COP 27 ended on 20 November 2022 with a historic agreement on the place of “Loss and Damage” in the fight against climate change. This agreement established the grounds for the creation of a pooled fund for climate vulnerable countries to use to recover from the unavoidable impacts of climate change.
The term “loss and damage” refers to loss, both economic and otherwise, caused by climate change that cannot be avoided by mitigation (of emissions) and adaptation, while the capitalised term “Loss and Damage” is shorthand for policies to address this. The topic has been a bone of contention in the UNFCCC climate negotiations for over three decades. While the Paris Agreement in 2015 made Loss and Damage the "third pillar" of climate policy (alongside mitigation and adaptation), little progress had been made on it before COP 27. Developed countries were and remain worried that funding Loss and Damage could be viewed as an admission of liability, potentially leading to calls for limitless compensation and further international climate litigation.
At a COP 27 event on Loss and Damage negotiations, the issue of climate litigation received significant attention, including from environmental lawyer César Rodríguez-Garavito who spoke on applying lessons learned from mitigation litigation to loss and damage litigation. Rodríguez-Garavito explained how climate litigation could set the agenda for climate negotiations, improve corporate governance and set legal standards regarding loss and damage. Indeed, if high profile climate litigants are successful, this may increase the pressure for developed countries to be held liable for the loss and damage they cause. Further, the damages claimants receive may supplement the anticipated new sources of Loss & Damage funding and act as a parallel funding mechanism for vulnerable parties.
The exact terms of the new Loss and Damage finance facility remain to be negotiated. Time will tell whether it is able to provide meaningful assistance to communities that are struggling to adapt to a rapidly changing climate, and whether it has an impact on the volume of climate litigation against state and non-state actors.
Such concerns fall under the wider scope of climate risk. Clyde & Co's Climate Change Risk and Liability Report 2022 (“the Report”) was released in November 2022. The Report explored the impact of the current energy crisis on the climate change agenda, with a particular emphasis on climate litigation risk and claims involving loss and damage.
To many the climate negotiations appear to be stuck, how do we unlock progress on Loss and Damage? - YouTube