A EUR350 million ($496.15 million) program seeking to ease the financial burden of climate disasters for the world’s most vulnerable countries has dispersed only EUR5.2 million in two years, according to the managers of the fund.
The Global Shield was launched at the United Nations COP27 climate talks in Sharm El-Sheikh, Egypt with the support of the Group of Seven countries, led by Germany in 2022. Its bespoke approach to designing aid packages that fit a country’s needs is taking years.
“Climate risk management is not only about risk transfer and risk retention, it’s about understanding risk first,” said Astrid Zwick, a co-director of the Global Shield secretariat.
Climate finance is a central part of COP29 talks this week in Azerbaijan, where countries are due to replace an existing annual US$100 billion ($134 billion) finance pledge with one delivering far more to help poorer nations build green economies and resilience to global warming.
Already, developing countries have said rich nations have been slow to deliver on past funding promises.
The Global Shield wants to be a complement to a UN-backed fund for loss and damage from climate change, which currently only has about US$700 million in it. That sum is nowhere close to the estimated cost of damages caused by climate change, which some analysts see being as much as hundreds of billions of dollars a year.
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The Germany-led fund aims to make disasters less financially devastating for countries by, among other things, helping pay premiums for insurance policies covering climate-related extreme weather events. It also sets aside money for early-warning systems, national disaster-relief funds and emergency management training.
Since its initial announcement, 17 countries are working toward securing support from the program. So far only one, Ghana, has publicly announced it’s unlocked funding for insurance coverage. The African country purchased its first-ever sovereign drought insurance with US$1 million in financing from the German government and the Global Shield. The policy was issued by African Risk Capacity.
The Global Shield said on Monday it has dispersed the remainder of the EUR5.2 million to pay for insurance premiums for Pacific Island Countries.
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Pakistan, which had been hit by extreme flooding in 2022, was expected to be the first country to receive funding from the Global Shield, but it’s taken the country nearly two years to do the analysis needed to secure support.
Madagascar, which has been hit by 48 cyclones in the last 15 years and has more than a third of its population undernourished, said it needs US$773 million each year for its resilience needs.
Insurance programs on their own won’t be enough. “We need to diversify instruments of risk financing,” said Rabevohitra Bako Nirina of Madagascar’s disaster management unit.
The many steps involved with unlocking funds from the Global Shield has raised scepticism about the commitment of developed nations to helping the poorest countries grapple with the impacts of global warming.
Harjeet Singh, engagement director with the Fossil Fuel Non-Proliferation Treaty Initiative, said there should now be a renewed focus on the UN’s loss and damage fund, which is designed to provide immediate assistance in the aftermath of disasters.
“The reluctance of developed nations to provide substantial funding [to loss and damage] has led to significant delays,” he said. “The Global Shield's dismal progress starkly contrasts with the optimistic assurances initially made by developed countries.”
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