Kicking the can into the storm

Another milestone was reached in December 2025 in the global effort to combat climate change. The Fund for Responding to Loss and Damage (FRLD) officially opened, inviting developing countries to submit funding requests for projects aimed at addressing the irreversible impacts of the climate crisis. For the first time, a dedicated financial mechanism exists to support communities facing the destruction of their livelihoods, lands, and heritage. As the first applications are to be submitted over the coming months of 2026, the timing of this operational victory is overshadowed by a much larger, more systemic failure to act when the stakes were lower. 

Global climate discussions have long centred around mitigation, while adaptation followed far behind. Only in recent years have discussions shifted more towards adaptation with the announcement of another global goal to triple adaptation finance by 2035. The slow progress has inadvertently left loss and damage as the ‘third pillar’ that remains perpetually sidelined. By symbolically kicking the can down the road, slow-onset events, such as rising sea levels and gradual salinisation of soil, are being overtaken by high-impact disasters.  The consequences of this ‘wait and see‘ approach have become the lived reality of 2025. In Malaysia, the recent floods have served as a grim reminder of what happens when slow-onset vulnerabilities meet immediate triggers. In mid-December 2025, more than 14,000 people were displaced by floods across Malaysia, disrupting the economic and social fabric in the affected areas. When such events occur, the question shifts from ‘how do we adapt?’ to ‘what is left?’. 

Previously, the main challenge regarding loss and damage was the lack of a mechanism to address it. That is no longer the case, as the challenge now is the compounding cost of institutional inertia. The delay faced today is a three-fold crisis of finance, politics, and leadership. First is the financial disconnect regarding the FRLD. While the fund is now active for its first cycle, the scale of the funding is insufficient compared to the scale of the need. From the USD 788 million pledge, only USD 407 million is in the trust as of December 2025. Of that, USD 250 million is allocated to the Barbados Implementation Modalities (BIM) for operational costs and disbursement through the FRLD. This leaves roughly USD 150 million for the following year in 2027. Though it coincides with the fund’s replenishment cycle, without a legal obligation to turn pledges into contribution agreements, the FRLD faces insolvency by its second year of operationalisation. In this light, the fund appears more like a symbolic gesture rather than a solution for developing countries facing irreversible climate impacts. 

Second is the geopolitical upheaval that prevents climate cooperation. The current era is described as a ‘new world disorder’ by Nobel laureate Joseph Stiglitz. In his recent analysis of global economic policies, Stiglitz points out that the international divide is widening. This is partly attributed to the notable market power of big tech that has shifted the focus of developed countries’ economies inward. The global trade system is in shambles, and the confidence in the USD is waning due to mercurial policies from the United States that stoke market uncertainty.  Third is the leadership vacuum left by the United States when it exited the Paris Agreement again at the start of 2025. Furthermore, the United States has withdrawn from 31 United Nations agencies, including the United Nations Framework Convention on Climate Change (UNFCCC). The country was far from a self-proclaimed climate leader, but its exit from the climate pact has ripple effects on policies and economies worldwide. Other developed countries have not stepped up because they are distracted by the ‘new world disorder’ issues, further sidelining loss and damage. 

Concerningly, these new anxieties exacerbate old problems. The ongoing climate crisis and the widening inequalities both within and between countries are now intertwined with the global financial system, making it increasingly difficult to secure the multilateral cooperation necessary to access support to address loss and damage or achieve a climate-stable economic development. The interplay between the financial shortfall, the geopolitical fragmentation, and the leadership vacuum suggests that the world is approaching a tipping point. It becomes more apparent that cooperation is a matter of collective self-interest. The establishment of the FRLD, the Warsaw International Mechanism (WIM), and the Santiago Network proves that the international community can build the necessary architecture for change. Though the structures are in place, interconnecting anxieties prevent filling these structures with the resources they require. The lack of political will from developed countries does not help either.

The time for treating loss and damage as a secondary concern has passed. In the remainder of this decade, the global community must recognise that every moment of hesitation increases the price of recovery. We must move beyond the cycle of pledging and move toward a system of mandatory, predictable contributions that reflect the true scale of the crisis.  We must accept that in a world of shared risks, failing to support those on the front lines of the climate crisis ensures that eventually, there will be no one left to hold the line. The storm is already here, and we can no longer afford to wait for a clearer day to begin rebuilding.

Submitted by:
Farhana Shukor