Strategic workstream (e) of the five-year workplan of the Executive Committee is to enhance cooperation and facilitation in relation to action and support, including finance, technology and capacity-building, to address loss and damage associated with the adverse effects of climate change.
Activities are clustered under finance, capacity-building and stakeholder engagement, and include:
- Finance: determining the scope of a technical paper elaborating the sources of financial support, as provided through and outside the Financial Mechanism, for addressing loss and damage as described in relevant decisions, as well as the modalities for accessing such support; inviting the Standing Committee on Finance to continue its collaboration and engagement with the Executive Committee; and inviting relevant actors to consider how to facilitate or enhance, as appropriate, the availability of finance relevant to loss and damage.
- Capacity-building: inviting the Paris Committee on Capacity Building and other relevant agencies to identify capacity gaps and recommend ways to address the gaps; inviting relevant actors to organize regional stakeholder workshops to build capacity; inviting the Durban Forum on capacity-building to consider dedicating one of its future annual in-session events to the issue of loss and damage; and developing actions to address capacity-building for addressing loss and damage and inviting relevant actors to support their implementation.
- Stakeholder engagement: engaging stakeholders to develop knowledge and support the dissemination of best practices to effectively plan and prepare for and respond to loss and damage; and inviting relevant actors to continue developing insurance mechanisms, as appropriate, embedded in an integrated risk management approach.
For further information on activities of the Executive Committee in relation to action and support, see the five-year workplan.
How to get involved?
Calls for input and invitations:
- Invitation to public institutions, funds and private investors to provide relevant information on: (i) Efforts that your organization has undertaken or plans to undertake to incorporate climate risk and resilience into development projects and into investment criteria and decisions; (ii) Research and development efforts that your organization has undertaken on financial instruments and tools that address the risks of loss and damage associated with the adverse effects of climate change.
- Call for inputs in response to the key messages in the context of Action Area 7 of the initial two-year workplan, including making recommendations for addressing any gaps and challenges.
- Call for submissions on best practices, challenges and lessons learned from existing financial instruments. See submissions received to date >>>
Abbreviations used: European Union (EU), United States of America (USA), CARE International (CARE), Centre for Climate Change Economics and Policy/Grantham Research Institute on Climate Change and the Environment (CCCEP), Centre for International Governance Innovation (CIGI), CINCS LLC, Climate Action Network International (CAN), Climate and Development Lab, Brown University/International Centre for Climate Change and Development (CDL/ICCCAD), Climate Bonds Standard, Food and Agriculture Organization of the United Nations (FAO), Global Facility for Disaster Reduction and Recovery/the World Bank Group (GFDRR), International Actuarial Association (IAA), International Labour Organization (ILO), Loss and Damage Network, Munich Climate Insurance Initiative (MCII), United Nations Development Programme (UNDP), Vivid Economics, and World Food Programme (WFP).
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Risk transfer and risk pooling schemes help risk holders (at the micro, meso, national, and regional levels) to spread losses widely across time, stakeholders, and/or geographical areas in the case of sovereign risk holders. Risk pooling enables risk holders to gain efficiency by bundling risk which can take various forms like funds, reserves, index- based schemes etc. |
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Financial instrument |
Submissions |
Relevant page numbers |
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African Risk Capacity |
pages 3-4 |
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Africa Disaster Risk Financing Program |
EU (128 kB) |
page 11 |
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Caribbean Catastrophe Risk Insurance Facility |
page 4 |
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Climate Insurance Fund |
EU (128 kB) |
page 10 |
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Conditional Cash Transfer |
UNDP (296 kB) |
page 2 |
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Disaster Risk Financing Analytics |
EU (128 kB) |
pages 10-11 |
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FoodSecure |
WFP (194 kB) |
pages 3-5 |
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Global Index Insurance Facility |
EU (128 kB) |
pages 11-12 |
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Impact Insurance Facility |
ILO (117 kB) |
pages 1-6 |
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InsuResilience |
EU (128 kB) |
page 7-8 |
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Livelihood Protection Policy |
MCII (800 kB) |
page 4 |
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Livelihood Recovery Package |
CARE International (497 kB) |
page 9 |
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Loan Portfolio Cover |
MCII (800 kB) |
pages 3, 5-7 |
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Pacific Catastrophe Risk Insurance Pilot |
GFDRR (242 kB) |
page 3 |
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Turkish Agricultural Insurance System |
Turkey (202 kB) |
pages 3-4 |
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Village Saving Loans Associations |
CARE International (497 kB) |
pages 2-3, 6-7 |
Additional relevant information
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Information paper (578 kB) (pages 6-8, 15,17,20) |
General description
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Comprehensive Risk Management
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Insurance
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Case studies
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Catastrophe risk insurance at national or regional level protects against low-probability, high cost events. This may take the form of micro and meso insurance which bundles individuals’ loans and insurance, catastrophe reserve funds, and insurance- linked securities. |
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Financial instrument |
Submissions |
Relevant page numbers |
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African Risk Capacity |
EU (128 kB) |
pages 8-9 |
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Agricultural Insurance Development Program |
USA (212 kB) |
pages 2-3 |
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Caribbean Catastrophe Risk Insurance Facility |
