The plight of loss and damage finance at COP 26

Key consensuses and disagreements

A climate activist holds a placard during a protest organized by Extinction Rebellion to denounce the lack of measures against climate change ahead of COP26 summit in front of the Westfield Forum des Halles shopping centre, in Paris, France, October 31, 2021 Reuters


‘Loss and Damage’ (L&D) is a term used in climate negotiations to describe the unavoidable effects of climate change which has become increasingly evident in recent years, such as severe storms, major wildfires, frequent floods, heatwaves, droughts and so on. This year, at the 26th session of the Conference of the Parties (COP 26), L&D emerged as a significant point of contention, delaying negotiations as developing countries, including the small island states, refused to budge on their urgent need for finance to assist vulnerable communities.

At COP 26, vulnerable countries demand funds and assistance for those who are being harmed by the adverse effects of climate change. It has become the most contentious subject of all, with low-income countries claiming that they have a moral right to this fund, which is referred to as compensation or reparations by some. Rich countries, such as the United States and countries of the European Union, are hesitant to comply, fearing endless financial liabilities. On the other hand, they have persistently opposed this proposal, believing that they will be obliged to pay compensation for their previous role in climate change.

This year in Glasgow, the debate took place on several issues on L&D, on which the previous COPs failed to achieve an agreement. L&D finance, the governance system of the Warsaw International Mechanism (WIM), and the operationalization of the Santiago Network for L&D are among the most crucial issues on which light will be shaded in this article.

Prior to the Paris Agreement’s implementation in 2015, rich countries promised in 2009 to channel $100 billion in annual climate funds to developing countries by 2020. However, they fell short of their target, with cash flows in 2019 totalling only roughly $80 million. The deadline for 2020 has been postponed until 2022. Although Article 9 of the Paris Agreement does not set a new climate finance target, developing-country negotiators are urging developed-country negotiators at COP 26 not just to keep their earlier promise but to create a new, greater climate finance target for 2025.

The G77 and China suggested the development of a “Glasgow Loss and Damage facility” in the L&D discussions, through which developed-country parties would channelize funds allocated for L&D. The suggestion, however, was not included in any version of the “Glasgow Climate Pact”. Despite widespread support, Alok Sharma, the COP26 president, did not include the facility in the draft document, blaming developed-country parties. The United States, Australia, and countries in the European Union were adamant in opposing the establishment of the aforementioned “Glasgow Loss and Damage Facility,” which they saw as opening the door to massive compensation claims.

A new text surfaced on Friday morning, 12 November 2021, mentioning a “technical assistance facility to provide cash support for technical assistance”. Developing countries quickly expressed their dismay, claiming that this was not the facility they had envisioned. Rather than money being sent directly to disaster-stricken countries, analysts believe “technical assistance” refers to funds being used to pay consultants in the global north to help poorer nations to create capacity. The current concept is to establish a centre to give technical support, which will then aid countries in obtaining funding for technical assistance. Besides, the agreement calls for having a “Glasgow Dialogue between Parties, relevant organizations, and stakeholders to discuss the arrangements for the funding of activities to avert, minimize, and address Loss and Damage associated with the adverse impacts of climate change,” as stated in paragraph 73.

In addition, a deal on the governance provisions for the WIM was not reached at COP25 in 2019. Developing country Parties have argued that the WIM should be operated under both the Convention and the Paris Agreement Developed country parties. But on the other hand, have opposed that the WIM should be administered solely by the Conference of the Meeting of the Parties to the Paris Agreement. At COP26, consensus on governance was also elusive, as the two sides remained obstinate in their respective positions. As a result, it was resolved that at the next COP, negotiations on the governance of the WIM would be restarted.

Moreover, the agreement achieved the functions of the newly created Santiago Network on L&D which was ice on wounds for developing countries. The Santiago Network will organize technical support to developing countries, including access to funds to aid in disaster preparedness. On the final day of COP 26, the German government pledged 10 million euros to assist the Network’s efforts. Party and non-party stakeholders have been invited to submit their views on issues such as the Network’s operational modalities and structure, the role of the WIM’s Executive Committee, and the “terms of reference of a potential convening or coordinating body” as part of the process to fully operationalize the Network. These perspectives, along with the outcomes of a technical workshop, will serve as the foundation for discussions during the UNFCCC intersessional conference in Bonn, Germany, in mid-2022. At COP 27, in 2022, a final decision on the Santiago Network’s operationalization is expected. 

It is worth mentioning that the Scottish government has pledged £2 million to help vulnerable poor countries deal with L&D. These funds will be used to support the Climate Justice Resilience Fund, which will help women, youth, and indigenous peoples as they are the front-liners of climate change impact. In terms of the fund, the number is small, but it is noteworthy in two ways: first, it breaks the richer countries’ refusal to openly promise money to help poorer countries deal with L&D; and second, its operationalization appears to sidestep the UN system entirely.

However, the Glasgow Climate Pact failed to gain the establishment of a dedicated new L&D fund that vulnerable countries had pressed for earlier in the summit, owing to opposition from the United States, the European Union, and some other rich nations. Guinea, speaking on behalf of the developing-country group, voiced “great displeasure” with the decision to start simply a “conversation” to discuss “arrangements for the finance of activities to avert, minimize, and address loss and damage.”  Low-lying small island nations such as the Marshall Islands, Fiji, and Antigua & Barbuda, which fear losing most of their land to increasing sea levels, expressed disappointment that the fund they had requested had not been established. The Glasgow agreement does include funding for the Santiago Network, which attempts to develop technical competence in dealing with L&D, such as assisting governments in determining how to relocate settlements away from vulnerable shorelines. 

So, we need to hopefully establish the process now, and then hammer out the details during the next subsidiary body sessions and the next COP. It is needed to ensure that the Santiago Network includes a varied range of opinions and perspectives by concentrating on the most vulnerable people who are underserved by traditional financial mechanisms and obtaining new finance for L&D from the countries that are accountable for the adverse impact of climate change.

Originally this article was published on January 23, 2022 at Dhaka Tribune

S M Saify Iqbal is working as a Research Officer at International Centre for Climate Change and Development (ICCCAD). He has research interest in climate-induced loss and damage and disaster risk reduction. He can be reached at