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COP 27 and CMA 4 Status on Loss and Damage | Policy Brief

Written by Molly Rahal, Policy Analyst, BCCIC’s Climate Change Branch

Molly at COP

After countless years of climate vulnerable communities calling for real and meaningful commitments on Loss and Damage, it’s finally starting to become official – Loss and Damage is on the UNFCCC agenda. But what does this actually mean?

Loss and Damage (henceforth abbreviated to L&D or LD) is thought of as the physical destruction and other resulting tangible consequences that happen on the ground in climate vulnerable countries when us citizens of the world (with differentiated responsibility for Global North countries to act on the damages they have disproportionately caused) have not been able to mitigate and adapt sufficiently to the climate crisis. The UNFCCC defines L&D as “the adverse effects of climate change.” 

In reality, this looks like many things; from destruction of architecture and housing; the destruction of personal belongings and goods; to the physical loss of livelihood.

In an impact report released by the IPCC’s Working Group II earlier this year, it is noted that approximately 3.5 billion people (mainly in the Global South) are living in highly vulnerable areas to climate impacts. We already know that a 1.5 degree Celsius global temperature average increase from pre-industrial levels is already a massive political trade-off, with immensely tragic loss. Mass destruction induced by anthropogenic climate change is already here – it’s just being disproportionately felt by those who have contributed to it the least. We must stop looking at these numbers as ‘just numbers’ – these are real people being impacted and experiencing L&D in real time.This is happening right now. The crisis is here and the impacts are being felt.

COP27 in Sharm el-Sheikh, Egypt, was the biggest COP in history in terms of universal voices talking about L&D, with COP26 laying down the focus for it in advance. Never before have so many voices from all over the world been calling attention to this issue at the same time. In fact, only a few years ago, countries from the Global North were not seriously listening whatsoever to calls for L&D finance. No one would have thought at all that an L&D finance facility would come out of the next few COPs, let alone COP27. Historically, the Global North has hardly recognized Loss and Damage as a separate entity from “Adaptation” as an agenda item. Though the Global South, Civil Society Organizations, Indigenous Peoples and youth have been desperately championing the fight for a healthy world in part by lobbying for Loss and Damage formally on the agenda for decades (without being listened to), this worldwide focus on L&D is new – loss and damage was even ‘trending’ recently on Twitter, one of the world’s largest social media platforms. 

This COP, a Loss and Damage Finance Facility was passed in the very final hours of the conference after long (and pretty agonizing) negotiations. The room even burst into applause upon completion of the text, considering the decades of NGO groups begging rich countries to pay their fair share for climate damages. Climate vulnerable nations have been asking for loss and damage financing for more than 30 years, for example Vanuatu on behalf of the small island states making a loss and damage finance request back in 1991. That rich polluting countries pay their fair share has been an ask before the UNFCCC COPs even began.

For once, what vulnerable nations have been asking for is (relatively, finally) in the spotlight. For once, these needs and asks for climate damage finance from those responsible were streamlined, and prioritized as an agenda item at the COP. This is a win after years overdue of Global North countries deadlocking the negotiations and pushing back during formal talks.

Now that an L&D Finance Facility (LDFF) has passed through the final conclusion text of COP27  – there are a few very important things we must keep an eye on as civil society observers: which boils down to keeping our eyes on implementation and transparency.

First let’s note that the COPs need to be focused on balancing both the causes of climate change, as well as dealing with the consequences – as quoted from Dr. Mohamed Adow in some of his COP takeaways. As it has been clear, for many years the UNFCCC was completely focused on mitigation and adaptation, while loss and damage and those dealing with the adverse effects of climate change on the frontlines were ignored or pushed to the side, or lobbed together with adaptation policy, especially during negotiations about climate finance.Though Adaptation and Loss and Damage are closely connected by nature, they absolutely must be seen as separate entities when talking about financial compensation and finance facilities to support on the ground communities, who are experiencing adverse climate losses and need immediate accessible fund access for climate crisis loss and damage. A separate loss and damage finance facility is a win for commitment to climate financial responsibility and a step towards addressing the exponentially urgent gap in global climate finance mechanisms.

We also must ensure that Global North countries cannot move around funds that are already pledged to Adaptation initiatives by calling it “new” finance for L&D. We, as civil society observers present at the UNFCCC, need to watch closely and report accordingly to ensure that the financial pledges for Loss and Damage are not just rearranged finances that end up being double counted. The Global North promises must be for new money. Civil society observers must call out any accounting games being played, and ensure that money being pledged is not money already pledged to an existing development fund.

Another thing is not just about the money itself, but how it is being accessed by vulnerable communities locally and on the ground. Until now, the majority of the money that has been offered is being offered in the form of loans that come with high interest rates. The Global South needs a finance facility where they are granted the money without any strings attached – not through loans, without conditions, and without further harming local communities. The use of the LD finance also needs to be driven by the local communities rather than outsiders coming in and forcing their external opinion of best practice; which causes further harm to the local communities. And the money needs to actually be accessible when needed to the communities in question, without unnecessary bureaucratic and political barriers that we have seen to date.

