Understanding the Global Shield

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What is the objective of the Global Shield against Climate Risks?

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The objective of the Global Shield is to increase financial protection for climate vulnerable people by providing more and better pre-arranged risk finance against climate-related disasters. Climate and Disaster Risk Finance and Insurance provides quick and reliable funding when climate impacts materialize, which in turn helps governments, people, and businesses to act earlier and respond more effectively. The timely pay-outs are crucial to reduce the follow-on costs of disasters, accelerate economic recovery, and avert the danger of people sliding into poverty. This contributes to cost-effectively addressing losses and damages exacerbated by climate change.

The Global Shield will support countries in acquiring needs-based financial protection in a systematic, coherent, and sustained way, leveraging a broad and diverse landscape of institutions. Countries are supported in identifying and implementing the most cost-effective solutions to cover their protection gaps. Protection gaps can be defined as risks that cannot be mitigated through risk prevention or risk reduction, and for which no financial protection is yet in place.

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How does the Global Shield relate to the “Loss and Damage” debate?

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Action and support for “Loss and Damage” is a key topic in the international climate change negotiations. It is against the background of growing demand for financial support responding to loss and damage that the V20 and the G7 under Germany’s presidency launched the Global Shield. The Global Shield provides a concrete offer for countries to scale financial protection for their most climate vulnerable population groups, and thus contribute to responding to loss and damage.

At the United Nations Framework Convention on Climate Change Conference in Sharm El-Sheikh in 2022 (COP27), a decision was reached to establish new funding arrangements, including a fund for responding to loss and damage to assist developing countries that are particularly vulnerable to the adverse effects of climate change.

At last year’s COP28 in Dubai, President Sultan Al Jaber announced an agreement on the set-up of the fund to respond to climate-related losses and damages. With its strong emphasis on country ownership, national response systems and long-term resilient recovery, the fund promises to become an integral part of a global financial system that is fit-for-climate. In the advance unedited version of the decision, the Global Shield against Climate Risks is explicitly welcomed as one of the funding arrangements to strengthen the response to loss and damage.

The experience accrued by the Global Shield can be built on and maximized within the emerging finance architecture. The Global Shield can serve as a platform for pre-arranged finance as it is coordinating the implementation of pre-arranged finance through the Global Shield Coordination Hub and is helping countries identify gaps and voice needs through inclusive and country-led  processes. It is furthermore facilitating joint standards, synergies, and complementary work across leading implementing organizations, including Multilateral Development Banks, the private sector, development organizations, and civil society.

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What is the relationship between the InsuResilience Global Partnership and the Global Shield against Climate Risks?

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The V20/G20 InsuResilience Global Partnership, founded in 2017, has focused on raising ambition for Climate and Disaster Risk Financing and Insurance (CDRFI), promoting collaboration, knowledge exchange, and evidence-building, and fostering a network of diverse stakeholders working in the CDRFI space. Most notably, Vision 2025 was launched in 2019 as a multi-year work plan for the Partnership with collective targets by 2025, including 500 million beneficiaries.

The Global Shield builds on the progress and learnings generated through the InsuResilience Global Partnership. Most importantly, it assembles and improves programmes so far working mainly separately under InsuResilience Global Partnership within a more systematic, coherent and sustained approach to delivering financial protection. The Global Shield’s distinct features are its Financing Structure, which bundles and allocates funds at a global level to close protection gaps, a country-led and inclusive In-Country Process, and enhanced coordination of implementing efforts through the Coordination Hub. In combination, these have the potential to significantly improve and scale financial protection.

InsuResilience Global Partnership Governance has been merged into and replaced by Global Shield structures since May 2023, with the Global Shield Board replacing the High-Level Consultative Group, the Programme Alliance transformed into the Global Shield Coordination Hub, and the InsuResilience Global Partnership Secretariat is transitioning to the Global Shield Secretariat. However, Vision 2025 will be continued as a work item under the Global Shield Board, ensuring continuous commitment towards its targets by InsuResilience Global Partnership programmes and donors, and corresponding tracking of indicators by the Global Shield Secretariat. As per end of 2023, 35 programmes reported engagements in 646 projects, leading to 232 million beneficiaries under Vision 2025.

