: G7 and the vulnerable 20 (V20) of 58 climate vulnerable economies officially launched the Global Shield against Climate Risks, an initiative for pre-arranged financial support designed to be quickly deployed in times of climate disasters, the German government that chairs the G7 said on Monday.
As COP27 moved to the second week of climate negotiations that will culminate in decisions by November 18, the beginning of the week was marked by significant announcements, including the Global Shield and of
: G7 and the vulnerable 20 (V20) of 58 climate vulnerable economies officially launched the Global Shield against Climate Risks, an initiative for pre-arranged financial support designed to be quickly deployed in times of climate disasters, the German government that chairs the G7 said on Monday.
As COP27 moved to the second week of climate negotiations that will culminate in decisions by November 18, the beginning of the week was marked by significant announcements, including the Global Shield and of India releasing its ‘long term strategy for low carbon development’ to meet its goal of net zero emissions by 2070. That makes India join a list of 56 countries that have laid out pathways for achieving net zero emissions.
The Global Shield is among the first concrete mechanisms for climate funding -- money that was meant to flow from developed nations to developing and at-risk countries but has largely been lacking. However, the new scheme is structured in an insurance mechanism that experts expressed scepticism over.
Initial contributions include around 170 million euros from Germany and more than 40 million euros from other countries. In addition, a broad coalition of countries, multilateral institutions, non-state and private sector partners has underlined institutional commitment to Global Shield.
The first recipients of Global Shield packages will include Bangladesh, Costa Rica, Fiji, Ghana, Pakistan, the Philippines and Senegal.
Independent experts, however, cautioned that such an initiative cannot replace the need for Loss and Damage funding under the United Nations Framework Convention on Climate Change (UNFCCC) that is being sought by vulnerable and developing nations.
“The Global Shield cannot be hyped up as a solution to address the increasing scale of floods, storms and droughts, fuelled by climate change. Disproportionate focus on a new mechanism that does not cover slow onset events such as rising sea levels or loss of language and culture cannot meet the needs of communities on the ground. It cannot take away attention from the primary demand of developing countries for establishing a finance facility for Loss and Damage at COP27,” said Harjeet Singh, Head of Global Political Strategy, Climate Action Network International.
Singh, speaking to Germany’s DW, also said insurance will not be feasible since, using an analogy of insurance in car accidents, “if I get into car accidents every other day, I will be blacklisted by the company”.
He also said details on how the initiative will work, where the money will go, and how it will get to the people who need it are so far “very vague and very opaque”.
In 2009 at COP15, developed countries pledged to contribute $100bn dollars in climate financing for developing nations starting 2020. .
“This is a path breaking effort. We hope our funding window will benefit equally compared to pre-existing structures whose performance remains to be proven. Our fiscal space is under constant threat and the inflationary pressures of climate change are closing out our options. As part of our Climate Prosperity Plan to reduce the 98 percent financial protection sinkhole, the Global Shield will play a key role in resourcing financial and social protection packages to protect our economy, our enterprises and our communities.The Global Shield is long overdue. It has never been a question of who pays for loss and damage because we are paying for it – our economies pay for it in lost growth prospects, our enterprises pay for it in business disruption, and our communities pay for it in lives and livelihoods lost,” said Ken Ofori-Atta, V20 Chair, Ghana Finance Minister
“Under the German presidency, the G7 have committed to scale-up action and support on loss and damage and to work towards a ‘Global Shield against Climate Risks’, responding to the V20’s call. Germany stands by its responsibility to support poor and vulnerable people and countries in dealing with loss and damage. This launch sends a signal: We have heard the urgency and we are acting. We aim at overcoming differences even in challenging circumstances. Germany wants to be a bridge-builder,” said Svenja Schulze, Federal Development minister of Germany.
Recent V20 research found that 98 per cent of the nearly 1.5 billion people in V20 countries do not have financial protection. “V20 countries have lost a total of 525 billion US dollars to climate impacts since 2000. As risks of losses and damages from climate change escalate further, the cost of capital and debt have risen to unsustainable levels, especially across climate vulnerable economies. The Global Shield addresses current weaknesses in the financial protection structure in climate vulnerable economies via pre-arranged finance which disburses quickly and reliably before or just after disasters happen,” a statement by Germany said.
In terms of implementation, the Global Shield will align behind vulnerable country strategies for closing protection gaps using a broad range of appropriate instruments. At the household and business level, these instruments comprise, for example, livelihood protection, social protection systems, livestock and crop insurance, property insurance, business interruption insurance, risk-sharing networks, and credit guarantees. At the level of (national and subnational) governments, humanitarian agencies and NGOs, the Global Shield will support the integrated development of instruments used to ensure that money is available when needed (money in), and the processes to ensure that the money is spent on providing what affected individuals and communities need when they need it most (money out).
For the first time in 28 years, since the adoption of the UN Climate Convention, 194 parties agreed to introduce Loss and Damage funding as an agenda item at COP 27 which makes the G7 announcement important but civil society groups focusing on Loss and Damage funding were not impressed by the announcement.
Global warming wreaked havoc this year with a deadly spring heatwave in India and Pakistan; floods in Pakistan that killed over 1,700 people along with 936,000 livestock; and floods in Bangladesh, the worst in 20 years, that affected 7.2 million people.
Across the East Africa region, under the effects of the drought and other shocks, an estimated 18.4 to 19.3 million people have faced a food crisis or worse levels of acute food insecurity before June 2022, according to World Meteorological Organisation.
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