What to expect for the Fund for responding to Loss and Damage in 2025 | Heinrich Böll Stiftung | Washington, DC Office

Analysis

In 2025, the new Fund for responding to Loss and Damage (FRLD) hopes to set up the interim procedures and modalities for a start-up phase by COP30 as a test case to inform its long-term approach. Can developing and developed countries overcome conflicting visions to agree on early interventions to swiftly deliver for vulnerable communities?

Hurricane Beryl devasted large swathes of the Western Hemisphere, from flooding in Barbados to tornados in the midwestern United States

Thanks are owed to Heidi White for her extensive suggestions, comments and feedback in the writing of this text.

Table of Contents

Introduction and background
Decision for a start-up phase of the Fund 2025-2026
Key decisions necessary for the start-up phase of the Fund
2025 work on long-term operational policies and procedures
Conclusion

1. Introduction and background

Decisions 2/CP.27 and 2/CMA 4 at COP 27 in Sharm el-Sheikh, Egypt established the Fund for responding to Loss and Damage (FRLD), and 1/CP.28 and 5/CMA.5 at COP28 in Dubai, United Arab Emirates adopted its Governing Instrument (GI). These decisions signaled the most significant milestones after decades of advocacy efforts by developing countries to push for financial support to help them respond to and address increasingly catastrophic losses and damages resulting from escalating climate change. Many hopes and expectations are riding on the FRLD, including a push for its rapid full operationalization at scale and starting funding disbursement as quickly as possible. The urgency of that effort was underscored during the first year of the FRLD 26-member Board’s work in 2024, which saw a neverending cascade of over 600 extreme weather events with droughts, wildfires, floods and storms causing damage in the hundreds of billions, displacing over 800 million people and costing too many lives, while long-term loss and damage effects like biodiversity loss, glacier melt and sea level rise reached unprecedented levels. It also proved to be the hottest year on record, surpassing the 1.5 degree increase in temperature over pre-industrial times that Parties collectively committed to in the Paris Agreement as the threshold to limit global warming to.

The FRLD Board in its four meetings throughout 2024 focused its initial work primarily on the institutional set-up of the Fund as it had to contend with tight deadlines and several mandates set at COP28 to be fulfilled by COP29 in Baku in November 2024. This included processes that led to the selection of the Philippines as the Board’s host country at its second meeting. It also included a series of negotiations and sequenced actions leading to the signing of the agreements with the World Bank for the FRLD to be set up as a financial intermediary fund (FIF) with its independent Secretariat hosted by the World Bank, which also serves as the Fund’s interim trustee. A decision at COP29 in Baku confirmed this set up at least for an interim period of four years until a decision on the permanence of this arrangement at COP33. The Board also selected the independent Secretariat’s inaugural Executive Director (ED) with Ibrahima Cheikh Diong and started the process to transition from the interim Secretariat, staffed with seconded experts from the secretariats of the UN Framework Convention on Climate Change (UNFCCC), the Green Climate Fund (GCF) and the UN Development Programme (UNDP), which supported the Board throughout 2024, to the dedicated, independent Secretariat, which is supposed to be completed by mid-2025.

The Board in 2024 had started as early as its second meeting in July to discuss the Fund’s operational model with further discussions pursued at its third meeting in September and fourth meeting post-COP in December following an initial presentation by the ED. This discussion was initially led by its Co-chairs Richard Sherman (South Africa) and Jean-Christophe Donnellier (France), who will serve until the end of 2025. The issue of the Fund’s long-term operational model was implicitly of course considered in other decisions taken by the Board in 2024, such as the on the institutional set-up and governance of the Fund, where there were discussions and disagreements among the Board for example on whether the ED should have a role in resource mobilization.

It became quickly clear that unresolved issues from the design process on the Fund’s ultimate objective, purpose, scale and scope showed very differing, if not incompatible visions for the Fund by developed and developing country Board members. For example, already in the Transitional Committee in 2023, developed countries had argued consistently that the Fund should focus on addressing a limited number of priority actions through ex ante approaches including pre-arranged finance, insurance, and preparing national plans to address non-economic loss and damage, and especially for slow onset events or for climate-induced human mobility. Developed countries also pushed eligibility for a limited number of developing countries deemed particularly vulnerable, which they argued were important gaps currently not adequately covered in the ‘mosaic’ of a broader landscape of already existing and active institutions and processes in responding to loss and damage. In this view, the FRLD would have to show its additionality to other actors. Developing countries on the other hand asked for comprehensive coverage, particularly ex post an event, from rapid response after climate-related emergencies, and after immediate humanitarian support ended, to addressing rehabilitation, recovery and reconstruction in the medium- to long-term and preparing for and dealing with slow onset events as well as addressing both economic and non-economic loss and damage. In this understanding, an FRLD at scale would be the center-piece of the current landscape of funding arrangements for responding to loss and damage, which fall significantly short of the scale needed to meet the needs of developing countries and the vulnerable communities within them.

The differing visions for the Fund among Board members - intricately linked with the ambition for the overall financial scale of the Fund – will influence all discussions about the Fund’s operational model in 2025. While all Board members agree that the Fund is tasked to take bold approaches and think outside of the box, consensus decisions are likely to be hard-fought, as the commitment of developed countries to a Fund that is bottom-up and country-owned and at the scale of and responsive to the needs and priorities of developing countries is tested.

2. Decision for a start-up phase of the Fund 2025-2026

The Board at its fourth meeting in Manila in December tasked the independent Secretariat under the guidance of the Co-chairs of the the Board to draw up options for early interventions by the Fund during 2025-2026 for its consideration and a potential decision to agree on elements of that phase already at its fifth meeting in April 2025 in Barbados. This would require that the interim systems or frameworks and interim policies for such start-up financing are then fleshed out further during the two subsequent Board meetings in July and October 2025 in order to be set by COP30 in November. The first interventions could then be considered and approved with disbursal of funding from January 2026 onward for a one or two-year interim funding period, noting the timeframe for this first phase is an element which still requires some further clarification.

In parallel, the decision from Manila asks the independent Secretariat to work on elaborating the options and choices for the policies and procedures for the medium- and long-term operations of the Fund with “a bottom-up country-led approach that promotes and strengthens national responses to loss and damage.” A workplan approved in Manila lays out the ambition to fully operationalize the Fund by 2027 and proposes starting discussions on the long-term program and project approval cycle, a broad range of financial instruments and frameworks for monitoring and evaluation as well as budgeting already at its sixth and/or seventh Board meeting in July or October of this year.

At the same time, the Board, already at its second Board meeting, had decided that the Board would finalize its long-term fundraising and resource mobilization strategy by the end of 2025. This is in line with the GI’s mandate under para.56 for the Board to prepare a plan to mobilize “new, additional, predictable and adequate financial resources from all sources of funding” for the FRLD. Addressing the medium- to long-term financial future of the FRLD is urgently required, since the COP28 decision establishing the Fund only asks for financial contributions, with developed countries taking the lead, “for commencing the operationalization of the Fund,” but not the needed resources for its full-fledged operation at scale. This is an immediate priority for developing countries that does not allow for any delay. In contrast, developed country Board members are deemphasizing a focus on the long-term resource mobilization strategy by instead arguing that through the start-up phase and showcasing its effectiveness and impact they could within their capitals subsequently make the case for further funding support.

