Global Shield Against Climate Risks

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Global Shield Against Climate Risks

On 14 November 2022, G7 and V20 group of nations most vulnerable to the effects of climate change launched an ambitious scheme to give speedy financial support to communities battered by climate disasters: the Global Shield against Climate Risks which, with an initial funding of more than $200 million, aims to provide “pre-arranged financial support designed to be quickly deployed in times of climate disasters”. The entry of the Global Shield against Climate Risks creates much-needed impetus for the momentum generated in the private sector to support a resilient future.
Key Highlights
The Global Shield, co-ordinated by G7 president Germany, aims to provide climate-vulnerable countries with rapid access to insurance and disaster protection funding after floods or drought.
The initiative is envisioned as a social-protection and insurance-based finance mechanism for loss and damage outside the UNFCCC process.
It is being developed in collaboration with 58 climate-vulnerable economies to bring together climate risk finance and preparedness.
Initial contributions include around EUR 170 million from Germany and more than EUR 40 million from other countries.
In addition, a broad coalition of countries, multilateral institutions and non-state and private sector partners has underlined their full institutional commitment to Global Shield.
The fund will help nations prepare for climate change and respond to natural disasters sparked by rising temperatures.
The first recipients of Global Shield packages – called Pathfinder countries – include Bangladesh, Costa Rica, Fiji, Ghana, Pakistan, the Philippines and Senegal.
Ghana’s Finance Minister Ken Ofori-Atta, who is also the V20 chair, called it “a path-breaking effort” that would help protect communities when lives and livelihoods are lost. “This is a path-breaking effort. We hope our funding window will benefit equally compared to pre-existing structures whose performance remains to be proven. Our fiscal space is under constant threat and the inflationary pressures of climate change are closing out our options. As part of our Climate Prosperity Plan to reduce the 98 percent financial protection sinkhole, the Global Shield will play a key role in resourcing financial and social protection packages to protect our economy, our enterprises and our communities,” he said.
Importance for Pakistan
For Pakistan, Global Shield has a different kind of worth than whatever funding it may bring in. It is important to understand why. Global Shield funding will be provided to countries to fund protective nets, such as means to cover lost livelihoods, social protection, livestock and crop insurance, property insurance, business interruption insurance, and so forth. Global Shield will also help sub-national governments, humanitarian agencies, and NGOs develop instruments that can ensure that they have money available as soon as it is needed and then are able to spend it on what is needed most. Integrating proactively with Global Shield can help our policymakers understand the various areas exposed to climate change and then develop and roll out insurance plans that can best cover and mitigate those risks. This is an area we have significantly lagged behind on, as our disaster ‘planning’ seems more focused on recovering damages and losses once a catastrophe has occurred rather than on planning ahead for the changing climate and taking broad-ranging steps to protect against the threats it is expected to bring. Pakistan will still need tens of billions of dollars to become resilient to the vagaries of environmental change; meanwhile, initiatives like Global Shield can greatly help orient us in the right direction.
The writer is a member of staff.

Muhammad Ali Asghar

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