LONDON (Reuters) – The World Bank’s board approved a plan on Tuesday for the bank to act as interim host of a fund that will provide financial support to developing countries impacted by climate change.
Richer nations had been concerned that creating a fund to help cover the impact of extreme weather events – such as floods and droughts – would mean they have conceded liability for causing damage to the climate with their carbon emissions.
Still, a ‘Loss and Damage’ fund was agreed in principle at climate talks in 2022 after years of debate, and, from 2023, countries began to make pledges towards it, among them Italy and the Netherlands.
A plan for the World Bank to initially host the fund, had met with criticism from some countries concerned that it would give donors, including the United States which appoints the World Bank’s president, too much influence.
The fund will remain housed in the World Bank for four years as a financial intermediary fund, and the fund’s board will remain independent from the bank, retaining its own governance structure and control over financing decisions, it said.
Harjeet Singh, climate activist and global engagement director at non-profit Fossil Fuel Treaty Initiative, said the bank now needs to formalise hosting and trustee agreements by August.
Those pacts would help ensure the autonomy of the fund’s board over operations and guarantee financial access for developing countries, he said.
The bank should secure the money pledged quickly and allow the “earliest possible disbursement,” Singh said.
“The success of the Loss and Damage Fund will be measured by how quickly and adequately those facing the harsh realities of the climate emergency receive support for recovery,” he said.
(Reporting by Simon Jessop and Kate Abnett; Editing by Bernadette Baum)
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