TWN Info Service on Climate Change (Jul26/05)
20 July 2026
Third World Network

LOSS AND DAMAGE FUND BOARD MEETING REVEALS FRICTION OVER WORLD BANK ROLE

Kuala Lumpur, 20 July (Jinghann Hong) - The ninth meeting of the Board (B.9) of the Fund for Responding to Loss and Damage (FRLD), held from 8–10 July 2026 in Manila, Philippines, revealed, through the stalling of the operationalisation of the ‘Country Support System’, prevailing friction in the Fund arising from the World Bank’s role as interim Trustee. It also saw an unprecedented “package of decision items” being adopted around five key agenda items together. [See details below].

The convening of the meeting which only began around midday of day 1 under the leadership of Co‑Chairs Camila Minerva Rodriguez Tavarez (Dominican Republic) and Georg Børsting (Norway), saw opening remarks by Juan Miguel T. Cuna, Secretary of the Department of Environment and Natural Resources in the Philippines, who underscored the importance of the FRLD as “beyond its financial resources” in that 
it “reflects the principles of international cooperation, solidarity, and shared responsibility that underpin the global climate regime.”

The opening followed a prolonged recess in the morning in which both developing and developed country Board Members engaged in their respective constituency meetings, which set the scene for the next few days where work was undertaken largely in closed‑door settings, leaving observers with little visibility into the Board’s deliberations.

Of key interest at B.9 was how the Board would manage the funding requests presented, as this would be the first set of proposals to be considered on a meeting‑by‑meeting basis following the adoption of decision B.7/D.3 on the funding cycle under the Barbados Implementation Modalities (BIM). [The BIM is the start-up phase of the Fund with an initial allocation of USD 250 million].

The document on ‘Overview of funding requests for Board consideration’ [FRLD/B.9/9] revealed four funding requests from Jamaica, Côte d’Ivoire, Nigeria and Haiti and amount to a total project budget of USD 77.4 million, with total oversight fees of USD 6 million. This is out of 176 funding requests that entered the formal BIM pipeline as of 29 June 2026, of which the ‘Report on the status of the pipeline for the BIM’ states that this represents a combined amount of USD 2.8 billion, with the average amount requested per funding request is approximately USD 15.9 million [FRLD/B.9/7].

It is learnt that the four funding requests are the first four that the Secretariat has completed processing but were not considered at B.9 in the end. In the final decision adopted, the Board, emphasizing the need for the fair and equal treatment of all funding requests being reviewed, requested the Secretariat to submit to the Board, based on certain elements, an initial starter package of funding requests for consideration and approval at the next Board meeting i.e., at B.10.

Given the scale of need, another crucial issue before the Board was the development of a resource mobilization strategy (RMS) pursuant to decision B.7/D.7, which requested the Co‑Chairs, with Secretariat support and Board consultation, to prepare a draft RMS for B.9. Per decision D.8/B.8, the Board in Livingstone, Zambia had already decided that the RMS would be developed based on a two-stage approach informed by the resource mobilization strategy framing paper and the views expressed by Board members during B.8.

On the Country Support System (CSS), there were divergences on its operationalisation amongst which was the division over who would sign the CSS funding agreements. Related to this was the sticky issue of determining the ‘functional equivalency’ of access entities to the World Bank’s fiduciary principles and standards, which is stated in the report by the Co-Chairs on their engagement with the World Bank (in its capacity as host of the Secretariat and as interim Trustee of the Fund), as an area of engagement identified as important for enabling implementation of the BIM and the ability of the Fund to deliver on its mandate (i.e., ‘(b) the full operationalization of the various access modalities under the BIM, including functional equivalency; and (c) the post-approval legal and operational framework for funding requests, including the preparation and execution of financial agreements’).

As for the “package of decision items”, this was entirely negotiated behind closed‑door sessions involving respective constituency huddles on the last two days of B.9, involving matters relating to resource mobilization; status of the pipeline, matters relating to funding requests; Board work plan for 2026 and additional funding allocation for the BIM. It is learnt that this “package” was the Co-Chairs’ proposal presented to Board Members as basis for negotiations.

