Addressing Loss and Damage at COP29 and Beyond

In recent years, loss and damage (L&D) has shifted from the margins into the spotlight of multilateral negotiations under the United Nations Framework Convention on Climate Change (UNFCCC). A key pillar of international climate change policy alongside climate mitigation, adaptation and climate finance, loss and damage refers to the actual or potential adverse impacts of climate change that could not or have not been avoided, resulting from extreme weather events such as tropical storms and slow-onset processes including sea-level rise and desertification. As the eyes of the world turn to COP29, this short piece examines the latest L&D policy developments under the UNFCCC, spotlighting the Fund for Responding to Loss and Damage (hereinafter: ‘the Fund’), negotiations on the new collective quantified goal for climate finance (NCQG), the third review of the Warsaw International Mechanism (WIM), and the upcoming high-level dialogue on coordination and complementarity.

The Current State of Affairs

The Warsaw International Mechanism (WIM) was established in 2013 as a technical subprocess under the UNFCCC framework convention. Although its core functions alongside knowledge generation, dialogue and coordination covered action and support, including finance, the latter part of its mandate consistently failed to materialize. Since the adoption of the Paris Agreement in 2015, L&D has steadily moved to the forefront of the international response to climate change under the UNFCCC. In a political compromise, the explicit recognition of L&D in Article 8 of the Paris Agreement came with a disclaimer in the accompanying COP decision, explicitly excluding liability or compensation for L&D from its remit. Nonetheless, in declarations upon signature and ratification, many vulnerable countries made it clear that this non-binding disclaimer does not abrogate their rights under international law. Pacific island states have since launched several high-profile advisory proceedings before international courts and tribunals to provide clarity on this matter by outlining the obligations of States with respect to climate change .

At COP27 in 2022, Parties agreed on a financial mechanism with the establishment of the Fund, and agreed the following year at COP28 on its governing instrument. Since then, Parties have focused on the operationalization of the Fund, by appointing a board with balanced North-South representation (the Fund Board) agreeing on the World Bank as interim trustee and host of the Fund’s Secretariat, and selecting an Executive Director. Pledges by states to fill the Fund to date      fall far short of the scale required (by some estimates around US$ 671 billion annually by 2030), and only US$ 10 million have actually been paid into it. Many important matters remain to be decided regarding the scope, scale and operation of the Fund, including direct access and disbursement modalities, and resource mobilization. Many of these decisions will likely only be taken after COP29. It thus remains doubtful that any funds will be disbursed until the end of 2025, if not later.

What’s on the Menu at COP29?

This year’s COP in Baku is expected to finalize the third review of the WIM and its Executive Committee. This review marks an important milestone given that it is the first review following the establishment and operationalization  of the Fund. Based on the terms of reference adopted by the UNFCCC subsidiary bodies in June this year, Parties will review progress in implementing the mechanism’s core functions, evaluate its performance, activities and achievements, and consider the WIM’s long-term vision. Critically, as per the terms of reference, the review will also look at synergies in the L&D policy landscape, considering the interplay between the WIM, its Executive Committee and Santiago Network, and the Fund as well as new funding arrangements.

Synergies and complementarity appear to be the name of the game. A key piece of the puzzle to unpack the complex relationship of the new Fund and existing policies and governance structures such as the WIM is the new high-level dialogue on coordination and complementarity, to be co-hosted by the Executive Director of the Fund, Ibrahima Cheikh Diong, and UN Secretary-General, António Guterres. This dialogue, expected to convene annually, is mandated to ‘identify priority gaps and new opportunities for cooperation, coordination and complementarity’ and strengthen synergies to enhance integration of L&D measures into sources, funds, processes and initiatives both under and outside the Framework Convention and Paris Agreement. The first of its kind, the dialogue will be launched at COP29 through a high-level event on the margins of the World Leaders Climate Action Summit. Invited to the launch are the UN Secretary-General, the COP29 President, the principals of the three entities that comprise the interim secretariat (UNFCCC, the Green Climate Fund and the United Nations Development Programme), the President of the World Bank Group as host and trustee of the Fund, representatives from various regional development banks, several international organizations with relevant mandates, civil society and philanthropy, individual loss and damage experts, and the President of the Philippines as host country of the Board. The WIM Executive Committee and Santiago Network are also invited. The actual dialogue will take place at the beginning of 2025 and is expected to bring some much-needed clarity to the funding governance landscape and its interplay.

