The Vulnerable Twenty (V20) Group of Finance Ministers of the Climate Vulnerable Forum (CVF) that includes 58 climate vulnerable economies, and the Group of Seven (G7) on Monday (November 14, 2022) officially launched the Global Shield against Climate Risks – an initiative for pre-arranged financial support designed to be quickly deployed in times of climate disasters.
The first recipients of Global Shield packages – called ‘Pathfinder Countries’ – include Bangladesh, Costa Rica, Fiji, Ghana, Pakistan, the Philippines and Senegal, according to a message UNB received from COP27 being held in Egypt’s Sharm El-Sheikh.
The Global Shield will start its implementation immediately after COP27.
Initial contributions include around EUR 170 million from Germany and more than EUR 40 million from other countries.
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In addition, a broad coalition of countries, multilateral institutions, non-state and private sector partners has underlined their full institutional commitment to the Global Shield.
Ghana Finance Minister Ken Ofori-Atta, V20 Chair, called this is a path-breaking effort and hoped the funding window will benefit equally compared to the pre-existing structures whose performance remain to be proven.
“Our fiscal space is under constant threat and the inflationary pressures of climate change are closing out our options. As part of our Climate Prosperity Plan to reduce the 98 percent financial protection sinkhole, the Global Shield will play a key role in resourcing financial and social protection packages to protect our economy, our enterprises and our communities,” Ken said.
Ken said the Global Shield is long overdue. “It has never been a question of who pays for loss and damage because we are paying for it – 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.”
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Svenja Schulze, Federal Development Minister of Germany, said that under the German presidency, the G7 have committed to scale-up action and support on loss and damage and to work towards a “Global Shield against Climate Risks”, responding to the V20’s call.
“Germany stands by its responsibility to support poor and vulnerable people and countries in dealing with loss and damage. This launch sends a signal: We have heard the urgency and we are acting. We aim at overcoming differences even in challenging circumstances. Germany wants to be a bridge-builder.”
Henry Kokofu, Special Envoy of the Climate Vulnerable Forum (CVF) Ghana Presidency, said: “This is definitely the start we need, but the more effective we are in innovations like the Shield, the more we have to emphasize that scale matters.”
Recent V20 research found that 98% of the nearly 1.5 billion people in V20 countries do not have financial protection – a massive sinkhole for these countries whose workforce is mainly employed by small and medium enterprises.
According to this research, V20 countries have lost a total of USD 525 billion to climate impacts since 2000.
As risks of losses and damages from climate change escalate further, the cost of capital and debt have risen to unsustainable levels, especially across climate vulnerable economies.
The Global Shield addresses current weaknesses in the financial protection structure in climate vulnerable economies via pre-arranged finance which disburses quickly and reliably before or just after disasters happen.
It expands instruments of financial protection for governments, communities, businesses, and households, thus, lessening the impact of disasters, making vulnerable economies resilient, safeguarding sustainable development, and protecting lives and livelihoods.
Germany is providing some EUR 170 million as seed contribution, of which EUR 84 million are core funding to the Global Shield and EUR 85.5 million for related climate risk finance instruments.
Further pledges of core funding to the Global Shield include DKK 35 million (about EUR 4.7 million) from Denmark, EUR 10 million from Ireland, USD 7 million from Canada, and EUR 20 million from France. Further contributions by donors are expected to materialize soon.
The V20 and G7 have decided that it will be steered by the Global Shield High-Level Consultative Group, which includes representatives of the V20, G7, G20, think tanks, civil society, multilateral organizations and the private sector.
A financing structure with three complementary funds forms the foundation of the Global Shield against Climate Risks: the Global Shield Solutions Platform, which builds on InsuResilience Solutions Fund, the Global Shield Financing Facility at the World Bank, and the Climate Vulnerable Forum (CVF) and V20 Joint Multi-Donor Fund.
Source: United News of Bangladesh