At COP28, countries reached a historic agreement on the operationalization of a fund to address loss and damage associated with the adverse effects of climate change. As part of that decision, the World Bank was invited to “operationalize the Fund as a World Bank hosted financial intermediary fund (FIF) for an interim period of four years”. The role of the World Bank will be to host the Fund secretariat, and to provide trustee services for the Fund.
The purpose of the Fund is to assist particularly vulnerable developing countries in responding to economic and non-economic loss and damage associated with the adverse effects of climate change, including extreme weather events and slow onset events. As a new channel for multilateral finance, the Fund seeks to provide new, additional, predictable, and adequate financial resources to developing countries that are particularly vulnerable to the adverse effects of climate change and assist in mobilizing external finance to address loss and damage, while supporting achievement of sustainable development and the eradication of poverty.
The Fund is expected to be operationalized over the coming months with final approvals to be made at COP29.
The World Bank has been asked to confirm to the COP28 Presidency by early June 2024 that it is willing and able to meet the stipulated conditions and to submit to the Fund’s Board by early August 2024 relevant FIF documentation, including a hosting agreement. To meet these deadlines, the Bank will undertake the following key steps:
| Through March | Draft Board Paper: This will describe the rationale and objectives of the FIF, key design features, proposed activities, roles and responsibilities of the Bank as host and trustee as laid out in the COP decision text. |
| By mid-April | World Bank Board approval: Approval of the Board paper which will allow World Bank management to proceed with establishment of the FIF in cooperation with the Board of the Fund and for the Bank to perform the necessary functions, in line with the COP’s invitation and based on the COP Decision. |
| Mid-April-July 2024 | Preparation of detailed hosting arrangement and trustee arrangement, in consultation with the Fund Board* |
| By end July 2024 | Agreement with the Fund Board on the hosting arrangement and trustee arrangement* |
* Both these steps are contingent on the establishment of the Fund’s Board. The World Bank is not involved in the process for establishing the Board of the Fund.