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Where is the Global Shield already active?

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In its initial phase, the Global Shield started activities in eight pathfinder countries and one pathfinder region, namely Bangladesh, Costa Rica, Ghana, Jamaica, Malawi, Pakistan, The Philippines, Senegal, and the Pacific. A new cohort of climate vulnerable countries, so called Global Shield Countries, is to be determined annually. Eligible countries are invited to apply for Global Shield support by submitting their Expression of Interest through a call.

21 climate vulnerable countries followed the first call in 2024 and signaled their interest to access support from the Global Shield. After a thorough prioritization process, the Global Shield Board endorsed The Gambia, Madagascar, Peru, Rwanda and Somalia as the next cohort of Global Shield countries in April 2024.

In addition, as the Global Shield’s Financing Structure builds on existing financing facilities (e.g. the Global Shield Financing Facility, formerly the Global Risk Financing Facility (GRIF), there are projects in a broader list of countries that were initiated prior to the launch, and these commitments will be upheld. Such “legacy projects” may complement the Financing Structure and continue delivering Climate and Disaster Risk Finance and Insurance to additional countries over the near future, but not affecting funding for pathfinder countries. Furthermore, such legacy interventions will be able to feed into formal Global Shield support to the countries, following their application and selection.

Financial Support

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What is the Financing Structure and its specific role?

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The Global Shield Financing Structure incorporates three complementary financing vehicles, namely the Global Shield Solutions Platform (GSSP), managed by the Frankfurt School of Finance & Management; the Global Shield Financing Facility (GSFF), managed by the World Bank; and the Climate Vulnerable Forum (CVF) & V20 Joint Multi-Donor Fund (V20 JMDF).

The Financing Structure acts as a financial intermediary between country’s needs and a vast marketplace of solutions. It can channel finance to implementing organizations, governments, the private sector, NGOs, and humanitarian agencies to address the needs identified in the In-Country Processes and deliver respective packages of Climate and Disaster Risk Finance and Insurance instruments and support. Coherence and synergies will also be sought with other financing sources and vehicles for maximum impact.

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How much funding has the Global Shield raised to date, and how much can each country expect to receive from the Global Shield?

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As of December 2023, the Global Shield has raised roughly 300 million euros in donor funding. This funding will be allocated to countries based on their financial protection needs as identified in the In-Country Process and submitted via their request for Climate and Disaster Finance and Insurance (CDRFI) support. Hence, the amount of allocated funding will vary greatly across different country risk profiles and required solutions and support.

Based on global data collected across existing implementation efforts for CDRFI, including information on costs and market-level pricing, we expect funding support to countries to range from anywhere between 2 million euros to 40 million euros per country, depending on country size, vulnerability, and geographic profile. Applied to the Global Shield’s pathfinder countries and regions, we estimate that the allocation of current Global Shield funding could leverage an additional 2.9 billion euros from Multilateral Development Banks in concessional financing and 5.1 billion euros from private risk capacities, which would be paid out to vulnerable countries in case of climate impacts.

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What types of interventions can the Global Shield deliver, and what is outside its scope?

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Starting with a systematic analysis of countries’ protection gaps, the Global Shield facilitates a broad range of financial instruments and corresponding technical and financial support.

Instruments entail:

  • Solutions providing financial relief directly to households and businesses to respond to disaster-related losses (e.g. inclusive property or agricultural insurance),
  • Money-in” instruments for governments, humanitarian agencies, and non-governmental organizations, (i.e. instruments that disburse funds quickly when predefined climate/disaster impacts materialize, e.g. contingent financing or sovereign risk transfer).

For number 2, this also entails setting up “money-out” systems which ensure that pay-outs are spent on providing what individuals and communities affected by climate impacts need and when they need it the most, including shock-responsive social protection systems.

Depending on a country’s readiness for these instruments, the Global Shield facilitates different types of support from various sources to help countries use the needed instruments sustainably:

  • Technical assistance to support policy reforms, conduct risk analysis and assessments, strengthen regulatory frameworks, and capacity building.
  • Financial assistance to capitalize insurance carriers (i.e. entities that can provide insurance), (co)finance insurance premiums, or improve access to contingent financing. In addition, the private sector can be mobilized to deliver risk analytics, design products, and triggers, and underwrite (=offer the product and take on the risk) respective risk transfer solutions.

