World Bank has estimated that by 2040, more than 130 million people could be pushed into extreme poverty by climate change.
The Apex Bank, Managing Director of Operations, Axel van Trotsenburg who disclosed this on Wednesday during the signing of agreement between the Bank and the United Nation’s World Food Programme (WFP) to scale up disaster risk protection financed by Germany and the United Kingdom for vulnerable communities and nations faced with catastrophic climate extremes like storms and drought.
As world leaders confront the global climate crisis at the annual UN Climate Change Conference (COP27) in Egypt, this initiative underscores the importance of investment in climate action to protect vulnerable communities when disasters strike.
According to the Apex Bank Director, “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.”
Under this agreement, WFP will receive US$20 million from Germany and the United Kingdom through the World Bank’s Global Shield Financing Facility, while the funding will support the expansion of WFP’s climate and disaster risk financing cover in 23 countries across the globe, protecting up to 4.6 million people from climate risks over the next two years.
WFP Deputy Executive Director, Ute Klamert said, “The financial protection that climate risk insurance provides means more lives saved, livelihoods preserved, infrastructure protected and communities empowered.
Having predictable financing ready when climate impacts materialize is crucial in supporting farmers and communities to minimize climate- induced losses and damages. Working together with the Global Shield, we aim to bring more and more communities into our programmes, shielding them from the growing threat of climate impacts.”
Furthermore, the disaster risk finance policies purchased by WFP through this contribution will complement those purchased by governments, increasing the number of people protected and strengthening responses so vulnerable people can be reached more quickly as a climate-related disaster hits.
Supporting WFP’s contribution to the goals of the newly announced Global Shield against Climate Risks, an initiative of the G7 and V20 to scale up protection for climate risks before a crisis occurs. This includes early warning systems, preparedness plans and financing systems that include insurance schemes as well as social protection systems.
Minister of State of the UK’s Foreign, Commonwealth & Development Office, Andrew Mitchell said, the UK is a committed partner on disaster risk finance – the earlier we act, the more resilient vulnerable communities will be.
“We are proud to be a partner in the new Global Shield against Climate Risks being launched at COP27, and to co-fund the Global Shield Finance Facility. I am especially pleased that the first new grant will enable WFP to buy drought and tropical cyclone insurance to protect communities in the Sahel region, Madagascar, Sudan, Zimbabwe and Haiti.
“This investment will build climate resilience and help address acute food insecurity risks, helping WFP to respond more quickly and save lives”.
Also, German Federal Minister for Economic Cooperation and Development, Svenja Schulze said, “Across the globe, WFP reaches vulnerable people on the frontlines of the climate crisis. This funding is part of our joint efforts of building a Global Shield Against Climate Risks. Anticipatory and early action make all the difference between a climate impact and a climate disaster.
“This is a practical step to support countries of the global south in addressing losses and damages and it shows how the Global Shield against Climate Risk will protect vulnerable groups in the future.”
Since 2019, with support from Germany, the UK and other donors, WFP has protected 4.5 million people in seven African countries with insurance policies from African Risk Capacity (ARC) Ltd.
To date, WFP has received five payouts totalling US$9.9 million for four countries, which was used to support more than 300,000 people with cash and food assistance, nutrition support and emergency asset creation.