Germany’s G7 proposal Global Shield against Climate Risks

Due to climate change, extreme weather events like heavy flooding or droughts are becoming increasingly more frequent. Poor and vulnerable people and countries need to get better protection against these climate-related risks. They are calling on the industrialised countries for support. The G7 countries have therefore agreed to set up a Global Shield against Climate Risks.

Svenja Schulze, Federal Minister for Economic Cooperation and Development
Climate-related disasters have devastating impacts on poor people in particular. They often do not have the means to protect themselves and their homes, fields or businesses against extreme weather and can lose their entire possessions when a disaster strikes.
Svenja Schulze Federal Minister for Economic Cooperation and Development
Logo of Germany's G7 Presidency 2022

The countries of the Global South are the ones worst affected by the consequences of climate change and they often do not have the resources needed to protect their citizens from them. “Loss and Damage” is one of the topics being discussed in international climate negotiations. The topic is tied up with the responsibility of the industrialised countries for causing climate change and with the associated question of climate justice.

Germany is very engaged in (further) developing support programmes for dealing with climate-related damages, with a view to providing protection against climate risks for as many poor and vulnerable people as possible. It is against this background that, under Germany’s G7 Presidency in 2022, the G7 has recognised that vulnerable developing countries need more support for dealing with climate-related damage.

During its G7 Presidency, Germany has made a start on developing a “Global Shield against Climate Risks”, a move which has been unanimously supported by the G7. The Shield gathers activities in the field of climate risk finance and preparedness together under one roof. Under the Shield, solutions to provide protection will be devised that can be implemented swiftly if climate-related damages occur. This process is linked to contingency plans of developing countries. As a result, people and authorities will be able to access the assistance that they urgently need when disaster strikes more easily and more quickly. Furthermore, the Shield will mobilise additional funds in order to meet the growing demand for finance.

Financial protection and preparedness plans can help

Various instruments are available that can be used to help disburse money quickly to governments and to poor people and those worst affected when a disaster occurs. They include, for example, social protection systems, designated disaster reserves in public budgets, loans from multilateral development banks that are disbursed in an emergency, or government bonds for which repayment can be reduced or suspended in a disaster situation. Insurance against rare events with the potential to cause a huge amount of damage can also be a useful instrument.

The basis is provided by contingency plans that a country draws up after analysing its own climate risks. Where are the biggest risks? What efficient protection and preparedness systems are needed to mitigate these risks?

Swift action after climate-related damages occur reduces follow-on costs

Governments can use these preparedness mechanisms after climate-related damages have occurred to quickly restore the foundations for economic and social activities for the population. This fast response is very important because, if poor and particularly vulnerable people do not get quick support when a disaster strikes, there can be long-term consequences. They may be forced to use the savings that they have put to one side for investments to buy food instead. Or they may have to sell their tractor instead of using it to replant their fields. The children of these families are often not able to stay in school, because their parents are no longer able to pay the school fees or because they must work in order to contribute to the household income.

The Global Shield against Climate Risks will help to reduce the follow-on costs of disasters, accelerate economic recovery and avert the danger of people sliding into poverty.

Flooding on the Philippines

Climate risk insurance Internal link

Developing solutions to protect people financially against climate shocks

Flooded roads and paths in Gonaives, Haiti, after hurricane Tomas passed through the area

Analysing and managing climate risks Internal link

Adopting a preparedness-based approach to climate-related environmental changes and extreme weather events

Cooperation in action

Village in the Somali region of Ethiopia where nomads have settled because of the ongoing drought

Africa: Cooperation in action Insurance policies against drought effects – ARC and ARC Replica Internal link

The African Risk Capacity (ARC) and ARC Replica provide support to African countries' efforts for better drought preparedness and offer them protection against financial losses from drought. This facilitates quick and effective assistance.

A young girl on a makeshift bridge after flooding in Sindh province, Pakistan.

Pakistan: Local micro insurance InsuResilience Investment Fund provides support for local institutions Internal link

Pakistan regularly experiences extreme weather events with negative consequences for the population, especially in agriculture. With support from the InsuResilience Investment Fund (IIF), a local foundation in Pakistan offers farmers a chance to combine micro loans for livestock purchases with micro insurance.

Flooding in Iquitos, Peru

Peru: Protection for public infrastructure Introduction of a new insurance programme for public schools in Peru Internal link

The increase in extreme weather events such as floods has been presenting a major challenge to Peru. Public infrastructure is particularly important in this context. The InsuResilience Solutions Fund addresses this by supporting an insurance programme for public schools.


Cover: A Global Shield against Climate Risks: Germany’s G7 proposal for tackling climate-related losses and damages in developing countries

A Global Shield against Climate Risks

Germany’s G7 proposal for tackling climate-related losses and damages in developing countries

File type PDF | Date of status 07/2022 | File size 810 KB, Pages 6 Pages | Accessibility Accessible
Cover: A joint G7 and V20 ambition: Working towards a Global Shield against Climate Risks

A joint G7 and V20 ambition: Working towards a Global Shield against Climate Risks

Information Note

File type PDF | Date of status 09/2022 | File size 495 KB, Pages 5 Pages
Cover Insuresilience Global Partnership

InsuResilience Global Partnership

The global partnership for financing and insurance solutions against climate and disaster risks

File type PDF | Date of status 11/2021 | File size 292 KB, Pages 2 Pages

As at: 16/07/2022