Loss and Damage Funds and Climate Justice: What Responsibilities Do Developed Countries Owe to Developing Countries?

“The establishment of a Loss and Damage Fund is not charity. It is a down payment on our shared futures. It is a down payment on climate justice.” These were the words used by Pakistan’s Federal Minister of Climate Change, Shehrbano Rehman, at the closing session of COP 27 in Egypt, held in 2022. This statement highlights an increasingly central debate in international relations: that of climate debt and climate justice. As defined by the IMF, climate debt is the sum of damages linked to emissions for which there is no compensation, while climate justice describes “the ethical challenge at the heart of the argument for climate action.” 

Faced with climate-related loss and damage—such as floods that reduce agricultural yields—developing country leaders, who bear little historical responsibility for these climate impacts, have increasingly called for the creation of Loss and Damage Funds. These funds, financed primarily by the Global North, are intended to support climate action in the Global South. Global warming is reshaping geopolitical power relations between the Global North and the Global South.

Cyclone Chido in Mayotte, unprecedented floods in Nigeria, and extreme heat in India are only a few examples of the mounting climate change impacts faced by developing countries. By contrast, developed countries are generally less exposed to such disasters as they possess the financial resources to build sustainable infrastructure, their economies rely less on subsistence agriculture, and they are located in areas less susceptible to extreme climate events.

This disparity in climate-related loss and damage between developed and developing countries stands in stark contrast to their respective historical responsibilities. The Global North, having benefited far more from the Industrial Revolution (1770-1850), has emitted significantly more greenhouse gases than the Global South through its extensive reliance on coal since the early nineteenth century. Data shows that the 38 countries belonging to the Organization for Economic Cooperation and Development (OECD) historically accounted for the largest share of annual CO₂ emissions until 2004, thereby making them historically responsible for contemporary global warming. For instance, in 1950, OECD countries emitted 4.67 billion tons of CO₂, compared to 1.13 billion tons for non-OECD countries that did not ratify the OECD Convention.

How, then, are developing countries the first victims of climate change despite being the least responsible? Although such concerns were raised almost 20 years ago by Chinese President Hu Jintao at the United Nations Climate Summit on September 28, 2009, it nevertheless persists today.

International law has sought to address this injustice through the principle of “Common But Differentiated Responsibilities” (CBDR). Enshrined in Article 3.1 of the United Nations Framework Convention on Climate Change (UNFCCC), this principle recognizes climate change as a global concern while acknowledging that developed countries bear stricter mitigation obligations and a duty to support developing countries financially, in light of their historical responsibility. The current implementation of “Common But Differentiated Responsibilities” (CBDR) remains largely ineffective and weakly implemented, notably due to the United States’ withdrawal from the Paris Agreement under the Trump administration in 2020 and 2025.

Despite the limited effectiveness of climate finance for the Global South, progress has been made over recent decades. At COP15 in Copenhagen in 2009, developed countries agreed on a political objective to collectively mobilize at least $100 billion annually by 2020 to support developing countries in their mitigation and adaptation efforts to address climate change. In 2022, following extensive negotiations led by the G77 and China at COP27, parties agreed to establish a Loss and Damage Fund. The decision included new funding arrangements to assist developing countries in responding to loss and damage. This fund was operationalized at the opening of COP 28 in 2023 and several States rapidly pledged contributions, such as $100 million from the United Arab Emirates, €100 million from Germany, and from smaller pledges, including the United Kingdom and the United States. In total, initial pledges amounted to approximately $700 million.

Although this fund represents a major advance in climate justice, it remains significantly underfunded relative to estimated needs. As noted in “Le Grand Continent”, the announced contributions represent at most “0.2 percent of the estimated annual amount of loss and damage in developing countries by 2030”, with estimated annual losses being between 290 and $580 billion by 2030, and between $1.1 to 1.7 trillion by 2050.

COP 29 in 2024 partially addressed this funding gap by adopting a New Collective Quantified Goal on climate finance, including a collective target for developed countries to mobilize at least $300 billion per year by 2035, alongside a broader call for all actors to work toward mobilizing at least $1.3 trillion per year by 2030 (called the Baku to Belém Roadmap to 1.3T).

Thus, it was during COP30 in 2025 that the “Baku to Belém Roadmap to 1.3T” was operationalized. Structured around five pillars: replenishing (scaling up grants), rebalancing (enhancing debt sustainability for vulnerable countries), rechanneling (mobilizing private capital at scale), revamping (creating national coordination platforms aligning Nationally Determined Contributions (NDCs) with bankable project pipelines), and reshaping (reforming financial systems to enable equitable capital flows). This roadmap seeks to transform the global climate finance architecture and to facilitate an equitable ecological and energy transition.

Although the “Baku-to-Belém Roadmap to 1.3 T” constitutes a historic milestone for climate justice, its full implementation nonetheless remains uncertain within a global order marked by the rise of populism and the weakening of diplomatic ties, as illustrated by Executive Order 14199 of the second Trump administration issued on February 4, 2025 that announced the withdrawal of the United States "from 66 international organizations identified as unnecessary, ineffective, and harmful," such as the UN Conference on Trade and Development or the World Health Organization, thereby highlighting the weakening of the United Nations.