Toward Structural Climate Reparations? A Legal Agenda to Address the Financial Subordination of the Global South – Climate Law Blog

Legal scholarship on climate reparations has so far focused almost exclusively on financial compensation whereby wealthier nations provide funding to cover the costs of climate-induced disasters in developing countries. This body of work has examined the scale of financial needs, liability under international law, and potential institutional arrangements. Yet, cash transfers alone are insufficient to address the deeper structural barriers that prevent countries in the Global South from mobilizing the resources needed for effective climate mitigation and adaptation. This blog post argues for a shift toward structural reparations that address both the crushing debt burdens and climate vulnerabilities facing Global South countries. 

In many Global South countries, debt servicing severely constrains public spending that could otherwise support climate-resilient infrastructure, while channeling vast financial flows from South to North. These debt relations reflect and reinforce deep asymmetries in the global financial system. As such, a systemic approach to reparations demands rethinking and rewriting the rules of global finance, as proposed, for example, by the Bridgetown Initiative. Legal scholars have a vital role to play in this project. Key questions that need to be addressed include: Which legal regimes entrench the financial subordination of post-colonial states and restrict their capacity to invest in mitigation and adaptation? And conversely, what legal frameworks and institutions could enable green developmental states to lead a just climate transition? 

This blog post first highlights the mainstream focus on cash transfers as the primary form of climate reparations. It then advocates for a structural turn in the debate, building on recent scholarly interventions, and explores the implications of such a shift for lawyers engaged in the pursuit of climate reparations.

The depoliticizing focus on cash-transfers

As the climate crisis intensifies, extreme weather events are occurring with greater frequency and intensity, disproportionately affecting individuals and communities in the Global South. This has pushed climate finance to the top of the global agenda. In 2009, at the Copenhagen climate summit, rich nations pledged to channel 100 billion USD annually to developing countries by 2020 to help them with climate change mitigation and adaptation. Subsequently, discussions concerning financial transfers between developed and developing nations shifted toward the concept of “loss and damage”. While this notion lacks an official definition, climate scholars usually use this concept to refer to impacts that are not avoided by mitigation and adaptation. In its 6th Assessment Report, the IPCC indeed recognized that, as mitigation efforts fall short, the magnitude of climate change will exceed the adaptative capacities of countries. In 2022, COP27 led to the establishment of the “Loss and Damage Fund” to provide financial support to nations that are most vulnerable and affected by the consequences of climate change. At COP28 the following year, countries reached an agreement on the operationalization of the Fund with several countries announcing the first pledges. The World Bank was made the host of the fund for an interim period of four years. The most recent financial agreement made at COP29 in Baku targets $300 billion per year – significantly below the needs and demands of the Global South.

These developments have received considerable scholarly attention. A key point of debate in the existing literature pertains to the appropriate level of payments to cover the costs faced by vulnerable communities – the recurrent criticism pointing to the insufficiency of funds pledged by wealthy nations. This approach fails to question the reasons why countries in the Global South have limited fiscal space and must rely on the benevolence of the Global North to provide essential relief in the event of climate-induced harm. Regardless of the monetary amount allocated, “loss and damage” funding fails to question the core-periphery dynamics prevalent in international trade, the US dollar dominance in financial transactions, and structural asymmetries in North-South financing conditions. In other words, the “international financial subordination” remains intact. 

This narrowing of the debate is neither surprising nor accidental. Anton Jäger and Daniel Zamora Vargas show that global poverty alleviation underwent a depoliticization process from the 1980s onwards: from a structural discussion around the global economic order, embodied in the “New International Economic Order” initiative, in support of state-led industrialization in post-colonial countries, to a focus on cash transfers. As Ha-Joon Chang contends, development discourses underwent a major shift in the last decades and began to focus on serving the global poor without questioning or transforming the underlying productive structures of the economy. A comparable dynamic now shapes climate politics. The emphasis is on delivering humanitarian relief to affected communities, while broader debates about the social and political conditions necessary to build green developmental states – capable of meeting both climate mitigation and adaptation goals – are largely sidelined. Reducing climate reparations to cash transfers risks replicating this long-standing pattern of depoliticization.

Structural reparations to address the vicious cycle of debt and climate crises 

Several scholars have recently embraced a structural approach to reparations in the context of the climate crisis. For example, Olúfẹmi O. Táíwò calls for a constructive view on reparations, moving beyond the focus on redressing past harms, and rooted in a forward-looking vision of global justice. Climate reparations, in this view, should be about reshaping institutions, redistributing power, and transforming global systems, and more specifically, the remnants of the global racial empire that continues to structure inequalities today. Ndongo Samba Sylla and his co-authors highlight that “reparations for slavery, colonialism and climate injustice, however generous in monetary terms they might eventually be, would not be transformative if the underlying global economic structures that sustain development and climate inequalities are not reformed or replaced with supportive ones.” As such, they call for “systemic reparations” that would challenge the colonial patterns of wealth and resource extraction on a global scale. This structural understanding of reparations has deep roots in the Black radical tradition, which has long tied reparative demands to a broader critique of global capitalism and its racialized patterns of distribution. As Robin Kelley puts it, reparations are “part of a broad strategy to radically transform society—redistributing wealth, creating a democratic and caring public culture, [and] exposing the ways capitalism and slavery produced massive inequality”. 

