Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of establishing a loss and damage fund as part of his Autumn Statement.

The Government is working with vulnerable countries to improve their resilience and response to climate shocks and is already funding activities that avert, minimise and address losses and damages incurred from climate shocks, including: adaptation, disaster risk reduction and improving responses following climate shocks and disasters.

In response to discussions with vulnerable countries, the Prime Minister announced at COP27 that the UK was tripling its adaptation spend to £1.5bn by 2025 to help communities be better prepared and reduce the impacts of climate change.

We are committed to helping developing countries deliver on their own green growth pathways. The UK, as the world leading sustainable finance centre, is helping developing countries raise finance for their green growth, including COP27 host Egypt’s $750mn first sovereign green bond issuance on the London Stock Exchange in 2020. We have also continued to build on the commitments we made at COP26 in Glasgow to support countries’ green growth, through Just Energy Transition Partnerships. The UK is delivering a $1.8bn guarantee for South Africa, as the largest sovereign donor in the total $8.5bn package, which will support coal plant decommissioning, ensuring affected communities are not left behind, and investing in renewables.

The UK is a strong supporter of Disaster Risk Finance (DRF) helping people better manage the impacts of disasters. The UK committed £120m at Carbis Bay and have invested over £200m in DRF since 2014. Pre-arranged finance such as contingent credit or insurance enable quicker responses that can pre-empt damage. Early action is more cost-efficient and enables communities to recover more quickly.

The UK government has also led in measures to help improve the financial resilience of vulnerable countries such as low-income countries and small island developing states in the face of severe climate shocks. At COP27, UK Export Finance announced they would become the first export credit agency in the world to offer climate resilient debt clauses (CRDCs) in its direct sovereign lending. CRDCs will allow countries to defer debt payments in the event of a severe climate shock or natural disaster and enable them to focus on responding and recovering from a crisis. The UK is working the multilateral development banks and the private sector to embed CRDCs into standard loan and bond contracts.