Global Shield against Climate Risks launched at COP27
The Global Shield against Climate Risks, an initiative for prearranged financial support designed to be quickly deployed in times of climate disasters, was officially launched by the Vulnerable 20 Group of Finance Ministers (V20) of 58 climate vulnerable economies and the Group of Seven (G7) at the UN Climate Change Conference (COP27) in November 2022. Initial contributions include around 170 million euros from Germany and more than 40 million euros from other countries.
In addition, a broad coalition of countries, multilateral institutions, non-state and private sector partners have underlined their full institutional commitment to the Global Shield. The first recipients of Global Shield packages – called Pathfinder countries – include Bangladesh, Costa Rica, Fiji, Ghana, Pakistan, the Philippines and Senegal.
Recent V20 research found that 98 per cent of the nearly 1.5 billion people in V20 countries do not have financial protection – a massive sinkhole for these countries, whose workforce is mainly employed by small and medium enterprises. According to this research, V20 countries have lost a total of USD 525 billion to climate impacts since 2000. As risks of losses and damages from climate change escalate further, the cost of capital and debt has risen to unsustainable levels, especially across climate vulnerable economies.
In terms of implementation, the Global Shield will align behind vulnerable country strategies for closing protection gaps using a broad range of appropriate instruments. At the household and business level, these instruments comprise, for example, livelihood protection, social protection systems, livestock and crop insurance, property insurance, business interruption insurance, risk-sharing networks and credit guarantees. At the level of (national and subnational) governments, 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 the processes to ensure that the money is spent on providing what affected individuals and communities need when they need it most (money out).
The Global Shield is to start its implementation immediately after COP27. The V20 and G7 have decided that it will be steered by the Global Shield High-Level Consultative Group, which includes representatives of the V20, G7, G20, think tanks, civil society, multilateral organisations and the private sector. A financing structure with three complementary funds forms the foundation of the Shield: the Global Shield Solutions Platform, which builds on InsuResilience Solutions Fund, the Global Shield Financing Facility at the World Bank, and the Climate Vulnerable Forum (CVF) & V20 Joint Multi-Donor Fund.
Read more on the German Federal Ministry for Economic Cooperation and Development (BMZ) website