The start-up phase is not only understood as necessary to demonstrate the potential impact of the Fund, but also to serve as an initial test period, allowing for the refinement of the long-term operational approaches to be developed and implemented in parallel by enabling ‘rapid learning’. The start-up phase will also propose some simplified procedures and criteria and fast-tracking of screening for implementation partners and approaches, including direct budget support. It will be quite challenging for the Board and the independent Secretariat to find the right balance between procedures for quick funding action while developing the long-term operational policies and modalities for the Fund. There is concern among some Board members and observers about the extent to which actions prioritized as early interventions in 2025 or 2026 could set a precedent for the Fund’s ultimate operational model to still be agreed, including by possibly prejudging and narrowing scope, purpose or eligibility for FRLD funding and by potentially lowering the Fund’s overall ambition.

Of particular relevance in this context are some early discussions during the fourth Board meeting that for example suggested focusing on technical assistance for needs assessments or funding applications as early interventions, despite the potential overlap with the technical assistance mandate for the Santiago Network on Loss and Damage, which is now operational, as well as prioritising small-scale community access. The Board’s decision from its fourth meeting seeks to allay those fears by stressing the need for a pragmatic and phased approach to the operationalization of the Fund, with the needed flexibility to learn from and adjust operational approaches based on early implementation experience. However, early interventions will undoubtedly have a signaling effect as to the ambition and priorities of the Fund long-term and some of the early ‘interim’ procedures could prove sticky (the GCF after ten years of funding decisions is still operating with some interim frameworks). This also highlights the need to consult with and integrate inputs from the Board, observers, entities active in the loss and damage funding landscape and communities on the frontlines of climate change, as well as integrate best available science, in particular findings and recommendations from the Intergovernmental Panel on Climate Change (IPCC), as the Board develops both the contours and the focus of the start-up phase as well as the Fund’s long-term operational model.

Preparing operational options, modalities and policies for both the start-up phase and the long-term Fund model will require a fully functioning independent Secretariat, which needs to ramp up quickly, including its staffing levels, with the transition period and the support of the interim Secretariat staff scheduled to end in mid-2025.The Board at its fourth meeting approved the work plan for the independent Secretariat and the administrative budgets for the transition period, which cover so far only a skeleton initial operation. The staffing cost for the independent Secretariat until mid-2025 cover the salaries for the ED, a Deputy ED to be brought on and promised to be on Board already by the April Board meeting, a senior executive assistant and two World Bank senior support staff only, although cost-neutral secondees from other organisations are not precluded. A comprehensive work plan for the independent Secretariat and the administrative budgets for the rest of 2025 are to be presented to the Board for approval at its fifth meeting.

3. Key decisions necessary for the start-up phase of the Fund

With the Board scheduled to consider the Secretariat’s proposal for the start-up phase at its fifth meeting in April, the discussion in Barbados will need to provide guidance on the core elements to pursue for the start-up phase, with various decisions that have to be taken then, such as which programming areas and funding modalities to prioritize, the financial instruments to be utilized for early interventions, which of the multiple access modalities laid out in the GI should apply. Most difficult will be an agreement on how to allocate what essentially are quite limited resources that the FRLD will have in 2025 until the end of 2026 and potentially into 2027, and with it a limited commitment authority for initial funding decisions during the start-up phase. The sequencing for the development of interim policies and procedures for the start-up phase will be crucial; initial decisions for the framing of early interventions in Barbados will require tightly scripted follow-up decisions in July and October if the interim structure for funding decisions is to be ready for launch at or post COP30. At COP30, the FRLD will also receive for the second time after COP29 its formal guidance by the COP and the CMA by the Parties, which could either confirm or demand further adjustments to an initial funding approach to then start presumably with the first Board meeting in 2026. This of course depends also on the capacity of an independent Secretariat still finding its feet to do the leg-work on the development of interim modalities and policies required.

3.A. Financial inputs and commitment authority for the interim period

As the Board will decide on the scope of and its priorities for the start-up phase, it will have to keep in mind how much money it will have in its trust fund in 2026 (and 2027 pending clarification by the Board of the time-frame of the start-up phase) at any given time, as this will determine its commitment authority to make funding decisions at each of its meetings. Funding will also have to be set aside for the administrative budget of the Fund (which includes the cost for the Secretariat, the Board, the cost recovery fees for the World Bank hosting the Secretariat and the World Bank fees for providing trustee services). The Board at its fourth meeting only approved the administrative budget in the amount of USD 4.8 million for the first half of 2025, with a Board set to approve the administrative budget for the second half of 2025, which will be higher. Administrative costs will also grow in 2026 and beyond as the Secretariat scales up its operations, and with it the cost recovery fees for the World Bank’s hosting of the Secretariat and its cost for administering the FRLD trust fund as interim trustee.

How much funding will the FRLD have available for early interventions? This is not clear at this point, as for example the payment schedule for some of the signed contribution agreements is not publicly known (such as whether a country pays its entire pledged amount at once or in several installments and the timing of these installments) and not all pledges are as of yet converted into signed contribution agreements. More transparency would be helpful, for example by publishing the signed contribution agreements on the FRLD website (as has been the case with signed contribution agreements for the GCF second replenishment). Additionally, there is of course the hope that in the context of the start-up phase, new and additional pledges and contributions could be made.

As of late March 2025, according to its Secretariat the FRLD has received pledges from 25 countries, the European Union and the Belgian region of Walloon in the amount of USD 766 million equivalent (as pledges were made in a multitude of currencies).1 The majority of these pledges were made during COP28 (see Table 1 below), when some 18 countries and the European Union made commitments worth USD 657 million equivalent2 to the Fund (with top pledges made by Italy, France, Germany as well as the United Arab Emirates). They were made in the spirit of ‘kicking off’ the operationalisation of the Fund, including the USD 200 million in grants necessary as the minimum contribution for establishing a World Bank-hosted FIF. However, over the course of 2024, only seven further new pledges and two countries adding to previous pledges worth USD 109 million were made, signaling a slowing down, not a ramping up of contributions.

Of the overall pledges received, according to the World Bank’s FIF trust fund page for the FRLD, as of late March 2025 around USD 475 million were confirmed in signed contribution agreements with USD 261 million received in paid-in contributions. Some contributors like Italy have yet to convert their COP28 pledges into signed contribution agreements; doing so quickly remains a priority for all outstanding pledges. This does not take into account the USD 10 million that Japan already contributed in 2024, and which was advanced directly to the interim secretariat to support its work in 2024, but includes an additional USD 5 million pledged and signed as contribution by Japan in February 2025. Thus, carefully calculated, the Board might have at best USD 400 to 500 million at its disposal for start-up funding decisions for 2026-2027.

This of course raises the question of how much will be left for the long-term operations of the Fund after the end of the start-up phase, absent a focused resource mobilization or ‘early replenishment’ approach. With the Board’s work on a resource mobilization strategy only to be completed by year’s end, a scheduled replenishment effort (which the GI in para. 55 foresees to happen every four years) could come in late 2026 at the earliest, although of course the FRLD trust fund managed by the World Bank can accept financial inputs in the form of grants on an ongoing basis. For the acceptance of other financial inputs such as loans or capital contributions, the Board first would have to approve a policy on contributions (which is usually set prior to formal replenishment rounds).

Table 1: Status of pledges and contributions to the FRLD received as of late March 2025

table of data showing the Status of pledges and contributions to the FRLD received as of late March 2025

*Amount in USD equivalent on the basis of the exchange rate as at 14 March 2025 (source: the World Bank) as reported on the FRLD website, https://unfccc.int/topics/climate-finance/funds-entities-bodies/fund-for-responding-to-loss-and-damage/pledges-to-the--fund-for-responding-to-loss-and-damage; accessed on 28 March 2025.