The Global Shield cannot deliver interventions across the broader risk management toolkit, e.g. investments in resilient infrastructure or in risk reduction measures. However, climate risk analytics developed under the Global Shield can feed into such measures, for example, the work of the Global Risk Modelling Alliance (e.g. risk assessments that can inform investments in resilient infrastructure). Climate and Disaster Risk Finance and Insurance provided by the Global Shield should be aligned and integrated into broader policies/strategies, including Disaster Risk Reduction and national adaptation plans. This will help promote synergies between financial protection and other risk management measures.

Application Process

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How can countries access Global Shield support?

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An initial list of pathfinder countries was announced at COP27 in which the Global Shield will deliver its first protection packages (see next question). New cohorts of climate vulnerable countries, so called Global Shield Countries, are to be determined annually. Eligible countries are invited to apply for Global Shield support by submitting their Expression of Interest through a call.

All countries on the Official Development Assistance List by the Development Assistance Committee (ODA-DAC) are generally eligible for support, but a systematic, transparent, and criteria-based process will be applied to prioritize countries if applications exceed a predefined “cohort” size. Criteria include measures on i) climate and disaster risk, ii) poverty, and iii) country readiness to further Climate and Disaster Risk Finance and Insurance actions. Further, countries must submit an official letter of commitment to demonstrate a ministerial commitment to the Global Shield, nominate an In-Country Coordinator (i.e. a governmental focal point and a potential support structure), and underscore the country’s commitment to conduct the process in an inclusive and participatory manner.

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When will countries be notified if they are included in the next cohort of Global Shield countries?

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As described in more detail in the Country Prioritization Framework, once the application deadline has passed (refer to this page for more information) countries will be assessed against the quantitative criteria detailed in the Framework.

In addition, consultation calls will be held with the Global Shield Secretariat. A shortlist of countries will then be recommended to the Global Shield Board for approval. Following the Board’s approval, successful countries will be notified and asked to submit an official letter of commitment by a certain deadline. A template for this official letter can be found here.

Subject to the receipt of the formal letters, countries will then be included on a final list of countries for approval at the next Global Shield Board meeting. The first new cohort of countries was announced in April 2024: The Gambia, Madagascar, Peru, Rwanda, and Somalia.

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What happens to countries that apply to the Global Shield, but do not receive an invitation to participate in the current cohort of Global Shield countries?

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In 2024, 5 additional countries were invited to participate in the next Global Shield country cohort; as more countries sought access to the Global Shield than could be accommodated at this time, countries were prioritized based on the Country Prioritization Framework.

Countries that were not invited to participate in this new cohort will automatically be included in the prioritization process for the next cohort. It is envisaged that new cohorts of Global Shield countries will be invited to participate in the In-Country Process on an annual basis.

Country-Level Support

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How does the Global Shield work in countries?

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The Global Shield applies evidence-based, systematic, and inclusive analyses of countries’ protection gaps to design, fund, and facilitate needs-based financial protection. This is facilitated through the In-Country-Process. The In Country Process is an inclusive, country-led process that engages all stakeholders relevant to advancing Climate and Disaster Risk Finance and Insurance (CDRFI) including the needs and perspectives of climate vulnerable and affected groups. An In-Country Coordinator facilitates the In-Country Process.

The In-Country Process starts with a kick-off workshop to initiate the process and determine relevant stakeholders. This is followed by a stocktake and a gap analysis to identify all relevant projects and solutions already in place in the country, as well as to assess protection gaps. Based on this, the country drafts a request for CDRFI support. The Technical Advisory Group reviews the draft and provides recommendations to the government on how to strengthen the request. The country then submits its request for CDRFI support to the Global Shield. Upon receiving the request, the Financing Structure puts together a support package that is tailored to the needs of the country, leveraging the broad institutional landscape including through the Global Shield Coordination Hub.

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What kind of support can be delivered by the Global Shield during the In-Country Process?

