Floods, cyclones and rising seas now destroy homes and farms faster than poor countries can rebuild. Who should pay for that damage? In 2022 the world agreed on a new UN climate fund to help. In October 2026 that fund made its first allocation, to Nepal.
This lesson explains the Fund for Responding to Loss and Damage (FRLD) in simple steps. It covers how the fund was born, how it is built, and what it has done so far. For the older climate fund, read Green Climate Fund and Global Climate Finance.
- Purpose: help developing countries that are particularly vulnerable to climate harm.
- Born: agreed at COP27 (2022), operationalised on 30 November 2023 at COP28.
- Host: the World Bank hosts it for an interim four years. The Philippines hosts the Board.
- Board: 26 members, 12 from developed and 14 from developing countries.
- First allocation: USD 20 million for Nepal, approved on 22 October 2026.
- India: welcomed the fund and said it would not pay into it.
Must Know · Understand the words
What is loss and damage?
Loss and damage is the harm from climate change that people cannot prevent or adapt to. The FRLD helps particularly vulnerable developing countries respond to this harm. It covers economic and non-economic loss and damage.
How is it different from mitigation and adaptation?
- Mitigation cuts emissions so that warming slows.
- Adaptation prepares people for impacts, for example with sea walls or early warnings.
- Loss and damage is the harm that adaptation cannot prevent.
Think of a village hit by a cyclone. A strong shelter is adaptation. The homes and crops still lost are loss and damage.
What kinds of events does it cover?
The fund covers extreme weather events and slow-onset events. An extreme weather event is a sudden shock, such as a flood. A slow-onset event builds over years, such as sea-level rise.
Why not use the older climate funds?
On 4 November 2022, before COP27, India named three older funds: the Global Environment Facility (GEF), the Green Climate Fund (GCF) and the Adaptation Fund. It said they had not been able to mobilise or deliver funds for loss and damage. It called them under-funded. It said most money goes to mitigation. The GCF is explained in its own lesson.
How did the idea grow?
Slowly, over three decades. Small island states first asked for help in 1991. Each later step added a body or a dialogue, but no fund. The table shows the steps in order.
What happened at each step?
| Year | Event |
|---|---|
| 1991 | Vanuatu proposes an insurance pool for the Alliance of Small Island States (AOSIS) |
| 2013, COP19 | Warsaw International Mechanism for Loss and Damage (WIM) set up |
| 2015, COP21 | Decision, paragraph 51: Paris loss-and-damage article gives no basis for liability or compensation |
| 2019, COP25 | Santiago Network set up under the WIM |
| 2021, COP26 | Glasgow Dialogue starts; G77 plus China push for a finance facility is opposed by developed countries, including the EU and US |
A common mix-up: the no-liability line is in the COP21 decision, not in the text of the Paris Agreement itself.
Check 1
The Warsaw International Mechanism for Loss and Damage was set up at COP19 in 2013.
Good to Know · Follow the fund
How was the fund created?
In two steps. COP27 agreed to create a fund in 2022. COP28 made it operational on 30 November 2023, the opening day of the Dubai summit. A COP is the yearly Conference of the Parties to the UN climate treaty.
What did COP27 do?
At COP27 in Sharm el-Sheikh (2022), loss-and-damage finance was put on the formal agenda for the first time. The meeting then agreed a new fund. That came more than three decades after small island states first proposed one.
Recipients are developing countries “that are particularly vulnerable”. The words are not “most vulnerable”. This small difference is a favourite exam trap.
What did COP28 do?
COP28 adopted the decision by consensus, including India. About USD 475 million was pledged on that first day. By mid-December 2023, pledges were about USD 700 million. Developing countries were wary of the World Bank as host but accepted it.
Is paying into the fund compulsory?
No fixed amounts are binding. The decision “urges” developed countries to contribute. It “encourages” others to give on a voluntary basis. So the wording differs for the two groups.
Check 2
The Fund was operationalised on 30 November 2023, the opening day of COP28.
How is the FRLD built?
It is a World Bank-hosted financial intermediary fund (FIF), but the Board takes the decisions. A FIF is a fund that the World Bank holds and manages for others. The hosting lasts an interim period of four years.
What does the World Bank do?
The World Bank hosts the Secretariat and acts as trustee. It has no decision-making role. The FRLD Board makes all decisions on eligibility, resource mobilisation and allocation.
The World Bank submitted the FIF documents in August 2024. The Board approved them in September 2024.
Who sits on the Board?
The Board has 26 members. Twelve come from developed countries and 14 from developing countries. Each member has an alternate.
| Developing-country seats | Number |
|---|---|
| Asia-Pacific | 3 |
| Africa | 3 |
| Latin America and Caribbean | 3 |
| Small Island Developing States (SIDS) | 2 |
| Least Developed Countries (LDCs) | 2 |
| Other | 1 |
The first Executive Director is Ibrahima Cheikh Diong of Senegal.
Where is the Board hosted?
