First Grant Highlights the Need for Climate Justice

Nearly two months after devastating floods struck Nepal, the United Nations climate convention’s Fund for Responding to Loss and Damage (FLD) has allocated $21.6 million to the Himalayan nation. This marks the first time the Fund has earmarked a grant for a country affected by a major disaster, signalling a step towards translating climate compensation commitments into action.

Nepal invoked the principle of climate justice in its application, highlighting that it contributes barely 0.1 per cent of global greenhouse gas emissions but remains highly vulnerable to climate change. An ice-and-rock avalanche triggered flash floods in the Bhotekoshi and Trishuli river systems, killing more than 1,400 people, destroying several villages and damaging at least 10 per cent of the country’s hydropower facilities. Conservative estimates place Nepal’s recovery and reconstruction requirements at $5 billion, making the grant significantly smaller than its actual needs.

Established at the United Nations Framework Convention on Climate Change (UNFCCC) COP27 in 2022 and operationalised in 2023, the FLD emerged from a decades-long campaign by climate-vulnerable nations. Its central objective is to address the irreversible losses and damages caused by climate change, emphasising compensation rather than charity.

Funding Shortages and Delays Challenge Climate Compensation

Nepal’s application encountered administrative hurdles because the Fund’s application window had closed in June and requests from 119 countries were awaiting approval. Developed countries initially opposed granting emergency funding, arguing that it would allow Nepal to bypass other applicants. They eventually agreed to the allocation as an exception, while maintaining that it should not establish a permanent rapid-response mechanism.

The episode highlights the need to reform the Fund’s procedures. Delays in disbursing financial assistance can prolong hardship, disrupt essential services and increase reconstruction costs. Poorer countries are particularly vulnerable because their limited public finances make it difficult to absorb sudden disaster-related expenditure.

Funding constraints remain another major obstacle. The FLD has received pledges worth $822 million, approximately one-third of the claims awaiting consideration, limiting its ability to meet the needs of affected countries.

Climate compensation is expected to feature prominently at COP31, scheduled to begin on November 9 in Antalya, Turkey. As extreme weather events become more frequent and intense, strengthening the Fund’s financing and delivery mechanisms will be crucial to advancing climate justice and supporting vulnerable nations.