Loss and Damage Fund: Key takeaways from the 2nd Board meeting

What happened at the 2nd meeting of the Board of the Loss and Damage Fund, last week in Songdo? My key takeaways ??

1? Progress on procedural matters

With a decision on the host country of the Board (the Philippines), the name of the Fund (now officially "Fund for responding to Loss and Damage"), and a Terms of Reference to select an Executive Director, the Board has taken some important procedural steps that will allow it to move forward in the coming months. The Board also adopted a work plan which gives some clarity on the timeline of expected decisions, while leaving flexibility to adjust as the work progresses.

2? Start of more substantive work - but still a long way to go

This meeting saw the start of discussions on key topics that will determine how the Loss and Damage Fund will operate: access modalities & financial instruments.

?? "Access modalities" are very important with regards to breaking free from 'business-as-usual' climate/development finance with large international intermediaries being the main implementers of projects and programmes. This Fund has to be different and learn from past mistakes: we want to see it moving towards direct access for countries - to build institutions and capacity to deal with loss and damage - and, importantly, for communities as first responders and agents of change. For more about community access, read our open letter signed by 350+ organizations demanding a Community Access Window under the Fund.

?? "Financial instruments" are key to realizing justice: we are talking about livelihoods, housing, cultural heritage and health - losses which often can't be repaired and when they can, only fairly so through grants-based finance. Increasing countries' debt burden to address a crisis they haven't caused would be unjust and unethical, and not what this Fund is about. The financial instruments discussion will be key to confirm the Fund's focus on grants.

After an initial discussion, more background research will be done - which should inclusively and comprehensively involve those most affected, and civil society - and further conversations are expected in upcoming board meetings.

3? Recognition of the importance of participation & inclusion

An expected decision on participation of civil society and Indigenous Peoples in the Board meetings was postponed until the 4th Board meeting (at the latest). This is somehow disappointing as a formalization of participation is key to ensure access to all documents & meetings of the Board (also those that are closed & intersessional).

On a positive note, the conversation on this policy and the meeting more broadly demonstrated a wide recognition of the importance to ensure meaningful participation in the context of the Loss and Damage Fund, to ensure it meets the needs and priorities of those most affected. It will be a matter to formalize this recognition, not only in the context of the Board meetings but also when it comes to assessing needs, and planning, implementing and monitoring activities.

Read more about the need for & elements of a comprehensive approach to participation & inclusion in our publication "Loss and Damage Fund: A Participation Blueprint". Co-authored with the ever-amazing Isatis Cintrón Rodríguez & Liane Schalatek .

4? No clarity and lots of contention on the scale of the Fund

Even without a dedicated agenda item, questions around the scale of the Fund seeped into other conversations and demonstrated how those most responsible for the climate crisis are still not ready to talk about the elephant in the room: the hundreds of billions of dollars that are needed to actually address the needs of frontline communities across the globe - and how this Fund is going to operate at that scale. Developing countries rightly argued that talking about access modalities and financial instruments is tough without knowing the scale of the Fund, and brought the need for resource mobilizations to billions to be one of the Executive Director's responsibilities.

The matter did not get resolved, but agreement was found on developing a resource mobilization strategy by the end of 2025.

One thing is crystal clear: without money, this Fund will not deliver justice. Rich countries with high cumulative emissions need to come to the table with a recognition of their responsibility in causing the climate crisis, and a willingness to pay up for the damage it has caused and will cause. A voluntary pledging system will not do and countries will also have to think outside of the box by setting up global mechanisms to make polluters pay.

Beyond the UNFCCC, all eyes are on the International Court of Justice (ICJ) as it develops its advisory opinion on the legal obligations in the context of climate change, and the consequences of breaching those, to confirm the responsibility to redress climate harm and provide reparations.

5? Outstanding issues determining the future of the Fund: World Bank as a host & a human rights-based Fund

Although not prominently featured on the agenda of this meeting, two issues will determine the future of the Loss and Damage Fund, and its ability to deliver justice.

?? World Bank as a host: COP28 invited the World Bank as an (interim) host for the Fund, subject to 11 conditions that the Bank has to meet. In accordance with the foreseen timeline, the World Bank accepted this invitation, and is now working on documentation to set this up. The meeting demonstrated that many questions remain, including on the ability of the Bank to realize direct access for countries and communities, and the high costs associated with this hosting arrangement. The WB's documentation (expected by August 12) will allow the Board - and the world - to judge whether it provides enough proof that the conditions will actually be met. This decision is critical to determine the Fund's future - which should be set up to meet needs and priorities of communities, not to fit the 'business model' of the World Bank.

?? Given the track record of the World Bank as an institution that is focused on lending and investment rather than grants and compensation, and the extensive cases of harm WB-related projects have caused to communities, strong scrutiny is needed before accepting any sort of hosting arrangement. All documentation must be made fully public, ahead of a decision being taken by the Board.

?? Policies to realize a human rights-based Loss and Damage Fund: Crucially, the Board must put in place policies to ensure that the Fund will operate in line with human rights standards and principles. This includes making sure it doesn't do harm (environmental and social safeguards) and focuses on doing good and enhancing substantive equality (dedicated policies e.g. on Indigenous Peoples, gender, children, persons with disabilities...). The work plan includes an accountability framework and safeguards, but lacks explicit references to human rights-based policies. Also crucially missing from the workplan is the establishment of a dedicated, independent grievance redress mechanisms where communities can find access to justice and redress in the context of harm caused by the Fund.

?? These matters cannot be an afterthought and should be front & center on the Board's agenda going forward.

?? Next up: 3rd Board meeting in Baku

?? All eyes on the next meeting of the Board, which will take place 18-20 September (new dates!) in Baku, Azerbaijan. This meeting is set to make the decision on whether or not the World Bank has met the conditions, agree on additional Rules of Procedure and hopefully also the 'Observer policy' determining public participation in the Board, and make significant progress on many aspects that will determine the Fund's future. Stay tuned!