The Problem
The Mission
The Solution
The Impact & Value
The Problem
Extreme-weather events such as floods, storms, heatwaves and droughts pose a growing threat to lives, livelihoods and prosperity around the world. The problem is quite acute in climate vulnerable developing countries. An assessment of 55 climate-vulnerable countries estimates that between 2000–2019, these -economies lost USD 525 billion, or one fifth of their wealth, due to the effects of climate change. In 2024, the Philippines was hit by six typhoons in a row within a month, damaging over 250,000 homes. Earlier in 2024, Hurricane Beryl wreaked havoc across the Caribbean, leaving 90% of the infrastructure in St. Vincent and the Grenadines damaged.
Managing the financial impacts of increasingly frequent and intense disasters poses enormous financial challenges for climate-vulnerable and debt-strapped economies. In many countries, disaster response and recovery rely heavily on international assistance or ad-hoc budget reallocations. These ex-post funding mechanisms are not only unreliable and slow but can also hamper urgently needed recoverey and long-term investments in climate-resilient development. At the same time, many households and businesses in climate-vulnerable countries remain without access to social safety nets or financial services, leaving them woefully unprotected when disasters strike.
The Mission
The Global Shield against Climate Risks seeks to strengthen the financial protection of climate vulnerable people and communities by increasing access to pre-arranged finance. Pre-arranged finance includes a broad array of climate and disaster risk finance and insurance (CDRFI) mechanisms that safeguards households, businesses or governments against climate-induced disaster losses. What these mechanisms have in common is that funding has been approved in advance of a disaster and is released when specific pre-defined trigger conditions are met.
As part of a comprehensive risk management approach, pre-arranged finance can significantly lower the follow-on costs of disasters and support an effective response to climate-related losses and damages.
The Impact & Value
With its programmatic, demand-based approach and pre-arranged finance domain, the Global Shield forms an integral part of the emerging loss and damage financing architecture. Moreover, improved understanding of in-country risks through sound risk analytics provided by the Global Shield enhance each country’s preparation in determining potential losses and assess solutions in mitigating to climate-induced damage.. The overall process also develops local institutional knowledge and structures that are needed to better respond to the ever-increasing effects of climate change.
The Global Shield is thus committed to a coherent and complementary approach to responding to climate related loss and damage. Through close collaboration with the CDRFI ecosystem, its Financing Vehicles, the Fund for responding to Loss and Damage, the Santiago Network and other mechanisms, Global Shield ensures that the experiences and learnings from implementing country support packages contribute to the effective closing of financial protection gap in climate vulnerable countries and building long-term resilience.
Read more about the Global Shield’s Ambition.