Given that the Board had yet to adopt a policy on Active Observers despite it being slated on the agenda, B.9 also saw observers delivering strong interventions following the adoption of the “package of decision items” which was never formally opened, hence, conveying serious concern over the lack of transparent proceedings, particularly in relation to the issues on the interim Trustee i.e. the World Bank.

This article thus sets out the issues around the World Bank’s role as interim Trustee of the FRLD, before detailing the “package” that was adopted and key Board Members’ subsequent interventions. Another article will follow on the Fund’s available commitment authority.

CSS AGENDA ITEM EXPOSES ISSUES WITH INTERIM TRUSTEE

Despite the operationalisation of Country Support System (CSS) being priority for B.9 after its launch at B.8, Board Members could not come to a consensus on this agenda item. [The CSS, akin to the Green Climate Fund’s ‘Readiness Programme’, intends to provide support for activities relevant for preparing and strengthening national processes and support systems. For more, see TWN update.]

While there were divergences relating to the parameters for resource allocation and the inclusion of ‘complementarity and coherence’ as a third funding criteria for the CSS, a more fundamental point of contention was over the signature arrangements for the CSS funding agreements and whether the Trustee Agreement would be triggered - thus by extension, require the Board to determine ‘functional equivalency’ for each entity seeking support.

On signing the CSS funding agreements, the contested provisions were para 16 of the document on ‘Operational modalities for the country support system under the BIM’ [FRLD/B.9/11] which reads, “Upon approval, a CSS funding agreement will be signed, following the same arrangements for signing that apply to BIM funding requests,” [leaving it unclear as to who will sign the agreements], and the same document’s Annex II states, “The interim Trustee signs standardized CSS funding agreements with countries and/or CSS entities, on behalf of the Board as per the Trustee Agreement.”  [explicitly referencing that it is the interim Trustee who signs].

Richard Sherman (South Africa) elaborated on two options for the Board: option (i) for the FRLD Board to authorize the Co-Chairs to sign, which he suggested, limiting this strictly to the CSS funding requests under the BIM, pending ongoing discussions with the World Bank; while option (ii) is to request the interim Trustee to sign, which would “make the process of delegation [to the Executive Director of the FRLD for approval of CSS funding requests] obsolete”, as “We [the Board] would have to then confirm every single entity that has a delegated approval request before it could be signed, that that entity is functionally equivalent,” (with the World Bank’s fiduciary principles and standards.) 

Said Sherman further, the latter option put in other words, the Board could not “implement the CSS decision under the current Trustee Agreement unless the Board satisfies that Agreement, which is to declare any of the entities that are seeking support as functionally equivalent.” (This interpretation was confirmed by World Bank representatives nodding off‑screen.)

[On ‘functional equivalency’, para 2.04 of the Trustee Agreement sets out that the Fund Board (not the Trustee) is responsible for ‘the development of modalities to facilitate access to the Fund’s resources through Recipients whose safeguards and standards have been judged functionally equivalent to those of multilateral development banks in accordance with a process adopted by the Fund Board and satisfactory to the Trustee; […]’ (emphasis author’s).]

[Para 50 of the Governing Instrument (GI) requires the Fund to create ‘simplified procedures and criteria for fast-tracked screening to determine functional equivalency with internationally recognized standards of national and/or regional funding entities’ safeguards and standards’, of which are subsequently elaborated in para 67 on high‑integrity fiduciary standards and para 68 on best‑practice environmental and social safeguards. In both cases, the GI also states that the Secretariat is required to ensure that the implementing entities apply such standards/safeguards and to build capacity within the direct access implementing entities to enable them to attain functional equivalency with the World Bank’s standards/safeguards.]

[As regards developing access modalities during previous meetings, the Board had agreed on operationalizing various access modalities under the BIM (B.7/D.5 and B.8/D.3), and within the said decisions had also explained the approach for ‘functional equivalency’ assessment. However, it is learnt from reliable sources that the World Bank is currently in disagreement with these decisions, one of the divergences being that the said assessment for determination of ‘functional equivalency’ is not sufficiently explicit nor satisfactory for the Bank.]