GFDRR (242 kB) |
page 4 |
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Climate Insurance Fund |
EU (128 kB) |
page 10 |
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Disaster Risk Financing and Insurance Program |
GFDRR (242 kB) |
page 2 |
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Ethiopia Project on Interlinking Insurance with Credit for Agriculture |
FAO (222 kB) |
pages 2-3 |
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National Agricultural Insurance Scheme |
CARE International (497 kB) |
pages 4-5 |
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Pacific Catastrophe Risk Insurance Pilot |
page 3 |
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Rural Resilience Enhancement Project |
Japan (91 kB) |
page 3 |
Additional relevant information
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Information paper (578 kB) (pages 7-10, 20-21) |
General description
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Insurance |
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Contingency finance is a fast-disbursing finance opportunity, which provides lines of borrowing from which to draw in the immediate aftermath of a natural disaster declared as a national emergency by the government. The funds provide for early response and recovery measures (sometimes contingent on the country maintaining satisfactory ex-ante or ex-post in-country disaster risk management programmes). |
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Financial instrument |
Submissions |
Relevant page numbers |
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Business Continuity Measures |
Japan (91 kB) |
page 2 |
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Community-based Revolving Fund |
UNDP (296 kB) |
page 2-3 |
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Deferred Drawdown Options for Catastrophe Risk |
GFDRR (242 kB) |
page 2 |
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Disaster Relief Fund |
EU (128 kB) |
pages 4- 5 |
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FoodSecure |
WFP (194 kB) |
page 3-5 |
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Stand-by Emergency Credit for Urgent Recovery |
Japan (91 kB) |
page 1 |
Additional relevant information
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Information paper (578 kB) (pages 9-10) |
General description
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Examples |
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Climate themed bonds are fixed income, and sometimes market-linked financial instruments issued to finance or re-finance climate-change related projects (e.g. mitigation, adaptation or risk reduction). The issuing entity (multinational banks or corporations) guarantees to repay the bond over a certain period of time, plus either a fixed or variable rate of return. Investors can be institutional entities (e.g. pension funds) or individuals. Climate bonds have the same credit risk and return profile as standard bonds. |
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Financial instrument |
Submissions |
Relevant page numbers |
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Climate Bond Standard |
Climate Bond Standard(2944 kB) |
pages 22-32 |
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Resilience bonds |
FAO (222 kB) |
page 2 |
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Green bond |
CIGI (1447 kB) |
page 9 |
Additional relevant information
Information paper (578 kB) (pages 11-24)
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Catastrophe bonds, also known as cat bonds, are high-yield debt instruments which are usually insurance-linked, in order to secure cash flow in case of a disaster to those most exposed and at risk of severe financial losses as a result of the changing climate. They include a special condition that states that if the issuer suffers a loss from a particular pre-defined catastrophe, then the issuer's obligation to pay interest and/or repay the principal is either deferred or completely forgiven. |
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Financial instrument |
Submissions |
Relevant page numbers |
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Caribbean Catastrophe Risk Insurance Facility |
GFDRR (242 kB) |
page 4 |
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MultiCat Program |
GFDRR (242 kB) |
page 2 |
Additional relevant information
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Information paper (578 kB) (page 11) |
General description
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Social protection involves interventions from public, private, voluntary organizations, and social networks, to support individuals, households and communities in preventing, managing, and overcoming the hazards, risks, and stresses threatening their present and future well-being. Schemes can include the provision of safety nets in the case of both extreme and slow onset climate-related events, through conditional or unconditional cash transfers or food or cash-for-work programmes. They are usually channeled through national government funds. |
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Financial instrument |
Submissions |
Relevant page numbers |
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Conditional cash transfer |
UNDP |
pages 2-3 |
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Community self-management |
CARE International (497 kB) |
page 6 |
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Social security schemes |
EU (128 kB) |
page 5 |
Additional relevant information
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Information paper (578 kB) (pages 9-10, 23-24) |
General description |
Examples
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Financial instrument |
Submissions |
Relevant page numbers |
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Attribution bonds |
CIGI (1447 kB) |
page 9 |
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Blue bonds |
CIGI (1447 kB) |
page 9 |
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District Development Fund |
UNDP (296 kB) |
pages 1-2 |
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Disaster Risk Financing Analytics single donor trust fund |
EU (128 kB) |
page 10 |
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Forest resilience bonds |
CIGI (1447 kB) |
page 9 |
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Fossil Fuels Levy, carbon pricing |
CAN (566 kB) |
pages 3-8 |
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Natural Capital Financing Facility |
EU (128 kB) |
page 13 |
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Remote Sensing based information and insurance for Crops in Emerging economies |
EU (128 kB) |
page 9 |
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Sea level rise bonds |
CIGI (1447 kB) |
page 9 |
Additional relevant information
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Information paper (578 kB) (page 11) |
Examples
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