Finance for loss and damage: principles and modalities

The report argues that current climate finance is largely inaccessible and unsuitable for loss and damage, recommending a shift toward grant-based, community-led funding models based on historical responsibility and the 'polluter pays' principle.

• Current climate finance is characterized by stringent accreditation and proposal requirements and long delivery lag times, making it largely inaccessible for recipient countries and communities.
• Loan-based and project-based finance models often fail to reach the most vulnerable and can increase the debt burdens of recipient nations; therefore, small grants and unconditional cash transfers are recommended as more effective alternatives.
• To ensure climate justice, loss and damage finance should be governed by principles including historical responsibility, the 'polluter pays' principle, recipient ownership, and transparency that is accountable to affected communities rather than just providers.
• Effective delivery of climate finance is often seen in small-scale projects with direct community access, suggesting that a potential global loss and damage finance facility should devolve decision-making power to the lowest levels.
• The authors suggest a phased approach for COP27: mobilizing finance through existing mechanisms and bilateral agreements in the short term, while using the Glasgow Dialogue to design a dedicated loss and damage finance facility for the medium term.

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} }