Loss and Damage Fund

The Loss and Damage Fund is a multilateral climate finance fund that assists vulnerable developing countries in responding to climate-related losses that have already occurred or cannot be adequately avoided. Its mandate covers both economic and non-economic loss and damage arising from the adverse effects of climate change.

Institutional basis

The Fund was established at COP27 in 2022 and operationalized at COP28 in 2023 through an agreed governing instrument. It is an entity entrusted with operating the UNFCCC Financial Mechanism and is accountable to both the Conference of the Parties and the meeting of Parties to the Paris Agreement.

• Article 8 of the Paris Agreement provides the broader framework for averting, minimizing and addressing loss and damage.
• The Fund is governed by a Board that determines its operational policies, financing modalities and allocation system.

What the mandate covers

The Fund assists developing countries that are particularly vulnerable to the adverse effects of climate change. Support covers loss and damage associated with extreme weather events and slow onset events, such as sea-level rise.

• It addresses economic losses involving property, infrastructure and livelihoods, as well as non-economic losses involving lives, health, mobility, cultural heritage and indigenous knowledge.
• Finance may support climate emergencies, recovery, reconstruction, displacement, relocation, migration and improved climate information.
• The Fund aims to provide and mobilize new, additional, predictable and adequate resources while complementing existing humanitarian, development and climate finance arrangements.

Financing and access

Resources may come from public, private and innovative sources and may be delivered through grants, concessional resources and other financial products. The governing instrument emphasizes country ownership and access suited to national circumstances.

• Access may occur through national, regional or international entities, alongside arrangements for small grants benefiting communities, indigenous peoples and vulnerable groups.
• The Fund is a cooperative financing mechanism, not a forum for determining legal liability or awarding compensation.