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Redefining climate finance – from aid to reparations

The concept of loss and damage is gaining traction in discussions. This shift marks a turning point for how to think about climate finance, and for what constitutes climate justice. Zoha Shawoo from SEI US examines this issue as part of Currents 2022, a series of SEI perspectives highlighting trends of 2022 and beyond.

Zoha Shawoo / Published on 20 December 2021
Protesters holding up banner saying Loss and damage

Photo: Zoha Shawoo / SEI.

Climate justice has been at the heart of climate negotiations almost since the United Nations Framework Convention on Climate Change was conceived nearly 30 years ago. Central to climate agreements is this premise that developed countries, being responsible for the majority of carbon emissions, should provide financial support to developing countries to help them mitigate and adapt. The idea that developing countries should receive compensation for the losses and damages they already face – more extreme floods and droughts, rising sea levels and rising temperatures – proved to be so contentious that it was largely relegated to the sidelines.

This is changing. The COP26 climate conference in Glasgow in 2021 gave new recognition and legitimacy to the matter of loss and damage, marking a turning point that gives a new framing to the concept of what constitutes climate justice.

The new emphasis on loss and damages expands the old focus of what historical responsibility for climate change means. It sets the stage for reparations for harm inflicted. This is a view far different from one confined to simply offering aid for those in need. This is a striking shift: from viewing climate finance as a form of aid to a moral obligation for restitution.

Almost a decade after loss and damage entered mainstream climate policy with the Warsaw International Mechanism on Loss and Damage in 2013, finance for addressing loss and damage has still not been provided. Conversations about loss and damage finance had until recently been shut down due to fears from developed countries of liability or compensation claims.

At COP26 in Glasgow, loss and damage finance came to the fore. Developing countries stressed the need for loss and damage finance at every opportunity in negotiations. Campaigning by civil society actors for the first time succeeded in including loss and damage within the COP’s official programme. Outside the negotiations, activists demanded progress on loss and damage finance as a key indicator of the COP’s success. This rather technical term became an unlikely rallying cry. Chants of “Loss and damage finance now!” were the refrain heard in the halls of the COP venue and outside at the climate marches in Glasgow.

Though the loss and damage finance facility proposed by developing countries did not make it into the final agreement text, the agreement did call for establishing the Glasgow Dialogue to discuss the arrangements for funding loss and damage. This marks the first time that the need for finance has been so explicitly recognized in the official text of the UN Framework Convention on Climate Change. Moreover, the Scottish government committed a symbolic £2 million to finance loss and damage, making Scotland the first developed country to explicitly do so.

These steps put loss and damage finance firmly on the agenda going forward.

This reframing of climate justice opens up avenues for recognizing, for example, the role of colonial legacies, capitalist exploitation and modern-day imperialism in perpetuating the inequalities that leave some more vulnerable to climate impacts, giving them the right to compensation.

A reparations framing helps convey that the exploitation of vulnerable and marginalized communities is a root cause of the climate crisis the world faces. It promotes a “systems-thinking” approach to the issue and deeper contemplation about questions such as how can we move away from the unequal power dynamics and profit-driven patterns of capitalist exploitation that created the climate crisis? How can we correct historical wrongs and prioritize meeting the needs of marginalized communities? What role can we researchers play in connecting these dots and charting new pathways forward?

Within mainstream climate policy, the need to address loss and damage will increasingly be recognized for what it is: an essential component of climate justice. I hope that it opens up new avenues for what we see as a “climate solution” that ensures an end to perpetuating of inequalities that played a pivotal role in bringing the world to this point.

Written by

Zoha Shawoo
Zoha Shawoo



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