World Bank Set to Host Climate Loss and Damage Fund, Amid Concerns – Reuters

By Gloria Dickie and Valerie Volcovici

Countries made progress on Saturday towards establishing a fund aimed at assisting poorer nations impacted by climate-related disasters, despite concerns from both developing countries and the United States.

The initiative to create a "loss and damage" fund was celebrated as a significant achievement for negotiators from developing nations during last year’s United Nations climate talks in Egypt, marking a shift after years of reluctance from wealthier countries.

However, in the last 11 months, governments have faced challenges in agreeing on the specifics of the fund, including financing and its location.

A special U.N. committee assigned to implement the fund convened for the fifth time in Abu Dhabi this week, following an impasse in Egypt the previous month. The aim is to finalize recommendations for the upcoming climate summit (COP28) in Dubai, scheduled in less than four weeks. The target is to launch the fund by 2024.

The committee, composed of representatives from a diverse range of countries, intends to recommend that the World Bank act as the trustee and host for the fund—a suggestion that has sparked disagreements between developed and developing nations.

Critics argue that placing the fund at the World Bank, whose leadership is selected by the U.S., would grant donor countries excessive influence and impose high fees on recipient nations. To facilitate broader agreement, the committee agreed that the World Bank would serve in this role on an interim basis for a period of four years.

Germany’s special climate envoy, Jennifer Morgan, expressed Berlin’s readiness to contribute to the new fund while exploring additional structural financing options.

Conversely, some advocates voiced concerns. Harjeet Singh, the head of global political strategy at Climate Action Network International, lamented, “It is a sombre day for climate justice, as rich countries turn their backs on vulnerable communities.” He criticized wealthier nations for coercing developing countries into accepting the World Bank as the fund’s host while not meeting their financial obligations to support vulnerable communities.

The committee also urged developed countries to continue backing the fund, yet did not reach an agreement on whether these nations would be strictly obliged to contribute financially.

A U.S. State Department official expressed disappointment that the text did not reflect consensus on the need for clarity regarding the voluntary nature of contributions.

The U.S. proposed to add a note stating that contributions to the fund would be voluntary, but this was not permitted by the committee chair, leading to U.S. objections.

Sultan al-Jaber, who will lead the COP28 discussions, welcomed the committee’s recommendations, indicating that they would pave the way for an agreement at the summit.