What would this theoretical shift mean for climate reparations? It is primarily an invitation to confront the interconnected causes and consequences of climate change and sovereign debt crises. A large number of low-income and middle-income countries are struggling with overwhelming debt burdens, worsened by the economic fallout from the Covid-19 crisis and the economic repercussions of geopolitical tensions. As a result, debt servicing costs are mounting. For example, a majority of African countries spend more on debt payments than on healthcare and education combined, according to a recent report. This massively constrains the investment capacities of those countries, which are then trapped into fossil fuel dependence, unable to enhance their adaptive capacities or provide relief measures when hit by climate-provoked disasters which prevents a swift socio-economic recovery. This dynamic produces a vicious circle: as climate-related vulnerabilities escalate due to a lack of investment in adaptation measures, this affects the credit ratings of Global South countries, leading to higher borrowing costs and further exacerbating the burden of debt. Climate related disasters result in a decline in productive capacity and tax revenues, amplifying the risks associated with crippling debt. Hence, those countries must make a distressing choice between covering the costs of current calamitous weather events, limiting the repercussions of future disasters by investing massively in effective infrastructure, or meeting their debt obligations. 

Additionally, debt repayments facilitate massive wealth transfers from South to North. Indeed, as Jerome Roos notes, the constant insistence on full repayment of sovereign debt regardless of distressing economic conditions ensures a “vast and largely uninterrupted flow of capital upstream from public hands in the global periphery to private hands in the advanced capitalist core”. In other words, while some payments from the Global North to the Global South are being discussed to address the costs of climate disasters, debt relations continue to channel financial flows in the opposite direction. 

One attempt to address this is via the Bridgetown Initiative, which first launched in 2022 by Barbadian Prime Minister Mia Mottley. It calls for reform of the global financial architecture in response to the climate crisis, debt burdens, and development financing challenges facing the Global South. Among other things, it demands the rechanneling of Special Drawing Rights (SDRs) held by the International Monetary Fund (IMF) from wealthy countries to vulnerable nations, the systematic inclusion of “disaster clauses” in sovereign debt contracts which would suspend debt servicing in the aftermath of climate catastrophes, the reform of debt sustainability assessments to account for necessary climate investments, and the overhaul of debt restructuring mechanisms to compel private creditors to participate in burden-sharing. 

The Bridgetown Initiative is not without its challenges, as it operates within the constraints of the current global financial architecture and its entrenched power dynamics. In many ways, it attempts to confront deep structural inequalities while negotiating with the very institutions that have historically upheld those asymmetries – such as the IMF, the World Bank, and the major creditor nations of the “Paris Club”. For this reason, the Bridgetown Initiative should not be mistaken for a straightforward case of transformative structural climate reparations. In fact, one of its key architects has described the language of reparations as unnecessarily divisive. Yet, in many ways, this agenda embraces a systemic approach that should inspire reparations movements: it is about rewriting the rules of the global financial system, rather than merely redistributing funds within the existing one. 

A legal agenda to challenge the financial subordination of post-colonial nations  

What does all of this mean for lawyers and legal scholars committed to climate reparations? Below I lay out three main themes that should inspire our future research. 

For one, it calls for a decentering of climate negotiations. Substantial time and attention has been devoted to loss and damage at various COPs; however there has been comparatively less focus on finance and trade relations, and how these impact climate finance. Legal scholars should broaden their inquiry to include debt negotiations as a crucial forum that entrenches climate inequalities and colonial patterns – but that could also serve to push forward-looking reparations. 

Moreover, this requires examining the legal foundations of fossil capitalism and the unequal dynamics it perpetuates. One example is how major corporations threaten to leverage international investment law to obtain compensation for the profit losses they claim result from climate policies by suing states through arbitration tribunals. Debt relations also rest on legal underpinnings as shown by Benjamin Lemoine’s new book : private financiers, particularly vulture funds, use the legal system to sue sovereign states and seize their assets to recover unpaid debts which constrains the ability of post-colonial nations to develop their economies independently

Finally, there is a need for new legal mechanisms and institutions that would allow post-colonial states to propel public investment toward climate policies, free from the constraints of relying on private investments from institutional investors in the Global North, often imposing their own terms and conditions. In essence, this requires a 21st-century iteration of the New International Economic Order, designed to address the financial subordination at the heart of both the debt and climate crises.