World Bank ready to ‘break new ground’ to host loss and damage fund

Board members of a new fund designed to support climate victims in vulnerable countries have welcomed engagement with the World Bank, which said it would help get the fund “up and running” by the 29th United Nations Climate Change Conference of the Parties, or COP 29, in Azerbaijan in November. The 26-member board held its first meeting in Abu Dhabi, United Arab Emirates, this week, three months later than planned, following delays by high-income nations to appoint its members. The board was reminded of the importance of the task ahead after being forced to hold the third day of the meeting online following warnings of heavy rains and thunderstorms across the UAE. The forecast came days after the country experienced catastrophic flooding, which killed more than 20 people in the Arabian peninsula. Although a lack of historic rainfall data for the region has made it more difficult to establish how much the event was caused by human-induced climate change, scientists found that higher global temperatures leading to a stronger El Niño phenomenon had made the downpours 10-40% heavier. We “could say that we have been affected by a loss and damage event,” Richard Sherman, the South African co-chair of the loss and damage fund’s board, told the meeting, adding that the disruption caused was much less important than that experienced by many people around the world facing the impacts of climate change. In recent weeks, extreme heat in Asia caused thousands of schools to close across the Philippines and Bangladesh, and heavy rains and flooding killed hundreds and displaced thousands in Kenya and Tanzania. Addressing board members, COP 28 President Sultan bin Ahmed Al Jaber said the fund’s first meeting marked “a moment in history” but “this is only the starting point.” After countries agreed to ask the World Bank to host the fund at COP 28 in Dubai in December, the international community pledged over $660 million to the new facility — a drop in the ocean compared to the $290 billion-580 billion researchers estimate low- and middle-income countries will need to respond to climate losses annually by 2030. Board members face a heavy workload over the next six months to operationalize the fund and get it ready to disburse money, with at least three more board meetings planned this year. The fund made progress on mostly procedural issues, while critical substantive issues — such as which countries are eligible to receive funding, how funding is allocated, and how to mobilize money at scale — will be discussed later in the year. A critical first step is for the World Bank to confirm by June whether it can meet a set of prerequisite conditions to host the fund’s secretariat on an interim basis for four years. Otherwise, board members will start the process of establishing an independent fund. Renaud Seligmann, World Bank director for strategy and operations in the sustainable development practice group, told the board that the bank was approaching its task with “a huge sense of responsibility” and “humility.” “The objective that I think we, collectively, are pursuing and that we would like to facilitate and support is to be operational by COP [29]. It would be a good signal to the international community, if this fund were up and running and ready to go by then.” Seligmann said the bank was ready to “break new ground” to meet the conditions to host the fund, including by allowing countries, communities, vulnerable groups, and Indigenous peoples to access funding directly. This is something board members consider to be fundamental to the fund’s work, but that the World Bank considers more risky and complex to implement, he explained. In a statement, the fund’s board stated that it “welcomes the engagement with World Bank management.” "We are working on the highly probable assumption that the World Bank will accept the invitation [to host the fund’s secretariat] by the 10th of June,” co-chair Sherman told board members. In addition, Seligmann sought to reassure board members concerned about the bank’s influence on the new fund. While the fund’s secretariat and its executive director will be employees of the World Bank — with senior management holding a veto over shortlisted candidates for the director role — they will remain “totally independent” from the rest of the bank’s operations, he said. The World Bank’s board will be asked to rubber-stamp any decision linked to an agreement to host the fund, but "the board is the ultimate decision-maker,” Seligmann added. Observers say the arrangement with the World Bank is a critical test for the fund’s independence. “Even if there is independence on paper, in practice how much influence will World Bank policies, culture, and ideology have on the secretariat?” Brandon Wu, director of policy and campaigns at NGO ActionAid USA, told Devex. “This is a question that can't easily be answered at this point. The Bank may have provided enough assurance for the board to move forward, but there will always be a certain level of unease until the fund has actually started up and we see how things are working,” he said. Campaigners have previously argued that the World Bank, a donor-driven institution focused on lending, is unfit to host the fund, which is meant to be recipient-driven and disburse grants.