Climate Finance: Loans or Fair Compensation?

The United Nations Climate Change Conference, widely known as COP, is held every year in November or December. It provides a global platform where world leaders, policymakers and representatives from different countries come together to discuss critical issues related to climate change and explore possible solutions. This year, the conference is being hosted in Antalya, Turkiye, marking its 31st edition. As in previous years, Bangladesh has sent a delegation comprising Prime Minister Tarique Rahman, the Foreign Minister, the State Minister for Foreign Affairs and other representatives. Climate vulnerable communities, who are directly affected by the consequences of global warming, are also participating in the conference and representing the realities of those suffering on the ground.

Among the most severely affected regions of Bangladesh is the country’s southwestern coastal belt. Every year, recurring cyclones, storm surges and other climate induced disasters destroy homes, livelihoods and valuable assets, leaving countless people impoverished and displaced. As these communities continue to face the devastating impacts of climate change, many are compelled to migrate to other parts of the country. Consequently, cities such as Dhaka and other divisional headquarters are experiencing increasing population pressure, creating additional challenges in housing, employment, public services and urban management. The fundamental question, however, remains What kind of support have the world’s major greenhouse gas emitting countries actually provided to climate vulnerable nations like Bangladesh? For decades, industrialised nations have contributed disproportionately to the accumulation of greenhouse gases in the atmosphere. Their extensive industrial activities, large scale production, extraction of oil and natural gas and excessive energy consumption have accelerated global warming. Methane emissions from fossil fuel extraction and the widespread use of energy intensive cooling systems have further intensified the problem.

Yet, countries like Bangladesh are bearing the heaviest consequences of these activities despite contributing relatively little to global emissions. Coastal communities are losing their homes and becoming climate refugees. Access to safe drinking water is increasingly scarce, while agriculture and food security are being severely disrupted. These challenges are threatening livelihoods, economic stability and the overall well being of millions of people. Under these circumstances, developed nations must stand beside climate vulnerable countries. However, their assistance must not come in the form of loans. It must be provided as fair, adequate and unconditional compensation for the damage caused by climate change.

According to United Nations and environmental research organisations, the 100 countries with the lowest carbon emissions collectively account for only around three per cent of global greenhouse gas emissions. Nevertheless, many of these countries are among those facing the most severe climate related losses and damages. Ironically, they continue to struggle to secure adequate financial support to address the consequences of a crisis they have contributed very little to creating. Every year, during international climate conferences, powerful nations make various promises and commitments in an attempt to demonstrate their willingness to address the climate crisis. However, they often avoid accepting their historical responsibility. Even when they acknowledge their obligations, the financial assistance they offer frequently comes in the form of conditional loans rather than grants.

Although some developed countries occasionally provide grants, a significant proportion of climate finance continues to be delivered as loans. This must change. We need to move beyond the practice of imposing debt burdens on climate vulnerable nations in the name of financial assistance.

This practice is deeply unjust. Under the guise of climate assistance, vulnerable countries are being pushed further into debt. Such financial arrangements weaken their economic structures and create additional burdens for future generations. Countries that are already struggling with economic vulnerabilities should not have to borrow money to recover from disasters largely driven by the excessive emissions of wealthier nations. Although some developed countries occasionally provide grants, a significant proportion of climate finance continues to be delivered as loans. This must change. We need to move beyond the practice of imposing debt burdens on climate vulnerable nations in the name of financial assistance.

Climate justice must not become another instrument of environmental injustice. Instead, the international community must ensure adequate grant based climate financing. The losses and damages suffered by vulnerable countries must be presented forcefully on global platforms. Bangladesh should strengthen its international advocacy through research, evidence based campaigns, awareness programmes, posters and other communication initiatives that highlight the real life consequences of climate change. Those representing Bangladesh at international forums must make these issues a diplomatic priority. They should develop innovative strategies to draw global attention to the country’s climate challenges and ensure that the voices of affected communities are heard.

In particular, major emitters such as China, the United States and Russia bear substantial responsibility for global greenhouse gas emissions. Over more than two centuries of industrialisation, major industrial powers have released enormous quantities of pollution into the atmosphere, contributing significantly to global warming. Today, countries like Bangladesh are suffering the consequences of this historical environmental injustice. Therefore, at the negotiating table of international climate conferences, these powerful nations must not be allowed to evade their responsibilities. They should not be permitted to repeatedly offer reassuring statements while imposing additional debt burdens on countries that are already struggling to survive the climate crisis. Bangladesh must remain firm in asserting its legitimate rights through strong diplomatic engagement and a united international position.

Ultimately, climate justice is not a matter of charity; it is a matter of responsibility and fairness. Countries that have contributed most to the climate crisis must accept their historical obligations and provide compensation to those suffering its consequences. We hope that Bangladesh’s Head of Government and all representatives attending this international gathering will strongly highlight the country’s climate related challenges, the destruction of its coastal communities and its legitimate demand for climate compensation. They must speak with a firm, united and uncompromising voice to ensure that the rights of climate vulnerable nations are recognised and protected.