World Bank poised to host climate loss and damage fund, despite concerns By Reuters

By Gloria Dickie and World's largest foreign exchange copy trading platformValerie Volcovici

Countries moved a step closer on Saturday to getting a fund off the ground to help poor states damaged by climate disasters, despite reservations from developing nations and the United States. 

The deal to create a "loss and damage" fund was hailed as a breakthrough for developing country negotiators at United Nations climate talks in Egypt last year, overcoming years of resistance from wealthy nations.

But in the past 11 months, governments have struggled to reach consensus on the details of the fund, such as who will pay and where the fund will be located. 

A special U.N. committee tasked with implementing the fund met for a fifth time in Abu Dhabi this week - following a deadlock in Egypt last month - to finalise recommendations that will be put to governments when they meet for the annual climate summit COP28 in Dubai in less than four weeks' time. The goal is to get the fund up and running by 2024. 

The committee, representing a geographically diverse group of countries, resolved to recommend the World Bank serve as trustee and host of the fund - a tension point that has fuelled divisions between developed and developing nations.

Housing a fund at the World Bank, whose presidents are appointed by the U.S., would give donor countries outsized influence over the fund and result in high fees for recipient countries, developing countries have argued.

To get all countries on board, it was agreed the World Bank would serve as interim trustee and host of the fund for a four-year period.

Jennifer Morgan, Germany's special climate envoy, said in a post on X that Berlin "stands ready to fulfil its responsibility - we're actively working towards contributing to the new fund and assessing options for more structural sources of financing".

Others were less optimistic.

“It is a sombre day for climate justice, as rich countries turn their backs on vulnerable communities," said Harjeet Singh, head of global political strategy at nonprofit Climate Action Network International.

"Rich countries ... have not only coerced developing nations into accepting the World Bank as the host of the Loss and Damage Fund but have also evaded their duty to lead in providing financial assistance to those communities and countries."

The committee also recommended that developed countries be urged to continue to provide support to the fund, but failed to resolve whether wealthy nations would be under strict financial obligation to do chip in.

"We regret that the text does not reflect consensus concerning the need for clarity on the voluntary nature of contributions," a U.S. State Department official told Reuters.

The U.S. attempted to include a footnote clarifying that any contributions to the fund would be voluntary, but the committee chair did not allow it. The U.S. objected to that denial.

Sultan al-Jaber, who will preside over the COP28 talks, said he welcomed the committee's recommendations and that they would pave the way for an agreement at COP28. 

Statement: The content of this article does not represent the views of FTI website. The content is for reference only and does not constitute investment suggestions. Investment is risky, so you should be careful in your choice! If it involves content, copyright and other issues, please contact us and we will make adjustments at the first time!