TWN Info Service on Climate Change (Jul26/06)
24 July 2026
Third World Network

Loss & Damage Fund: US$474 million available, but US$2.8 billion needed for starting pipeline

Kathmandu, 24 July (Chhegu Palmuu): At the ninth meeting of the Board (B.9) of the Fund for responding to Loss and Damage (FRLD), which met on 8-10 July in Manila, Philippines, the report by the World Bank (WB) who is the interim Trustee, revealed that only a meager sum of USD 474 million of resources is currently available, a far cry from the immediate needs of USD 2.8 billion represented by the pipeline of funding requests received under the Barbados Implementation Modalities (BIM) start-up phase.

Out of the USD 474 million available as of 7 July, the Board has set aside USD 277.5 million comprised of : USD 250 million for the BIM; USD 20 million for oversight fee; and USD 7.5 million for the approved Country Support System (CSS).

After the deduction of the USD 277.5 million and other already approved Board allocations, the remaining available resources amount to only USD 196.50 million as the “commitment authority” – the estimated maximum level of financial resources available at a given point in time to the Board to approve new funding decisions.

[Note: the above figures are based on the WB’s report on the status of financial resources as of 7 July presented at B.9, which factored in the additional USD 30 million received since B.8, to the available resources of USD 474 million. The secretariat’s report and the WB’s report shared as B.9 documents are based on resources available as at 31 May.]

[The secretariat’s report contains the calculation of commitment authority as the maximum level of financial resources at a given point in time that are available to the Board to approve new funding decisions, after accounting for existing Board-approved obligations and any applicable prudential set-asides or risk reserves. It is an estimate of the Fund’s financial headroom, thereby supporting informed decision-making on funding approvals, allocations and budgetary matters. The report is intended to ensure that Board decisions remain aligned with the available resources of the Fund.]

[At B.8, the Board adopted the methodology for the management of commitment authority (decision B.8/D.2) and requested the secretariat to calculate and present the available commitment authority prior to each Board meeting.]

With USD 196.50 million as the estimated commitment authority as of 7 July prior to B.9, the approved funding allocations by B.9 have to be now factored in, notably, the additional BIM allocation of USD 92 million, along with the oversight fee of USD 8 million, decided by the Board, which amounts to USD 100 million.

Therefore, with a further reduced commitment authority (after deduction of USD 100 million) to “less than a million (in USD)” at next B.10, this bleak picture does not bode well for the USD 2.8 billion BIM pipeline of funding requests received – noting, the initial BIM allocation of USD 250 million and the additional allocation of USD 92 million at B.9 are the only set-aside resources for the funding requests, as of now, which totals to USD 342 million only.

The dismally low-ambition status of resources at the Fund drew flak from developing countries and observer constituencies alike – primarily, urging developed countries to fulfill their legal obligations on the delivery of climate finance under the UNFCCC (the Convention) and its Paris Agreement (PA).

Commitment Authority: Risks of unencashed Promissory Notes (PNs)

In terms of resources received, with USD 26.68 million as unencashed promissory notes (PNs), Richard Sherman (South Africa) questioned about the unencashed PNs being part of the commitment authority given that the money or cash is not available yet, and hence, could pose as a problem. He cautioned about “spending what we actually don’t have”. In response, Antoine Bergerot (France) shared his understanding that “PNs are unconditional and its enforceable standard practice to consider it as cash”.

Further, the FRLD’s Deputy Executive Director, Mathilda Laurans. assured that PNs are “resources which are confirmed even though unencashed”, withdrawn upon requests, therefore, calculated as part of the commitment authority.

The WB representative also confirmed about “PNs as a banking instrument, legally binding and good as cash” and therefore counted as commitment authority. He further informed that the United Kingdom (UK) mostly deals in PNs, and because of the different currencies involved, a small risk reserve is accounted for, in case the British pound devalues and a smaller amount in USD received.

Sherman however maintained caution about the risk taken by the Board in relation to PNs when there is no “actual cash” available in the Trustee’s account. He said that despite standard practice, there are current challenges in the use of PNs in “other places” (alluding to the UK’s cut of its pledge by 50% at the Green Climate Fund earlier this year), and he would not want it to happen in the Fund. He also stated of coming back to the matter once discussion on the “contribution policy” of the Fund is triggered.

Further, commenting on the WB’s report, he expressed concern about the loss of “USD 6 million” resources lost in currency fluctuations, equivalent to CSS allocation for next year. On the expected additional resources reported, to be around USD 48 million in 2026, USD 55 million in 2027 and USD 26 million in 2028, Sherman bemoaned its implications on the commitment authority to the Board for any new funding decisions. He underlined the urgency of “rapid payment” of pledges, which have been lagging behind even after three years of commitment made in 2023 in Dubai. He reminded that the Fund’s rapid response mechanism to respond to the loss and damage will not be solved unless rapid conversion of pledges is ensured.

Adao Soares Barbosa (Timor-Leste) also stressed on “timely” payment of contributions as well as “scaling them up”, based on the demands by the funding requests received under the BIM until now.

