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GRAPH 3

AN EVER-INCREASING BILL: IS IT FINALLY TIME TO BRIDGE THE TRANSITION FINANCING GAP?

PART 2: LOSS & DAMAGE COMPENSATION

By Gerrit Dubois,
Responsible Investment Specialist at DPAM

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STATUS PRE-COP27

  • All eyes on the 2022 Bridgetown Agenda for the Reform of the Global Financial Architecture to ensure loss & damage is integrated in the agreement. This is crucial. The IPCC estimates that 3.3 to 3.6 billion people (nearly half the world’s population!) currently live in contexts that are highly vulnerable to climate change. Note that it’s the first time the topic has been included in the official agenda.
  • High-income countries account for the bulk of the current greenhouse gases (GHG) concentrations in the atmosphere, while low-income countries face the greatest impact from Global Warming in the form of extreme natural events such as storms, droughts and other disasters.

Why loss & damage compensation matters

Source: World Resources Institute, 2021

OUTCOME POST-COP27: NEUTRAL

  • A deal was reached to create a fund for climate disaster relief. This can be considered a major win for the most vulnerable nations, given the lengthy resistance of developed economies to create a dedicated loss and damage fund. Within the first draft released, the concept was only ‘welcomed’, which is, of course, nowhere near the true aim of serving ‘climate justice’. To make it even more tangible, participants agreed to establish a ‘transitional committee’ to ensure details on the operationalisation of the fund can be agreed upon at the next COP. A first meeting is already expected in Q1 2023. But will the promises and commitments survive the ongoing political uncertainty and economic downturn?
  • Furthermore, the EU has tried to modify the funding basis for such a fund by addressing the elephant in the room: China, a move that was not welcomed by the developing nations. This is not due to its historic emissions, but because of its current emissions, lack of ambition and economic power. However, without rapidly-growing economies like China and Saudi Arabia on board with their own ambitious targets and commitments, GHG concentrations will not fall.
  • The deal between French President, Emmanuel Macron, and Barbados Prime Minister, Mia Mottley, is another positive development. They agreed to set up a group to suggest changes at the next meeting of the IMF and World Bank governors in spring 2023. Putting climate resilience financing on the official IMF and World Bank agenda can be considered a step in the right direction. Will this completely reform the international financial institutions? Let’s hope so.
  • Yet another acronym launched at the COP: SURGe, or Sustainable Urban Resilience for the Next Generation focusing on carbonisation, climate adaptation, reaching nature-positivity, preserving culture and promoting human health and biodiversity. This might be a positive news, as cities seem to be more ambitious, active and driven to push through necessary adaptations.
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