In October 2022, Scotland hosted a conference which brought together international representatives and practitioners to articulate best practice and explore innovative new opportunities to mobilise finance for, and address Loss and Damage ahead of COP27.
Insights for Accelerating Action on Loss and Damage
Issues of climate justice, gender equality and human rights are central to the Scottish Government’s approach to addressing loss and damage and are the bedrock of existing principles for loss and damage action across continents. Therefore the Scottish Government convened this conference to draw on the expertise of delegates and over 30 case studies to build on these principles for loss and damage and to consider what they might mean in practical terms.
This summary report captures critical insights from the conference discussions on how principles for addressing loss and damage can be developed and put into practice. The full synthesis report to follow this summary in early 2023 will expand on these insights by drawing more deeply from the case studies and evidence submitted, aligning practical examples to existing principles to illustrate best practice.
Certain principles will speak more profoundly to different actors and contexts. During the conference opening plenary, Scotland’s First Minister, Nicola Sturgeon, Professor Saleemul Huq of ICCCAD in Bangladesh and Vanessa Nakate, a youth climate activist from Uganda, were asked to articulate the principles that they each considered most important. Their proposals included:
1) We must act urgently to mobilise finance to address loss and damage – as shown by Scotland, Wallonia and Denmark;
2) Loss and damage finance must be new and additional to meet the new and additional needs, not simply re-allocated from other climate or development priorities;
3) Finance must not be burdensome or create further indebtedness for recipient countries and communities;
4) Finance for loss and damage should be mobilised from a wide range of public and private sources;
5) Loss and damage action and finance should ‘do no harm’ to current or future generations.
In the final conference session, participants were presented with the outputs of consultative work undertaken by the Stockholm Environment Institute (SEI) and co-funded by the Scottish Government on ‘Principles for operationalising loss and damage finance’, which built upon SEI’s previous seminal work on principles for loss and damage. The presentation highlighted the following principles:
- Historical responsibility and polluter pays
- Equitable and targeted support
- Grant-based, programmatic finance
- Recipient ownership
- Transparency and accountability
Participants were invited first to review and expand upon these principles. They were then asked to propose and elaborate guidance for practical implementation of these principles – for all actors, non-state and state, and at all scales. The following ‘stages of action’ to address loss and damage were proposed to encourage participants to generate end-to-end guidance for practical application: mobilising finance; assessing needs; designing and implementing interventions (incl. resourcing); monitoring, evaluation and learning (MEL); and measures for long term resilience.
The following section brings together the in-depth discussion captured from conference sessions and brings them into interaction with the existing principles presented by SEI, as well as those proposed by speakers and by participants themselves, to gather these outputs under thematic ‘Insights.’ These insights begin to reference cases that delegates felt exemplified an element of good practice – the full synthesis report, to be published in early 2023, will do this in greater depth.
1. Urgency of Action
Action must be taken without further delay to mobilise finance for addressing loss and damage and get it to where it is needed. While a global loss and damage financing facility is much needed, those being impacted now by climate change cannot wait for it to be established. Meanwhile, participants noted the variety of existing financial instruments from public and private sources that were presented during the conference (as outlined in sections 3 and 4 above) and reflected that these can be accelerated and expanded alongside developing new, innovative sources of funding to better meet rising needs.
At the same time, urgency, particularly when assessing needs and disbursing funds, must be tempered by the need to facilitate participation and local ownership, ensuring that no harm is done to affected populations. To this end, a body of evidence is available which draws upon the experience of the humanitarian community in conducting rapid participatory needs assessment and co-designing programmes within complex emergency settings. Funding agencies can work with implementation partners and affected communities to apply these approaches to addressing the economic and non-economic losses and damages that accrue over the longer term beyond the initial humanitarian response. Deploying adaptive management processes and forming communities of practice can support lesson-sharing and accelerate the pace of effective action.
Building on existing distribution mechanisms and programmes in operation within the affected communities prior to the disaster can provide an avenue to accelerate the distribution of funds. For example, in 2022 the Scottish Government rapidly mobilised and disbursed funds to communities in Malawi affected by Storm Ana through a trusted partner, SCIAF, who had previously established close working relationships with the affected communities on the ground. Such examples can also help to build momentum toward the huge scale of global finance needed for loss and damage, and act as a precursor and test-bed for the envisaged international finance facility under the UNFCCC.
