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Position Paper Loss and Damage AFD and KfW

First mentioned in 1991, Loss and Damage (L&D) has become the third pillar of the climate negotiations within a few years. In the absence of an agreed UNFCCC definition, a number of competing framings of L&D have emerged over the course of the negotiations. Nevertheless, elements of consensus have emerged, notably through the promotion of a comprehensive climate risk management (CRM) framework within the Warsaw International Mechanism (WIM) and Article 8 of the Paris Agreement, which links L&D to the “importance of averting, minimising and addressing” adverse climate risks and impacts. However, negotiations on finance remained stalled until COP 27 achieved a breakthrough on the creation of “new financing arrangements including a fund” dedicated to L&D.

The COP27 negotiations have placed the issue of L&D at the heart of the debate on climate finance. At the opening of COP28, the adoption of the conclusions of the Transitional Committee on the operationalization of the fund as well as first financial pledges of more than 600 million USD show the high political commitment of parties to make the Fund to become real. 

While the Transitional Committee worked to establish new funding arrangements for L&D, including a new fund, stakeholders such as AFD and KfW are reconsidering their activities in the light of this new critical component of international climate policy. This joint working paper intends to stimulate the discussion, inter alia among the Development finance institutions (DFIs) and Public Development Banks (PDBs).

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