Finance for loss and damage: principles and modalities

This report by the Stockholm Environment Institute outlines principles and operational modalities for loss and damage finance grounded in climate justice, arguing that current climate finance architectures are unsuitable for addressing the needs of vulnerable communities.

• The authors propose six core principles to underpin the operationalization of loss and damage finance: historical responsibility and the "polluter pays" principle, equitable and targeted support (including gender equality and human rights protection), grant-based and programmatic finance, accessibility, recipient ownership, and transparency and accountability.
• Current climate finance is largely inaccessible to recipient countries and communities because of long delivery lag times and stringent accreditation and proposal requirements. The report recommends that COP27 negotiations prioritize enhanced and simplified direct access procedures to reach marginalized groups and communities.
• Project-based and loan-based finance often fails to reach the most vulnerable, imposes burdensome reporting, and increases the debt of recipient countries. The report suggests prioritizing unconditional cash transfers and small grants to better reach marginalized and disempowered groups.
• Climate finance is frequently tied to conditionalities and does not align with recipient needs. The authors argue that representatives of discriminated and vulnerable communities should be involved in all decision-making stages, potentially by serving on the board of a global loss and damage finance facility or through the devolution of decision-making to the lowest levels.
• Existing transparency and accountability requirements often reflect the priorities of providers rather than affected communities and are burdensome for recipients. The report recommends creating accountability mechanisms that empower communities and embedding participatory, independent monitoring and evaluation.
• While a dedicated loss and damage finance facility would take time to implement, it offers a 'blank slate' for justice-grounded modalities. The report suggests a phased approach: mobilizing finance through existing mechanisms and bilateral agreements in the short term, while using the Glasgow Dialogue to arrange a medium-term facility.

APA

Stockholm Environment Institute (2022). Finance for loss and damage: principles and modalities. https://www.sei.org/publications/finance-loss-damage-principles-modalities

Chicago

Stockholm Environment Institute. Finance for loss and damage: principles and modalities. 2022. https://www.sei.org/publications/finance-loss-damage-principles-modalities.

Wikipedia

{{cite report |author=Stockholm Environment Institute |title=Finance for loss and damage: principles and modalities |date=1 November 2022 |url=https://www.sei.org/publications/finance-loss-damage-principles-modalities |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stockholmenvironmentinstitute2022finance, author = {{Stockholm Environment Institute}}, title = {{Finance for loss and damage: principles and modalities}}, institution = {Stockholm Environment Institute}, year = {2022}, month = nov, url = {https://www.sei.org/publications/finance-loss-damage-principles-modalities}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }