Fair Shares in Loss and Damage Finance

We are living in the ‘era of loss and damage’. Unprecedented climate change impacts are visible worldwide and are already a lived reality for people on all continents and in all regions. The decision to establish the new Fund for Responding to Loss and Damage (FLD) at COP27 was a historic milestone after decades of blocking by many developed countries. However, the fund’s mere existence will not automatically lead to adequate provision of loss and damage (L&D) finance. Established principles of climate justice do offer guidance on the need to provide L&D finance and who should provide it. 

In this discussion paper, we calculate fair shares for countries in providing finance to address L&D. The paper describes possible ways to arrive at fair shares in providing L&D finance, generally based on the principles of common but differentiated responsibilities and respective capabilities, while seeking to inform and catalyse advocacy on the topic and, ultimately, strengthen the discourse around climate justice. 

Information on the fair share of L&D finance will be relevant for the long-term funding structure and the fundraising strategy for the FLD, and its scope, which the Fund’s board is set to develop in 2024. This discussion paper’s findings can be used to hold countries accountable regarding their future L&D finance contributions and to inform on their performance compared with that of other countries. 

This discussion paper’s findings are also highly relevant to the international debate around climate finance, particularly the New Collective Quantified Goal on Climate Finance (NCQG). The paper makes an important novel contribution to the discussion around the climate finance contributor base, by considering three different cases for defining what could constitute a circle of contributors consistent with the Paris Agreement.