**Amount in USD as reflected in the World Bank FRLD FIF trust fund account as of 28 March 2025. The amounts listed reflect the amounts recorded in signed contribution agreements with contributors. Due to exchange fluctuations, they may differ from USD equivalent amounts reported previously, including at the time of pledging (such as by the COP28 presidency), or as reflected on the FRLD website.

***Japan’s initial contribution of USD10 million was made available in 2024 to the interim Secretariat directly, and is thus not recorded in the amount available in the FRLD trust fund; Japan in February 2025 signed a contribution agreement for an additional USD 5 million, which is reflected in the FRLD trust fund.

3.B. Interim approach to bottom-up, country-owned programming

The GI in its section on objectives, purpose and scope of the Fund (paras.2-9) and on country-ownership and access modalities (paras. 43-49) provides the core guidance for the bottom-up country-ownership of programming in the FRLD with respect to the scope of programming, namely timed interventions after extreme weather events (complementary to humanitarian interventions and addressing intermediate or long-term recovery, reconstruction and rehabilitation) and actions that address slow onset events, both for economic and non-economic loss and damage. Also included in the GI is the focus on country-owned bottom-up processes and institutions in channeling funding to ensure responsiveness to country priorities and circumstances, such as utilizing to the extent possible existing national or regional systems or supporting activities relevant for supporting national processes and support systems, including national-level loss and damage response plans and finance systems. These are to include the direct engagement of relevant institutions and stakeholders, including on the subnational and local level, not the least women, vulnerable communities and Indigenous Peoples. These mandates have to also guide the Board’s decision on early interventions.

However, it is also clear that not all actions in all eligible developing countries can be pursued during the start-up phase, so the Board will have to be clear and transparent about what it seeks to prioritize and why, given that this early phase is supposed to inform the long-term operations of the Fund and should not lead to a potential narrowing of the programming approaches long-term. In this context, it will be important that core mandates for inclusivity in bottom-up, country-led programming are supported from the get go - for example through broad stakeholder engagement both on the Fund-level as the start-up phase is developed and operationalized, but also within developing countries.

For the Fund to be a different funding instrument, it will be crucially important that some of the early programming interventions show-case the potential of the Fund, including in particular in the area of non-economic loss and damage (such as for rehabilitation or restoration of cultural sites or addressing the physical and psychological impacts of survivors of extreme weather events, including gender-specific ones such as gender-based violence) in funded support actions responding to particular events as well as in the integration of such aspects in national response plans. Likewise, how economic losses can be addressed in directly affected communities, including through the strengthening of existing social safety nets or via direct access to support programs for affected and often marginalized communities, should be included as part of early bottom-up, country-led programming in the start-up phase.

The Board will have to make some decisions about how to determine country-ownership in the interim phase of early interventions, including the involvement of relevant stakeholders in the country for determining the country's funding priorities. For example, how will it ascertain alignment of proposed activities with country priorities and existing country plans and processes? Will it automatically assume country ownership when the funding request comes from a government entity, such as the designated national authority or national focal point? How quickly can those be registered with the Fund? The GI indicates in para.48 that the national authority or focal point would be consulted for any funding request. And for non-government entities such as MDBs or UN agencies or direct access implementing entities, would active endorsement by the national authority in the form of a formal letter of no-objection be required or would a passive no-objection procedure be sufficient, in which national authorities are notified of the request and support is assumed if no objection is received? Will there be a differentiation in funding requests for rapid response and slow onset events? How this will be answered in the start-up phase could very well predetermine the approach of the long-term operational approach.

3.C. Interim funding modalities

How funding will be disbursed, and for what activities (involving both economic and non-economic loss and damage), and how they are matched initially during the start-up phase, will provide an early test for the FRLD’s ability to pursue different funding modalities for different programming priorities, clarify if there are some that are better suited to some actions than others, and fine-tune to target them better for what developing country recipients’ indicate they need by creating effective disbursement avenues for maximum impacts.

In preliminary Board discussions, including at its fourth meeting, the importance of FRLD support for programmatic approaches, including for longer-term loss and damage planning, to get away from individual disjointed projects, and a role for targeted technical support were discussed. Also discussed, was how to best achieve the necessary speed and simplification in funding disbursement, especially in rapid response to extreme weather events. From the developing countries’ side, it is clear that such early testing of funding approaches must include direct budget support, which is prominently highlighted in para.49(a) of the GI. Developing country Board members have made it very clear that they prioritize direct budget support across the spectrum of addressing rapid response and slow-onset events such as sea-level rise or biodiversity loss. SIDS in particular have emphasised that an artificial segregation of rapid and slow onset events would hinder effectively addressing loss and damage as impacts are often overlapping and cascading and it is this interaction that the FRLD must be focusing on.

The agreed objectives of the start-up phase include developing budget support through direct access. However, the Board still needs to agree if this will be deployed for all programming priorities. Deployment of direct budget support as a rapid response modality, for example, could test out the capability of the Board during the start-up phase to quickly approve funding in response to an event. As a non-sitting Board, the Board is only scheduled to convene three times in 2025 and so the Board will need to consider whether it will take decisions between meetings and how, noting an initial procedure on select circumstances was approved in December at the Manila meeting but further consultations are ongoing on how this can apply to facilitate a rapid approval process. It could also involve setting up some pre-arranged finance arrangements to be activated once pre-approved circumstances and conditions have been met, anticipating that for many countries, it is not a question of whether but when catastrophic events will hit. In these cases, the Fund could also test out whether the Board would be comfortable in the start-up phase to devolve the funding release decision to the ED once pre-approved requirements have been triggered, in line with para. 22(i) of the GI. Such funding released could then for example go directly to a Ministry of Finance, or an existing national disaster response fund or mechanism, and would provide the recipient country flexibility to use FRLD support alongside domestic or other external resources, although for accountability and impact measurement some traceability, if not ringfencing of FRLD funding, will be necessary.

Some funding for preparing future larger-scale programmatic approaches, such as ongoing loss and damage response and investment planning, is likely part of the early intervention tool box; this could also involve developing plans for pre-arranged finance. However, large-scale programmatic funding (other than first individual projects under a broader program) will not be possible in the start-up phase, given limits to the overall commitment authority of the Board over the two-year start-up period. While some developing countries are already quite advanced in their loss and damage response planning for both rapid onset and slow onset events, others will still require technical assistance, including for strengthening existing or for setting up of new national and sub-national institutions and mechanisms.The Board will have to be sensitive to not requiring certain national plans as a prerequisite to access and also decide on the extent to which early interventions should include technical assistance. This will involve clarifying where they see the FRLD’s additionality to and differentiating from other actors as part of ongoing work to develop the ideas around how to manage coherence, complementarity and coordination, especially given that with the Santiago Network on Loss and Damage a dedicated technical support facility (although with limited funding) is now operational. Other funds like the Adaptation Fund and the GCF also provide technical assistance, including for readiness to access finance, for strengthening the capacity of national designated and direct access entities, for funding proposal preparation, and in the case of the GCF for the development of National Adaptation Plans (NAPs) and their implementation. The Secretariat is now pursuing letters of intent with those actors for collaboration, including on matters related to technical assistance, which should help in determining complementarity.

