The Global Shield against Climate Risks addresses weaknesses in the financial protection structure in climate-vulnerable economies through pre-arranged finance disbursed before or just after disasters happen.
The first recipients of Global Shield packages are Bangladesh, Costa Rica, Fiji, Ghana, Pakistan, the Philippines, and Senegal.
UNICEF’s ‘Today and Tomorrow’ initiative is an integrated climate change finance solution combining “funding for immediate climate resilience and risk prevention programmes for children today with an innovative use of risk transfer finance provided by the insurance market for cyclone disasters tomorrow,” whose “tomorrow” portion is supported by the German and UK Governments under the Global Shield.
The Vulnerable 20 Group (V20) of Finance Ministers and the Group of Seven (G7) launched the Global Shield against Climate Risks – “an initiative for pre-arranged financial support designed to be quickly deployed in times of climate disasters.” Initial contributions exceed EUR 210 million, including around EUR 170 million from Germany and more than EUR 40 million from other countries.
V20 research shows that 98% of the nearly 1.5 billion people in V20 countries do not have financial protection, and since 2000, V20 countries have lost USD 525 billion to climate impacts. The rising costs of capital and debt are aggravating the situation in climate-vulnerable countries.
The Global Shield, launched during the Sharm El-Sheikh Climate Change Conference (UNFCCC COP 27) on 14 November 2022, addresses weaknesses in the financial protection structure in climate-vulnerable economies through pre-arranged finance disbursed before or just after disasters happen. It expands financial protection instruments for governments, communities, businesses, and households, making vulnerable economies resilient, safeguarding sustainable development, and protecting lives and livelihoods in the wake of disasters.
The Global Shield includes:
- strengthened coordination within the global climate and disaster risk finance and insurance architecture across the G7 and V20 and other climate vulnerable economies, to ensure coherence of institutions’ and donors’ efforts at the global, regional, and national levels;
- a global, flexible, and collaborative financing structure to mobilize and pool donor and other funds and enable a more systematic global approach to closing protection gaps; and
- sustained protection in the face of increasing climate risks by scaling up existing successful programmes, including social protection schemes, and preparing country-specific, needs-based support packages, including the scaling up of smart premium and capital support to address affordability barriers.
According to a press release, the Global Shield will align behind vulnerable country strategies for closing protection gaps using a broad range of instruments, including livestock and crop insurance, property insurance, business interruption insurance, risk-sharing networks, and credit guarantees at the household and business level. At the level of national and subnational governments, humanitarian agencies, and non-governmental organizations (NGOs), the Global Shield will “support the integrated development of instruments used to ensure that money is available when needed (money in), and the processes to ensure that the money is spent on providing what affected individuals and communities need when they need it most (money out).”
The Global Shield’s financing structure includes three complementary funds: the Global Shield Solutions Platform, which builds on InsuResilience Solutions Fund; the Global Shield Financing Facility at the World Bank; and the Climate Vulnerable Forum (CVF) and V20 Joint Multi-Donor Fund.
Steered by the Global Shield High-Level Consultative Group, which includes representatives of the V20, G7, the Group of 20 (G20), think tanks, civil society, multilateral organizations, and the private sector, the initiative begins implementation immediately after COP 27. The first recipients of Global Shield packages – called ‘Pathfinder countries’ – are Bangladesh, Costa Rica, Fiji, Ghana, Pakistan, the Philippines, and Senegal.
Under the Global Shield, the German and UK Governments are supporting the “tomorrow” portion of the UN Children’s Fund’s (UNICEF) ‘Today and Tomorrow’ initiative – an integrated climate change finance solution combining “funding for immediate climate resilience and risk prevention programmes for children today with an innovative use of risk transfer finance provided by the insurance market for cyclone disasters tomorrow.” In its three-year pilot, UNICEF’s initiative, launched on 16 November, will focus on Bangladesh, Comoros, Haiti, Fiji, Madagascar, Mozambique, Solomon Islands, and Vanuatu.
The 58 members of the V20 are Afghanistan, Bangladesh, Barbados, Benin, Bhutan, Burkina Faso, Cambodia, Chad, Colombia, Comoros, Costa Rica, Côte d’Ivoire, the Democratic Republic of the Congo, the Dominican Republic, Eswatini, Ethiopia, Fiji, The Gambia, Ghana, Grenada, Guatemala, Guinea, Guyana, Haiti, Honduras, Kenya, Kiribati, Kyrgyzstan, Lebanon, Liberia, Madagascar, Malawi, Maldives, the Marshall Islands, Mongolia, Morocco, Nepal, Nicaragua, Niger, Palau, Palestine, Papua New Guinea, the Philippines, Rwanda, Saint Lucia, Samoa, Senegal, South Sudan, Sri Lanka, the Sudan, Tanzania, Timor-Leste, Tunisia, Tuvalu, Uganda, Vanuatu, Viet Nam, and Yemen.