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The Global Shield promotes a demand-driven approach in countries, with full ownership by the country. With this in mind, the ministry or agency responsible for the Global Shield in the partner country nominates a political governmental focal point to head the In-Country Process as In-Country Coordinator. The In-Country Coordinator is the representative of the respective country for all Global Shield processes and is responsible for the coordination and facilitation of the In-Country Process.

In light of the various tasks and administrative resources needed to implement the In-Country Process, a support structure can be set up for the In-Country Coordinator, if requested. This could be an external entity, e.g. a consultancy or a development organization with a local presence. The Global Shield Secretariat can provide financial support to facilitate an external support structure. In addition, the Secretariat provides on-demand support to the In-Country Coordinator throughout the process. This includes matchmaking with and facilitating additional resources from members of the Global Shield Coordination Hub, feeding information into the Stocktaking, and taking up the country’s Request for Support with partners and the Financing Structure. However, support by the Global Shield Secretariat cannot replace the In-Country Coordinator and the coordinative resources needed to ensure full country ownership and efficient processes at the country level. 

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How long will it take for countries to go through the entire In-Country Process, from kick-off to fully implemented instruments?

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The In-Country Process will build on and integrate existing Climate and Disaster Risk Finance and Insurance (CDRFI)-related consultations, analyses, and projects and benefit from their lessons learned and best practices. Therefore, the In-Country Process should not take longer than six to twelve months, in line with Global Shield’s ambition to respond to the increasing financial protection needs as quickly as possible. To ensure speed and efficiency, the In-Country Coordinator may also decide to run steps in parallel as well as to use outcomes from CDRFI-related work undertaken prior to the official start of the In-Country Process.

It should be emphasized, however, that the duration of the process is highly dependent on the country context, the priorities of the In-Country Coordinator, the systems and institutions in place,  and particularly, the data available.

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What is the time commitment for the lead government authority?

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The government focal point nominated by the country to lead the In-Country Process should reserve approximately one person-day a week for the duration of the Global Shield In-Country Process (6 – 12 months). Support from additional colleagues will likely be required during busy periods such as stakeholder workshops.

The time commitment will vary, with higher resource requirements around key events and milestones and with less resources needed at other times. Please review the In-Country Process guidance note for information on additional support through a support structure.

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What own resources are government authorities expected to provide to support their involvement in the Global Shield In-Country Process?

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Government authorities are expected to provide in-kind support to the Global Shield In-Country Process through the involvement of their employees in the process. This might also include travel and accommodation costs for attending local meetings. Government authorities are not expected to provide additional financial resources.  

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Once a country submits a request for support, how does the Global Shield take it up and deliver the requested support?

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The country submits its request for Climate and Disaster Risk Finance and Insurance support via the Global Shield Secretariat. As a first step, the Secretariat consults with the Coordination Hub to determine whether there are any projects or implementing programs that could deliver on (part of) the request. Once potential supporting projects/ programs have been identified, the Secretariat then channels the remaining/unfulfilled request to the Financing Structure. If no project/program is identified, the request is channeled in its entirety to the Financing Structure.

As a second step, the Secretariat facilitates an exchange with the Financing Structure to identify which (or combination) of the three Financing Vehicles is best suited to deliver on the request. If no consensus is reached, the Secretariat will engage the Technical Advisory Group to offer a recommendation to the In-Country Coordinator/government focal.

The country has the final decision on which Financing Vehicle(s) will deliver the support. The selected Financing Vehicle(s) develops a preliminary support package proposal based on the country’s request, including any potential projects/programs identified in Step 1, to be approved by the government.

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Guiding Documents

This subpage provides an overview of guiding documents related to the Global Shield against Climate Risks. 

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Instruments

The V20/G7 Global Shield will support Climate and Disaster Risk Finance and Insurance (CDRFI) instruments to strengthen vulnerable countries’ strategies in closing the protection gap.

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About

The G7/V20 Global Shield against Climate Risks initiative aims to strengthen resilience in countries that are most vulnerable to climate risks.

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Activities

The Global Shield against Climate Risk aims to support countries that are most vulnerable to climate risks.

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