Fund for Responding to Loss and Damage (FRLD)
- Context: Nepal’s Ministry of Finance has submitted a formal request to the Fund for Responding to Loss and Damage (FRLD) following the devastating glacial-collapse flash flood that struck the country in August 2026.
- What is the FRLD? Also referred to as the Loss and Damage Fund, the FRLD is a UN-backed climate-finance mechanism designed to provide financial support to developing countries facing the impacts of severe climate-related events.
- Purpose: Unlike mitigation, which focuses on reducing greenhouse-gas emissions, and adaptation, which aims to prepare communities for future climate risks, the fund specifically addresses the economic and non-economic impacts that remain after climate-related disasters.
- Evolution: The establishment of the fund was agreed upon at COP27 in Sharm el-Sheikh in 2022 and its institutional arrangements were formally operationalised at COP28 in Dubai in 2023. The World Bank serves as the interim host and trustee for an initial four-year period, extending to COP33 in 2028.
- Governance: The FRLD is overseen by a 26-member Governing Board, with 14 representatives from developing countries and 12 from developed countries. Decisions are taken through consensus.
- Scope of support: The fund covers both quantifiable losses, such as damage to infrastructure, homes and agricultural production, and non-quantifiable impacts, including cultural heritage loss and displacement. Support can address both sudden disasters and slow-onset climate impacts.
- Initial funding mechanism: Under the Barbados Implementation Modalities (BIM), the start-up phase provides approximately $5–20 million per project, with funding channelled through accredited entities.
- Funding gap: Despite pledges of around $822 million by mid-2026, only about $350 million had been allocated for disbursement. This amounts to roughly 12.5% of the $2.8 billion in funding requested, highlighting the significant gap between climate-related needs and available resources.
- Institutional context: The Warsaw International Mechanism (WIM), established at COP19 in 2013, forms an important part of the broader international framework for addressing loss and damage associated with climate change.