The journey toward recognizing and addressing the disproportionate impacts of climate change on vulnerable countries has been long and full of resistance. In 1991, Vanuatu, representing the Alliance of Small Island States (AOSIS), first proposed the creation of an international climate fund to support countries most threatened by rising sea levels. However, strong opposition from economically developed countries unwilling to take financial responsibility for historical emissions has delayed meaningful progress for decades.
Similarly, while the establishment of the United Nations Framework Convention on Climate Change (UNFCCC) in 1992 laid the groundwork for international cooperation, it was not until 2007 that the concept of “loss and damage” formally entered the global climate discussion. Subsequent milestones – including the Warsaw International Mechanism in 2013 and the Paris Agreement in 2015 – moved negotiations forward but fell short on finance.
Only in 2022 was the first ‘Loss and Damages’ fund finally established at the COP27 climate talks, a major breakthrough driven by climate disasters, including devastating floods in Pakistan that took thousands of lives and crippled the country’s economy.
India’s role in this long-running and still-evolving story is particularly complex given its dual identity as a climate-vulnerable nation and an emerging economic power. This chapter explores the historical development of the ‘Loss and Damages’ fund, India’s stance and the broader political arena in which climate finance is taking shape today.
origin of funds
On June 4, 1991, Vanuatu, a small island country in Oceania, submitted a resolution on behalf of the Alliance of Small Island States (AOSIS) outlining the elements of the ‘Framework Convention on Climate Change’. It was one of the world’s first proposals to establish an international climate fund to assist vulnerable countries against the effects of climate change, especially since AOSIS recognized the need to protect their lands against the threat of rising seas.
But economically developed countries did not accept the proposal and progress on the matter remained slow due to their reluctance to bear financial responsibility for historical emissions.
However, the UNFCCC was established in 1992 to promote international cooperation in addressing and ameliorating the consequences of climate change. Conversations about a fund to help economically developing countries deal with the disproportionate impacts of climate change gained momentum in the early 2000s, even though “loss and damage” were not formally included in international climate planning until 2007.
Call for support: Climate activists take part in a protest during the COP27 climate summit in Sharm el-Sheikh, Egypt on November 17, 2022. Photo courtesy: Reuters
That year, at the 13th session of the Conference of the Parties (COP13) to the UNFCCC in Bali, Indonesia, member states agreed to consider losses and damages in developing countries that were “particularly vulnerable” to the impacts of climate change. In 2010, a work program on loss and damage was established at the COP16 talks held in Cancún, Mexico.
However, the real milestone came in 2013: when at the COP19 talks in Warsaw, Poland, Member States established the Warsaw International Mechanism for Loss and Damage Associated with Climate Change Impacts (abbreviated as WIM) to address the devastating impacts of climate change, including extreme events and slow-onset events in developing countries. The next milestone in this journey was the Paris Agreement in 2015, although it was a negative milestone. Even though the agreement sought to address the loss and damage caused by the climate crisis, finance was not part of the outcome.
The world took a real step towards economically compensating particularly vulnerable countries in 2022 at the COP27 talks held in Sharm el-Sheikh, Egypt. Here for the first time the ‘Loss and Damages’ Fund was established, providing funds to compensate vulnerable countries against severe disasters caused or caused by climate change. The countries also decided that a transitional committee would recommend management, contributions and other details of the fund.
Once this committee met five times, it decided that the World Bank would host the fund for four years and that it would be overseen by an independent secretariat. UNFCCC member states agreed to operationalize the fund at the COP28 talks held in the United Arab Emirates in 2023, and pledged $800 million to its corpus.
COP27 also had significance in that it came on the heels of widespread flooding in Pakistan, which caused billions of dollars in damage. Attribution research quickly revealed that climate change had caused floods to become so deadly and that Pakistan had to bear the brunt of the carbon emissions that economically developed countries first released during industrialization. Ahead of COP27, the catastrophe reminded many countries that climate change is a transboundary problem and prompted them to engage more closely on the issue of loss and damage.
At the last UNFCCC conference, COP29 held in Baku, Azerbaijan in 2024, the ‘Loss and Damage’ Fund was finally operationalized.
situation of india
India’s climate action commitments at multilateral fora have generally been a tightrope walk as its representatives try to simultaneously hold two identities: a country highly vulnerable to the impacts of climate change and a country ranked among the world’s top economic powers. (According to the Global Climate Risk Index released in 2025 by Germanwatch, India is ranked sixth among the countries most affected by climate change between 1993 and 2022. Various studies have acknowledged that extreme weather events such as floods, heat waves, cyclones and droughts are becoming more common.)
