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As the 27th Conference of the Parties (COP 27) entered its second week on Monday (14 November) in Egypt’s Sharm el-Sheikh, Group of Seven (G7) members announced an initiative to make funding available for low-income and vulnerable countries hit by climate disasters.
The plan, dubbed ‘Global Shield’, is coordinated by G7 president Germany and aims to rapidly provide insurance and disaster protection funding in the event of floods, drought and other climate calamities in climate-vulnerable nations.
It is being developed in collaboration with the Vulnerable Twenty (V20) group of 58 climate vulnerable economies. The research released by the V20 bloc this year estimates countries had lost some $525 billion to climate impacts since 2000, reports Al Jazeera.
Notably, this was the first time that a special loss and damage fund was on the agenda at the United Nation’s climate conference.
Who will pay for this ‘Global Shield’ fund and who will benefit? Why have some questioned the plan? Let’s find out.
Who will pay for the fund?
Germany has announced shelling out €170 million ($172 million) for the insurance plan.
As per The National, Germany’s minister for economic cooperation and development, Svenja Schulze, that climate disasters particularly have a devastating impact on poor people, who often “do not have the means to protect themselves and their homes, fields or businesses against extreme weather and can lose their entire possessions when a disaster strikes.”
She assured that this fund is not a “tactic” to dodge calls for a dedicated loss and damage funding mechanism. “The Global Shield isn’t the one and only solution for loss and damage, certainly not,” Schulze was quoted as saying by The National.
However, she added that “those most affected by climate impacts need practical action now”.
France will pay $20 million initially and its total commitment would be $60 million over three years. Canada and Denmark will stump up $7 million and $4.7 million respectively, reported The National.
Committing €10 million, Ireland’s Taoiseach Micheal Martin told the leaders present at the COP27 conclave that “once exceptional events are now occurring with increased frequency and ferocity.”
Joe Biden, President of the United States, has also expressed support for the plan.
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Which nations would benefit from the funding?
According to the statement released by Germany on Monday, Pakistan, Bangladesh, Costa Rica, Ghana, Fiji, the Philippines and Senegal will initially benefit from Global Shield packages – which would be developed in the coming months.
The Global Shield funding launched by G7 president Germany has been hailed by Ghana. AP (Representational Image)
The announcement has come after some countries witnessed catastrophic climate-related disasters this year such as flooding in Pakistan that killed at least 1,700 people and affected more than 33 million.
David Ryfisch from Bonn-based environmental NGO Germanwatch told Deutsche Welle (DW) that ‘Global Shield’ is a “genuine attempt to really move the needle on finance.”
He said insurance is a key component of the plan but there is also a natural disaster clause that will “kick in to pause a country’s climate loans in certain circumstances”.
Calling it a “path-breaking effort”, Ghana’s finance minister Ken Ofori-Atta,
who chairs the V20 group, welcomed the initiative, saying it would help in protecting communities when lives and livelihoods are lost, reports The National.
“It has never been a question of who pays for loss and damage because we are paying for it,” Ofori-Atta said.
“Our economies pay for it in lost growth prospects, our enterprises pay for it in business disruption, and our communities pay for it in lives and livelihoods lost,” he said, as per DW.
Why it is being questioned?
Critics argue that mere insurance is not enough.
Harjeet Singh, head of global political strategy at Climate Action Network, told DW, “The insurance product will not be feasible. If I get into car accidents every other day, I will be blacklisted by the company”.
Singh also said that details of how the plan will work are “very vague and very opaque” so far.
He also pitched for a “clear” loss and damage funding mechanism. “Insurance doesn’t cover slow onset events that cause serious damage like sea level rise or desertification,” Singh argued.
Critics have raised questions about the ‘Golden Shield’ initiative launched at COP27. AFP (Representational Image)
“In case of responding to climate disasters, the role of insurance is very, very limited. Insurance takes a huge part of a huge space in these discussions,” Singh told DW.
He further said that he is “not against” insurance, but it is being presented as a “silver bullet”.
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Civil society groups and aid agencies have also warned that the initiative should not be used to divert attention from getting “big polluters to pay for the loss and damage they’ve caused with their greenhouse gases”, reports Associated Press.
As per The National, Teresa Anderson of ActionAid International said although the ‘Global Shield’ initiative shows the global community realises the need to act on loss and damage, it was a “distraction” from discussions on a specific “funding mechanism for climate damages”.
“Everyone knows that insurance companies, by their very nature, are either reluctant to provide coverage, or reluctant to pay out,” she said, adding “but when it comes to loss and damage, this is a matter of life and death.”
With inputs from agencies
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