The Board chose the Philippines as host country at its second meeting, in Incheon, South Korea, in July 2024. Barbados is a different story. It is only where the Board adopted its start-up rules in April 2025.
Check 3
The FRLD Board is hosted in Barbados.
How does it give money?
Through a start-up phase called the Barbados Implementation Modalities (BIM). The Board adopted the BIM at its fifth meeting, held 8-10 April 2025 in Bridgetown, Barbados. It is a short-term plan for the first grants.
What are the main rules of the BIM?
- The BIM sets aside USD 250 million to spend until the end of 2026.
- Grants are USD 5 million to USD 20 million per proposal.
- SIDS and LDCs get at least 50 percent of resources in the start-up phase.
What happened to the first call for proposals?
The first call was announced at COP30 in Belem in November 2025. It closed on 15 June 2026. It drew about 180 requests worth about USD 2.8 billion. That is far more than the money on offer.
Check 4
Under the start-up rules, SIDS and LDCs get at least 50 percent of resources.
Are pledges enough?
Pledges are small against the need. By mid-2026, donors had pledged about USD 822 million. Only about USD 449 million had been delivered by April 2026. By October 2026 the Board had released about USD 350 million for grants. That is USD 250 million under the start-up plan, plus USD 100 million added in July 2026.
How wide is the gap?
| Item | Figure |
|---|---|
| Total pledged (mid-2026) | About USD 822 million |
| Delivered (April 2026) | About USD 449 million |
| Released for grants (October 2026) | About USD 350 million (250 + 100) |
| Requests in the first call | About 180, worth about USD 2.8 billion |
| Annual needs (advocacy-group estimate) | USD 400 billion or more |
The needs figure is an estimate by advocacy groups. It is not an official number. The Loss and Damage Collaboration later put it at about USD 724 billion a year.
Who pledged early?
Early pledges came from several donors. The UAE gave USD 100 million and the UK GBP 40 million. Japan gave USD 10 million. The European Union, including Germany, gave EUR 225 million.
Great to Know · Nepal, India and the exam
What was the first allocation?
On 22 October 2026 the Board approved USD 20 million for Nepal. It also approved USD 1.6 million for administrative costs. This is the first time the Fund has set money aside for a specific disaster.
What was the disaster?
Floods struck the Bhotekoshi-Trishuli region on 26 August 2026. They are linked to a collapse of glacier ice and rock near Langtang Lirung. The exact sequence is still debated.
The flood killed more than 1,400 people, with thousands missing. The International Centre for Integrated Mountain Development (ICIMOD) counted at least 1,451 dead and 5,745 missing, as reported on 23 October 2026.
How was the decision made?
Nepal’s agriculture-and-environment minister Gita Chaudhary and finance minister Swarnim Wagle wrote to the Fund on 31 August 2026. The decision came at the Board’s first extraordinary meeting, held online. A small group of developed and developing-country Board members negotiated it.
Germany and Czechia said it should not set a precedent. Japan called it “truly exceptional”. Nepal’s request works as a pilot for requests outside the regular call.
How much does it cover?
Nepal’s recovery needs are about USD 4.8 billion. So USD 20 million covers under 0.5 percent. The money is set aside, not yet disbursed. Nepal must submit a proposal for a future meeting.
Down to Earth reports USD 21.6 million. That is the same money, 20 plus 1.6. The next Board meeting, the tenth, is in Manila in December 2026. The eleventh is planned for Kathmandu, 17-19 March 2027.
Check 5
The USD 20 million has already been paid out to Nepal.
The Fund approved its first-ever allocation, USD 20 million for Nepal’s August 2026 floods, plus USD 1.6 million for administrative costs. Why it matters: it turns years of talks into a first real grant, yet it covers under 0.5 percent of Nepal’s need. Read the site item: Loss and Damage Fund makes its first-ever allocation: USD 20 million for Nepal’s August 2026 floods. (Source: Kathmandu Post) (Source: Climate Home News)
What is India’s position?
India welcomed the fund but said it would not pay into it. At COP27, environment minister Bhupender Yadav said paying is the responsibility of developed countries. In its COP28 statement, India welcomed the Fund’s operationalisation on day one.
Who should pay?
Under the UN climate treaty (UNFCCC), only “Annex II” countries must provide climate finance. Annex II means the OECD members of 1992. The EU argued that wealthy high-emitting countries such as China should also pay in.
China’s envoy Xie Zhenhua cited “common but differentiated responsibilities”. China says, as a developing country, it has no obligation to pay but may give voluntarily.
Which traps should you avoid?
- Date: the Fund was operationalised on 30 November 2023, not 1 December.
- Wording: “particularly vulnerable”, not “most vulnerable”.
- Host mix-up: World Bank hosts the Fund for four years. The Philippines hosts the Board. Barbados is where the BIM was adopted.
- Fund mix-up: the FRLD is not the Green Climate Fund. Read the GCF lesson to compare.
- Liability: the no-compensation line is in the COP21 decision, paragraph 51.
- Order: WIM 2013, Santiago Network 2019, Glasgow Dialogue 2021.
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