What is Fund for responding to Loss and Damage (FRLD)?

• The Board of the Fund for responding to Loss and Damage (FRLD) has provisionally set aside $21.6 million from its available commitment authority for Nepal.

• The decision was made during the Board’s first-ever extraordinary meeting on October 22.

• The Board has 26 members from Parties to the United Nations Framework Convention on Climate Change (UNFCCC), and the 2015 Paris Agreement.

• Triggered by a climate-induced ice-and-rock avalanche on August 26, a massive debris flow and severe downstream flooding devastated Nepal’s Bhote Koshi-Trishuli-Narayani river system, claiming many lives and leaving others still missing.

What is FRLD?

• Climate change disproportionately affects developing nations, leading to excessive losses and damage, undermining development progress, exacerbating poverty, displacing populations, and destabilising livelihoods. 

• The Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) and the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA) established the Fund for responding to Loss and Damage (FRLD) with a mandate to assist developing nations that are particularly vulnerable to the adverse effects of climate change in responding to economic and non-economic loss and damage associated with the adverse effects of climate change, including extreme weather events and slow onset events.

• A landmark agreement reached at COP27 in 2022 in Sharm El-Sheikh, Egypt, led to the decision to establish a fund to consolidate global efforts to address climate-induced loss and damage. 

• Subsequently, a transitional committee was formed to help design the Fund’s framework. 

• During COP28 in 2023 in Dubai, the United Arab Emirates, the COP and CMA decided to operationalise the Fund as an entity entrusted with the operation of the financial mechanism.

• It addresses the growing needs of vulnerable communities in developing countries facing the irreversible impacts of climate change. 

• By financing recovery initiatives from climate-related losses and damage, the Fund empowers communities to rebuild and adapt. 

• It strives for country-led locally driven solutions, ensuring interventions are aligned to country needs, priorities and contexts. 

• A Board of 26 members was constituted in 2023, and subsequently, the Philippines was selected as the host of the Board in 2024, while the World Bank was selected to host the Secretariat, and as the Fund Trustee.