In London, the World Bank's board has given its approval on Tuesday (June 11) for a proposal outlining the bank's role as the temporary custodian of a fund designed to offer financial assistance to developing nations affected by the impacts of climate change. Some wealthier nations expressed reservations about establishing a fund to aid in addressing the consequences of extreme weather events, such as floods and droughts, fearing it could imply acknowledgment of their responsibility for climate damage due to their carbon emissions.

Despite these concerns, the concept of a 'Loss and Damage' fund was tentatively agreed upon during climate negotiations in 2022 following years of deliberation. Since 2023, various countries, including Italy and the Netherlands, have begun making pledges toward this initiative. Initially proposing that the World Bank host the fund drew criticism from certain nations, apprehensive that it could grant undue influence to donors, particularly the United States, which appoints the president of the World Bank.

The arrangement stipulates that the fund will be administered by the World Bank as a financial intermediary for a period of four years. Importantly, the fund's board will maintain its autonomy from the bank, retaining its distinct governance structure and decision-making authority over financial allocations.