A significant win for the new Fund, and with the potential to leapfrog to enhancing access to funding for the people and communities already most severely impacted by loss and damage, is a clear commitment in the GI to develop access modalities for “small grants to support communities, Indigenous Peoples and vulnerable groups and their livelihoods, including with respect to recovery after climate-related events” (GI, para.49(d)). Throughout its meetings in 2024, the Board reiterated its broad support for community access to FRLD funding, including in regular exchanges with civil society observers as part of formal Board proceedings. To the extent that early interventions should showcase the Fund’s direction and intention for its long-term operational model of ‘thinking outside of the box’ of traditional climate funds, it will be crucial that community access, including with small grants funding, is operationalized with a clear intention already in the start-up phase to both showcase its importance, and also to fine-tune and improve for it to be a defining part of the FRLD’s full operationalisation.

Rather than thinking of community access, including through small grants provision, as distinctly separate from other funding modalities or as unsuitable for the start-up phase, the Fund Board should consider it integral to all funding modalities it proposes for early intervention, such as through direct budget support (with an articulated expectation by the FRLD that a certain percentage of funding will be directly supporting local communities) or through programmatic approaches that might be tested during the start-up phase such as funding for loss and damage response plans or country-owned investment plans or through technical assistance to strengthen countries’ loss and damage institutional capacity long-term.

In addition, the Board should consider a pilot program at Fund level during the start-up phase that would allow some affected communities to directly receive funding; such an approach could look at current small grant disbursement at funds such as through the GCF’s readiness or preparatory support program, where after the Board’s approval of a framework and and overall funding envelope, individual funding decisions are made by the ED. This could be an early test case for sharpening the design of a dedicated community access window or program, as more than 350 civil society groups demanded in an open letter to the Board in mid-2024, for the long-term operations of the FRLD.

3.D. Financial instruments for the start-up phase

The GI lists as one core function of the Board in para. 22(d) its mandate to approve “a policy for the provision of grants, concessional resources and other financial instruments, modalities and facilities, taking into account access to other financial resources and debt sustainability” and explicitly allows in para. 58 for the potential deployment of “financial instruments that take into consideration debt sustainability (grants, highly concessional loans, guarantees, direct budget support and policy-based finance, equity, insurance mechanisms, risk-sharing mechanisms, pre-arranged finance, performance-based programmes and other financial products, as appropriate) to augment and complement national resources for addressing loss and damage.” Such a policy should clarify among other things that the Board assigns priority use to grants as the main financial instrument through which to program. It should avoid any indication that it intends to operate instrument-agnostic in describing equal relevance and value for a possibly wide range of financial tools. So far the Board only had an initial discussion of a background paper on financial instruments suitable for the FRLD at its second meeting in July 2024.

For the start-up phase, the Fund should focus on grant provision only through the various funding modalities it decides to prioritize (which will likely include direct budget support and pre-arranged finance and should include direct small grant support to affected communities). For one, more complex financial instruments other than grants need different policy framing that the Fund has not yet discussed, such as policies on concessionality or co-financing, the setting of terms for different financial instruments or a potential differentiation for funding support provided to public or private sector actors. This should not be the focus of the start-up phase. In addition, it is essential that the FRLD from the start delivers adequate finance by providing the vast majority of its funding in the form of grants and non-debt creating instruments in the context of addressing loss and damage as a matter of climate justice. Already in the start-up phase, grant provision must prioritize full cost grants without differentiating between the cost of a development baseline and added ‘incremental’ costs brought on by climate change impacts. Incremental cost calculations might be difficult and are inadequate, given that for example rehabilitation and recovery tries to regain ‘lost development’ for which recipient countries have already paid at least once and often in the form of debt.

3.E. Access through implementing partners in the start-up phase

3.E.I. Partnering with entities already accredited with other climate funds

One of the ways that the FRLD will work is through implementing partners. The Board will have to decide for the start-up phase who those implementing partners will be and how it will screen those partners for their capacity to design and implement bottom-up, country-owned early interventions funded by the FRLD during the next two years. One approach that the Board is likely to discuss at its fifth meeting is the extent to which the new Fund can or should draw on already established accredited entities from other funds under the UNFCCC and Paris Agreement, such as the GCF, the Global Environment Facility (GEF) and the Adaptation Fund (AF), when considering its own implementing partners. Indeed, the GI under para. 49(b) indicates that the FRLD might look specifically at subnational, national, and regional developing country direct access entities accredited under those other funds in addition to international access entities like multilateral entities (such as multilateral development banks or UN agencies) and developed countries’ bilateral agencies for its implementation partners.

For example, the Board could decide to approve through a blanket approach entities currently accredited in the GCF, GEF and AF, arguing that they already underwent strenuous and comprehensive accreditation procedures that tested the rigor of their fiduciary standards as well as the existence of an entity-level environmental and social management framework and their ability to apply respective safeguards throughout the funding cycle and that therefore, by virtue of having been accredited by partner funds, they fulfill the “functional equivalency with internationally recognized standards”, specifically with those of the World Bank, that the GI in relevant paras.50, 67 and 68 requires. Such a blanket approval based on having undergone accreditation would however not consider that entities have very different implementation experience, with some having been accredited but without ever having implemented a project under those funds. Entities will also differentiate on whether they have relevant experience with activities meaningful for interventions for responding to loss and damage. The Board would have to consider whether to approve all, or just some of those already accredited with other funds, and if it would approve different groups in a phased approach.

There are some 159 entities currently accredited with the GCF, the AF and the GEF, among them 104 direct access entities (85 national and 19 regional ones, including 29 from LDCs and SIDS) and 55 international access entities. They span a wide variety of actors, both from the public and the private sector, ranging from some developing country government departments or ministries to developing countries’ national or regional development banks or internationally operating private equity firms in addition to developed countries’ own development agencies. They also have very different programming capabilities, with many of the direct access entities accredited for smaller scale activities with lower risk for environmental and social harms and low levels of financial intermediation versus international access entities able to implement large-scale, high risk projects and programs using sophisticated financial instruments and high levels of intermediation.

If the Board were to decide on a blanket approach to bringing in implementation partners at B.5, presumably, such an approach would bring in existing accredited entities with the programming capabilities they are accredited with in other funds (and the highest programming capability in the case of entities that are accredited differently under different funds). However, proven capability to program with other funds does not automatically ensure suitability to partner with the FRLD. For example, many entities accredited with the GCF from the banking sector, including large scale commercial banks like HSBC or MUFC, are still investing in fossil fuels, and thus should be excluded from drawing on the scare public resources of a Fund whose mission it is to support developing countries to address the devastating impacts of losses and damage from fossil fuel-driven climate change. Other actors, such as international equity firms like Macquarie or Pegasus Capital Advisors, which specialize in funding of large-scale fund-of-fund approaches, often set up in secrecy jurisdictions with limited public transparency and accountability of funded sub-projects, are also not suitable for a Fund that needs to be able to withstand maximum public scrutiny and comprehensively document how benefits are accruing directly to communities on the ground, not bolstering dividends of shareholders.

In a sequenced approach to bringing in implementing partners through a blanket approval, suitability for the mission of the FRLD as well as prioritizing direct access entities must be an overriding consideration. After all, ensuring that direct access entities can receive funding under the FRLD as a World Bank-hosted FIF was an important condition for this institutional set up and anchored in the hosting agreement with the Word Bank. Here both the optics of and the learning opportunity for direct access entities in the early intervention phase on equal footing with multilateral and bilateral entities will be crucial for the long-term operations of the Fund. In particular, the Fund should avoid an early over-reliance on MDBs and UN agencies, considered by the World Bank to be traditional FIF partners, in the name of a quick start-up to funding disbursement. Given limited funding under the start-up phase, this could result in a ‘first-come first-serve’ funding grab for international access entities that might persist through the long-term operation, as the lesson from the GCF teaches where still 80% of funding is programmed through international access entities almost a decade after the first GCF project was approved.

