A G7-led plan dubbed “Global Shield” to provide funding to countries suffering climate disasters was launched at the U.N. COP27 summit, although some questioned the effectiveness of the planned scheme.
Coordinated by Group of 7 president Germany and the V20 group of climate-vulnerable countries, it aims to rapidly provide pre-arranged insurance and disaster protection funding after events such as floods, droughts and hurricanes hit.
Germany will provide €170 million ($172 million) to a “Global Shield” insurance initiative to help low-income and vulnerable countries to rebound in the event of climate calamities.
It aims to strengthen social protection schemes and climate risk insurance , so when an extreme weather event like flooding strikes, communities can access aid quickly and recover, said Germany’s ministry for economic development and cooperation (BMZ).
The initiative was officially launched by the G7 and the V20 group of 58 climate vulnerable nations at the COP27 climate summit in Egypt. US President Joe Biden announced the US would support the “Global Shield” during his COP27 speech.
The “Global Shield” initiative is one step to address such funding, with Ghana finance minister and V20 chair Kenneth Nana Yaw Ofori-Atta calling it “long overdue.”
Since 2000, V20 states have lost around $525 billion to climate impacts. As those disasters escalate, the V20 risks getting further into debt because much of the climate financing ear-marked for low-income countries comes in the form of loans.
V20 research also found that 1.5 billion people in their countries do not have any financial protection like insurance. Ofori-Atta said that focusing on insurance would help those countries avoid increasing their debt.
The V20’s debt payments alone are about half a trillion US dollars over the next four years.