A paradigm shift on climate change: Why COP27’s “Loss & Damage” fund matters

Sharm El-Sheikh failed in many ways, but succeeded in one: The decision for a compensation fund (“Loss & Damage”) represents a paradigm shift in international climate diplomacy. For the first time, the crisis issue of climate has been recognised as a justice issue at this top international level. This is significant: History shows that major transformations have always started with moral revolutions “from below”. By achieving this discursive shift, the Global South and the climate movement have opened windows for further change that can no longer be closed.

Yes, the results of Sharm El-Sheikh are meagre in many respects. And it is a fact that they are far from sufficient in the fight against the climate crisis, which exceeds all other crises and is the biggest threat to humanity.

No progress in the ambition to phase out coal. Not even clarity on the harmfulness of gas, let alone a commitment to end it. Not a word on methane. Falling behind Glasgow on the 1.5 degree target was averted, but a resolution for an emissions peak in 2025 did not make it into the final document. In many ways, the Egyptian COP presidency of Sameh Shoukry failed. In some respects, the climate summit even turned into a gas summit: The presence of almost 700 gas lobbyists and the signing of further gas expansion agreements prove that short-termism and fast business once more won the upper hand.

A victory for the South: Shifting the climate paradigm

And yet this summit is historic, because the agreement on Loss & Damage not only creates a financial instrument that will – hopefully – help the countries of the Global South mitigate climate damage. The fact that the issue of compensation for climate impacts has finally reached the level of top-tier climate diplomacy after 30 years of futile calls from poor countries also represents a paradigm shift in the international response to the climate crisis.

The issue of justice has finally reached the international climate debate: The key question of how the 1.5 degree target can be achieved has won a moral dimension for the first time with the agreement on a compensation fund. The Global North – the largest emitter and historic perpetrator of the climate crisis – is thereby finally taking responsibility for the damage it has caused the Global South.

Why moral revolutions are important

One might ask, “Yes, and what good does that bring?”

It brings – perhaps – everything. The climate crisis requires a systemic transformation. If this transformation is only tackled as a giant bundle of individual measures in the various sectors, it will not succeed in developing the traction and urgency that a change of this magnitude requires: Climate change not only affects all people, it must ultimately also involve everyone.

History shows that great transformations are possible. But it also shows that they always began with discursive changes: The end of slavery had its beginning in the moral concerns of individuals, then many, about the brutality of the system. Women’s suffrage grew out of changing ideas about the role of women. Racial segregation in the US was ended first in minds, before politicians responded to the pressure of the civil rights movement with changes in the law.

Seen in this light, the decision for “Loss & Damage” is a historic step. It has – finally – opened a door that can no longer be closed at the highest level of climate diplomacy. This is a big win for the Global South and their representatives such as Mia Mottley, the Prime Minister of Barbados, who postulated the compensation fund in Sharm El-Sheikh as “a matter of justice and morality”.

Stages of transformation: Change emerges from below

Transformation scholars such as Kwame Anthony Appiah have explored the processes of moral transformations throughout history in detail: The forces of existing systems respond to growing social movements first with repression, then by slow recognition combined with considerations that still ward off systemic change: “Too expensive, too complex, too lengthy etc. etc.” Following these exact patterns, the international reaction to the climate crisis has been textbook to date.

According to transformation research, it is bottom-up social pressure evolving from changing views on morality which ultimately drives change at the legislative and economic levels.

Calling for Courage: Persevering despite failure is now needed

The Mia Mottleys of the Global South have opened these windows for change and spaces for action, together with the representatives of the climate movement in the halls and antechambers of COP27. That it was the EU which broke down the hardened fronts of both the Global North and the Global South by proposing an expansion of donor countries signals the first success of this moral change also on the polluter side of climate change. Next in the domino effect was the softening of the US stance, which had been one of strict opposition to “Loss & Damage” right up to the climate summit.

What this also says is, “It pays off not to give up”. Citizens and civil society are far ahead of politics, but change is possible. We must not be discouraged by the failures of COP27, even if time is running low.