Ali Tauqeer Sheikh (Pakistan) sharing his concerns on the report on the commitment authority, highlighted that the financial headroom is “shrinking” and this must be clearly reflected in the report, that the secretariat needs to say when no more meetings can be done or employees paid – a “dreadful” scenario nevertheless and “current scenario for us”. He added that this projection also needs to be integrated into the Fund’s “resource mobilization strategy (RMS)”, or else the RMS would only become a “theoretical” narrow strategy to guide the “capitalization and replenishment” of the Fund. For the next commitment report, he stressed on a clear “graph” reflecting the real financial headroom in order to have a realistic picture even for the “developed countries to replenish the Fund and at what scale”.

Resource Mobilization Strategy: Conversion of Pledges into Signed Contributions; Urging New Contributions

At B.9, the Board decided on “Stage 1” of the RMS by adopting a decision which reads:

“...stage 1 of the resource mobilization strategy (RMS) will support the scaling up of resources of the Fund for responding to Loss and Damage (FRLD) to ensure the operational continuity of the Barbados Implementation Modalities (BIM) while transitioning to the long-term operational model of the FRLD;

Further decides that stage 1 of the RMS will be comprised of the following enabling steps:

(a) Strategic positioning of the FRLD, guided by the uniqueness of its mandate and the demand signalled by responses to the call for proposals under the BIM;

(b) Ensuring the rapid conversion of existing pledges into signed agreements;

(c) Urging new contributions to the fund, guided by decisions 1/CP.28 and 5/CMA.5, para 12, and the Governing Instrument, paras 54 – 59.”

The decision was arrived at only through Board consultations without any “open” discussion among observers and on webcast as well. (See TWN Update on the package of B.9 decisions.)

It is learnt that paragraph (c) was particularly contentious with developed countries opposing to replace the originally proposed “Encouraging” with “Urging”, despite the latter being agreed language drawn from para 12, decisions 1/CP.28 and 5/CMA.5. [Para 12 of the decision 1/CP.28 and 5/CMA.5 reads, “Also urge developed country Parties to continue to provide support and encourage other Parties to provide, or continue to provide support, on a voluntary basis, for activities to address loss and damage.”] However, Saudi Arabia for the Asia-Pacific seat (and representing the Arab Group in the UNFCCC negotiations) supported by developing countries pushed to anchor the legal financial obligations of developed countries under the Convention and its PA. Further, developed countries also rejected a high-level pledging event in 2026 to mobilize additional resources for the BIM pipeline, and therefore, this does not appear in the final decision adopted.

[Note: The RMS will be developed based on a two-stage approach decided (decision B.8/D.8) at B.8 and informed by the framing paper by the Co-Chairs as well as views expressed by Board members during B.8. Further, B.8 requested the Co-Chairs supported by the secretariat and in consultations with the Board to prepare a Stage 1 RMS for consideration at B.9.]

The Co-Chairs’ framing paper states that RMS Stage I will focus on supporting the scale of the early interventions of the Fund under the BIM – which is anticipated to be oversubscribed – promoting actions in the short term, while the long-term operational model of the Fund is being developed. Given the current status of capitalization of the Fund, there is a risk of the Fund exhausting its capital by the end of 2027, which could result in a loss of operational momentum and expose the Fund to reputational risk. To mitigate these risks, RMS Stage 1 will focus on the short-term time-horizon (through to the end of 2027) and will comprise proactive enabling steps to increase capitalization of the Fund, including:

(a)   Converting existing pledges into signed agreements and then cash transfers.

(b) Encouraging new voluntary contributions (as part of the replenishment and outside the replenishment process);

(c) Beginning initial outreach steps targeted to increase the number of contributors beyond the current 27. The outreach will include approaching a variety of sources, including public, private sector and innovative sources.

It is learnt that the initial iteration of paragraph (c) of the RMS decision contained “a variety of sources, including public, private sector and innovative sources” which was eventually dropped from the decision.

According to the final decision adopted on RMS, the immediate next steps expected are: rapid conversion of existing pledges into signed agreements, which points to the WB report on existing unsigned pledges of “USD 196.61 million” and signed contributions not yet received of “128.25 million”, as of 7 July; and, new contributions urged from developed countries guided by decisions 1/CP.28 and 5/CMA.5, para 12 – for scaling up of resources to ensure the operational continuity of the BIM while transitioning to the long-term operational model of the Fund.

As regards the replenishment process of the Fund, in its B.9 decision on the 2026 work plan, the Board requested the Co-Chairs Camila Minerva Rodriguez Tavarez (Dominican Republic) and Georg Børsting (Norway) to present at B.10, “a proposal on the elements of and timeline of the replenishment process, including options for fast-tracking the replenishment process, which should be aimed at ensuring the operational continuity of the Fund, while maintaining its ability to respond to demonstrated demand; and advancing the transition to the long-term operational model of the FRLD.”

