Put your Money Where your Mouth is!

    Stockholm (NordSIP) – Here we go again.  The familiar whiff of panic, the series of last-minute preparatory meetings, and the persistent disagreements over fundamental questions relating to the climate crisis.  Yes, it is almost COP time.  Exactly 34 days, 10 hours, 32 minutes and 26 seconds at time of writing, according to the countdown clock on the official COP28 website.  Like the Fast & Furious film franchise, the COP series has been running for a long time and is in danger of losing its audience.  In the latest plot twist, the major protagonists failed to agree on the next steps for the Loss and Damage (L&D) Fund that was set up in the last episode that was set in Sharm El-Sheikh.

    The Loss and Damage Fund was established to go someway towards redressing the balance between wealthy, historically high-emitting nations and the low-emitting developing nations that stand to suffer the worst effects of climate change.  There is an old saying that “The road to hell is paved with good intentions,” and while setting up the L&D Fund was agreed upon in principle, all the parties involved have been arguing since and very little money has materialised.  In an attempt to break the deadlock, the United Nations’ (UN) Transitional Committee (TC) on Loss and Damage gathered in Aswan, Egypt between 17 and 20 October.

    World Bank an unpopular choice

    The disagreements over the L&D Fund are not trivial.  The points of contention include the Fund’s location, governance, sources of funding and beneficiaries.  Everything, in other words.  The developed nations, spearheaded by the United States, have been pushing for the Fund to be located within the World Bank.  However, the likely beneficiaries of the funding fear that the World Bank would represent yet another barrier between them and the funding that they desperately need.  Although the bank is “Under New Management,” the developing nations fear that the legacy of its previous climate-unfriendly President David Malpass lingers on and they want to guarantee more direct access to the new structure.  There are also strong differences over exactly which countries qualify as beneficiaries, with some developing nations arguably in a grey area as their economies have grown dramatically in recent years.  It nevertheless remains that their legacy emissions are dwarfed by those of the North American and Western European nations.

    The strength of feeling in the aftermath of the latest TC meeting was abundantly clear in statements made by participating NGOs.  Harjeet Singh, Head of Global Political Strategy at Climate Action Network International said: “The failure of the Transitional Committee to draft recommendations for the operationalisation of the Loss and Damage Fund is a clear indication of the deep chasm between rich and poor nations. Developed countries must be held accountable for their shameless attempts to push the World Bank as the host of the fund, their refusal to discuss the necessary scale of finance, and their blatant disregard for their responsibilities under the UN Climate Change Convention and the Paris Agreement. Behind closed doors, developed nations not only attempted to fracture the solidarity of developing countries, but when unsuccessful, brazenly asked even the poorest nations to contribute to the fund.”

    Rather than working with the World Bank, the G77 and China group of developing nations would like to see a fully independent L&D Fund, or failing that one that operates under the auspices of the UN.  The new World Bank president Ajay Banga has sought to ease the concerns over his organisation’s alleged obstructiveness and potentially high fees, stating that he would be willing to adapt their procedures accordingly.  The Transitional Committee on Loss and Damage will now meet again in Abu Dhabi on 3 and 4 November, in the hope that they can resolve their simmering differences before COP28.  They would do well to keep a keen eye on that countdown clock.

    Image courtesy of Henryk Niestrój from Pixabay
    Richard Tyszkiewicz
    Richard Tyszkiewicz
    Richard has over 30 years’ experience in the international investment industry. He has worked closely with major Nordic investors on consultancy projects, focusing on the evaluation of external asset managers. While doing so, Richard built up a strong practical understanding of the challenges faced by institutional investors seeking to integrate ESG into their portfolios. Richard has an MA degree in Management and Spanish from St Andrews University, and sustainability qualifications from Cambridge University, PRI and the CFA Institute.

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