To this end, at the COP26 talks to be held in Glasgow, Scotland in 2021, focused on india The principle of Common but Differentiated Responsibilities and Related Capacities (CBDR-RC) – one of the fundamental principles of the UNFCCC – deals with the idea that climate finance should enhance the ability of developing countries to cope with natural disasters resulting from climate change. India also argued that its historical cumulative emissions and per capita emissions were “very low” despite being home to more than 17% of the world’s population.
(In fact, the country is currently the third-largest emitter of greenhouse gases in the world, but its per capita emissions are 1.776 tCO2/capita (2022) – much lower than the global average, which was 4.3 tCO2/capita in 2022.)
India actively engaged with the demand for a ‘loss and damage’ fund at the COP27 talks held in Egypt in 2022, where it once again raised the issue of CBDR-RC. Union Environment Minister Bhupendra Yadav addressed the Egyptian President at the climate conference, saying, “You are presiding over a historic COP, where agreement has been reached for loss and damage financing arrangements, including the establishment of a Loss and Damage Fund.” “The world has waited too long for this. We congratulate you on your tireless efforts to build consensus.”
Government of India also maintained The most abundant emitters of greenhouse gases in human history should also take a leading role in providing available financial assistance to more vulnerable countries.
In unison: Activists are protesting for climate finance grants to poor countries. , Photo Credit: Getty Images
India is part of the G77 block of developing countries, and is also part of the COP27, G77 plus China grouping called for New financing mechanism to support developing countries. And at the G77 plus China Ministerial Meeting held in New York in September 2024, members asked for The ‘Loss and Damage’ Fund will be made the “centrepiece of the new Loss and Damage Fund regime”.
The important thing is that India has been in this position at the forefront of demands That the ‘loss and damage’ fund should be above and beyond other climate finance commitments. An example of the latter is the New Collective Quantified Goal, which is money that developed countries are to give to developing countries to help them meet their goals to move away from continued use of fossil fuels and curb greenhouse-gas emissions.
big political picture
India is part of many factions and its perspective on loss and damage is influenced by its relative position among them. Perhaps the bloc that most closely reflects its stance is BRICS, which has otherwise also positioned itself as a champion of emerging economies around the world and has expressed support for a ‘loss and damage’ fund. A joint statement issued by the foreign ministers of the BRICS countries on June 10, 2024, said: “The Ministers welcomed the creation of the Loss and Damage Fund under the UNFCCC at COP27 in Sharm el-Sheikh and its operationalization in the UAE at COP28 and reaffirmed its important role in supporting all developing countries in responding to loss and damage caused by climate impacts.”
At the third Voice of the Global South summit hosted by India in August 2024, it highlighted the demand of economically developing countries for more and better climate finance and the importance of urgently improving the resilience of these countries – but especially small island developing states – against the impacts of climate change.
Finally, India is also currently an alternate board member of the Fund to respond to losses and damages for those “developing countries that are not included in regional groupings and constituencies”.
All this said, many experts have expressed confidence that India’s share of loss and damage has been below expectations. India is a growing economy, a member of the G20 bloc, and is hoping to secure a spot on the UN Security Council. These are some of the geopolitical aspirations that have reduced the country’s response to demands for loss and damage, despite being highly vulnerable to climate change.
future of the fund
In April 2025, the Fund’s Board launched the Barbados Implementation Modalities (BIM), a global action plan to provide financial assistance to countries particularly vulnerable to the impacts of climate change, to respond to loss and damage. The meeting was held in Bridgetown, Barbados from 8 to 10 April. Barbados itself is a Small Island Developing State (SIDS).
This is the start-up phase of the mechanism: Under BIM, vulnerable countries are planned to receive $250 million in grants by the end of 2026. Meanwhile, the fund will also explore how it can involve the private sector. Each intervention under BIM will amount to between $5 million and $20 million. The 50% minimum allocation limit under BIM will be reserved for SIDS and least developed countries (LDCs).
However, the resource status report Published by UNFCCC On April 7 – just before the meeting in Barbados – it was revealed that even though the world’s countries had pledged $768 million to the ‘Loss and Damage’ fund, only $319 million had been made available so far and $388 million were expected to fall by December 31, 2025.
The problem is that it is nowhere near Weaker countries have estimated how much money they need. According to a study conducted by the Loss and Damage Collaboration and the Heinrich-Boll-Stiftung in Washington, DC, and published in 2023, loss and damage finance will need to have at least $400 billion per year to operate. This difference is a whole order of magnitude.
Ahead of the COP29 talks in Baku in November 2024, LDC representatives adopted the 2024 Lilongwe Declaration on climate change in Malawi. Under this declaration, they demanded that losses and damages and mitigation efforts be addressed through new and additional climate finance. The declaration estimates that the financial needs of economically developing countries will be approximately $5.8–5.9 trillion by 2030 and that LDCs will need approximately $1 trillion to implement their current NDCs.
Priyali Prakash is chief staff writer, The Hindu,