On the option of authorising the Co‑Chairs to sign CSS funding agreements on behalf of the FRLD Board based on the approval of the Executive Director [the option not triggering the Trustee Agreement and thus not requiring the determination of ‘functional equivalency’], this was objected to by developed country Board Members.

Jan Dusík (European Union) said, “At this stage, it would not be advisable to say that the Co‑Chairs are signing. What is in front of us in the draft [decision] makes sense with the interim Trustee signing; we need to be consistent in that.” Lorelai Lankester (France) added, “I’m not sure we will feel comfortable deciding now that the Co‑Chairs sign, especially because I’m not sure we have all the understanding of what that would imply for …[the current Co-Chairs] and the next Co‑Chairs.”

Sherman also said that “We’re struggling to resolve this matter for funding proposals of USD 20 million. We’re not going to solve that matter for USD 250,000 million [referring to the BIM funding envelope].” Saying further, “Maybe it becomes easier to answer the question of who signs once we have had the broader discussion about the issues with the World Bank.” He also cautioned that “we cannot afford to leave this Board meeting with the process that we may develop [...] and then launch a process for to support developing countries to prepare for loss and damage without the clarity that we can actually implement this decision.” He concluded by saying that the Board was “at a crisis point” if it did not resolve the issue.

Suspending the CSS agenda item, Co-Chair Børsting said, “We'll discuss that, depending on consultations with you, whether this item is still mature enough that we could test the possibility of a BBM decision [Between-Board-Meeting], ahead of our next meeting [B.10], if this is considered important for both [developed and developing constituencies] [...] It's clear for us that we will first have to clear this issue of the Trustee Agreement on what it means as far as the signing is concerned.”

Separately, on the B.9 agenda was also ‘matters relating to the Hosting Agreement and the Trustee Agreement’, which the Board took behind closed doors. It seems that the said matters continue to be unresolved and the Co-Chairs are expected to continue engagement with the WB to resolve them.

PACKAGE OF DECISION ITEMS

Hailed as an important outcome of the B.9 meeting, the “package” originally contained five decisions but was eventually adopted as four, with the decision on additional funding allocation for the BIM folded into the decision on funding requests. [Note: The adopted decision is not yet published online. The draft iterations of the decision are restricted documents limited to the Board, and only displayed on screen during final adoption by the Board.]

First, on matters related to resource mobilisation, the Board decided that: “…stage 1 of the resource mobilization strategy (RMS) will support the scaling up of resources of the Fund for responding to Loss and Damage (FRLD) to ensure the operational continuity of the Barbados Implementation Modalities (BIM) while transitioning to the long-term operational model of the FRLD.”

It further decided “that stage 1 of the RMS will be comprised of the following enabling steps:

(a) Strategic positioning of the FRLD, guided by the uniqueness of its mandate and the demand signalled by responses to the call for proposals under the BIM;

(b) Ensuring the rapid conversion of existing pledges into signed agreements;

(c) Urging new contributions to the fund, guided by decisions 1/CP.28 and 5/CMA.5, para 12, and the Governing Instrument, paras 54 – 59.”

It is learnt that para (c) was particularly contentious and that developed countries did not want the originally proposed “Encouraging” to be replaced with “Urging” in the sentence. The latter was strongly pushed by Saudi Arabia for the Asia-Pacific seat, and was supported by developing countries. (“Urging” is agreed language drawn from para 12, decisions 1/CP.28 and 5/CMA.5. [Para 12 of the decision 1/CP.28 and 5/CMA.5 reads, “Also urge developed country Parties to continue to provide support and encourage other Parties to provide, or continue to provide support, on a voluntary basis, for activities to address loss and damage.”]

Developed countries also rejected the suggestion for a high-level pledging event in 2026, for additional resource mobilisation for the BIM.

Second, on status of the pipeline, the Board took note of the document FRLD/B.9/7  on ‘Report on the status of the pipeline for the Barbados Implementation Modalities’, and requested the Secretariat, “ahead of Board meetings, to enhance the presentation of the status of the pipeline under the BIM by providing disaggregated information on funding requests, including, on access modality, type of access entity, region and country group (including Least Developed Countries [LDCs] and Small Island Developing States [SIDS]), thematic area, stage of review; and/or other quantitative or qualitative information that may assist the Board in understanding the composition and evolution of the funding request pipeline.”

