The FRLD is one of the most significant attempts made under the United Nations Framework Convention on Climate Change (UNFCCC) to restore climate justice. It resources efforts to address climate impacts that are unavoidable, irreversible, and otherwise beyond the limits of vulnerable communities to solve through adaptation. For many climate-vulnerable communities, the FRLD presents a final hope for survival amid the escalating crisis. But will the Fund deliver on this expectation?

This will depend on how well the FRLD Board tackles two key challenges it is facing:

• First, the political will in developed countries is weakening, with rising nationalism undermining multilateral climate action. While the initial pledges and contributions to the FRLD are a positive start, they fall short of addressing the projected USD hundreds of billions of losses and damages that developing countries will incur annually. The COP29 decision on the New Collective Quantified Goal (NCQG) excluded a specific L&D finance target, leaving FRLD funding outside donor obligations. The FRLD Board at the 5th board meeting (B5) will need to make programmatic decisions without knowing that the required resourcing will be available over the coming years.

• Second, the FRLD faces the major challenge of designing a country-owned operational modality that differentiates itself from the complex and top-down models adopted by previous climate financing streams. FRLD must also focus on helping strengthen the existing national systems to address the interlinked drivers of losses and damages and dismantle systems that perpetuate vulnerability (political, economic, or social) and injustice. Without this holistic systemic transformation, funding will only provide temporary relief rather than a locally determined path toward long-term resilience.

As the FRLD transitions from planning to early intervention disbursement in the start-up phase, it must overcome several challenges encountered in past climate finance efforts: bureaucratic processes, limited capacity of implementing partners, and weak mechanisms to reach the most affected communities directly.

At this critical planning moment of the B5, there is a clear need for locally grounded evidence to guide the Fund’s fair, effective, innovative, and country-owned implementation. This Policy Brief presents lessons from three case studies: Emao Island in Vanuatu, Melamchi and Helambu in Nepal, and Barishal in Bangladesh, to provide insights into how L&D financing can be made more inclusive and transformative.

Full policy brief can be found here: https://ifsd.com.au/L&D-Finance-Policy-Brief.pdf