While the existing network of entities already accredited with other relevant multilateral climate funds is large, it does notably exclude many of the international, bilateral and developing country organizations and agencies active in the humanitarian and disaster response areas, which one could argue would be better geared to partner with the FRLD for some of the rapid response actions required, or potential partners with a focus on non-economic loss and damage. The Secretariat should consider a suitability mapping of suggested and potential implementing partners with the FRLD mission, also to see if a targeted inclusion and outreach to actors not covered under a blanket accreditation should be pursued with urgency already during the early intervention period.

3.E.II. Early approaches to determining 'functional equivalency'

The GI promises that FRLD-funded activities would apply “high-integrity fiduciary principles and standards” (para.67) and “best practice environmental and social safeguard policies” (para.68), and mandates the Board to develop “a mechanism that will help ensure the activities financed by the Fund are implemented based on high-integrity environmental and social safeguards (ESS) and fiduciary principles and standards” (GI, para.22(f)). This is suggested to be achieved not by the Fund setting its own high-integrity standards and safeguards, as for example the AF and the GCF do with their respective own human-rights based environmental and social policy, but by relying exclusively on the environmental and social safeguard policies as well as the fiduciary policies and practices of its implementing partners.

According to the GI, those safeguards and standards are supposed to be ‘functionally equivalent’ with the World Bank’s ESS and fiduciary principles and standards for direct access entities (as outlined specifically in paras.67 and 68 of the GI). However, the GI is not clear if the equivalency with World Bank standards and safeguards would be also applied to other entities, or whether some other standards might be considered. For example, in referencing direct budget support in para.49(a), the GI suggests that it could be facilitated “in partnership with entities whose safeguards and standards have been judged functionally equivalent to those of multilateral development banks”. Thus, there is the specter of potential different reference points for ‘functional equivalency.’ The Board will therefore have to make a decision what it would allow under “a streamlined and rapid approval process with simplified criteria and procedures” while maintaining high standards and safeguard as mandated in para.41 of the GI and whether the same functional equivalency test is applied across its partner network.

Having successfully undergone the accreditation procedures of the GCF, GEF and AF, the Board and Secretariat could for example presume this ‘functional equivalency’ to have been proven for the entities it would find eligible for partnering under a possible blanket approach for the start-up phase. This leaves other potential new partner entities to be brought in for the start-up phase to have their existing policies and systems tested for such ‘functional equivalency.’ The question is then how simplified or rigorous such testing would be, what standards and safeguards should be considered (all? some?), recognising that different levels of safeguards and standards are inextricably linked to the scale, financial complexity and risks of funded actions and thus would require a differentiated fit-for-purpose approach that could explicitly exclude a number of activities from the start-up phase.

Civil society observers worry that relying exclusively on equivalency with World Bank ESS is a missed opportunity for the new Fund to set its own human rights-centered ESS standards targeted at addressing unavoidable short and long term climate impacts on people and environment that not only focus on harm prevention (‘do no harm’) but pro-actively highlight the need to ‘do good’ - something they argue many of the existing accredited institutions, including many MDBs and private sector actors, do not do sufficiently if at all. They acknowledge that it will take time to develop the FRLD’s own ESS approach, which would thus not be available to guide early interventions. They therefore argue for early interventions to be restricted to no or low-risk interventions (such as planning or locally-led community support), while the Fund develops its own environmental and social management system for the longer- term operational model in parallel. Such an approach, so the argument, would be more in line with the limited scale of financing available through the start-up phase, which would for example preclude large-scale reconstruction projects. Large-scale infrastructure interventions are traditionally among those funded activities with the highest risk for harmful environmental and social impacts and categorized as such in MDBs and multilateral climate funds. CSOs have long held that relevant actors involved in such projects, including public development and commercial banks, are among those frequently implicated with violating human rights and hurting communities in the implementation of such projects.

Where one concern is that a start-up FRLD funding phase might be ‘low-balling’ ESS concerns for early interventions for new entities, if not risk adjusted, the concern with a Word Bank ‘functional equivalency’ approach to fiduciary principles and standards might be that they could be overly restrictive, geared towards large-scale, heavily intermediated financial transactions such as those pursued by MDBs and commercial banks and thus not sufficiently differentiated to reflect the scale, use of a limited range of financial instruments or lower financial risks (such as for grants or small-scale ongranting) for funded activities likely pursued by many national and especially subnational entities working with communities hoping to get direct access to the FRLD as new partner entities. The Board must be careful in guiding the Secretariat in screening modalities for fiduciary ‘functional equivalency’ for the start-up phase to not create de facto barriers to access for direct access partners, especially those working directly with affected communities. The Secretariat is called on to provide support for “the strengthening of the capacities of direct access implementing entities, where needed”: to enable them to attain functional equivalency with the World Bank’s fiduciary standards and ESS (GI, paras.67 and 68).

As direct budget support is one of the funding approaches that the Board is likely to prioritize for the start-up phase, a special consideration must be given to how to determine the ‘functional equivalency’ of developing country government entities as direct recipients of FRLD budget support that have not been accredited with existing climate funds. Would it for example be sufficient to showcase a track record of having successfully implemented direct budget support through other providers such as the MDBs or bilateral agencies in the past? Or would instead a partnership approach in line with para.49(a) of the GI be applied through entities (presumably not just restricted to direct access entities) that have been judged to have such functionally equivalent standards and safeguards with those of MDBs? This could be a slippery slope to cement the majority of FRLD funding flowing through international access entities in the long term if in the name of early interventions and expediency the majority of the FRLD’s commitment authority is programmed in the start-up phase through international access entities, including as intermediated budget support.

Ultimately, the FRLD will need to enable an approach that will bring in new partner entities through simplified screening procedures already during the start-up phase in a fit-for-purpose differentiated approach that considers scale, scope, financial complexity and environmental and social risks of the entities’ capacity and desire to implement FRLD funding. It will be an early test case for how the FRLD Board will address the tension between providing accountability to ensure funding is spent in the way and reaches those intended and without causing or contributing to human rights violations or financial carelessness on one side and the need to simplify and enhance access to funding on the other side. As such, the start-up phase could indeed provide some important first learning of what is necessary and appropriate for the FRLD.

3.F. Interim resource allocation systems

As the Board proceedings in 2024 have made already clear, the question of resource allocation remains one of the most challenging and contentious issues, given the scarcity of resources that the Fund will have at its disposal, currently in the hundreds of millions, versus the scale of the needs of developing countries, already in the hundreds of billions annually. As part of its planned early intervention phase, the Board will have to give guidance on the elements of an initial resource allocation system at its fifth meeting in April 2025 to then come back in subsequent meetings more fully elaborated. While it is not supposed to set precedent for the development of a long-term resource allocation approach, as with all of the interim policies to be agreed for the start-up phase, it could give an early indication for a potential consensus to be found.

The language in the GI on allocation of funding was hard fought and carefully calibrated. It mandates the Board to develop and operate a dynamic resource allocation system to be periodically reviewed. The GI highlights a number of considerations that will be taken into account when drafting and approving the FRLD allocation system (GI, para 60(a)-(f)). The development of the interim allocation system will thus need to manage the tension between these multiple elements, to enable effective learning to inform the system that will operate once the Fund transitions to full operations. Such a system is supposed to take into account the needs and priorities of developing countries, and especially those of climate-vulnerable communities (GI, para.60(a)) in relation to the scale of impacts (severity, geographic reach, socio-economic effects) relative to national circumstances, including capacities to respond (GI, para.60 (b)). These are influenced to a high degree by a recipient country’s fiscal space and level of indebtedness as well as numerous other factors such as population density, reliance on climate-sensitive sectors, and compounding effects of other crises such as in the case of fragile and conflict-affected states. This speaks to the need to provide most of the funding in the form of grants. There is also a question of whether to include certain allocation targets for early intervention programming priorities, such as funding support for planning, rapid onset and slow onset events or for funding modalities such as direct budget support or community access.

