The World Bank Group has announced the establishment of a Global Shield Financing Facility to assist developing nations in obtaining additional funding for recovery from natural disasters and climate shocks.
The World Bank has been a longstanding partner to Germany and the U.K. in risk finance and has brought strong experience to the development of the Global Shield Against Climate Risks. The Global Shield Financing Facility builds on the earlier Global Risk Financing Facility, established in 2018, which has supported country operations in Africa, Asia, and Small Island Developing States. The program has been paired with $3 billion in World Bank lending and helped to mobilize more than $1 billion in private sector capital.
This facility is expected to support the Global Shield Against Climate Risks, a collaborative initiative launched at COP27 by the G7 and V20 to better protect poor and vulnerable people from disasters by arranging for more funding before disasters occur.
Speaking about the initiative, World Bank Managing Director of Operations, Axel van Trotsenburg, said: “We estimate that by 2040, over 130 million people could be pushed into extreme poverty by climate change”.
“Access to disaster risk finance and insurance solutions for low-income countries is part of the World Bank’s strategy for helping them adapt to the growing risks of natural disasters. We will contribute to the Global Shield initiative through our analytical and advisory work, policy dialogue and country lending operations,” he said.
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The Global Shield Financing Facility will channel funding to developing nations via World Bank initiatives or programmes developed by other collaborating partners such as UN agencies and multilateral development banks. It will also collaborate closely with key stakeholders like civil society organisations, risk pools, the commercial sector, and humanitarian partners.
The Global Shield Financing Facility will finance integrated financial protection packages that offer coordinated and consolidated financial support to those vulnerable to climate shocks and disasters. These financial packages will complement investments in climate adaptation and disaster risk reduction.
Such packages will also enable and mobilise private capital for improved financial resilience, by offering private financial solutions, including insurance and other risk transfer instruments such as catastrophe bonds.
This story was adapted from The Nation.
