LOSS AND DAMAGE FUND: NEGOTIATIONS ENTER THE MOST DELICATE PHASE

• The first week of COP30 had seen a promising start to negotiations on the Fund for responding to Loss and Damage (FRLD): the launch of the Barbados Implementation Modalities and the first call for proposals, 250 million dollars announced, and clear priorities set out by negotiating groups as they awaited a new text.
• The second week opened with a new compromise draft that acknowledges the Fund’s progress but removes the reference to the 250 million dollars: strong tensions immediately emerged over access, references to COP28, financial pledges, and bureaucratic barriers.
• Deep divergences remain, and the process has moved to “informal informals”, closed-door discussions aimed at seeking agreement on four key issues: references to past decisions, direct access, conversion of financial pledges, fiduciary standards and simplification.

Where we left off

In the first week of COP30, negotiations on the Fund for responding to Loss and Damage (FRLD) opened with cautious optimism. Parties had welcomed the rapid operational start-up of the Fund and the launch of its first call for proposals through the Barbados Implementation Modalities (BIM), the rules defining who can access the funds, which types of damage can be covered, and which procedures must be followed.
A first set of interventions for 2025–2026 had been announced, with 250 million dollars available.

At that stage, negotiating groups had placed their priorities on the table:

• G77 and China called for more resources and fast, predictable disbursement mechanisms;
• The Philippines, host country of the Fund, insisted on clear guidelines and an approach sensitive to social and gender dimensions;
• Least Developed Countries and the Alliance of Small Island States (LDC and AOSIS) stressed the urgency of direct access and rapid disbursement;
• The Arab Group asked for explicit references to decisions on the new collective quantified goal (NCQG), while the EU reiterated that responsibility for a fundraising strategy lies with the Fund’s Board.

After this first round of interventions, an updated version of the negotiation text was expected.

Second week opens with rising tensions over the new draft

The week began with a second version of the negotiating text, presented by the co-facilitators as a possible compromise basis (a “landing zone”). The new version largely retains the structure of the initial draft, with some modifications. It acknowledges the Fund’s progress – including the launch of the BIM, the opening of the call for proposals and the definition of the 2026 work plan – and addresses topics such as the conversion of pledges, direct access, the future resource-mobilisation strategy and the need to avoid bureaucratic hurdles in accessing funds.
The reference to the 250 million dollars in non-repayable funding has disappeared.

During Monday’s negotiating session, discussions on this new draft revealed that numerous passages remain highly politicised and a source of conflict between the Parties.

Key points of tension in the negotiating room

1. Access to the Fund and references to COP28 decisions

The delegate of the Arab Group expressed strong concern and indignation at the absence of specific references to the decision adopted in Dubai (1/CP.28), asking sarcastically whether Parties were “trying to revise the COP28 decisions”.
The group is demanding the inclusion of an explicit reference to paragraph 12 of Decision 1/CP.28 concerning the resource-mobilisation strategy, which stipulates that developed countries must provide financial support for activities addressing loss and damage, while other Parties are merely encouraged to contribute voluntarily.
Furthermore, the request is to reformulate the language on access with an explicit reference to paragraph 20(e) to reaffirm that all developing countries are entitled to access the Fund’s resources.

For the Arab Group, omitting these references would constitute backtracking on agreements already reached. The delegation warned that without these insertions, it is prepared to invoke Rule 16, sending the entire dossier into the next year.

The European Union, supported by Japan and the United Kingdom, rejected the accusation of backtracking, stating that previous decisions must be interpreted and implemented as a whole, and not selectively recalled only in parts convenient to certain groups (a practice it described as “cherry picking”).

2. Direct access via national budget support

For the Alliance of Small Island States, small island States that often struggle to access climate funds, the possibility of receiving resources directly into national budgets is crucial. The group therefore requested that the reference to direct access procedures be strengthened.

The EU proposed a less prescriptive formulation: acknowledging that the COP “looks forward” to the Fund’s Board implementing these arrangements at its next meeting, leaving it to the Board to define them in concrete terms.

3. Converting pledges into actual contributions

Another heavily debated issue concerns the transformation of financial pledges into actual contributions.

The EU noted that it is working with the Alliance of Small Island States on language linking the conversion of pledges to the allocation of resources through the BIM, taking into account the different national regulatory frameworks of contributing countries.

4. Bureaucratic barriers and fiduciary standards

Paragraph 13 of the new text, addressing bureaucratic barriers to fund access, triggered one of the most sensitive debates of the session.
The least developed countries (LDC), supported by the African Group and the Alliance of Small Island States, recalled that bureaucracy is already one of the main obstacles in existing climate-finance mechanisms, and insisted that the Fund operate in a simpler and faster way, as envisaged by the Barbados Implementation Modalities (BIM). They stressed that the reference to avoiding overly complex procedures must not be conflated with the issue of maintaining fiduciary standards, which should be treated separately to avoid suggesting that simplification means lowering safeguards.

The Arab Group proposed an even more direct amendment: replacing the term “high fiduciary standards” with “fiduciary standards”, fearing that excessively strict language could become yet another barrier to access.

5. And under the CMA? The debate on future finance returns

Under the CMA (the meeting of Parties to the Paris Agreement), debate focused almost entirely on paragraph 14 of the draft decision, which references Decision 1/CMA.6 on the new climate finance goal (NCQG).
The Alliance of Small Island States and Least Developed Countries requested an explicit citation of paragraph 16 of that decision, which commits the international community to tripling public climate-finance flows through major climate funds by 2030. For them, this reference is essential to ensure future strengthening of the Loss and Damage Fund.

The Arab Group supported the proposal and asked to include additional references already discussed under the COP.
The EU, however, requested that paragraph 14 be bracketed, warning that selecting specific paragraphs from the NCQG decision would again constitute “cherry picking”.
The issue was left open for further informal consultations.

No agreement so far: moving to “informal informals”

Acknowledging the gap between positions, the co-facilitators convened an “informal informal”, a closed-door session inviting delegations to continue discussions in a smaller group to try to move closer to a balanced outcome. Their work will focus especially on the most contentious points:

• references to COP28 decisions;
• direct access to the Fund;
• conversion of pledges;
• wording on bureaucratic barriers and fiduciary standards.

The outcomes of these “informal informals” will be decisive in assessing whether convergence on a shared text is possible. Updates may come within hours. We will keep you informed in the next bulletin.

Update

The inf-inf consultations have indeed allowed progress. After publication of the article, Parties reconvened in a new informal consultation session and converged on a revised text, which has just been transmitted to the Presidency.
We will analyse it, follow the process, and return with updates.

Article by Ruben David, Delegate of Italian Climate Network 

Cover image: UN Climate Change – Kiara Worth