Proposal

[First draft]

for the start-up phase of the Fund for responding to Loss and Damage (FRLD)

Consultation with Observers

17 March 2025

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Presented by the Executive Director

FRLD Secretariat

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Contents

1. Context

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• Highlights of the Proposal

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• Summary of the decision-making points for the Board for B.5

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• Other elements for the Board’s consideration for B.6/7

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I. Context

The start-up phase will:

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• Develop inclusive, bottom-up & country-led approaches that promote and strengthen national responses to loss and damage

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• Serve as the initial period to test and refine approaches, with a view to generating lessons and evidence to refine the development and implementation of the long-term operating model

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• Enable rapid learning while maintaining flexibility to adjust approaches based on early implementation experience

The Board requested the Secretariat to develop a proposal for the start-up phase (2025-2026).

B.2

B.4

B.5

Initial discussions on access modalities and financial instruments

Propositions for early interventions

Proposal for the start-up phase

PROPOSAL FOR THE START-UP PHASE

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II. Highlights of the Proposal

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Programming areas & prioritization targets

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Funding modalities prioritized (3 out of 6)

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Access modalities -

2 channels

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Resource allocation framework – initial floors & caps

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Financial instruments -

prioritizing grants

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PROPOSAL FOR THE START-UP PHASE

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1. Bottom-up, country-owned programming areas

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Country-led and owned activities for

responding to loss and damage

Loss & Damage

Extreme weather events

Slow-onset events

Reconstruction

Recovery

Rehabilitation

Economic loss

Non-economic loss

Options for prioritization targets

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• Support for developing or strengthening [X] national plans for responding to loss and damage

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• Support for responding to [X] climate-induced extreme weather events

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• Support for responding to [X] climate-induced slow onset events

PROPOSAL FOR THE START-UP PHASE

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2. Funding modalities for the start-up phase

Programmatic Approaches

for long term needs for responding to L&D

Rapid disbursement

via direct budget support

Technical assistance

for strengthening country-led programming for responding to L&D

Risk-sharing & insurance mechanisms

Small grants

for community-led initiatives on responding to L&D

Performance-based programs

Start-up phase

Options for prioritization targets

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• [X] countries supported through programmatic approaches approved

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• [X] countries supported through technical assistance approved

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• [X] countries supported through rapid disbursement via direct budget support approved

PROPOSAL FOR THE START-UP PHASE

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As per the Board’s deliberations at B.4, the prioritization of grants as the primary financial instrument for the start-up phase is proposed.

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Financial instruments will be expanded to include the others in the subsequent phase.

Grants

Concessional

loans

Guarantees

Equity

Etc.

3. Financial instruments for the start-up phase

PROPOSAL FOR THE START-UP PHASE

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4. Access modalities for the start-up phase

Phased approach for blanket approval is proposed:

1. Blanket approval of a subset of entities at B.5
2. Blanket approval of a subset of entities at B.7

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The Board is requested to consider the subset of entities to be considered for blanket approval.

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*Upon approval, entities will be required to submit documents/ evidence which will be verified by the Secretariat.

Blanket approval of entities already accredited

to the AF, GEF and GCF

Simplified screening to determine functional equivalency for new entities

The simplified screening process will be more streamlined compared to traditional accreditation processes, with an emphasis placed on ensuring speed and efficiency.

The Board is requested to consider the following questions that will guide the design of the mechanism:

1. Which standards will be used by the Fund?
2. Do all standards and safeguards need to be reviewed in the same way to access the various funding modalities?
3. In simplifying screening requirements, what risk mitigation measures would be needed?

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PROPOSAL FOR THE START-UP PHASE

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5. Resource allocation framework for the start-up phase

As guided by paragraph 60 (a)-(f) of the GI, options for the resource allocation framework are presented in the Proposal.

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The Board is requested to consider the options for the start-up phase.

Floor for SIDS & LDCs

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• [25-50%] floor for SIDS and LDCs as a group

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or

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• [X%] floor for SIDS and [X%] floor for LDCs

Programming caps

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• USD[X] cap for programmatic approaches
• USD[X] cap for technical assistance support
• USD[X] cap for rapid disbursement via direct budget support

PROPOSAL FOR THE START-UP PHASE