The Vulnerable 20 Group of Finance Ministers (V20) of 58 climate vulnerable economies and the Group of Seven (G7) have launched the Global Shield against Climate Risks, an initiative for pre-arranged financial support designed to be deployed during climate disasters.
Launched at COP27 this week, initial contributions to the initiative include around €170 million from Germany and more than €40 million from other countries.
Additionally, the World Bank Group has announced a Global Shield Financing Facility to channel grants to developing countries through World Bank projects or through projects prepared by other participating partners, including UN agencies and multilateral development banks.
A coalition of countries, multilateral institutions, non-state and private sector partners have also underlined their full institutional commitment to Global Shield.
The Global Shield initiative will aim to address current weaknesses in the financial protection structure in climate vulnerable economies via pre-arranged finance which disburses before or just after disasters happen.
In terms of implementation, it will align behind vulnerable country strategies for closing protection gaps using a range of appropriate instruments.
At the household and business level, these instruments comprise livelihood protection, social protection systems, livestock and crop insurance, property insurance, business interruption insurance, risk-sharing networks, and credit guarantees, among other options.
And at the level of governments, humanitarian agencies and NGOs, the Global Shield will support the integrated development of instruments used to ensure that money is available when needed and the processes to ensure that it is spent on providing what affected individuals and communities need.
The first recipients of Global Shield packages include Bangladesh, Costa Rica, Fiji, Ghana, Pakistan, the Philippines and Senegal.
The Global Shield will start its implementation immediately after the ongoing COP27 conference, and will be steered by the Global Shield High-Level Consultative Group, which includes representatives of the V20, G7, G20, think tanks, civil society, multilateral organizations and the private sector.
“This is a path breaking effort,” said Ghana Finance Minister Ken Ofori-Atta, V20 Chair. “We hope our funding window will benefit equally compared to pre-existing structures whose performance remains to be proven. Our fiscal space is under constant threat and the inflationary pressures of climate change are closing out our options. As part of our Climate Prosperity Plan to reduce the 98 percent financial protection sinkhole, the Global Shield will play a key role in resourcing financial and social protection packages to protect our economy, our enterprises and our communities.”
Svenja Schulze, Federal Development Minister of Germany, also commented: “Under the German Presidency, the G7 have committed to scale-up action and support on loss and damage and to work towards a ‘Global Shield against Climate Risks’, responding to the V20’s call. Germany stands by its responsibility to support poor and vulnerable people and countries in dealing with loss and damage. This launch sends a signal: We have heard the urgency and we are acting. We aim at overcoming differences even in challenging circumstances. Germany wants to be a bridge-builder.”
“This is definitely the start we need, but the more effective we are in innovations like the Shield, the more we have to emphasize that scale matters,” added Henry Kokofu, Special Envoy of the Climate Vulnerable Forum (CVF) Ghana Presidency. “It is time for more path breaking efforts and to grow allocations to enable the ambition of the Shield to cover far more than what it currently protects. For example, the V20 L&D funding program in the Global Shield aims to demonstrate that finance for loss and damage can be meaningfully delivered directly to communities to address losses and damages including community scale infrastructure and livelihood replacement options in a way that could be done at scale.”