An additional requirement according to the GI when determining an allocation approach is “to safeguard against the overconcentration of support provided by the Fund in any given country, group of countries or region” (GI, para.60(c)), which could make the case for also establishing some funding ceilings, at least for the long-term operational approach.

While an interim resource allocation system must support the eligibility of all developing countries to FRLD resources, including through early interventions, by recognising that all have priorities and needs that are not being addressed by the current climate finance architecture, the system also must ensure that countries with additional aggravating challenges and circumstances, such as SIDS and LDCs, receive a guaranteed “minimum percentage allocation floor” as stipulated in the GI (GI, para.60(f)). However, while such a minimum floor is anticipated as part of the interim allocation approach, how much of the commitment authority in the start-up phase should be set aside for SIDS and LDCs, and whether such an allocation should be jointly set for both country groups (recognizing there is some overlap with currently eight SIDS also considered LDCs) or with minimum floors for either, is far from certain. A preliminary Secretariat proposal for consultation in the lead-up to the fifth Board meeting suggested a range from 25% to 50% of total resources as a minimum floor, with the Board at its April meeting expected to clarify its agreed approach as one of the decision elements in Barbados for the start-up phase.

Given the limited funding availability, the FRLD’s interim allocation approach might learn from the experience of a number of existing funds in terms of setting both floors and ceilings to funding to be accessed per country, country group, access modality or per funding proposal. The GEF for example uses a formula-based approach to determine country caps through its System for Transparent Allocation of Resources (STAR), recalculated with every replenishment period, that safeguards a guaranteed share for each eligible country in its respective focal areas. By contrast, the GCF guarantees under its allocation framework half of its funding in grant-equivalent terms for adaptation and ringfences 50% of this adaptation support for SIDS, LDCs and African states; this minimum allocation floor is now regularly exceeded and is now portfolio-wide around 65%. The AF, which faces similar constraints to its annual commitment authority as the FRLD will (at least during its start-up phase), safeguards against a ‘first-come-first-serve’ approach to funding by having instituted a number of caps. They cover how much can be spent per intervention and differentiate between single country projects (no more than USD 10 million) and regional projects (up to USD 14 million) as well as support for technical assistance (ranging depending on type from USD 10,000 to 150,000), and how a single country can receive in funding (currently no more than USD 20 million). The AF also reserves up to 50% of its available funding for direct access entities. Some funding floors and ceilings might be useful also to be considered for the FRLD interim allocation approach, not the least to allow for a number of different funding modalities and programming priorities for a range of countries to be accommodated in the start-up phase.

There is currently no way of knowing exactly how much funding will be available for early interventions in 2026 and 2027, and what this might mean if certain funding caps are applied. The Board will need to base its funding decisions during that time on its commitment authority, as it can only spend money that is in the FRLD’s trust fund account. This commitment authority can vary from Board meeting to Board meeting. It is based on the schedule of paid in contributions (when funding or funding tranches are received in the FRLD trust fund) once a contribution agreement has been signed and become fully effective. To determine the amount the Board has for funding decisions for loss and damage interventions, it will have to determine its commitment authority and then subtract its administrative costs to run the Fund for the 2025 to 2027 period. The administrative costs include the cost for the Secretariat and Board functions, the cost recovery for the World Bank hosting of the Secretariat and the World Bank’s fees for administering the FRLD trust fund. Assuming for example around USD 400-500 million might be paid in and available for funding commitments over two years, a funding cap per intervention for rapid onset or slow onset events (either focused on economic or non-economic loss and damage) set at USD 20 million could presumably support 15-20 activities over two years, with funding left for technical assistance or planning (which could be capped at around USD 1-2 million per country for a combination of both) for between 40-80 interventions. This would still allow for some ringfenced amount for direct community access, if it is not integrated satisfactorily through other funding modalities. The distribution of this funding will also have to consider regional balance. Other combinations for funding and programming targets are obviously also conceivable.

3.G. Interim results measurement approach

The Board in its discussion and expected decisions on the broad outline of and parameters for the programming of early interventions in the start-up phase will also have to give some thought on how it will measure and account for some of the results and impact of that early funding in the interim. This is in the absence of a fully developed results management framework with a comprehensive set of indicators, which the Board is mandated to develop, approve and periodically review according to para.22(g) for the long-term operational approach. This will be also necessary to comply with the mandate of the GI work on the “continuous improvement of the Fund’s impact, effectiveness and operational performance” (GI, para.63), given that the start-up phase is also meant to test and fine-tune approaches to interventions for the long-term.

For example, would an interim results measurement approach only look at funding priorities such as the number of interventions for rapid onset or slow onset events or the number of supported loss and damage planning processes respectively per year and over the interim funding period? Would it differentiate those between economic and non-economic loss and damage? Or would it also consider funding modalities targets as key performance indicators during the start-up phase such as how many countries receive programmatic or direct budget support or how many direct community access grants have been provided?

Undoubtedly, the interim results measurement approach will give an early indication of what the Board considers as an important measure for the impact and success for FRLD funding support, For this reason, it will be crucially important to ensure that the FRLD’s success is defined by performing well against people-centred benefit-focused indicators and targets already in the interim phase and success is not narrowly equated only with the number of interventions supported but also provides a first measure of the people and communities helped through the funding support, including through starting with an early practice of disaggregating beneficiary numbers to allow for gender and intersectionalities such as Indigeneity, age or economic class. Quantitative indicators should also already in the start-up phase be complemented by considering and including qualitative targets and assessments to provide some early learning. This will be even more critical in the context of initial interventions on non-economic loss and damage, which must be part of the start-up phase.

3.H. Secretariat resourcing, required scale up and implementation timelines

As highlighted by the FRLD’s ED during the fourth Board meeting in Manila in December 2024, the capacity to develop the necessary interim policies, frameworks and approaches for the rapid start of early interventions will depend strongly on quickly building up the numbers and the expertise in the independent Secretariat. This will be especially important after the April Board meeting, where Board members need to decide key minimum requirements for operationalising the start-up phase. The Secretariat will have to turn the guidance from the Board into draft policies and frameworks for consideration, further guidance where necessary, and ultimately decisions at the subsequent two Board meetings in July and October. This approach is necessary if the Board seeks to meet the target of having the interim operational framework for funding delivery in place by COP30.

In December, when the Board approved the work plan for the independent Secretariat and the administrative budgets for the transition period from the interim Secretariat to the independent Secretariat (with current support of staff from the UNFCCC, the GCF and UNDP to run out mid-year), it also greenlighted the hiring of a Deputy Executive Director, whose recruitment is expected to be completed prior to the fifth meeting in April 2025, which it is hoped will enable them to attend and engage in at the fifth Board meeting in April. The focus of this position is on operational development, with the ED to prioritize broader strategic matters, including resource mobilisation efforts. Having the Deputy ED in place and already present in Barbados will be important to carry out their primary role of accelerating impactful operationalisation of the Fund’s start-up phase this year, while laying the groundwork for the long-term operations of the FRLD.