Third, on matters relating to funding requests, the Board “took note of the document FRLD/B.9/9 ‘Overview of funding requests for Board consideration’” and “expressed appreciation to all countries that have submitted funding requests under the BIM.” Emphasizing the “need for the fair and equal treatment of all funding requests being reviewed by the Secretariat”, the Board also “requested the Secretariat to submit to the Board, for consideration and approval at B.10, an initial starter package of funding requests; informed by the process identified in para (f)”. The Secretariat is also “requested to organize intersessional technical sessions before presenting the initial starter package of funding requests to the Board for their information and to seek feedback on the process identified in para (f).”

Para (f) reads: Requests the Secretariat, in its identification of funding requests to be presented to the Board for consideration, to be guided by, in addition to the elements set out in decision B.7/D.4, the objective of presenting a portfolio of funding requests that: 

i. Supports the testing, learning and refinement of operational modalities, financial instruments and funding structures in accordance with decision B.5/D.4, para (d);

ii. Reflects a diversity of approaches to responding to loss and damage, with a view to demonstrating the unique and distinct features of the Fund’s programming;

iii. Provides opportunities to test a variety of access modalities and different access entities.

In the same decision, the Board “decided to allocate USD 92 million in additional resources to the BIM for the consideration and approval of the initial starter package” above, and also “further decided to allocate USD 8 million” in line with the FRLD’s oversight fee policy.

The Board “reaffirmed that funding requests not included in the package submitted, or not approved by the Board, shall remain in the BIM pipeline unless withdrawn by the applicant.” It also “decided that, given the volume of work remaining for the review and assessment of funding requests submitted under the BIM, the dates for B.10 will be changed from 7–9 October 2026 to 15–18 December 2026.”

It is learnt that developed country Board Members had wanted to delay approval of funding requests to B.11, but this was resisted by developing country Board Members, resulting instead in the change of B.10 dates from October to December, to account for the additional workload. (The agenda item on dates and venues of future meetings had presciently been removed during the adoption of the B.9 agenda on day 1.)

Fourth and last, on the Board work plan for 2026, the Board “requested a presentation by the Co-Chairs at B.10, on the elements of and sequence for development of the long-term operating model of the FRLD, including options for the essential elements of the long term-model to be concluded prior to launching the replenishment.” The Board also “requested a proposal on the elements and timeline of the replenishment process, including options for fast-tracking the replenishment process, which should be aimed at ensuring the operational continuity of the Fund, while maintaining its ability to respond to demonstrated demand; and advancing the transition to the long-term operational model of the FRLD.”

It is learnt that developed countries did not want the inclusion of ‘options for fast-tracking the replenishment’ in the decision; however, it was firmly pushed by developing countries which ultimately prevailed.

HIGHLIGHTS OF INTERVENTIONS ON THE “PACKAGE”

Prior to gavelling for adoption of the package of decisions, Co‑Chair Tavarez opened the floor for reactions from Board Members.

Preferring to call it a “balanced set of decisions” instead of a “package” (as referred to by the Co-Chairs up to this point), Sherman (South Africa) stated that he was “happy” with the decisions taken and wanted to note on the record that the term ‘long term operating model’ is not used and that the word ‘operating’ is new. On the allocation of USD 92 million plus the USD 8 million, he also pointed out that this was not done before and that “when we allocate money for projects, it's the amount for the projects, the fees, and the other costs are additional to that.” He stated that he did not support the phrasing of either and that this does not set a precedent of how it is phrased in the future, which was duly noted by Co‑Chair Tavarez.

Amb. Ruleta Camacho-Thomas (Antigua and Barbuda) stated that the package will foreclose opportunities for funding projects that have not been seen when the first projects are being presented for decision-making, which is not fair nor equitable. She pointed out that, “The only reason that we are in this position is because we do not have enough funds to address loss and damage needs. I hope that that is recognized [...]; one of the lessons that have been demonstrated in the BIM so far, is that the fund is woefully undercapitalized. I hope that is reflected as we make decisions going forward.” She also said that “It is very uncomfortable for this seat to look at projects in our region, where we know their needs and have to be considering whether there are other projects coming up, and have to weigh those needs and make decisions. It is literally life-altering, these decisions we're going to be making. 
So, we're never happy when the decision-making is a package, and a negotiation, and a trade-off, because what we're doing is we're trading off on people's lives. That is what's happening here,” she lamented further.