2. Equitable and Targeted
Climate change disproportionately affects women, the elderly, people with disabilities and indigenous groups. The assessment of needs and the design and delivery of interventions must consider the differentiated impacts and intersecting vulnerabilities of the people and communities at the climate frontline. Furthermore, it is critical that the knowledge, needs and capacity of those affected by loss and damage are recognised and that their agency in decision-making is facilitated.
Those mobilising finance, those implementing programmes and those experiencing losses and damages can work together across the different stages of addressing losses and damages. Delivery mechanisms must not exacerbate inequalities and patterns of disadvantage, and the use of gendered and intersectionality-informed needs assessment can be used to minimise elite capture.
Various case studies presented during the conference emphasised the importance of locally- led approaches that enable affected communities to act as the primary agents of change. The Climate Justice Resilience Fund, supported by the Scottish Government, works with partner organisations to deliver loss and damage initiatives that acknowledge and address intersectionality. One such project by Helvetas has developed a gender-disaggregated database of seasonal and temporary migrant workers, to provide an evidence base for further support for climate-forced displacement, including rebuilding livelihoods and infrastructure damaged by climate-induced disasters.
3. Responsive to Context
The broader socio-economic and political context needs to be considered in the mobilisation of funds, needs assessments and intervention design and delivery. This is particularly important where people face intersecting risks and accumulated losses and damages related to conflict, economic instability, climate change and geophysical hazards. When informed by a comprehensive risk assessment that takes account of intersectional drivers of vulnerability such as poverty, food insecurity and poor infrastructure, loss and damage interventions can help to build longer term resilience.
People and communities affected by climate loss and damage in conflict zones are often harder to reach due to the challenges of operating in fragile locations. Ensuring the safety of affected people is particularly crucial when supporting relocation and displacement, and climate induced disasters exacerbate the risk of gender-based violence for women and girls who are more likely to be displaced than men. The Climate and Environment Charter for Humanitarian Organizations has been developed by agencies specialised in humanitarian work in conflict affected locations.
4. Adequate to Meet Real Needs
The scale and types of both finance and action must be adequate to the task of addressing particular losses and damages in specific contexts now and into the future. The sums of finance provided need to adequately meet the immediate needs of people and communities negatively impacted by climate shocks, their recovery and rehabilitation needs and their long term resilience-building requirements.
Adequacy of intervention must cover the full range of needs of those impacted, from infrastructure rehabilitation, provision of food relief, public health support, emergency shelter and livelihoods recovery, to mental health support and grief counselling, and actions to address other forms of non-economic losses and damages. Participants noted that long-term programmes and projects are essential to ensure the scale and effectiveness of addressing loss and damage.
Affected people, households and communities can engage with and lead in defining what ‘adequate’ means. Participatory MEL methodologies can be utilised to assess and ensure the adequacy of processes to address loss and damage.
The Glasgow Pact included a call for nations to revise their National Determined Contributions (NDCs). While not obligatory, an increasing number of countries are including loss and damage considerations and responses in their latest NDCs. By costing the interventions needed to address loss and damage in their NDCs, vulnerable developing countries signal the need for new and additional funding and outline how they intend to use it. Vanuatu has made a huge step in this direction with the Revised and Enhanced Nationally Determined Contribution where addressing loss and damage is centre stage.
Countries can conduct analyses of the potential scale of losses and damages (both economic and non-economic) for different climate scenarios, to quantify financial needs in the event of specific shocks and to put in place financial mechanisms that deliver adequate sums for effective action. Based on these risk analyses, governments can work with other stakeholders to develop comprehensive Loss and Damage action plans to prepare to address the losses and damages predicted under particular, geo-specific hazard scenarios. UNDP has supported an initiative to establish national disaster loss and damage databases since the late 1990s, in more than 35 countries, of climate disaster data disaggregated by sub-district, impact and sector, upon which such planning might draw.
5. Accessible to All
Loss and damage finance should be easily and rapidly accessible to countries and communities in need. Participants at the conference reflected that this accessibility operates in two directions: from the bottom up, in terms of ensuring funds are accessible to the people that need them, and from the top down, by ensuring that those organisations and people that want to contribute to finance and action have the opportunity to do so.
Finance and interventions must be designed and delivered in ways that actively empower those affected to access funds. Accessibility requires that finance providers themselves identify and remove obstacles. This may entail reviewing and revisiting their risk analysis and disbursement processes, building the capacity of the recipients and putting in place additional safeguards as required.
