TWN Info Service on Climate Change (Jul25/01)
10 July 2025
Third World Network

Developing countries stress expectations on scale of resources for Loss and Damage Fund

Cebu, 10 July (Chhegu Palmuu): On the official opening day of the sixth meeting of the Board of the Fund for responding to Loss and Damage (FRLD) held on 9 July in Cebu, Philippines, developing countries issued a statement conveying their “concerns and expectations regarding the scale and status of resources” of the FRLD.

The statement said that it was issued in the face of a “critical juncture as the Board begins substantive work to prepare its long-term fundraising and resource mobilization strategy and plan for the Fund by the end of 2025”.

The statement was read out by Board member Elena Cristina Pereira Colindres (Honduras) at an evening online press conference, held to launch a major new global campaign on loss and damage named “Fill the Fund”, which is backed by a global coalition of civil society movements, networks and organizations united by a single, urgent mission to ensure governments in the global North deliver on their responsibility to fully finance the FRLD.

The press conference moderated by the campaign’s convener Harjeet Singh with Satat Sampada Climate Foundation, saw a video statement by Prime Minister Jotham Napat (Vanuatu), also featuring Board members Richard Sherman (South Africa), Ambassador Henrietta Elizabeth Thompson (Barbados) and Daniel Jerome Lund (Fiji), along with civil society speakers, Claire Miranda with the Asian Peoples Movement on Debt and Development (APMDD), Tasneem Essop with the Climate Action Network (CAN) and Brandon Wu with ActionAid USA.

“While the scale of the Fund has long been a key concern of developing countries as an essential prerequisite to address the existing funding gaps related to providing action and support in responding to loss and damage associated with the adverse effects of climate change through new, additional, predictable and adequate financial resources, this matter remains unresolved. We urge our partners to meaningfully engage on this issue”, said the statement from developing countries.

In a document provided to the Board, the current status of resources as of 27 June, amounts to only USD 348 million out of the USD 788.68 million of total pledges and contributions.

(It is to be noted that at the preceding fifth Board meeting held in Barbados in April this year, which established the “Barbados Implementation Modalities (BIM)” as the start-up phase of the Fund, a miniscule USD 250 million was allocated for the first set of interventions for the calendar years of 2025 and 2026 due to the limited availability of resources. Developing countries have been demanding at least USD 100 billion a year by 2030 since the third meeting of the Transitional Committee [which negotiated the FRLD and its governing instrument in 2022], as the scale of the FRLD)

The full statement on behalf of the developing country constituency (which was made available to Third World Network) reads as follows:

“We, the developing country constituency, issue this statement to convey our concerns and expectations regarding the scale and status of resources of the Fund for responding to Loss and Damage (FRLD/Fund). We issue this statement at a critical juncture as the Board begins substantive work to prepare its long-term fundraising and resource mobilization strategy and plan for the Fund by the end of 2025.[1]

The constituency affirms its strong commitment to fully operationalising a fair, equitable, and accessible Fund that delivers effectively and sufficiently at both speed and scale, and that serves as the central channel for multilateral finance for developing countries to respond to loss and damage.

We also underscore the Fund’s critical importance in addressing the urgent and immediate need for new, additional, predictable and adequate financial resources to assist developing countries to respond to economic and non-economic loss and damage associated with the adverse effects of climate change – including extreme weather events and slow onset events – especially in the context of ongoing and ex post action, including rehabilitation, recovery and reconstruction.[2]

We have entered the third year since the historic juncture when the Fund was established at COP 27 in Sharm el-Sheikh, Egypt, and the second year since the decision on its operationalisation at COP 28 in Dubai, United Arab Emirates. In that time, the frequency and intensity of loss and damage events has continued to escalate alongside the numerous emerging and persistent challenges faced by developing countries. Estimates of funding needs for economic damages alone in developing countries are now projected to be in the order of USD 395 billion in 2025, with a range of USD 128-937 billion.[3]

While the scale of the Fund has long been a key concern of developing countries as an essential prerequisite to address the existing funding gaps related to providing action and support in responding to loss and damage associated with the adverse effects of climate change through new, additional, predictable and adequate financial resources, this matter remains unresolved. We urge our partners to meaningfully engage on this issue.

Since the Transitional Committee process, the constituency has maintained that indicating the scale of the Fund is indispensable to its effective operationalisation, an integral part of its design and essential for its credibility and sustainability. The constituency proposed at the Transitional Committee’s third meeting,[4] and maintains the view, that the Fund must program at least USD 100 billion a year by 2030 as a minimum floor of commitments and urgently embark on an initial capitalization and replenishment process guided by an assessment of developing countries’ loss and damage response needs, to mobilize and maintain the necessary volume of resources to be responsive to the scale of the needs of developing countries. The Fund must be prepared to adjust to new climate change realities with the rising trajectory of losses and damages. The gravity, scope and frequency of loss and damage will continue to increase with every additional fraction of a degree of temperature increase.

