As COP26 enters its second week, climate finance issues remain a notable point of contention in negotiations. Talks with respect to funding for loss and damage—which relates to addressing the effects of climate change events—remain particularly contentious. Loss and damage funding is a core aspect of the Paris Agreement, but there is not yet a mechanism for providing this type of aid when Least Developed Countries (LDCs) experience climate-related loss and damage. While LDCs may receive climate finance for adaptation projects (e.g. seawalls), LDCs generally argue that climate impacts occur with such intensity that funding for rebuilding is crucial. LDCs also argue that loss and damage funding warrants a standalone disclosure under climate finance reporting obligations. This would allow for greater visibility as to where loss and damage events are occurring. Yet LDCs report that developed countries continue to resist loss and damages funding proposals.
With only a week left at COP26, it remains to be seen what progress will be made with respect to loss and damages funding. However, businesses remain focused on loss and funding, and climate finance issues more generally. Any progress on climate finance issues, or lack thereof, at COP26 could signal how quickly green asset investment and financing will pick up and how this could affect transitions to greener business models.