Statements by Civil Society constituencies on the Status of Resources of the Fund

At the dialogue with civil society, on behalf of the environmental NGOs (ENGO) constituency, Aleijn Reintegrado (Philippines) with the Asian Peoples’ Movement on Debt and Development (APMDD) and the Demand for Climate Justice (DCJ), expressed alarm at the meagre commitment authority stating “...even if all pledges to the Fund were delivered overnight, current pledges would have to increase by 239% to meet the whopping USD 2.8 billion demanded by the current pipeline. Therefore, RMS Stage 1 must urgently convert existing pledges, make all contribution agreements publicly available, and ensure transparent reporting on delivery and delays. And more importantly, it must have the ambition to scale up pledges to the billions and even trillions that our peoples and communities urgently need. Without new, additional, accessible, adequate and predictable grants-based finance, the Fund will not be able to fulfill its mandate”. 

She further urged “the Board to prioritize resource mobilization and replenishment, and decide on these matters equitably. Public and grants-based climate finance delivery by Global North governments must serve as the primary contributions to the Fund, consistent with legal obligations under the UNFCCC. These include Article 9.1 of the PA, and Article 4.3 of the Convention. COP/CMA decisions also reiterate such obligations, such as paragraph 12 of decision 1/CP.28, which urged developed countries to provide support for addressing loss and damage. Loss and damage finance cannot be reduced to public/private investment, private sector mobilization, innovative finance, or voluntary contributions, but recognized and upheld as the legal obligations of Global North governments. New, accessible, adequate and predictable trillions are available in war and military spending, royalty payments, fossil fuel subsidies, as well as in policies for tax, trade and debt justice, and we encourage the Board and FRLD Secretariat to explore these avenues as well”.

Reflecting on the intervention, Tamim Alothimin (Saudi Arabia) underlined its importance of reminding the Board about the legal obligations and the developed countries’ role in replenishing the Fund that has shown oversubscription in the BIM phase, which only indicates the scale of needs for the Fund. He also supported the involvement of civil society and observers in the RMS discussion given their important role in the process.

Highlighting resource mobilization, in their closing interventions of B.9:

John Leo Algo (Philippines) for the Youth NGOs (YOUNGO) while acknowledging the additional funding for the BIM, nevertheless, reiterated the “need for drastically scaling up climate finance, for the BIM and as part of the eventual RMS. We also reiterate the need for speeding up the delivery of promised support and conversion of pledges”.

Kalea Aquino (Philippines) for the Indigenous Peoples Organizations (IPO) said “For more than three years, this Fund has stayed stuck in the millions, while what our relatives from the seven socio-cultural regions actually need runs into the billions, even trillions. Nearly half of what was promised still hasn’t been delivered and even if every promise were paid tomorrow, it would still fall far short of what the requests already on the table are asking for”. She added, “We expect the RMS to carry a real replenishment figure, in grants and public finance, owed by those historically responsible. And we expect the path toward direct access for Indigenous and community organizations to move from principle to a dated commitment”.

Jinghann Hong (Malaysia) for the ENGO constituency, noted the significance of the funding package adopted as well as the RMS decision adopted, and reminded that increase in contributions must be delivered by “Global North governments, who are obligated to serve as the primary contributors to the Fund. This is provided for in Article 4.3 of the Convention, as well as Article 9.1 of the PA, which unambiguously state that Global North governments have a legal obligation to deliver climate finance because of their historical and continuing responsibility for the climate crisis”. 

Tetet Lauron (Philippines) for the Women and Gender constituency (WGC) reminded the Board, that “Women-led communities from the urban poor and informal sector, here in the Philippines, rallied outside..(the venue of the B.9 meeting at the Asian Development Bank) to demand that Global North governments pay up for loss and damage. They know that Global North governments owe them a massive climate debt, they know what it is like to lose loved ones and have their livelihoods destroyed due to a crisis not of their doing. They are closely watching what the Fund will do. This Board must answer”.

She added that “The Fund is in a crisis of scale; for over three years, it has failed to move past the millions mark in spite of the billions and even trillions that are truly needed. This Board cannot be content with trying to manage scraps equitably; we must move past scraps entirely. We are definitely in disagreement over this recent example of a Global North government unilaterally cutting its pledges to the GCF, in contravention of its signed contribution agreement. This adds to a lack of trust and confidence, and spotlights the need for immediate pledge conversion. Converting existing pledges, signing these into contribution agreements and actually delivering these are urgent tasks. Getting new pledges and contributions - would enable the Fund to double the BIM envelope and actually move us into imagining and realizing  the long-term operations of the Fund. We fought for this Fund, and we want this Fund to be able to move closer to financing climate justice”.

Charles Zander Deluna (Philippines) for the World’s Youth for Climate Justice, stated “The success of this Fund will be measured by whether developing countries can actually access support, whether that support arrives in time, and whether the Fund is bold enough to match the scale of the crisis it was created to address. Loss and damage is not a marginal issue. It is a central justice issue. The Fund must therefore be more than administratively functional; it must be politically courageous”. He expressed hope that “by B.10, the Board’s discussions will move beyond managing scarcity and procedural constraints, and toward the kind of ambition, directness, and urgency that Civil Society and Parties intended when they established this Fund. When we gather again, we hope we do so having narrowed the distance between this Fund and the communities it serves. Until then, may we carry forward not only the decisions we have taken, but also the responsibility that comes with them”.