Action and support

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).

Risk transfer and risk pooling

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.

 Financial instrument

Submissions 

Relevant page numbers

African Risk Capacity

USA (212 kB) 
CIGI (1447 kB)
EU (128 kB)

pages 3-4
pages 4-6
pages 8-9

Africa Disaster Risk Financing  Program

EU (128 kB)

page 11

Caribbean Catastrophe Risk Insurance Facility

GFDRR (242 kB)
CIGI (1447 kB)

page 4
pages 4-6

Climate Insurance Fund

EU (128 kB)

page 10

Conditional Cash Transfer

UNDP (296 kB)

page 2

Disaster Risk Financing Analytics

EU (128 kB)

pages 10-11

FoodSecure

WFP (194 kB)

pages 3-5

Global Index Insurance Facility

EU (128 kB)

pages 11-12

Impact Insurance Facility

ILO (117 kB)

pages 1-6

 InsuResilience

 EU (128 kB)

page 7-8

 Livelihood Protection Policy

 MCII (800 kB)

page 4

 Livelihood Recovery Package

 CARE International (497 kB)

page 9

 Loan Portfolio Cover

 MCII (800 kB)

 pages 3, 5-7

 Pacific Catastrophe Risk Insurance Pilot

 GFDRR (242 kB)

page 3

 Turkish Agricultural Insurance System

 Turkey (202 kB)

pages 3-4

 Village Saving Loans Associations

 CARE International (497 kB)

pages 2-3, 6-7

 

Additional relevant information

 

Information paper (578 kB) (pages 6-8, 15,17,20)

General description

Comprehensive Risk Management

 Insurance

 Case studies

 

Catastrophe risk insurance

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.

 Financial instrument

Submissions 

Relevant page numbers

African Risk Capacity

EU (128 kB)

pages 8-9

Agricultural Insurance Development Program

USA (212 kB)

pages 2-3

Caribbean Catastrophe Risk Insurance Facility

GFDRR (242 kB)

page 4

Climate Insurance Fund

EU (128 kB)

page 10

Disaster Risk Financing and Insurance Program

GFDRR (242 kB)

page 2

Ethiopia Project on Interlinking Insurance with Credit for Agriculture

FAO (222 kB)

pages 2-3

National Agricultural Insurance Scheme

CARE International (497 kB)

pages 4-5

Pacific Catastrophe Risk Insurance Pilot

GFDRR (242 kB)
Japan (91 kB)

page 3
pages 1-2

 Rural Resilience Enhancement Project

 Japan (91 kB)

page 3

 

Additional relevant information

 

Information paper (578 kB) (pages 7-10, 20-21)

General description

Insurance

  • CCCEP (690 kB) (pages 3-7)

  • IAA (297 kB) (pages 2-4)

  • EU (128 kB) (page 4) 

Contingency finance

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).

 Financial instrument

Submissions 

Relevant page numbers

Business Continuity Measures

Japan (91 kB)

page 2

Community-based Revolving Fund

UNDP (296 kB)

page 2-3

Deferred Drawdown Options for Catastrophe Risk

GFDRR (242 kB)

page 2

Disaster Relief Fund

EU (128 kB)

pages 4- 5

FoodSecure

WFP (194 kB)

page 3-5

Stand-by Emergency Credit for Urgent Recovery

Japan (91 kB)

page 1

 

Additional relevant information

 

Information paper (578 kB) (pages 9-10)

General description

  Examples

  • EU (128 kB) (pages 3- 5)

  • UNDP (296 kB) (page 3)

Climate-themed bonds

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.

 Financial instrument

Submissions 

Relevant page numbers

Climate Bond Standard

Climate Bond Standard(2944 kB)

pages 22-32

Resilience bonds

FAO (222 kB)

page 2

Green bond

CIGI (1447 kB)

page 9

 

Additional relevant information

 

Information paper (578 kB) (pages 11-24)

Catastrophe bonds

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.

 Financial instrument

Submissions 

Relevant page numbers

Caribbean Catastrophe Risk Insurance Facility

GFDRR (242 kB)

page 4

MultiCat Program

GFDRR (242 kB)

page 2

 

Additional relevant information

 

Information paper (578 kB) (page 11)

General description

  • CDL / ICCAD (781 kB)  (pages 9-10)

  • IAA (297 kB) (page 4)

  • CIGI (1447 kB) (page 9)

  • EU (128 kB) (pages 5-7)

Social protection schemes

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.

 Financial instrument

Submissions 

Relevant page numbers

Conditional cash transfer

UNDP

pages 2-3

Community self-management

CARE International (497 kB)

page 6

 Social security schemes

  EU (128 kB)

 page 5

 

Additional relevant information

 

Information paper (578 kB) (pages 9-10, 23-24)

General description

  • FAO (222 kB) (pages 4-5)

  • IAA (297 kB) (page 4)

 Examples

  • EU (128 kB) (pages 3, 9-10)

Innovative financial instruments

 

 Financial instrument

Submissions 

Relevant page numbers

Attribution bonds

CIGI (1447 kB)

page 9

Blue bonds

CIGI (1447 kB)

page 9

District Development Fund

UNDP (296 kB)

pages 1-2

Disaster Risk Financing Analytics single donor trust fund

EU (128 kB)

page 10

Forest resilience bonds

CIGI (1447 kB)

page 9

 Fossil Fuels Levy, carbon pricing

CAN (566 kB)

pages 3-8

Natural Capital Financing Facility

EU (128 kB)

page 13

Remote Sensing based information and insurance for Crops in Emerging economies

EU (128 kB)

page 9

 Sea level rise bonds

 CIGI (1447 kB)

page 9

 

Additional relevant information

 

Information paper (578 kB) (page 11)

Examples