The Fund for Responding to Loss and Damage (FRLD) will spend $250 million until the end of 2026 on an initial set of interventions to help developing countries deal with the aftermath of climate-driven disasters.
At a three-day meeting in Barbados, the UN fund’s board agreed on the strategy for the start-up phase of the mechanism, which will initially focus on strengthening national responses to climate catastrophes rather than community-level action – something activists had called for.
The fund will give grants of between $5 million and $20 million to project proposals submitted by developing countries, with the first round of approvals expected at the next board meeting. Governments will also be able to obtain direct budget support for emergency measures, such as temporary housing for displaced people, in case of a disaster.
The start-up phase will be formally called the “Barbados Implementation Modalities” (BIM) in a nod to the host of the meeting. BIM is a colloquial nickname used by Barbadians to refer to their country.
Most vulnerable states will get half of funding
In one of the most hotly debated issues, board members decided that small island developing states (SIDS) and the world’s least developed countries (LDCs) would receive at least 50% of the fund’s resources during the start-up period.
During discussions, developed countries strongly pushed for that option, setting a minimum floor, while most developing nations wanted a less binding target that the fund would only be “aiming to achieve”.
After gavelling the final decision, Richard Sherman, co-chair of the fund’s board, said it had been a “complicated” meeting with lots of disagreements, but the final agreement showed that “collective, multilateral action was still a possibility”.
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Among the most contentious issues was the role of other multilateral funds, such as the Green Climate Fund, in delivering the projects and the provision of financial instruments apart from grants, such as a blend of public and private finance.
On the first point, the board decided the start-up phase may be implemented in collaboration with other entities and tasked the FRLD’s Secretariat with devising a proposal. On the second issue, the fund will only disburse grants but recipient countries can voluntarily decide to combine them with other instruments.
Searching for billions
Harjeet Singh, founding director of the India-based Satat Sampada Climate Foundation, welcomed the board’s decision as a “long-overdue step in supporting countries devastated by climate impact”.
But he added that “frontline communities must not just receive support, they must have direct access to resources and decision-making over rebuilding their lives”.
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The money at the fund’s disposal is dwarfed by the escalating costs of dealing with the consequences of climate impacts.
Despite pledging $768 million to the fund, governments have so far signed contribution agreements for $495 million and only paid in $321 million. The Loss and Damage Collaboration, a network of NGOs working on the issue, has estimated that developing countries’ loss and damage needs add up to about $400 billion a year.
The FRLD’s executive director, Senegalese banker Ibrahima Cheikh Diong, said the Secretariat would deliver a plan to attract further resources by the end of 2025.
Mottley sends stark warning to fossil fuel CEOs
Addressing board members during the meeting, Barbados Prime Minister Mia Mottley said it would be necessary to “think outside of what is normal” to scale up funding.
She spotlighted taxes on flights, shipping and oil and gas extraction as a way to raise money for climate action. Barbados is a co-chair of the Global Solidarity Levies Task Force – together with France and Kenya – which is expected to offer concrete proposals by COP30 this November.
“Those who contributed to the problem, must help solve the problem,” Mottley said. “Those who stand to benefit egregiously from the solution, must equally leave something on the table.”
One of Mottley’s suggestions – the shipping levy for climate action – was dealt a huge blow on Friday when governments decided the proceeds of financial penalties imposed on polluting ship owners will not be spent outside the maritime sector.
During her speech, Mottley also urged the CEOs of oil and gas companies to come around the table and discuss how the industry can contribute money for climate action. “Unless they have a plan to live on Mars or Pluto and it is immediately accessible, they too will be part and parcel of the victimhood that will follow as a result of this crisis,” she said.
