Equity and Justice in Loss and Damage Finance: A Narrative Review of Catalysts and Obstacles

Recent focus on loss and damage within the United Nations Framework Convention on Climate Change (UNFCCC) follows decades of demands by vulnerable countries for compensation for losses due to climate change. Reviewing recent literature on loss and damage finance, we consider how the new UNFCCC Loss and Damage Fund could be transformative for climate finance. This article reviews developments within the UNFCCC, including the creation of the new Loss and Damage Fund and changes in the broader field of climate finance. Recent literature indicates that the factors necessary for just loss and damage finance include inclusive governance, new and additional funds, purpose-made instruments and channels, direct access to funds, and burden sharing aligned with the polluter pays principle. We overview the history of loss and damage finance, suggest five criteria that could make the Loss and Damage Fund just, and discuss four potential catalysts for just loss and damage finance: ecological and climatic impacts, institutional developments outside the UNFCCC, Global South leadership on debt justice, and legal developments. As the Loss and Damage Fund is operationalized and the need for loss and damage finance grows, scholars must continue to ask whether loss and damage finance furthers core tenets of climate justice, including forms of restitution.