 million (€634 million), at the end of the climate conference.
However, in the 12 months since, the fund has only received an additional $100 million (€91 million), raising concerns about a lack of momentum and commitment from wealthier nations. The fund’s board has argued that it needs $100 billion (€91 billion) more annually by 2030 to effectively address the escalating costs of climate change. Yet, experts caution that even this figure might be significantly lower than the actual need.
Estimates project that annual losses and damages from climate change in developing countries could reach $400 billion (€362 billion) by 2030, with expectations that this figure will continue to grow. “This is a drop in the ocean, compared to the trillions needed to address the escalating costs of the negative impacts of climate change,” Bahamas Prime Minister Phillip Davis told the UN General Assembly in September. “This is not just an issue of funding. It is fundamentally an issue of sustainability and survival. Without it, peace and security mean nothing.”
Davis emphasized the need for the fund’s full operationalization, highlighting the importance of accountability and responsibility in building a future where those most responsible for climate change contribute most to addressing its consequences. He called on developed nations to “step up” with concrete commitments that reflect the magnitude of the crisis.
The COP29 Presidency has identified one of its primary goals as rallying further contributions to the loss and damage fund, recognizing the urgency of the situation. The success of the fund, and its ability to deliver tangible support to vulnerable nations, hinges on the willingness of wealthier countries to fulfill their financial obligations and demonstrate a commitment to climate justice.
