Operationalizing finance for loss and damage: from principles to modalities

The report argues that current climate finance is inadequate for loss and damage due to accessibility barriers, a reliance on loans, and a lack of focus on slow-onset and non-economic losses. It proposes six guiding principles—historical responsibility, equitable support, grant-based finance, accessibility, recipient ownership, and transparency—to inform a new UNFCCC-hosted facility. The authors recommend a phased approach, prioritizing small grants and unconditional cash transfers to empower vulnerable communities.

• Existing climate finance structures are largely unsuitable for loss and damage because they are inaccessible to recipient countries due to stringent accreditation and proposal requirements, and often rely on loans that increase debt burdens.
• There is a critical funding gap for slow-onset climate impacts and non-economic losses, such as the loss of culture and identity, as current financial instruments are primarily designed for rapid-onset extreme weather events.
• The report identifies six core principles grounded in climate justice that should guide loss and damage finance: historical responsibility ("polluter pays"), equitable and targeted support, grant-based and programmatic finance, accessibility, recipient ownership, and transparency and accountability.
• To ensure distributive justice, finance should be delivered via small grants and unconditional cash transfers rather than large-scale projects, as these are more likely to reach marginalized groups and disempowered communities.
• The authors propose a phased approach to establishing a loss and damage finance facility: mobilizing finance through existing mechanisms in the immediate term and establishing a dedicated facility in the medium term.
• A new loss and damage facility should ideally be situated under the UNFCCC as a separate operating entity to avoid replicating the shortcomings of existing funds like the Green Climate Fund (GCF).
• Recipient ownership requires that vulnerable communities have actual decision-making power, which could be achieved by including community representatives on the governing boards of the finance facility.
• At the national level, the report suggests utilizing existing disaster management funds or creating dedicated climate change funds to channel finance, while ensuring that funds do not flow exclusively through government bodies to avoid elite capture.

APA

Bakhtaoui, I., Shawoo, Z., Chhetri, R. P., Huq, S., Hossain, M. F., Iqbal, S. M. S., Lindsay, C., Mustapha, S., Naushin, N., Schaefer, L., Schalatek, L., Sircar, A., Tahsin, K. T., Thomas, A., & Wilkinson, E. (2022). Operationalizing finance for loss and damage: from principles to modalities. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2022/10/sei-report-loss-damage-shawoo-bakhtaoui-2022-1.pdf

Chicago

Bakhtaoui, Inès, Zoha Shawoo, Raju Pandit Chhetri, Saleemul Huq, Md Fahad Hossain, S M Saify Iqbal, Courtney Lindsay, et al. Operationalizing finance for loss and damage: from principles to modalities. Stockholm Environment Institute, 2022. https://www.sei.org/wp-content/uploads/2022/10/sei-report-loss-damage-shawoo-bakhtaoui-2022-1.pdf.

Wikipedia

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BibTeX

@techreport{bakhtaoui2022operationalizing, author = {Bakhtaoui, Inès and Shawoo, Zoha and Chhetri, Raju Pandit and Huq, Saleemul and Hossain, Md Fahad and Iqbal, S M Saify and Lindsay, Courtney and Mustapha, Shakira and Naushin, Nusrat and Schaefer, Laura and Schalatek, Liane and Sircar, Arunima and Tahsin, Khandker Tarin and Thomas, Adelle and Wilkinson, Emily}, title = {{Operationalizing finance for loss and damage: from principles to modalities}}, institution = {Stockholm Environment Institute}, year = {2022}, month = nov, url = {https://www.sei.org/wp-content/uploads/2022/10/sei-report-loss-damage-shawoo-bakhtaoui-2022-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }