Since its establishment at the 27th Conference of the Parties (COP27) in 2022, the Fund for Responding to Loss and Damage (FRLD) has marked a significant milestone in global efforts to address the most severe impacts of climate change. At its 5th Board Meeting, USD 250 million was allocated for a pilot phase under the newly adopted Barbados Implementation Modalities (BIM), enabling Parties to submit project proposals ranging from USD 5 million to USD 20 million.
However, further work is needed for the implementation of BIM and ensure that the FRLD is fit for purpose as agreed by the Parties at the outset. This includes other pivotal aspects that must be acknowledged and integrated into the FRLD’s operational framework, such as reflecting community needs with a specific focus on non-economic loss, human mobility, and climate-linked livelihood disruptions.
Recognizing the importance of the FRLD to include community perspectives and local knowledge, the Indonesia Research Institute for Decarbonization (IRID), Germanwatch, the Institute for Climate and Sustainable Cities (ICSC), LAYA-INECC, Greenovation Hub, and SLYCAN Trust conducted the second knowledge-sharing session focusing on the FRLD on July 24, 2025.
The Funding Gap in the FRLD
At the COP28, the FRLD pledges from developed and developing countries reached USD 788 million. Yet only around USD 367 million has been made available as of August 29, 2025, an insufficient amount given the scale of need. It is particularly concerning when developing countries are expected to face annual economic losses from climate impacts of USD 400 billion – USD 800 billion by 2030. When non-economic losses, systemic disruptions, and broader climate risk are included, the number could reach USD 1 trillion annually. Thus, the FRLD will not be able to meet its objectives unless resource mobilization strategies are in place.
This funding shortfall also faces serious concerns for the FRLD’s initial implementation. The Board has approved USD 250 million to funding projects and activities under the BIM 25–2026 pilot phase of the FRLD. However, if the remaining pledges of USD 788 million are not actively pursued and the new funding is not obtained, less than USD 100 million would remain after 2026, an amount far too small to align with the projected funding for loss and damage by 2030. Without swift additional funding, the FRLD could become merely symbolic, weakening its intended role and diminishing its ability to deliver genuine support to those most affected by climate impacts.
Accessing the FRLD
Other than the fund availability, accessing the FRLD appears to be another key concern for developing countries. While the FRLD was originally meant to be accessible, several developed countries have pushed to restrict eligibility to only developing countries classified as “particularly vulnerable” and listed as World Bank members, potentially limiting over 90% of developing countries from accessing the FRLD. Complex eligibility requirements also shift the focus away from timely support. This complexity raises concerns that the FRLD could repeat the same challenges seen in funds like the Green Climate Fund (GCF), the Global Environment Facility (GEF), and the Adaptation Fund (AF), where a slow accreditation process and proposals have delayed the fund disbursement. Developing countries, particularly Least Developed Countries (LDCs), have emphasized the need to overcome such barriers, noting the lack of time and capacity to prepare detailed proposals during emergencies. Simplifying procedures remains a challenge for existing funds, including the FRLD.
Key Elements for Strengthening the FRLD
To ensure the FRLD delivers timely, equitable, and effective support, its operational framework must be balanced, and rapid fund disbursement must be done with the right and strong structure. Some of the key elements to build the right and strong structures are as follows:
- The FRLD needs to adopt direct budget support as the core access modality, enabling swift disbursement of funds during climate emergencies. This approach offers a valuable opportunity to channel resources directly to countries, bypassing international intermediaries and strengthening national capacities, with robust safeguards. Moreover, by simplifying access and avoiding lengthy proposal or accreditation processes, direct budget support can accelerate relief efforts, reinforce national ownership, and strengthen local institutions’ ability to lead recovery. Capacity building for national focal points and authorities is essential, particularly in the areas of financial management, project or program implementation, and accountability for direct budget support. The Santiago Network can play an important role in providing financial and technical assistance to strengthen these capacities, ensuring countries are ready to manage and deploy funds efficiently during climate emergencies.
- The establishment of adequate and capable independent staff in the secretariat for the FRLD. Lessons from other climate funds like GCF show that insufficient secretariat capacity often causes delays. Therefore, the FRLD secretariat should possess diverse fund administration expertise and engage meaningfully with communities, indigenous peoples, and vulnerable groups, breaking away from traditional international organizations’ “business-as-usual” practices.
- Civil Society Organizations (CSOs) must also be a central in shaping the FRLD. Their active involvement is vital for ensuring that the FRLD remains equitable, transparent, and responsive to the needs of vulnerable communities. The CSO engagement grounds policy discussions in the lived experiences of communities most affected by climate impacts and ensures attention to financial and non-economic losses.