Direct access to funds, support through untied grants, allocations not based upon competitive processes for distribution, and using participatory methods at the insider/outsider interface are all critical for accessibility. Participation and effective representation in decision-making should ensure allocation of resources bypasses domination by elites and reaches the most disadvantaged groups.
Finance providers can also develop technologies and mechanisms to transfer funds more quickly and in a more targeted manner to respond to the needs of recipients. This might involve the development of financial delivery mechanisms that make transfers on the basis of pre-determined climatic indicators rather than project proposals, or systems that allow finance to be delivered directly to households via electronic cash transfer.
From the top-down angle, there could be opportunities for organisations and enterprises that want to contribute to support crowd-funding mechanisms. An emerging example is the Climate Vulnerable Forum funding window for addressing losses and damages, to be formally announced at COP27, which will have a crowd-funding channel.
Finally, accessibility is informed by the ‘non-burdensome’ principle that avoids creation or compounding of indebtedness. At the national level, countries need non debt-generating finance primarily delivered in the forms of grants. At smaller scales, eligibility criteria that are inclusive and that account for the capacity of their target recipients should minimise financial and administrative burdens. The bureaucracy that makes it difficult for indigenous people, for example, to access funds can be revised. If communities are involved from the design phase, the risk of creating financial or administrative barriers to access can be mitigated.
6. Historical Responsibility and Polluter Pays
Scotland’s First Minister told the conference that developed nations should recognise their moral responsibilities for climate change in addressing loss and damage. The UNFCCC sets out the importance of historical responsibility and the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances. This is reaffirmed in Article 2 of the Paris Agreement.
One presenter during the conference outlined how approximately 90% of the costs of addressing loss and damage is currently borne by the people impacted. Developed countries can increase their share of loss and damage finance on the basis of solidarity with climate vulnerable countries.
As SEI set out, the principles of historical responsibility and polluter pays should guide contributions and could be a vehicle for restorative justice. The SEI presentation identified the following as potential examples of finance flows according to these principles: climate damages tax on the extraction of coal, oil and gas; international airline passenger levy; reallocation of Special Drawing Rights from developed to developing countries; and annual reduction in fossil fuel subsidies by G20 countries, with the funds being used to support efforts to address loss and damage. The call for an Advisory Opinion on climate change from the International Court of Justice by Vanuatu is an example of forward-looking action to hold major polluters accountable for anthropogenic climate change.
7. Creative Communication and Shared Learning
The issue of whose stories and experiences are communicated is important. The perspectives of those people and communities at the frontline of losses and damages that are heard and acknowledged. The global community must ensure those impacted have a platform to voice their realities of loss and damage without solely burdening them with the responsibility of advocating for action.
By listening to others with similar experiences of loss and damage we can learn about impacts and risks, as well as build a better picture of solutions that can draw down funding support. Effective communication can be through storytelling, paintings and art forms highly valued in different communities. Culture influences how we understand relationships with nature and each other. Connecting with local artists to mobilise local communities can be effective. Creative communication of learning and experiences from the implementation of measures to address loss and damage is essential. This can accelerate momentum toward success particularly with regard to processes to scale up effective measures.
People in Dhaka, Bangladesh are using theatre to make and tell stories of their lived experience of climate change. In a case study presented at the conference La Ruta Del Clima shared stories from a diversity of groups who are experiencing economic and non-economic loss and damage due to climatic impacts. Using stories helped to contextualise climate change; it showed how climate impacts perpetuate inequality and vulnerability and interact with extractive dynamics, and allowed further exploration of the experiences and perception of those most affected.
8. Transparency and Accountability
The SEI presentation proposed that providers and recipients of finance should be forthright about the quantity and use of funds. Facilitation of funding access could be hosted under the UNFCCC to ensure accountability to Parties who agree reporting requirements. Taking advantage of existing national systems of tracking finance is important. Use can be made of self-reporting based upon participatory monitoring, evaluation and learning.
Transparency and accountability builds trust among finance providers and recipients. Donors need reassurance that funds will be used as intended and not misappropriated. One way is to use established financing channels that are known to work to get the money to where it is needed. A facet of trust is shifting the power so the people who need support in addressing losses and damages have direct access to resources and are allowed to make their own allocation decisions. Non-conditional funding can help build trust for recipients.
