On June 10, 2025, ClimaComms hosted an interactive dialogue on finance for loss and damage in Bonn, Germany.
Finance and support for climate-related loss and damage took a long time to materialise. From the conclusion of the first work programme on loss and damage in 2012, it took another 10 years and substantial pressure from climate-vulnerable countries and civil society to establish the Fund for Responding to Loss and Damage (FRLD) in 2022. The fund is currently in its start-up phase, designing and testing preliminary projects, programmes, and activities under the ‘Barbados Implementation Modalities’ (BIM). These count with an overall budget of 250 million USD in tranches of 5-20 million for each activity, and with at least 50% allocated for SIDS and LDCs. This phase is important to test the ground and get quick disbursements from the FRLD, while not prejudging the long-term operational modalities, which will be developed in parallel in the coming months and years. The 5th FRLD board meeting also highlighted one of the major concerns of the fund - the current volume of funding available, and the need for substantial fundraising. Of the USD 795 million in pledges, USD 495 million have been covered by monetization agreements, and only USD 321 million have been paid in - a drop in the ocean, compared to the estimated USD 300 - 500 billion in needs each year.
The discussion started off with exploring the different meanings of ‘direct access’ to climate funds. On the one hand, direct access means funding can go to countries directly, through so-called ‘national entities’ for specific programmes. Under the GCF, LDCs and SIDS have only very few national entities accredited to the existing climate funds, and have been granted few projects so far - over 70% of projects go to international accredited agencies like UN organisations. Therefore, it was key for SIDS to have a minimum percentage of the FRLD allocated for them specifically. Direct access is distinct from direct budget support, which directly goes into the country’s treasury or ministerial budget, and which is an option explicitly available under the BIM. Here, the challenge is tracking what the funding is actually used for, as many countries do not have a (detailed) budget tracking system that would account for climate change-related expenditures.
For civil society organisations, on the other hand, direct access means accessing funds directly without having to go through a UN or other entity. Participants pointed out that, on the community level, few local organisations will have the awareness and capacity to apply to an international fund directly. Reasons include bureaucratic hurdles, lack of relevant documentation, lack of a history of successfully delivered (international) projects, and the “short” time that the organisation has been operating. More established civil society organisations do have the capacity to apply, a track record of implementation experience, and reliable accountability mechanisms, but this has the trade-off that funding repeatedly goes to the same organisations perpetuating access challenges at the community level. The modalities for civil society organisations’ (CSOs) access to the FRLD are yet to be developed. Some potential solutions discussed include:
In the discussions on the modalities of the FRLD, buzzwords such as ‘bottom-up’ and ‘country-driven’ are frequently used - but it is yet unclear what these really mean. Participants noted that so far, discussions have mostly focused on how funds will be dispersed, and less on what will be funded. Since the losses and damages are very diverse and context specific, it is important that countries work towards a comprehensive strategy, or a ‘national response plan’ as suggested in the COP28 decision. The Santiago Network for Technical Assistance on Loss and Damage can provide the necessary expertise to develop such a strategy.
Will countries need to prove that their losses and damages were (primarily) caused by climate change, for example, through the use of attribution science? While this highlights the fact that many vulnerabilities are caused by social systems and lack of good governance, and then exacerbated by climate change, such an approach would draw funds away from response towards studies and likely overwhelm countries' capacities and available data. Participants noted that even while impacts might be exacerbated by mismanagement, those suffering most will likely be poor and vulnerable population groups who have contributed little to climate change and have little means to change their often precarious situations. The FRLD needs to make funds available to vulnerable countries and groups, and try to minimise obstacles and hurdles for access.
The discussion on readiness programmes for climate finance showed that there are distinct aspects to it. On the one hand, project development assistance or pipeline mechanisms can help countries and entities to structure fundable proposals. But before this step, institutional capacity building must set up the right structures and build the skills and systems for countries to be able to access and handle climate finance. Experience shows that capacity building is not a one-off task. Rather, capacity building must be upheld over time, with staff changes and changing modalities, as few of the factors to take into account. The breadth of climate impacts also raises capacity building needs in sectors and ministries that are less frequently the target of climate finance but also respond to relevant impacts.
While the FRLD has a distinct mandate of focusing on responding to loss and damage, the list of eligible activities partially overlaps with activities funded, e.g. by the GCF, GEF, Adaptation Fund or humanitarian donors. Rather than discussing the definition of Loss and Damage, a cooperation between the funds, either in the form of co-financing of projects or cooperation between funds, could address this partial overlap of mandates. Given the available funding in the FRLD, it could then prioritise underfunded issues and/or actors within this group of funds.
Participants are looking forward to the full operationalisation of the FRLD and the development of access modalities. They further expressed hope that the fund’s engagement with civil society organizations and non-state actors during and outside of the board meetings can be scaled up to be more meaningful and include a wide variety of voices in the work of the Fund.