At COP 28, we acknowledged the initial pledges to the Fund, which totalled USD 661 million. Since then, an additional USD 127.68 million has been pledged, bringing the total to USD 788.68 million.[5] In its first year of work in 2024, the Board decided to launch early interventions through a start-up phase covering 2025 and 2026. This start-up phase – later agreed at the Board’s fifth meeting as the Barbados Implementation Modalities (with the acronym BIM) – would utilise the pledged resources as soon as possible, while simultaneously raising new resources based on the resource mobilization strategy to be adopted by the end of 2025. At the programming level, the start-up phase would support broad categories of activities with an adequate scale of resources for each intervention that would enable the Fund to begin implementing its bottom-up, country-led programming approach. This phase would in turn also deliver some measurable impact and generate lessons learned for the Fund’s long-term operations.

At COP 29, Parties noted the importance of converting pledges to contributions in a timely manner, urged the conversion of pledges as soon as possible and requested the Board to engage with relevant Parties for the timely conversion of pledges to increase the predictability of resources for the Fund.[6] In this regard, we express gratitude to those who rapidly converted pledges to contributions and made disbursements to the Fund. Additionally, the decision on the new collective quantified Goal on climate finance (NCQG) acknowledged the significant gaps that remain in responding to the increased scale and frequency of loss and damage, and the associated economic and non-economic losses, while also recognizing the need for urgent and enhanced action and support. Parties also acknowledged the need for public and grant- based resources and highly concessional finance, particularly for responding to loss and damage in developing countries and decided that the NCQG will reflect the evolving needs and priorities of developing countries.[7]

Most relevant to the FRLD and its resource mobilization is the clear affirmation in the NCQG decision by Parties that a significant increase of public resources be provided through the operating entities of the Financial Mechanism. Moreover, a direction of travel for the resource mobilization of these multilateral climate funds was set. This direction was a decision to triple the collective flows of these multilateral climate funds by 2030 in order to significantly scale up their share of delivered climate finance under the NCQG.[8] The FRLD as such an operating entity must operationalize this into its resource mobilization strategy.

With this context in mind, the Board was only able to allocate USD 250 million for the BIM start-up phase based on the Fund’s available commitment authority when we met in Barbados in April of this year. The Board agreed they would review the need for further allocation of resources at the eighth meeting of the Board in early 2026.[9]

However, as we arrive in Cebu for the Fund’s sixth Board meeting, we note with concern that the available resources in the Fund is only USD 348 million,[10] with no transparency or predictability on the timeline for payment of unpaid contributions where contributors have not paid their pledges in full, or clarity regarding the status of pledges that have not yet been formalized through contribution agreements. There is also a challenge of contributions on multi-year disbursement schedules. This lack of transparency is problematic, severely limiting our ability to determine the level of resources available for programming during the start-up phase while also reducing the overall confidence in our Partners commitment to the long-term capitalization of the Fund.

The developing country constituency therefore requests that all those who have made pledges clarify their respective status as soon as possible and urge developed country Parties to enhance their provision of support for the FRLD. We encourage other Parties to provide or continue to provide such support on a voluntary basis.[11] We also look forward to the development of the Fund’s resource mobilization strategy, to be completed by the conclusion of 2025, that can meet the scale of the needs of all developing countries. With these needs in the hundreds of billions, the USD 250 million agreed for the BIM must not be used or considered as an indication of the future scale of the Fund, since such scale will never respond to the growing needs of developing countries that are particularly vulnerable to the adverse effects of climate change.

The current financial situation and the lack of clarity on the overall scale of the Fund will likely affect the start-up phase and the long-term scaled financing needed from the Fund. We therefore raise the question of whether the Board should now shift its priorities towards launching an initial capitalization and replenishment process of new, additional, predictable, and adequate resources at a scale that goes far beyond the initial pledges.

It is of crucial importance to the constituency that this Fund that was established for all developing countries serves their collective needs at the scale that is needed.[12] The group maintains the emphasis in this regard on the conditions agreed at COP 28 that are to allow all developing countries to directly access resources from the Fund, with the Fund enabled to establish and apply its own policies and procedures to enable this to become a reality.[13]

The constituency stands ready to engage constructively at this meeting to operationalize an effective and impactful Fund. We urge our partners to do the same – to demonstrate their political will and commitment to an ambitious and scalable Fund that is ready to embark on delivering by COP 30.”

The FRLD Board will continue its meeting which ends on 11 July.

[1] As agreed in the Board’s workplan and noted in decisions 5/CP.29, 11/CMA.6, para 16.

[2] As acknowledged in decisions 2/CP.27, 2/CMA.4 para 1 and 1/CP.28, 5/CMA.5 Annex I para 3 (Governing Instrument of the Fund).

[3] https://www.nature.com/articles/s43017-024-00565-7

[4] https://unfccc.int/sites/default/files/resource/23_08_23_Final_Submission_TC_3.pdf

[5] FRLD/B.6/5 Status of resources.

[6] Decisions 5/CP.29, 11/CMA.6, para 10.

[7] Decision 1/CMA.6, paras 5, 19.

[8] Decision 1/CMA.6, para 16.

[9] Decision B.5/D.4, paras (a) and (b).

[10] FRLD/B.6/5 Status of resources.

[11] Decisions 1/CP.28, 5/CMA.5, para 12.

[12] Decisions 1/CP.28, 5/CMA.5 Annex I para 42 (Governing Instrument of the Fund).

[13] Decisions 1/CP.28, 5/CMA.5, paras 20(c), (d), (e) and (g).