IAS Gyan

Daily News Analysis


2nd March, 2024 Environment


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Picture Courtesy: https://www.onenews.ph/articles/phl-secures-loss-and-damage-fund-board-seat

Context: The delay in developed countries nominating members to the Loss and Damage Board could result in a delay in disbursing the pledged funds at COP28, posing a potential threat to millions affected by the severe impacts of climate change.

Key Highlights

  • Formation of the Fund: The Loss and Damage Fund was formally established at the 28th Conference of Parties to the United Nations Framework Convention on Climate Change (COP28). It aims to provide financial support to nations facing severe consequences such as droughts, floods, rising sea levels, and loss of livelihoods due to global warming.
  • Delay in Board Formation: The Fund is governed by a board comprising 26 members, with representation from both developed and developing countries. While developing countries have nominated their members, developed countries have not done so yet, causing delays in the Fund's operationalization.
  • Disagreements among Developed Countries: The delay is attributed to disagreements among developed countries over the distribution of seats on the Board. Issues include the number of seats each country should have and the basis for their allocation, particularly concerning countries that have pledged money to the Fund.
  • Impact of Delay: The delay in forming the Board hampers the disbursement of funds pledged at COP28. It also threatens to derail the timeline set for the Fund's operationalization, including a June deadline for the World Bank to confirm its willingness to host the Fund under conditions set at COP28.
  • Role of the World Bank: Developed countries initially pushed for the World Bank to host the Fund, citing its potential to expedite operationalization. However, developing countries raised concerns about the Bank's working culture and interests. Agreement on hosting conditions is crucial, and failure to reach an agreement could further delay the Fund's operationalization.
  • Call for Action: There's a call for more pledges from developed countries, as the $700 million announced at COP28 is considered insufficient compared to the losses faced by developing countries due to global heating.
  • Hope for Operationalization: Despite the delays and challenges, there is hope that the Fund will be fully operationalized this year. However, this depends on resolving disagreements, finalizing Board nominations, and securing an agreement on hosting conditions with the World Bank.

Loss and Damage Fund

Key Points


What is it?

A financial mechanism was announced at COP27 to help developing countries that are especially vulnerable to the negative impacts of climate change.


To provide financial assistance to developing countries those are disproportionately impacted by the adverse effects of climate change, despite contributing relatively little to the problem.


The establishment of this fund marks a major breakthrough after decades of advocacy by developing nations.

It acknowledges the historical responsibility of major emitters and aims to bridge the gap between climate impacts and financial support.

How it Works

Contributors: Primarily developed countries, the largest historical polluters, are expected to contribute to the fund. Other potential contributors include emerging economies and private donors.

Recipients: The fund focuses on particularly vulnerable countries experiencing severe climate-related disasters and facing irreversible loss and damage (e.g., rising sea levels, extreme weather events).

Governance: A Loss and Damage Board, composed of representatives from both developed and developing countries, oversees the fund's operations, policies, funding decisions, and overall strategic direction.


COP27: The concept of a Loss and Damage Fund was solidified at the COP27 climate summit in Egypt (2022).

COP28: The fund was formally established at COP28 (2023).


Interim Trustee: The World Bank will likely act as an interim trustee, hosting the fund's secretariat and managing its operations under specific conditions set by developing nations.

Ongoing Process: The Loss and Damage Board is tasked with further defining the fund's policies, procedures, and funding mechanisms. This includes how funds will be allocated and the process for submitting proposals.


Pledges v/s Needs: The initial pledges to the fund (over $700 million) are significantly lower than the estimated losses faced by developing countries. More substantial contributions are needed.

Board Stalemate: Delays in developed countries nominating their representatives to the board could hinder timely decision-making and the fund's efficiency.

World Bank Concerns: Developing countries' reservations about the World Bank's role as trustee could complicate the fund's execution.

Future Outlook

Success depends on: Timely nominations to the board, substantial financial pledges, streamlined processes, and fair and equitable distribution of funds.

Potential for Change: The Loss and Damage Fund has the potential to provide crucial support for vulnerable communities and act as a catalyst for broader climate justice.


  • The Loss and Damage Fund represents a critical international effort to address the impacts of climate change on the most vulnerable nations by providing financial assistance for irreparable losses and damages. The delays in operationalization highlight the challenges associated with global collaboration and the complexities of reaching a consensus on issues related to climate finance.

Must Read Articles:

LOSS AND DAMAGE FUND: https://www.iasgyan.in/daily-current-affairs/loss-and-damage-fund-25


Q. The loss and damage fund cannot be seen solely as an aid mechanism. How can this fund be structured to empower vulnerable communities, promote long-term resilience, and encourage transformative, sustainable adaptation strategies to prevent future loss, rather than simply providing a payout for past damage?