Finance dominates COP28, but how will funds get to the communities that need it?

From 3–10 December, the GLF team is in Dubai reporting from COP28. Follow us here for live updates, live-streamed interviews and daily wrap-ups.

As we approach the halfway point at this year’s UN Climate Change Conference (COP28), sustainable finance continues to dominate the summit. But while the big pledges and new funds dominate headlines, attendees on the ground are still grappling with how this cash can get to the people who need it – or if these financial commitments will even be enough.

The finance focus began on day one with an agreement on how to fund the Loss and Damage Fund, which aims to help vulnerable countries cope with the inevitable – and rising – costs of climate disasters.

With some USD 500 million in initial capital, the fund will be used to support some of the world’s poorest countries, which are often most at risk from the effects of the climate crisis, despite having done little to cause it.

However, concerns immediately arose around how those funds will be handled. Some countries and NGOs, for example, have called for funds to be distributed as grants rather than loans to avoid deepening inequities.

“Loss and damage means it has already happened, so if you give me a loan and impose a business model, it will be an injustice for me,” said Mohon Mondal, head of the Local Environment Development and Agricultural Research Society, speaking to The National.

Others were concerned about how funds would get to where they need to be. Christian Aid welcomed the operationalization of the Loss and Damage Fund, but Mariana Paoli, the charity’s global advocacy lead, noted: “We will need to be vigilant to ensure vulnerable communities are able to get swift and easy access to funds.”

Many attendees were more concerned about this issue of access than the big-number funds being announced. This was particularly noticeable when it came to funding the work of Indigenous Peoples and local communities, who risk being excluded from the benefits, creation and implementation of green funding mechanisms.

Still, there was promising news in some areas, including funding for tenure rights and forest guardianship, which is on the rise despite the ongoing challenges of direct funding. “We have increased funding, not as much in direct funding as it should be, but we are working on that,” said Leif John Fosse, a senior adviser at NICFI, at a CIFOR-ICRAF side event.

As the talks continue, pledges have been ramping up. On Monday, the finance-themed day of COP28, the U.A.E. banking sector pledged USD 270 billion in sustainable finance by 2030. This follows the country’s announcement on Friday of a new USD 30 billion climate-focused investment fund.

Several development banks also announced further commitments to climate finance, mainly through adjustments to debt repayments in the case of disaster.

That said, even with all this new financing, it’s still nowhere near enough. A report released at last year’s COP estimated that “emerging markets and developing countries other than China” would need some USD 2.4 trillion per year by 2030 for a “just energy transition, adaptation and resilience, loss and damage, and the conservation and restoration of nature.”

The focus so far on funding comes as little surprise, considering the U.A.E.’s consistent messaging on increasing climate finance rather than phasing out fossil fuels. Next week will reveal how this COP will approach rising temperatures, fossil fuel use and other major issues.