Climate finance & governance
Loss and Damage Fund
Definition
The Loss and Damage Fund (formally the Fund for responding to Loss and Damage, FRLD) is a dedicated financial mechanism under the UNFCCC and Paris Agreement, agreed at COP27 in Sharm el-Sheikh in 2022 and operationalised at COP28 in Dubai in 2023, to provide finance to particularly vulnerable developing countries for addressing economic and non-economic loss and damage from climate change. It is hosted at the World Bank as an interim financial intermediary fund for four years, with initial pledges of several hundred million dollars and provisions reserving at least 50% of resources for small island developing states and least developed countries.
References
Supports definition and framing.
Supports definition and framing.
Overview
What it means
The fund answers a three-decade demand from vulnerable nations for compensation-style finance distinct from mitigation and adaptation funding. Its board, based in Barbados under the Implementation Modalities, is developing direct access and rapid disbursement windows.
How it is used
Governments and civil society track pledges and capitalisation; the fund's first calls for funding requests mark the shift from political agreement to delivery.
Why it matters
Loss and damage finance is a litmus test for climate justice: countries least responsible for emissions face the severest impacts, and the fund's adequacy and accessibility shape trust in the entire climate regime.