Now that the loss and damage finance facility has been committed to, keeping an eye on effective and equitable implementation, and the transparency of its mechanisms – from the very beginning of implementation to when it is in full function – is top priority.

Global North countries are continuously falling short on their financial pledges outside of LD, so civil society must keep the pressure on. Reaffirmed during COP26 (The Glasgow Climate Pact), the $100 Billion USD that was pledged per annum by Global North countries to Global South countries, was not delivered; the 2020 target was missed. There is a resulting focus on the physical implementation of declared targets and how to actually and accurately monitor such progress. The heated debate around adaptation versus L&D finance was probably one of the most controversial topics amongst the negotiating Parties, evident by the finance facility text only coming through in essentially the final hours of the COP. Despite climate finance being statistically on the rise (OECD 2020), it goes without saying that we need major system change as climate finance ambition is nowhere even close to where it needs to be. But this fact does go to show that there is hope to be had and hope we must hold on to, as the work that various groups are doing are proving to have significant effect. We need all hands on deck, in every capacity.

Digging deeper into the LDFF setup, let’s note the Santiago Network on Loss and Damage (SNLD; shortened SN) that was established at COP25 in Madrid, Spain, back in December 2019. At COP25 it was not super clear what this would yet look like in practice, though it was to fall under the implementation of the Warsaw International Mechanism (WIM) – another early pillar of addressing L&D within the UNFCCC (which has previously been said as a common consensus amongst civil society to have almost completely fallen short on its purposes). Yet in Glasgow at COP26, Parties were able to decide on the general functions of the SN. They decided it to be a mechanism with the main purpose of connecting climate vulnerable countries with technical knowledge and on-the-ground assistance; including the sharing of education and technology, to minimize the consequences of LD. It is also supposed to actively connect communities seeking technical assistance with the proper and best suited “organization, body, network or expert.” The text for its general purpose was out; but how it was actually going to work was still up in the air and vague: We needed Parties to further clarify the role of how the finance facility will be delivered in practice under both the SNLD and the WIM, and we need bridging any gaps that may appear.

Then, at COP27 (featuring CMA.4), the SB57, CMP 17, the SBSTA and Subsidiary Body on Implementation (SBI) all present, covering all matters related to the Santiago Network under the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts : In an informal session on the SNLD on November 15th, the G77 and China, stated that they were 85% to completing the text, but asked for more time on the financing situation of the SNLD, the selection process of the host institution and the review of the performance of the Network – an example of flags by negotiating Parties. The G77 and China remained united in their stance and provided a structure for the negotiations here. After long hours of negotiations sometimes going deep into the hours of the night, and hold ups due to conflicts of interests from the different Parties; in another session during November 16th, G77 and China approximated being around 95% done with only a few paragraphs left. The UNFCCC is a consensus based mechanism, so every single Party to the convention must agree on every word of the texts for it to be passed as a draft to the secretariat.

Looking at one of the earlier COP27 draft decision text versions, we saw the structure for the SNLD laid out to include its own secretariat, an advisory board (to be elected at the next session in 2023), a network of member organizations, and further technical details about the set up. The draft recalls various previous decisions like 1/CMA.3 (the CMA text from Glasgow’s COP26), reiterating the purpose of the SNLD: that it will be provided with funds to support technical assistance, urging developing countries to pledge. Further details are broken down in the draft text released this evening about SNLD operationalization. Also, in the draft text, human rights was crucially referenced.

Now, the final COP27 and CMA4 final cover text has become available to read publicly on the UNFCCC website, covering the outcomes from all of the thematic areas. The short text for the funding arrangements for responding to loss and damage associated with the adverse effects of climate change (also from sessions CP.27 CMA.4, which both cover this matter) including a focus on the loss and damage revised draft decision, is available to read here which was published to the UNFCCC site on November 19th.

Scrolling down to the Loss and Damage section of the final COP27 cover text, there are still many crucial aspects missing, and there is still a lot of work to be done in pushing the FF forward into success. Reading the section, we see the confirmation of the agreement for the first time to include a sub-agenda item for loss and damage funding arrangements. The text also notes “with great concern… the growing gravity, scope and frequency of loss and damage in all regions” (para 44) and expresses “great concern to the significant financial costs associated with loss and damage for developing countries, resulting in increasing the burden of indebtedness” (para 45). Parties also agreed on all the institutional arrangements of the SN.

We don’t want a repeat of the fairly unproductive (slow) WIM set-up, and if the work of this year’s COP is going to be fruitful going forward, we need to see serious commitments from the leaders of the Global North to fill the loss and damage funding bucket before and after the next conference of parties being held in the UAE. The success of the SNLD lies on the commitment of wealthy majorly polluting countries and their ambition to fulfill these requirements. As it has been said before: developed countries shouldn’t ask for any procedural items here without a vision for implementation, and implementation of the FF needs to be equitable, transparent, and community-driven.