The staffing costs for the independent Secretariat until mid-2025 so far only cover the salaries for the ED, the Deputy ED, a senior executive assistant and two World Bank senior support staff only, although cost-neutral secondees from other organisations are not precluded. This is not enough by any stretch of the imagination to do the work needed in a short time-frame for the preparation of the start-up funding phase, let alone to develop in parallel some of the operational policies for the long-term, as at least the work plan approved by the Board for the full operationalization of the Fund by 2027 foresees. A comprehensive workplan for the independent Secretariat and the administrative budgets for the rest of 2025 are to be presented to the Board for approval at its fifth meeting. It will need to include the required staff buildup for the independent Secretariat to be able accomplish the work, including developing a full operational manual for the start-up phase that would outline simplified operational procedures and include templates to be differentiated likely by funding modality and/or programming area as well as detailed guidance for applicants how to use them. It should also clarify the needed staff capacity (in both numbers and expertise) to deal with the expected number of funding applications and manage the disbursement of resources.

Table 2: Administrative budget for the transition from the interim to the independent Secretariat (1 January – 30 June 2025)

table showing the Administrative budget for the transition from the interim to the independent Secretariat

Source: FRLD/B.4/6/Rev.1, tables 1-6.

The Board in considering the operational approach to the start-up phase will have to give guidance on what that simplification could look like and be clear on its preferences. For example, would the initial funding cycle only consider fully elaborated proposals, or also encourage the submission of concept notes and support their development into funding proposals through technical assistance or readiness support (including coordinated with other actors such as SNLD, the AF or the GCF that all provide some funding for technical assistance and/or readiness)? Who would review the proposals and how many could be tackled per year? A still growing independent Secretariat, which might lack some of the required issue expertise in the start-up phase, an independent panel of technical experts or both? And how long would it take to set up external expert support? Would this require a set-up by Board decision as a Board appointed panel?

Other issues will also have to be clarified quickly, if funding is to start flowing in early 2026. This could include Board guidance on the extent to which relevant indicators or triggers to clarify access to different support modalities, such as for rapid disbursed or tranched funding release, might be already set and utilized during the start-up phase, and their subsequent development (in line with para.22(l) of the GI). How would funding requests be approved: Only during Board meetings, and allowing presumably for voting in cases where there is no consensus? With only three meetings scheduled per year, this would restrict the number of proposals to be considered, or hinder a truly rapid response. Or would the Board make fundings decisions as decisions between meetings? The Board approved such a procedure at its fourth meeting that foresees a tacit approval when during a prescribed period no Board member raises an objection to a proposed decision, but postpones the decision to the in-person Board meeting when the objection is maintained. The Board could also delegate some of the funding decisions to the Executive Director, an option that is foreseen in the GI under para. 22(i). This could for example be applied for proposals up to a specific funding cap (including for small community grants or technical assistance) or in releasing tranches for previously Board-agreed pre-arranged financing.

Additionally, questions around the approach to legal arrangements with the implementing partners (a framework agreement and individual funded activity agreements or just the latter) and how to simplify disbursements, specifically in the case of direct budget support (tranched disbursements or multi-year initial funding release with build in flexibility of use), will need guidance by the Board.

3.I. Missing elements to be considered during the start-up phase

The discussions for the policy considerations and Board decisions to give guidance for early interventions in the start-up phase focus so far almost exclusively on the operational policies and procedures that need interim approaches to begin funding in early 2026. However, if the two year start-up phase is supposed to be really a testing and learning opportunity to also allow for the fine-tuning and/or improvement of policies, guidance and initial practice for the long-term operationalization of the Fund and its full mission, some missing elements should be considered as important framing requirement to ensure that the FRLD in its funding will serve those most affected people and communities already bearing the brunt of catastrophic loss and damage in developing countries. For this, the Board and the independent Secretariat also need to discuss and consider how to set up the FRLD for long-term operational success already in the start-up phase with respect to stakeholder engagement and participation, information disclosure as well as ensuring a human rights-based and gender-responsive approach to its funding operations from the beginning.

For example, sufficient capacity (and respective guidance by the Board through its decision-making) is also needed for the Secretariat to do the necessary outreach for the iterative participatory engagement with stakeholders for the start-up phase and the development of interim operational policies, such as through information sharing webinars and the encouragement to receive written inputs on multiple document versions to be considered, documented and to the extent possible integrated. This is inextricably linked to a commitment by the independent Secretariat to a pro-active information disclosure approach throughout the start-up phase that maximizes the timely publication of relevant documents and information, including in multiple languages. This early engagement – its comprehensiveness and thoroughness in seeking and inviting feedback from a broader set of stakeholder, and in particular with active efforts to receive inputs from affected communities and population groups such as climate refugees or Indigenous Peoples – is crucial and will set the tone, especially since the young independent Secretariat is still developing its organizational culture. The regular and iterative engagement with civil society and community actors has to be part and parcel of how the Secretariat goes about its tasks of preparing and implementing interim policies now, if it is to be ingrained in the long-term operations of the Fund. This comes as the Board is also scheduled to consider and discuss policies on active observers and broader stakeholder consultative forums following Board decisions in December at its sixth meeting in July (which the respective draft policies to be developed by the independent Secretariat through comprehensive stakeholder consultations in the lead-up to this meeting, yet to begin).

Similarly, the Board, which through the adoption of the additional rules of procedures (AROP) at its fourth meeting in Manila in December provided some important commitments regarding the routine disclosure of FRLD Board documents to be applicable already during the start-up phase, should push for a pro-active Fund-wide information disclosure approach that includes the operations of the independent Secretariat. According to the AROP, while English is the working language of the FRLD, core documents such as interim operational policies should be translated into other languages in support of a multilinguistic approach from the beginning to set the right tone.

The loss and damage suffered by communities in developing countries is undoubtedly undermining their basic human rights. A human-rights-based, people-centered and gender-responsive approach is thus fundamental to ensure that the FRLD can deliver the highest impact already in its early interventions. As the Board discusses the Fund’s interim operational model and will consider its approach to core modalities for the start-up phase at its fifth meeting in April, it needs to be mindful to integrate the GI’s mandate to “take a culturally sensitive and gender-responsive approach” (GI, para.5). This requires for one that the staff build up of the independent Secretariat takes not only into account geographical and gender balance (GI, para. 32) and builds up its staff’s gender expertise. It also requires that women, youth, and Indigenous Peoples as core stakeholder groups are actively reached out to in Fund-wide stakeholder engagement efforts during the start-up phase (in line with GI, paras.28 and 29), and included specifically through guidelines for early intervention funding support for determining country-led programming approaches, such as loss and damage response plans (in line with GI, para.43).

As the Fund starts engaging with implementing partners during the start-up phase, and in the absence of its own articulated policies on ESS and gender and Indigenous Peoples, accountability and transparency of early interventions – through the release of funding documents at an early stage, through documentation requirements and guidelines and mandated minimum actions and guarantees as well as in early results and impact measurement – must focus on how the concerns and rights of distinct population groups such as women and diverse gender groups, Indigenous Peoples, children and youth, climate migrants/refugees or people living with disabilities are considered, protected and advanced. This is not an irrelevant part of early interventions or a complication of the funding approach, but a prerequisite to ensure that the FRLD can fulfill its mission. This aligns with an approach in the start-up phase that utilizes grants, mainstreams community access through different pursued funding modalities, including piloting direct small-grant access at the Fund level, and focusing on activities for low-risk environmental and social harm initially.

