As the 29th Conference of the Parties (COP29) approaches, a central focus for the international climate conference will be getting the Fund for Responding to Loss and Damage (FRLD) up and running—a fitting priority for what’s being dubbed the “finance COP”. A functioning fund is crucial to protect lives and livelihoods from the ravages of climate change. It is also an opportunity to enact structural reforms developing nations have long demanded, working towards a fairer global financial system. With climate disasters on the rise, EU leaders must advocate for concrete outcomes at COP29 to establish a fully functional fund.
Loss and Damage, the push to address climate change’s unavoidable costs, gained significant attention at COP28 with the launch of a dedicated fund, the FRLD. It was celebrated as a milestone to help developing nations and vulnerable communities facing the devastating costs of climate change. Nearly a year later, the question is what has actually happened with the FRLD? Some steps have been taken. The Philippines has been chosen as the host country, and an executive director has been appointed. But these milestones haven’t translated into a fully functioning fund, as operational details remain undecided.
As the FRLD moves from concept to reality, COP29 discussions will broach two important issues: increasing funding (and the role of public funds) and streamlining access. These issues are critical not only for the fund’s success but also as a major opportunity to catalyse meaningful financial reform. While major decisions will likely be left for the FRLD Board’s fourth meeting following COP29, conference discussions will set the stage for progress on these fronts. This timing is especially significant for the EU, coinciding with the end of the commission hearings—an ideal moment to address recommendations in future work streams. Holding seven of the twelve Board seats reserved for developed nations, the EU and its member states have a unique responsibility. They can prioritise beneficiary needs, steer away from conflicts that may stall progress —especially under a Trump presidency—and push for actionable outcomes for the FRLD Board, all while strengthening the EU’s global standing.
Securing sufficient resources for the FRLD will be paramount at COP29. Current pledges total around $700 million, yet a 2022 UN report estimated that annual loss and damage needs could reach $300 billion by 2030, with some projections as high as $671 billion. Closing this gap requires both public and private funding. How much should come from public sources and how best to utilise them, will be a key point of debate at COP29.
Recipient countries’ focus on public funds, namely grants, partially stems from the roots of loss and damage in climate and restorative justice. The link between colonialism and environmental harm, combined with the reality that those least responsible for emissions are most impacted, has solidified the view that funding from the Global North is a responsibility, not a question of aid. Consequently, loans and returns-focused mechanisms, often favoured by the EU, are viewed as neglectful of this responsibility. For example, insurance will undoubtedly be discussed as a viable instrument to pay for climate damages given the Board’s exploration of this tool. Yet saddling vulnerable nations with the cost of premiums contradicts the polluter-pays principle. Similarly, loans, another favoured approach for European-sourced climate finance, are shown to perpetuate a vicious cycle of debt and crisis.
Political will for increased grants from Europe may fall short. Major contributors like France and Germany face budget constraints, while competitiveness concerns shape both the European Commission’s political guidelines and the European Council’s strategic agenda—resulting in a strategy that increasingly relies on private financing to address climate change. At COP29, participants will also discuss a new global climate finance target, the NCQG, which will replace the annual $100 billion commitment. Including Loss and Damage as a sub-goal would ensure commitments from developed countries, though many are resisting its inclusion.
Funding must be central to discussions at COP29. While grants should remain a priority, the Draghi report and the Commission’s focus on private investment mean that public-private partnerships will likely be on the agenda. Discussions must therefore consider how public funds can be leveraged to create equitable partnerships that do not leave impacted countries bearing the costs. Setting a precedent for other developed countries, the EU and member states should support including loss and damage as a sub-target under the NCQG to allow for guaranteed national commitments. To bolster these commitments, the EU and member states, particularly through their Board roles, should trial innovative financing streams and strategies. Options such as debt cancellation, repurposed financial sanctions, a Financial Transaction Tax, and tax levies on air travel and fossil fuel extraction are all mechanisms that could bolster public pledges. The EU and member states should build on existing research by examining how these strategies could be implemented within their own contexts. Moreover, other member states should consider joining France, Denmark, and Spain on the Global Solidarity Levies Task Force, exploring these strategies with countries worldwide.
Enhancing access to funds
Beyond securing funds for loss and damage, questions of who receives funding, for what purposes, and by what processes, remain open. FRLD aims to address known barriers to access climate finance. One challenge is the technical and financial burden recipients face navigating complex procedures and criteria. As a result, funds often flow through international entities with greater capacity, increasing intermediaries and delaying access. To counter this, the FRLD Board is pushing for measures like small grants for local entities. While the fund doesn’t lack ambition, it falls short of concrete roadmaps for achieving it. For example, specifics on how the Fund will address both sudden and slow-onset climate-related events remain undefined.
The bigger picture also lacks clarity, with no officially recognised cost estimate for loss and damage, no comprehensive map of existing support structures and limited understanding of the FRLD’s place within this landscape. Even the fund's relationship with its complementary bodies—the Warsaw International Mechanism for Loss and Damage (WIM) and the Santiago Network for Loss and Damage (SNLD)—remains murky. At the international level, the WIM serves as the primary body, mobilising knowledge and action on loss and damage, with the SNLD introduced for technical assistance, and now the FRLD will now supply funds. These entities hold strong potential for synergy, particularly around FRLD access. WIM’s existing research and network could help answer ongoing operational questions, while SNLD could support local capacity-building for accessing funds. Yet, no clear plan shows how these entities will complement each other.
With COP29 around the corner, these core issues are unavoidable. As the Board defines operational details, the EU and its member states must keep discussions from devolving into deadlock, delaying the Fund’s path to functionality. As a foundational step, the EU—acting through the FRLD Board—should call for a WIM-led report to assess the true costs of loss and damage, forming the basis for a funding gap analysis. If grounded in local research, this report could align the fund with the actual needs of beneficiary communities while identifying ways to leverage existing loss and damage support mechanisms, fostering local ownership and reducing costly inefficiencies. To ensure localised accessibility, robust capacity-building efforts are essential. The WIM and SNLD offer a network and technical support that could prove invaluable for the FRLD, but a clear roadmap defining responsibilities and interoperability between them is needed to maximise their impact. Building on this, EU representatives should push for the creation of a unified information system serving as a central hub for guidance, updates, and technical support, drawing inspiration from platforms like the European Climate Adaptation website. This platform should also function as a network hub, supporting community-to-community capacity-building for loss and damage actors.
From commitments to action
A fully operational fund is essential to safeguard lives and address longstanding injustices that hamper global collaboration and climate action. Despite billions invested in development, deep-rooted inequalities persist, fuelled by unfair practices that must be disrupted. The FRLD represents a rare opportunity to shift climate finance from a top-down approach to one centred on impacted communities. At COP29, avoiding delays and inefficiencies requires clear, coordinated action. The EU and its member states, as historical polluters, bear a unique responsibility to set an example for others. By championing essential reforms and driving urgency in FRLD discussions, the EU can also strengthen its reputation and pave the way for partnerships that are increasingly vital in today’s geopolitical landscape. The way forward is clear: bolster funding, streamline access, and build a unified support framework to bring the FRLD to full maturity. True progress now requires a decisive shift from abstract commitments to actionable solutions.
Brooke Moore is a Policy Analyst in the Sustainable Prosperity for Europe programme.
Mathilde Benguigui is a Junior Associate at the Advocacy Team.
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