climate finance
climate finance

Climate finance: Approaching justice through loss and damage finance

Climate justice is the anchor of any discussion or action to address loss and damage (L&D). With every typhoon, drought, or other hazard that hits our nation, it is always the poorest and most vulnerable peoples who experience its gravest impacts. 

Implementing solutions to reduce, if not avoid casualties and destruction of properties is necessary for developing countries like the Philippines to continue on its road to sustainable development. Yet they mostly lack the finance and resources to enforce their L&D strategies, which would come from the high-income nations that emitted most of the greenhouse gases that caused the climate crisis to begin with. 

With L&D finance poised to be one of the most hotly-debated topics at COP27 in Egypt, the question remains on how countries can break through this political wall that has impeded progress on this workstream for decades. 

Loss and damage finance: a new approach

In the context of L&D, many advocates demand for compensations from developed countries, based on the “polluter pays” principle. Most of them call for such payment in monetary form, although some have also suggested other modes of compensation through technologies and infrastructures to aid vulnerable communities address potential impacts. 

cop26 UN climate negotiations
Negotiators in the COP25 plenary in Madrid. Photo: UNFCCC.

Despite the efforts of developed nations to permanently end conversations on L&D finance, grounds for it gained significant momentum during last year’s climate negotiations in Glasgow. A bloc of developing countries pushed for a “loss and damage facility” that would finance actions to avert or minimize L&D, which gained enough momentum to be discussed at COP27. In addition, the governments of Scotland and Wallonia, Belgium, together with a few philanthropic organizations, collectively pledged nearly USD7 million to compensate victims of climate-related disasters.

These events are crucial for the global climate justice movement to keep pressuring governments, businesses, and funding agencies to formalize L&D finance. They provide hope for L&D victims and vulnerable communities affected by climate threats to adequately cope with the changing climate, especially if the projections of worsening impacts in the following decades happen.

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That said, the focus for calls on compensation raises an interesting question. If vulnerable nations and communities receive enough payments from developed countries and carbon majors, what happens next? 

Compensations for L&D would likely cover the economic, environmental, and social costs that nations and communities endured from extreme weather events they have already experienced. Yet after that, these people would still be highly vulnerable to climate change impacts that are projected to become even more intense in the future. 

Without appropriate interventions, these people could experience even more L&D. And the cycle of debates, frustrations, losses, and damages start all over again.

Climate finance, adaptation, and mitigation

It must be highlighted that addressing L&D cannot be isolated from adaptation or mitigation. Furthermore, addressing any of these three pillars of global climate action cannot focus on just one aspect of the solution. Multiple actions must be taken simultaneously, with all sectors working together to effectively address the impacts of the climate crisis.

Through this lens, achieving climate justice in the context of L&D should not only focus on providing compensations to the most vulnerable peoples by high-emissions countries and businesses. Policymakers must also account for how to distribute in an equitable manner the reparations and other forms of payment of the so-called “climate debt” among the L&D victims, also in aid of their pursuit of development.

When answers cannot be found, the right action might be to change the questions. For decades, the narrative involving L&D, and the climate crisis in general, has been on “who deserves the blame” to emphasize accountability of big polluters and pressure them to take action. And rightfully so.

Nina indonesia climate activist
Nina marches alongside other activists in Amsterdam, Netherlands, in light of the Climate Strike on November 6, 2021, to protest the plastic pollution problem. The protest was a part of an international climate strike amid COP26 negotiations in Glasgow, Scotland, between 31 October to 12 November. Photo: Prigi Arisandi

Yet with the urgency of increasing the resiliency of poorer communities growing with each passing year, the attention should also be placed on them in the global policymaking arena. Dialogues and actions should also be centered on “who has been harmed the most” and “who needs support the most” as much as “who deserves the blame”. This could not only help climate justice advocates mobilize more political support, but also help generate more L&D finance pledges before an official financing mechanism is even created.

Changing the messaging

Slightly changing the messaging by justice advocates from “because you caused this” to “because you benefited from this, which means you are the most capable to support” can also help gather more support and pledges for addressing L&D. 

What must not be lost in the discussions is the importance of inclusive decision-making at the global, national, and local levels. Policymakers and potential funders need to meaningfully engage with communities affected by L&D, not use them to advance their personal agendas. This would help them recover from local impacts, as well as deal with non-economic L&D, whose true value can only be assessed by the locals themselves. 

As another round of high-stakes negotiations approaches this November, a new paradigm for avoiding L&D and seeking climate justice must be forged. The world needs to consider a hybrid approach that not only demands compensation from big polluters, but also provides knowledge, resources, and tools to the most vulnerable nations and communities. 

The political deadlock at the negotiating table must end sooner than later, for the sake of current and future generations.

John Leo Algo
John Leo is the Deputy Executive Director for Programs and Campaigns of Living Laudato Si’ Philippines, and a member of the interim Secretariat of Aksyon Klima Pilipinas. He is one of the reviewers of the IPCC Working Group II Sixth Assessment Report, and a COP26 observer-delegate.