The start-up phase will also require the ongoing monitoring, and provide an early test case, of the World Bank’s hosting of the independent Secretariat in accordance with the set of conditions laid out in the COP28 decision. This is especially important to already fully apply a provision during the start-up phase that will allow all developing countries, including those not members of the World Bank, to directly access resources from the Fund, including through subnational, national and regional entities and through small grant funding for communities (in line with para. 20(e) and (g) of the decision). These were some of the conditions certified by the Board to be able to be met until COP33 in 2028 through the hosting arrangements concluded last year, which the COP29/CMA6 acknowledged, and which should be reflected in the FRLD’s second annual report to be submitted to COP30/CMA7. Annual guidance by the COP30/CMA7 in return could provide additional recommendations and mandates on how to improve funding access during the start-up phase further.

4. 2025 work on long-term operational policies and procedures

Given the comprehensive work needed to finalize the interim operational approach for the start-up phase by COP30 so that funding could begin in early 2026 and the fact that the independent Secretariat is still building up its staff and capacity, it will be quite challenging to significantly advance long-term operational policies and procedures simultaneously with the work on early interventions in 2025. The Board will thus have to give clear guidance to the independent Secretariat for how the workplan for the start-up phase and a workplan for the long-term operational development of the FRLD can be pursued in parallel, including by finetuning the phased approach to the consideration of policy priorities for the long-term operationalization of the Fund.

The workplan for the independent Secretariat approved at its fourth meeting lays out some of the priorities, indicating in particular the preparation and implementation of a long-term resource mobilization strategy and financial input plan to be discussed and finalized at the July and October meetings as a first order business. While a discussion about the scale of financial inputs, and who should provide financing, were not formally on the agenda of the four Board meetings throughout 2024, they nevertheless were the implicit background to many of the discussions regarding the Fund’s operational model and ambition and the development of related policies and modalities, such as on access or allocation. More certainty about the likely scale of the FRLD beyond the currently pledged USD 766 million, the overwhelming portion of which must be converted quickly into fully paid in contributions for use during a one or two year start-up funding phase, is needed to design appropriate long-term operational policies. The long-term mobilization strategy to be developed by COP30 could see efforts to also prepare a formal initial capitalization/replenishment round targeting additional public finance inputs by developed countries and other contributors for 2026. Grant pledges provided mostly during COP28 were largely seen as just the initial financial push “for commencing the operationalization of the Fund”, as the COP28 decision highlights, but by no means an adequate capitalization. The Board would for example have to agree on the type of contributions it wants to pursue - the GI in para.54 allows them to be received from a wide variety of sources of funding, including private and innovative – through a formal capitalization effort and would have to codify this in a policy of contributions, for example to provide for a financial cushion and a cap in case financial contributions are received in the form of concessional loans or capital inputs (which would have to be returned eventually).

A second priority for the parallel development of long-term operational policies in 2025 will be the modalities for complementarity and coherence with new and existing funding arrangements for responding to loss and damage across the international financial, climate, humanitarian, disaster risk reduction and development architectures (GI para 4). It is anticipated that this will look as a starting point at collaboration and coordination with the SNLD (with regard to technical assistance) and the WIM ExCom (for knowledge exchange) and with other main multilateral climate funds, especially the AF, GCF and GEF as funds under the UNFCCC and Paris Agreement. Collaboration with these funds might also center on the mandate under the COP29 decision for the new collective quantified goal on climate finance (NCQG) to triple the outflow of the operating entities of the UNFCCC financial mechanism (which includes the FRLD), the AF, the SCCF and LDCF from 2022 level by 2030.

This will follow the inaugural annual High Level Dialogue (HLD) on complementarity and coherence to be co-convened by the Fund and the United Nations Secretary-General on April 23 on the sidelines of the IMF/World Bank Spring Meetings in Washington, DC. It is to bring together a select group of no more than 30 high level representatives of entities engaged in responding to loss and damage from the FRLD, the WIM ExCom and the Santiago Network, the World Bank and regional development banks, the International Monetary Fund (IMF), relevant UN agencies and other intergovernmental organizations, relevant multilateral climate funds (AF, GCF, GEF, and the World Bank’s Climate Investment Funds), the International Organization for Migration, but also from civil society, Indigenous Peoples and the philanthropic sector. The HLD is supposed to discuss opportunities for new or enhanced collaboration and/or coordination among the ‘mosaic of actors’ of the evolving loss and damage funding landscape, and further information on support specifically targeting responding to loss and damage through post-impact support, including for both economic and non-economic loss and damage from both sudden and slow onset events, some of which could be applicable for early interventions. The long-term modalities on complementarity and coherence are currently scheduled to be developed by COP30 and would likely also already include the institutionalization of the HLD as well as the preparation of the 2026 one.

The independent Secretariat workplan also foresees work on the long-term project and program approval cycle and on a broader range of financial instruments and co-financing approaches also to be conducted for consideration by the Board during its July and October meetings in 2025; however, this timeline seems overly ambitious, if not counterproductive, as the Board will need to discuss the modalities for funding and proposal approval for the start-up phase at the same time. And if the start-up phase is to serve as the initial period to test and refine long-term operation approaches, then some time lag and sequencing seems necessary to facilitate that learning.

5. Conclusion

With devastating and escalating impacts of loss and damage already happening at growing scale and intensity that affects the poorest and most marginalized communities and population groups in developing countries already the hardest, existing funding arrangements are not delivering at the scale nor the scope of actions required to adequately address loss and damage. This is why many of the hopes and expectations from people and communities in developing countries are centered on the FRLD and its efforts and decisions in 2025.

As the FRLD Board and the new independent Secretariat embark on their joint efforts to set up the interim systems and modalities by COP30 for the Fund to begin funding early interventions in 2026, it will be important to set the right tone, priorities and approaches that show-cases that the Fund has applied lessons learned from existing mechanisms and is ready to develop something new and innovative in the way it provides access to its funding. This is both a tremendous challenge but also a great privilege and opportunity. Ultimately, the way the Fund decides in 2025 to operationalize its start-up phase, while advancing its long-term operation model, will show if it can fulfill the objectives and purpose laid out in para.5 of the GI, where it is called to “be scalable and flexible; practice continuous learning, guided by monitoring and evaluation processes; strive to maximize the impact of its funding for responding to loss and damage associated with the adverse effects of climate change while promoting environmental, social, economic and development co-benefits; and take a culturally sensitive and gender-responsive approach.”

Footnotes

1
This amount reflects the exchange rate used by the World Bank for the pledges received in multiple currencies as of 14 March 2025 ( (see also https://unfccc.int/topics/climate-finance/funds-entities-bodies/fund-for-responding-to-loss-and-damage/pledges-to-the-fund-for-responding-to-loss-and-damage, accessed on 28 March 2025); it might thus change over time, depending on the exchange rate conversion date used.
2
The amount reported at the time was higher, owing to the fact that pledges were received in multiple currencies and accounted for in USD equivalent with exchange rates applied at the time of the pledge. The pledge amount in USD will thus fluctuate, depending on the exchange applied at the day of conversion. The USD 656.71 million reflects the exchange rate used by the World Bank as of 14 March 2025 only accounting for the pledges received at COP28, additional contributions have been made since then. The total of USD 765.59 million reported by the FRLD on its website reflects the exchange rate used by the World Bank as of 14 March 2025 (see also https://unfccc.int/topics/climate-finance/funds-entities-bodies/fund-for-responding-to-loss-and-damage/pledges-to-the-fund-for-responding-to-loss-and-damage, accessed on 28 March 2025).