Climate Finance: Tackling Loss and Damage

Sarah Champion Excerpts

Tuesday 5th September 2023 Westminster Hall

[Sarah Champion (Rotherham) (Lab)]

It is a pleasure to serve under your chairship today, Mr Betts, as it always is.

I congratulate the hon. Member for Dundee West (Chris Law) on securing this much needed debate. He spoke about urgency, and he is absolutely right to focus on that. We continue to see extreme weather events occurring across the globe and the principal polluters—both historically and currently—burying their heads in the sand, pretending that it is not a problem they need to address, and hoping it will go away. It will not go away; it is urgent and it is severe.

Let me give an example. The prolonged drought in east Africa has pushed almost 60 million people into food insecurity, which is a dramatic increase from the 37 million people affected in the middle of last year, when the emergency was first declared. In some areas across the globe, the weather has swung to the other extreme. Last month, excessive rainfall in the Himalayas caused flash floods, landslides and rockfalls, which have killed dozens of people and destroyed homes and buildings. Such events prove that climate change continues to pose an increasing threat to the health of people and indeed the health of the planet.

We are seeing more frequent extreme weather events, such as wildfires and floods, which are destroying economies and infrastructure, with severe consequences for human life across the globe. Slow-onset events, such as increasing temperatures and sea level rises, are not receiving the attention they deserve but are a cause for serious concern.

I chair the International Development Committee, and I am grateful that the hon. Member for Dundee West is such a leading light on the Committee, pushing us to do more on climate change. The Committee has undertaken work on the impact of climate change. Evidence submitted to us has shown clearly that climate change does not have an equal impact on all countries. In our report on debt relief, we found that lower-income countries are more vulnerable to loss and damage from climate change than high-income ones. Lower-income countries are less likely to have the funds to invest in climate change mitigation and adaptation, but without such investment the loss and damage from climate shocks will be more severe. The cost of the response and reconstruction is then higher, reducing the future funding available to invest in climate change adaptation.

As part of the Committee’s inquiry on the effect of climate change on small island developing states, or SIDS, we heard that SIDS are particularly at risk from climate shocks. For example, in 2015 Dominica was hit by Tropical Storm Erika, which caused loss and damage amounting to 90% of its GDP. It then faced Hurricane Maria in 2017, which caused further loss and damage that amounted to 226% of its GDP.

My Committee has also heard about the threat of sea level rises, coastal erosion and, in some cases, the potential submergence of SIDS by climate change. Within this century, two SIDS are likely to disappear because of rising sea levels. Communities in low-lying atoll countries, such as the Maldives and the Marshall Islands, are at most risk. Climate change poses an existential threat for SIDS—one that is largely being overlooked.

Climate change will also put even more pressure on the most vulnerable and marginalised people. The World Bank has estimated that between 68 million and 135 million people will fall back into poverty due to climate change by 2030. Those who are already poor are likely to lose more when faced with climate shocks, even while having less to begin with.

The World Bank states that only one tenth of the world’s greenhouse gases are emitted by the 74 lowest income countries, yet it is those countries that will be the most affected by climate change. Lower-income countries are being forced to pay for damage they did not cause, despite having the least ability to pay for it. That is not just, it is not equitable, and it must be addressed. The UK could and should play a greater role in preventing and treating the suffering caused across the globe from climate change.

Loss and damage finance remains the most underfunded form of climate finance. At COP27, the Sharm el-Sheikh implementation plan was agreed, which included the establishment of the loss and damage fund. It is essential that the UK Government pledges new and additional funding for addressing loss and damage as part of their commitment to the most vulnerable people in the world.

To that end, I welcome the fact that at the first Africa climate summit the Minister for Development, the right hon. Member for Sutton Coldfield (Mr Mitchell), reaffirmed the UK’s commitment to double its international climate finance to £11.6 billion between 2021 and 2026. Ahead of COP26, though, the UK Government also committed to support the Santiago Network for Loss and Damage, which is meant to provide technical assistance to lower-income countries vulnerable to climate change. However, it was only at COP27 that the institutional arrangements to operationalise the network were agreed. As my Committee has previously recommended, the Government must urgently work to support the Santiago Network to be operational and to live up to its prior commitments.

My Committee has also made other core recommendations for meaningful action on climate change. We recommend that the Foreign, Commonwealth and Development Office should work closely with the least developed countries and small island developing states in developing practical measures to address loss and damage. We also recommend that the FCDO hosts a climate and development ministerial with climate-vulnerable countries every year to follow up on its previous work. I was pleased to hear yesterday that the Government will be co-hosting the third climate and development ministerial, but it is vital to hear the voices of lower-income countries and small island developing states on how that finance can be most effectively used.

Without concrete and concerted action, the most vulnerable countries and the most vulnerable people in them will continue to suffer. As a lead contributor to climate change, and as a high-income country, the UK Government have a moral responsibility to act now. I look forward to hearing what the Minister has to say on that.

--- Later in debate ---

[Patrick Grady]

Yes, that is a hugely important concept. We think of all the work done around the Jubilee 2000 campaign, 23 years ago, and the huge global effort and consensus about the need to take action because developing countries were being crippled by the debt they had incurred. That is not good for anyone; it is not good for us either. Progress was made, but again we seem to be going backwards on a lot of that, and the changing climate seems to be a driver. That has to factor into the discussions. The work begun at the most recent COPs, including COP26 in Glasgow and the commitments made last year in Sharm el-Sheikh, must be followed through, and a new governing instrument must be agreed at COP28 this year. The hon. Member for Rotherham (Sarah Champion), the Chair of the International Development Committee, made important points about the Santiago Network and some of the other mechanisms that exist.