Local ownership can also be used to confront existing power structures that may exist between governments, private sector, civil society and local communities in a way that ensures that all stakeholders are equitably represented. In this way, local ownership supports the distributional, procedural and transformative aspects of climate justice.
Efforts must be made to build the capacity of actors at all levels to take ownership of interventions and to build trust which enables both upward and downward accountability. A partnership between UNDP and Milliman that aims to build actuarial expertise in developing countries aims to enable insurers, pension funds and social security administrations to better manage risks and in turn offer innovative and affordable insurance solutions for all.
Monitoring, evaluation and learning is critical both for bottom-up accountability i.e. how measures are reported to funding bodies, and for downward accountability i.e. how those responsible for financially supporting and implementing measures to address losses and damages are held to account by those facing the impacts and risks of losses and damages.
The UNFCCC can and should embody and deliver global transparency and accountability for all climate action including to address loss and damage. For instance, to mobilise and distribute loss and damage finance the enhanced NDCs can be used to demonstrate need. The Global Stocktake is to be used to collate evidence both of the incidence and severity of losses and damages, but also the measures being taken to address them. This will require inputs from climate vulnerable countries and support for the articulation of their loss and damage needs (coordinated under the Santiago Network for Loss and Damage). A Loss and Damage Gap Report is proposed as a critical input to this process.
9. Far-sighted and ‘Do No Harm’
Acting on loss and damage in ways that are not deleterious to future generations is crucial. In the urgency to address loss and damage the danger of longer-term harm may be overlooked. This means that meaningful participation and engagement of climate frontline communities at all levels is essential.
Being cognisant of and acting to address the projected escalation in future risks of loss and damage, particularly the unavoidable increases in hazards, is important. The impacts of disasters will compound over time and eventually become insurmountable: longer-term projects that build resilience can break this cycle.
Far-sighted approaches also offer narrative shifts from relief and response towards a more sustainable approach that incorporates slow-onset events. Indonesia, for example, has published a Long-Term Strategy for Low Carbon and Climate Resilience 2050.58 In another example, C40’s Water Safe Cities project commits to creating a water-safe future for the world’s cities. Research in 97 C40 cities facilitated calculation of flood and drought risk by 2050, and the risk of population exposure and accompanying costs. The project gives technical assistance to develop, organise, and coordinate water management strategies.
The ‘Do No Harm’ approach may apply to the UNFCCC Loss and Damage negotiation process. The G77 and China group of Parties have pledged to do no harm to the proposals of sub-groups, even where these are not unanimously supported. An important factor in advancing Loss and Damage action, this is also part of the moral responsibility of developed countries referred to by Nicola Sturgeon, Scotland’s First Minister in her opening remarks to the conference.
10. No Additional Indebtedness
The SEI presentation explained that the costs of responding to loss and damage should not become a burden for affected groups and finance needs to be available at appropriate timescales and quantities. Two primary levers were discussed that different stakeholders can use to ensure that action to address loss and damage does not increase the debt burden already faced by affected countries, communities and individuals: debt relief, and grant-based (rather than loan-based) programme funding.
Debt relief was called for by some participants although it was recognised that this mechanism would not necessarily solve the need for urgent mobilisation of finance and would have to be deployed in addition to other mechanisms. There is also growing recognition of the role of debt relief in achieving climate justice goals, underlining the structural inequity in the availability of existing finance. Examples provided by Jubilee Scotland in a case study included the Debt Service Suspension Initiative (DSSI) and the Common Framework for Debt Treatments. In November 2020 Zambia defaulted on interest payments to private lenders and in February 2021, Zambia applied for a debt restructuring through the Common Framework. However, no progress has been made in the negotiations as large private creditors have refused to enter an agreement for debt relief, highlighting the importance of private sector engagement for many types of finance to address loss and damage.
Grant-based rather than loan-based programme funding means that affected countries, communities and individuals are not driven further into debt by having to repay more than the value of the finance that is provided. Where this is provided as longer term programmatic finance, action and interventions to address loss and damage can be delivered more strategically over the medium to long term. An example of this is shown through the actions of philanthropies such as CIFF who have experience of grant-based action through their delivery of the Global Methane Hub and who also backed the V20 fund, which builds on the GEF’s Small Grants Programme and is aligned with climate justice principles.
Published by Scottish Government