V20 and G7 jointly launch Global Climate Risk Shield at COP27

TEMPO.CO, Sharm el-Sheikh – The Vulnerable Group of 20 Finance Ministers (V20) of 58 economies vulnerable to climate change and the Group of Seven (G7) officially launched the Global Climate Risk Shield in COP27a pre-arranged financial support initiative designed for rapid deployment in times of climate disasters, November 14, 2022.

The initial contributions include around €170 million from Germany and more than €40 million from other countries.

In addition, a broad coalition of countries, multilateral institutions, private sector and non-state partners underscored its full institutional commitment to Global Shield.

The first recipients of Global Shield packages – called Pathfinder countries – are Bangladesh, Costa Rica, Fiji, Ghana, Pakistan, the Philippines and Senegal.

“This is a ground-breaking effort. We hope our funding window will similarly benefit compared to pre-existing structures whose performance is yet to be proven,” said Ghanaian Finance Minister Ken Ofori-Atta, Chairman of V20.

“Our fiscal space is under constant threat and inflationary pressures climate change closes our options,” he added.

Ken Ofori-Atta further explained that as part of his Climate Prosperity Plan to reduce the financial protection gap by 98%, the Global Shield will play a key role in funding financial and social protection programs to protect our economy, our businesses and our communities.

“The Global Shield is long overdue. It has never been a question of who pays for loss and damage because we pay it – our economies pay it in lost growth prospects, our businesses pay it in business interruption and our communities pay it in lives and in lost livelihoods. ,” he said.

Ken Ofori-Atta said they really hope the Global Shield will not only impact the most vulnerable communities, but also help build mutual trust and understanding to help close the gaps in resources in the face of climate action.

Recent research on the V20 found that 98% of the almost 1.5 billion people in the V20 countries lack financial protection – a huge chasm for these countries whose workforce is mainly employed by small and medium enterprises. According to this research, V20 countries have lost a total of $525 billion to climate impacts since 2000. reached unsustainable levels, especially in economies vulnerable to climate change. .

The Global Shield addresses current weaknesses in the financial protection structure in climate-vulnerable economies through pre-arranged finance that is disbursed quickly and reliably before or just after disasters. It expands financial protection instruments for governments, communities, businesses and households, thereby mitigating the impact of disasters, making vulnerable economies resilient, safeguarding sustainable development and protecting lives and livelihoods.

In terms of implementation, the Global Shield will align with vulnerable countries’ strategies to close protection gaps using a wide range of appropriate instruments. At the household and enterprise level, these instruments include, for example, livelihood protection, social safety nets, livestock and crop insurance, property insurance, loss insurance operations, risk-sharing networks and credit guarantees. At the level of governments (national and subnational), humanitarian agencies and NGOs, the Global Shield will support the integrated development of instruments used to ensure that money is available when needed (money in), and processes to ensure money is spent on providing what affected individuals and communities need when they need it most (money).

Germany is providing some EUR 170 million as a seed contribution, including EUR 84 million for Global Shield core funding and EUR 85.5 million for related climate risk financing instruments. Other core funding pledges to the Global Shield include DKK 35 million (approximately €4.7 million) from Denmark, €10 million from Ireland, $7 million from Canada and €20 million from euros from France. Further donor contributions are expected to materialize soon.

The Global Shield will begin its implementation immediately after COP27. The V20 and G7 decided that it would be steered by the Global Shield High Level Advisory Group, which includes representatives from the V20, G7, G20, think tanks, civil society, multilateral organizations and the private sector. A financing structure with three complementary funds forms the basis of the Shield: the Global Shield Solutions Platform, which is based on the InsuResilience Solutions Fund, the World Bank’s Global Shield Financing Facility and the Climate Vulnerable Forum (CVF) & V20 Joint Multi – Donor funds.

TEMPO.CO

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