Milagro Lily Matus (Belize) said that the unprecedented demand [of funding proposals] is not a problem to be solved by narrowing access, and that it is evidence that the Fund is fulfilling its purpose. She reminded the Board that “our responsibility is to ensure that every eligible proposal receives a fair, equitable, and timely assessment” and that the answer to oversubscription “cannot be to ask countries to compete against one another for a place in the queue.” Instead, the answer “must be to mobilize the resources necessary to respond to the scale of the need before us. [...] to accelerate the capitalization of the funds, so that all proposals, meeting the required standards, and the deadline, be considered through a process that is fair, predictable, and manageable.”

David Chama Kaluba (Zambia) said that while difficult to strike the balance, there is comfort that projects will still be considered by the Board in what he hoped will be managed in a timely manner. Echoing others on resource mobilisation, he also hoped for more effort put into ensuring additional support to reduce the gap between those that will be funded in the initial stages, and those that will get support later. He also highlighted the importance of communicating expectations to potential beneficiaries and those who have made efforts to put in quality projects that may not necessarily be considered in the first tranche, and hoped that Co-Chairs and Secretariat will ensure that communications go out in such a way that it sends the right message and is not misunderstood.

In light of the clear oversubscription of projects under the BIM, Isaac Glassie-Ryan (Cook Islands) reiterated his seat’s request for the Board to facilitate a fair and equitable process, stating concern for the fact that resource limitations and political timelines are shifting towards a ‘first come first serve’ basis which create unhelpful competition over resources between and amongst regions, and groups, thus disadvantaging the very modalities the Fund was designed to champion. On inclusive consultations required to be conducted by proponents of the funding requests, he pointed out that these consultations with communities facing a loss and damage is a different exercise than consulting with renewable energy stakeholders or assessing adaptation options in that “it's personal, it's sensitive, and it's uncomfortable” and so urged Board Members to be aware that this drastically increases the importance of ensuring a fair shot at equitable treatment. On the BIM meaning to produce lessons, he said that “It is already effective in doing so. We have learned, the capitalization of this Fund cannot wait. We have learned that even in the context of highly sensitive loss and damage response, their political prerogatives and timelines still seek precedent.”

Ali Tauqeer Sheikh (Pakistan) contrasted the USD 250 million start-up capital with a USD 2.8 billion pipeline, saying that “replenishments are overdue” and that it is “imperative for the health and well-being of the functioning of this Fund”. 
He also said that we must reach the affected and vulnerable people, and review sequencing which should follow capacity as “a request filed a minute before midnight on June 15th, is as well as the one filed in April.”

Adao Soares Barbosa (Timor-Leste) noted that it is “very unfortunate” that the decision text “will not be sufficiently available to support funding requests from all developing countries”, especially the 62 funding requests from LDCs. He also said, given limited financial resources to implement all those funding requests the Board is going to endorse and approve, that this is a “good lesson learned” to show to the world that additional contributions to the Fund are very much required to enable the implementation of at least one funding request per LDC country.

Tamim Alothimin (Saudi Arabia), after the adoption of the “package” decision, said that his seat supported remarks made by LDCs and SIDS colleagues, and wanted to emphasise the importance of directing efforts and on executing existing pledges that have been committed since the Dubai decision [on operationalising the FRLD at COP 28 in 2023]. He reiterated the obligations of developed countries in providing finance inherent under Article 9.1 of the Paris Agreement and the Convention, where “developed countries' historical responsibility in providing the finance is well integrated to this Fund's sustainability,” and cautioned against any dilution on this process from now to the long-term operating model. He also expressed frustration on the tranche process of having to choose projects without full assessment of the full pipeline, and said that “This process should be exceptional, and the way we conduct our business here as a Fund, understanding the urgency and the need to execute the implementation that is required.”

Much is to be anticipated at B.10, which will also convene in Manila, Philippines from 15-18 December, 2026.