What is needed above all is political will: decision makers who are prepared to take bold and innovative action. As my hon. Friend the Member for Dundee West said, that is exactly what the Scottish Government have done: first, way back in 2012, when they established their climate justice fund in addition to the international development fund; then at COP26, when Nicola Sturgeon pledged £2 million for loss and damage, making the Scottish Government the first western Government to do so; and now just recently when they committed a further £24 million over the next three years to respond to climate change in Rwanda, Malawi and Zambia. Malawi’s President, His Excellency Dr Lazarus Chakwera, said in February that the Scottish Government’s loss and damage fund for projects in his country

“has made huge differences in the people and their livelihoods because they are given a hand up, so the resilience we talk about becomes a practical issue.”

He went on:

“This fight belongs to all of us and I believe that this example will serve as a prototype of what could happen.”

Perhaps now the UK Government will start to play their part. Perhaps they will begin to see, as my hon. Friend the Member for Edinburgh North and Leith (Deidre Brock) said in an earlier contribution, that the savage cuts to the aid budget are a false economy. All the evidence that we have heard in this debate shows that more funding is needed, but this Government are determined to spend less. In the end, it will cost more. The hon. Member for Manchester, Gorton (Afzal Khan) and others spoke about population movements. Home Office Ministers themselves stand at the Dispatch Box and say that hundreds of millions of people are on the move and that they all want to come to the United Kingdom, but instead of—

[Sarah Champion]

I apologise for interrupting the hon. Member in full flow. He is making a strong speech and is absolutely right to make this point, because the ODA spend is designed to help people stay safe and prosperous in their own homes, which is what they want. The Minister is taking away the money that would enable people to stay at home and then spending it secondarily when they turn up on our shores.

[Patrick Grady]

Yes, the hon. Lady is exactly right. Rather than housing people in barges or hotels, or chasing them back into the sea, it would be considerably cheaper if we helped to build resilience in their countries of origin against climate change that we have caused and that our lifestyles are continuing to make worse. That would save money in the long run.

I do have to say that there is also a challenge here for the Labour party. It would be useful to hear the shadow Minister, the hon. Member for Leeds North East (Fabian Hamilton), commit to the principle of climate justice and a return to the 0.7% target, because voters, particularly in Scotland, will be listening carefully.

The Scottish Government’s actions have already shown that it is possible to make decisions and show leadership in this area and to encourage others to follow suit. In an independent Scotland, 0.7% would be the floor, not the ceiling, for our spending responsibilities to the poorest and most vulnerable people around the world. It would be the morally right thing to do, as others have said, but it is also in our enlightened self-interest.

Normally I would make a point about the spending being preventive, but the whole point of loss and damage is that it is now almost impossible to prevent some of the effects of climate change that we are already experiencing. Even as we speak, it is unseasonably warm; it is the start of September and we are once again experiencing record temperatures outside. But we can prevent loss of life and livelihoods with the right kind of investment and support for those who need it most. If we do not, it will cost more in the long term and we will all pay the price.

--- Later in debate ---

[Sarah Champion]

I am grateful to the Minister for outlining all the pledges that have been made, but is he able to say how much of the money has delivered, and whether it is new money or coming out of the existing ODA budget?

[Leo Docherty]

It is of course part of the ODA spend.

The UK invested £2.4 billion worth of international climate finance between 2016 and 2020 into adaptation, including investments in areas relevant to loss and damage—the subject of this debate. That included about £196 million on financial protection and risk management, £303 million on humanitarian assistance, and £396 million on social protection. To give a specific example, I mentioned the dreadful floods in Pakistan last year, and the UK offered significant support in the aftermath of that disaster. This included support for water, sanitation and hygiene, to prevent waterborne diseases, nutrition support, and shelter and protection for women and girls. In total, the UK provided £36 million in support following the flooding, on top of the £55 million we had already pledged for climate resilience and adaptation in Pakistan.

The UK is doing what it can to help avert, minimise and address loss and damage from climate change, but given the scale of the challenge, we know we have to be more creative in the ways we support countries to manage the impacts, and that includes developing new financial mechanisms to provide support. An example of this is the Taskforce on Access to Climate Finance, launched by the UK in partnership with Fiji. The taskforce is working to make it easier for the most vulnerable countries to take advantage of the climate finance that already exists.

The taskforce was launched following the UK-hosted climate and development ministerial in 2021. I am pleased to see that there will be a third climate and development ministerial held this year, with the UK, UAE, Vanuatu and Malawi co-hosting an event on how better development and climate actors can work together, which will build on the success of the first two.

On top of that, at the summit for a new global financing pact in Paris in June, the Minister of State, Foreign, Commonwealth and Development Office, my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), announced that UK Export Finance had started discussions with 12 partner countries in Africa and the Caribbean to add climate resilient debt clauses to new and existing loan agreements. That builds on the announcement at COP27 that UKEF would be the first credit export agency to offer those clauses, which allow Governments to delay their debt repayments and free up resources to fund disaster response and recovery.