At COP28, Parties decided that contributions to the Fund would be on a voluntary basis, absent any recognition of responsibility for loss and damage. Instead, more determined language dating back to the 1990s calling onin combating climate change  was diluted once more (for relevant commentary, see Weinger). Developed countries are expected to merely ‘take the lead to provide financial resources for commencing the operationalization of the Fund’ – rather than ensuring its full and effective operationalization, let alone paying into it. Many are now looking to the NCQG to be decided in Baku to deliver a transformative political signal, by including a thematic subgoal for loss and damage. If such a sub-goal were to be adopted, the scale of the overall NCQG would be a key determinant of the scale of and actual disbursement through the Fund, and any future funding mechanism for loss and damage. Larger questions loom whether, like the Fund, the NCQG will feature only voluntary contributions, and what lessons can be learned from the previous annual goal of US$100 billion agreed on in 2009 for mitigation and adaptation by 2020. Currently, the  draft text of the NCQG leading to COP29, has several mentions on loss and damage finance and on the Fund. Most of them are in brackets, meaning their inclusion in the final decision text remains subject to negotiation.

Future Directions

It should not be forgotten that in parallel to the Fund, the COP also agreed on so-called ‘new funding arrangements’ that should be coherent with and complementary to the Fund. While the Fund’s scope is to focus on priority gaps within the current landscape of institutions, these funding arrangements are to complement and include sources, funds, processes and initiatives under and outside the Framework Convention and the Paris Agreement. Essentially, they directly implicate financial institutions in the mobilization of funding, through scaling up or enhancing existing and initiating new finance for responding to loss and damage. The high-level dialogue to be launched at COP29 is expected to serve as a catalyst providing recommendations for the development and implementation of new funding arrangements.

The fourth meeting of the Fund Board will convene after COP29 from 2-5 of December 2024 in Manila, Philippines. The agenda for this meeting is packed with pending decisions and unanswered questions regarding the scope and scale of the fund, its fundraising strategy, the structure for direct access of funding for frontline communities and many other outstanding aspects. Unless and until these important issues are addressed through clear and implementable decisions that will ensure that the commitments reached two years ago can unlock the necessary finance, the viability of the Fund and funding arrangements as effective instruments to address loss and damage remains in doubt.

The future of climate finance thus remains uncertain for the time being, with the failure to achieve the US$100 billion pledge still recent in memory. The outcome of the NCQG discussions in Baku may very well be that the provision of climate finance will remain voluntary. Such a regressive approach would lower financial obligations for developed countries leaving climate vulnerable countries to shoulder the spiralling costs of economic and non-economic loss and damage.

Meanwhile, the bigger picture of the international climate regime beyond the negotiations appears to be shifting, not least thanks to an explosion of rights-based climate litigation since the Paris Agreement. The much-awaited advisory opinion from the International Court of Justice (ICJ) may build on the advisory opinion delivered by the International Tribunal on the Law of the Sea (ITLOS) a few months ago and even go beyond, given that the questions put to the ICJ are broader in scope and therefore permit the latter to address issues in an even more comprehensive manner.  One of the pivotal issues that the ITLOS has only touched upon, but that the ICJ will address in greater detail, is the of climate change. Concurrently, the Inter-American Court on Human Rights is also engaged in the process of formulating an advisory opinion pertaining to climate change and human rights. These advisory opinions could serve as a valuable political and advocacy tool, offering a structured framework for engaging in climate discourse. Even more so, they would serve as a timely reminder that the negotiations do not exist in a vacuum, and – in the words of the UN Special Rapporteur on Climate Change and Human Rights – cannot ‘shield States from the international responsibility that arises from breaching their international human rights obligations’.