Activists, countries, civil society groups and development partners have welcomed an agreement reached at the COP27 climate negotiations to establish a fund for vulnerable countries to avert, minimize, and address loss and damage associated with the adverse effects of climate change.

The United Nations Climate Change Conference COP27 closed on Sunday November 20, with a breakthrough agreement to provide "loss and damage” funding for vulnerable countries hit hard by climate disasters.

The proposed ‘loss and damage compensation fund’ seeks to see developed countries compensate developing countries for the loss and damages they cause as they are the biggest emitters of greenhouse gases causing climate change.

"It is good news. Loss and damage fund is going to help vulnerable countries to access money for climate change impacts which are not adaptable,” said Faida Zoubeda Uwase, a Rwandan greenpreneur and environmental activist.

The UN Development Programme has also welcomed the step forward in the global fight against the climate emergency.

Developing countries lead the world on climate ambition according to The UN Development Programme.

In its statement, it said support for these countries, who contribute the least to global heating, but bear the brunt of its worst effects, has long been overdue.

Under the UN Development Programme’s Climate Promise, 90 per cent of developing countries have increased their mitigation ambition and 95 per cent of them have increased their adaptation ambition.

"In addition, developed countries must step up to the commitment they have made to provide $100 billion annually to poorer nations to finance climate action,” reads part of the statement.

At COP27, deliberations continued on setting a ‘new collective quantified goal on climate finance’ in 2024, taking into account the needs and priorities of developing countries.

"It is illogical to fund the irreversible consequences of climate change without significant investment in the adaptation and mitigation measures that developing countries need to address the underlying causes, "adds the statement.

54 developing economies – 40 per cent of all low- and middle-income countries – currently suffer severe debt problems, strongly limiting their ability to take decisive climate action and to invest in the global green economy.

"There is no way around it, we need commitments to be met. We need financial investments without further delay to have the impact at the scale and speed that is needed.

A just transition to clean and sustainable sources of energy is critical if we are to reduce emissions and limit global heating to 1.5 degrees Celsius,” UN Development Programme stated.

"This outcome moves us forward,” said Simon Stiell, UN Climate Change Executive Secretary.

"We have determined a way forward on a decades-long conversation on funding for loss and damage – deliberating over how we address the impacts on communities whose lives and livelihoods have been ruined by the very worst impacts of climate change,” Stiell added.

Creating a specific fund for loss and damage marked an important point of progress, with the issue added to the official agenda and adopted for the first time at COP27.

Governments also agreed to establish a ‘transitional committee’ to make recommendations on how to operationalize both the new funding arrangements and the fund at COP28 next year.

The first meeting of the transitional committee is expected to take place before the end of March 2023.

However, COP27 saw significant progress on adaptation, with governments agreeing on the way to move forward on the Global Goal on Adaptation, which will conclude at COP28 and inform the first Global Stocktake, improving resilience amongst the most vulnerable.

Civil society groups welcome compensation fund

Climate Action Network (CAN), a global network of over 1900 NGOs in over 150 countries, working to fight the climate crisis has welcomed the decision to establish loss and damage compensation fund as a first step to rectify injustice to those suffering disproportionately from climate devastation, especially in the global South.

For two weeks, the G77 plus China, the largest developing country negotiation group representing over 134 countries including Rwanda and five billion of the world’s population, have stood united and resolutely behind the demand for the creation of a fund at COP27 for addressing Loss and Damage.

This despite intense pressure from countries like the USA who attempted to block the creation of a fund from the onset, and some EU nations who attempted to derail the talks with watered down options that would divide developing countries.

"The creation of the Loss and Damage Fund today is also a clear victory for civil society groups across the world, who made this issue a priority and used their power to put sustained pressure on rich nations to take responsibility for the crisis they have historically caused,” stated Climate Action Network (CAN).

Scaling up investment in renewable energy

CAN said that the agreement to scale up investment in renewable energy for the first time in this process is welcomed but without a strong outcome on phasing out all fossil fuels, governments risk breaching 1.5°C.

"Civil Society will continue its resistance against fossil fuel expansion outside these halls and will continue to fight against all injustices and human rights abuses and shrinking of civic space across the world.”

"While COP27 begins to address the consequences of the climate crisis, it failed to commit to phasing out fossil fuels, which are at the root of the climate crisis. More fossil fuel extraction means more losses and damages and more devastation. We need a rapid yet equitable transition away from the fossil era to renewable,” said Tasneem Essop, Executive Director, Climate Action Network International.

"With the creation of a new Loss and Damage Fund, COP27 has sent a warning shot to polluters that they can no longer go scot-free with their climate destruction. From now on, they will have to pay up for the damages they cause and are accountable to the people who are facing supercharged storms, devastating floods and rising seas.

Countries must now work together to ensure that the new fund can become fully operational and respond to the most vulnerable people and communities who are facing the brunt of the climate crisis,” said Harjeet Singh, Head of Global Political Strategy, Climate Action Network International.

Yeb Saño, Executive Director, Greenpeace Southeast Asia and Head of the Greenpeace COP27 delegation said: "Today’s victory for people power on loss and damage must be translated into renewed action to expose climate action blockers, push for bolder policies to reduce our dependence on fossil fuels, boost renewables, and support a just transition. Only then can a greater stride towards climate justice be taken at COP28.”

"The loss and damage deal agreed is a positive step, but it risks becoming a ‘fund for the end of the world’ if countries don’t move faster to slash emissions and limit warming to below 1.5°C,” said Manuel Pulgar-Vidal, WWF Global Climate and Energy Lead, and COP20 President.

$250 million pledges for adaptation fund

New pledges, totaling more than $230 million, were made to the Adaptation Fund at COP27.

These pledges will help many more vulnerable communities adapt to climate change through concrete adaptation solutions.

COP27 President Sameh Shoukry announced the Sharm el-Sheikh Adaptation Agenda, enhancing resilience for people living in the most climate-vulnerable communities by 2030.

The UN Climate Change’s Standing Committee on Finance was requested to prepare a report on doubling adaptation finance for consideration at COP28 next year.

The cover decision, known as the Sharm el-Sheikh Implementation Plan, highlights that a global transformation to a low-carbon economy is expected to require investments of at least $4-6 trillion a year.

Delivering such funding will require a swift and comprehensive transformation of the financial system and its structures and processes, engaging governments, central banks, commercial banks, institutional investors and other financial actors.

The UN’s Intergovernmental Panel on Climate Change indicates that greenhouse gas emissions must decline 45 per cent by 2030 to limit global warming to 1.5°C.