Magdalena Mirwald serves as Programme Manager for Climate Resilience and Risk Management at SLYCAN Trust. She is an expert on disaster risk management and finance, and climate policy. Magdalena has extensive experience in project management and multi-stakeholder engagement, ranging from civil society collaboration to national governments and international organizations and processes. She has conducted policy-oriented research, capacity building, and advocacy on human mobility, national adaptation policies, loss and damage, and climate risk insurance.
On June 10, 2025, ClimaComms hosted an interactive dialogue on finance for loss and damage in Bonn, Germany.
Finance and support for climate-related loss and damage took a long time to materialise. From the conclusion of the first work programme on loss and damage in 2012, it took another 10 years and substantial pressure from climate-vulnerable countries and civil society to establish the Fund for Responding to Loss and Damage (FRLD) in 2022. The fund is currently in its start-up phase, designing and testing preliminary projects, programmes, and activities under the ‘Barbados Implementation Modalities’ (BIM). These count with an overall budget of 250 million USD in tranches of 5-20 million for each activity, and with at least 50% allocated for SIDS and LDCs. This phase is important to test the ground and get quick disbursements from the FRLD, while not prejudging the long-term operational modalities, which will be developed in parallel in the coming months and years. The 5th FRLD board meeting also highlighted one of the major concerns of the fund - the current volume of funding available, and the need for substantial fundraising. Of the USD 795 million in pledges, USD 495 million have been covered by monetization agreements, and only USD 321 million have been paid in - a drop in the ocean, compared to the estimated USD 300 - 500 billion in needs each year.
The discussion started off with exploring the different meanings of ‘direct access’ to climate funds. On the one hand, direct access means funding can go to countries directly, through so-called ‘national entities’ for specific programmes. Under the GCF, LDCs and SIDS have only very few national entities accredited to the existing climate funds, and have been granted few projects so far - over 70% of projects go to international accredited agencies like UN organisations. Therefore, it was key for SIDS to have a minimum percentage of the FRLD allocated for them specifically. Direct access is distinct from direct budget support, which directly goes into the country’s treasury or ministerial budget, and which is an option explicitly available under the BIM. Here, the challenge is tracking what the funding is actually used for, as many countries do not have a (detailed) budget tracking system that would account for climate change-related expenditures.
For civil society organisations, on the other hand, direct access means accessing funds directly without having to go through a UN or other entity. Participants pointed out that, on the community level, few local organisations will have the awareness and capacity to apply to an international fund directly. Reasons include bureaucratic hurdles, lack of relevant documentation, lack of a history of successfully delivered (international) projects, and the “short” time that the organisation has been operating. More established civil society organisations do have the capacity to apply, a track record of implementation experience, and reliable accountability mechanisms, but this has the trade-off that funding repeatedly goes to the same organisations perpetuating access challenges at the community level. The modalities for civil society organisations’ (CSOs) access to the FRLD are yet to be developed. Some potential solutions discussed include:
In the discussions on the modalities of the FRLD, buzzwords such as ‘bottom-up’ and ‘country-driven’ are frequently used - but it is yet unclear what these really mean. Participants noted that so far, discussions have mostly focused on how funds will be dispersed, and less on what will be funded. Since the losses and damages are very diverse and context specific, it is important that countries work towards a comprehensive strategy, or a ‘national response plan’ as suggested in the COP28 decision. The Santiago Network for Technical Assistance on Loss and Damage can provide the necessary expertise to develop such a strategy.
Will countries need to prove that their losses and damages were (primarily) caused by climate change, for example, through the use of attribution science? While this highlights the fact that many vulnerabilities are caused by social systems and lack of good governance, and then exacerbated by climate change, such an approach would draw funds away from response towards studies and likely overwhelm countries' capacities and available data. Participants noted that even while impacts might be exacerbated by mismanagement, those suffering most will likely be poor and vulnerable population groups who have contributed little to climate change and have little means to change their often precarious situations. The FRLD needs to make funds available to vulnerable countries and groups, and try to minimise obstacles and hurdles for access.
The discussion on readiness programmes for climate finance showed that there are distinct aspects to it. On the one hand, project development assistance or pipeline mechanisms can help countries and entities to structure fundable proposals. But before this step, institutional capacity building must set up the right structures and build the skills and systems for countries to be able to access and handle climate finance. Experience shows that capacity building is not a one-off task. Rather, capacity building must be upheld over time, with staff changes and changing modalities, as few of the factors to take into account. The breadth of climate impacts also raises capacity building needs in sectors and ministries that are less frequently the target of climate finance but also respond to relevant impacts.
While the FRLD has a distinct mandate of focusing on responding to loss and damage, the list of eligible activities partially overlaps with activities funded, e.g. by the GCF, GEF, Adaptation Fund or humanitarian donors. Rather than discussing the definition of Loss and Damage, a cooperation between the funds, either in the form of co-financing of projects or cooperation between funds, could address this partial overlap of mandates. Given the available funding in the FRLD, it could then prioritise underfunded issues and/or actors within this group of funds.
Participants are looking forward to the full operationalisation of the FRLD and the development of access modalities. They further expressed hope that the fund’s engagement with civil society organizations and non-state actors during and outside of the board meetings can be scaled up to be more meaningful and include a wide variety of voices in the work of the Fund.
