Board members of the Green Climate Fund (GCF) will convene next week at the Board’s twenty-second meeting (B22) in Songdo, South Korea. Alongside political issues such as the election of the new Executive Director, the progress of the replenishment process and Board funding decisions that are expected to dominate media headlines, the Board will also aim to address some of the remaining gaps on policies to guide the operations of the Fund. While they may not capture the headlines, the resolution of these issues will have important consequences for Fund’s operation and impact.
Among those key issues that warrant attention are:
- The Fund’s approach to achieve its “impact” and “paradigm shift” objectives via the Results Management Framework (RMF).
What is the issue? The Fund uses an RMF to define causal links between the projects and programs it funds and the mitigation and adaptation impacts the Fund aims to achieve. A sound RMF is essential to understand whether the Fund is indeed on track to achieve its ambitious impacts and its paradigm shift objective. The paradigm shift mandate means the GCF can be bolder and take greater risks to attain greater impact and scale. As CCAP noted in its analysis of the Fund’s Measurement, Reporting and Verification (MRV) framework, such an ambitious mandate means the GCF needs particularly good indicators, data, and methodologies to measure the changes effected by the Fund’s investments. Measuring the Fund’s impact helps clarify where resources are most needed and what areas are underserved, particularly over the next 10 years, in line with the findings of the IPCC 1.5 special report.
What will be considered at B22? The Board will consider a review that the Independent Evaluation Unit (IEU) conducted of the Fund’s RMF, and the formal response from the Secretariat addressing findings and recommendations. The proposed decision for the Board is to request the Secretariat to present an updated RMF and performance measurement framework (PMF) by B24, with improved indicators and improved guidance on how those indicators are defined and measured, by whom, and based on which protocols. The Board could also request the Secretariat to take additional steps based on IEU’s recommendations, particularly those around developing guidance for how, in the long-term, project/program outcomes will contribute to a paradigm shift toward low-emission, resilient development.
The proposed decision for the Board also includes a mandate for the Secretariat to ensure accredited entities (AEs) budget enough resources during proposal design to collect data and to monitor and evaluate the results of their funded projects.
What should the Board and Fund’s stakeholders take into account? A revised and updated RMF and PMF are a much needed improvement for the Fund. Relevant teams within the Secretariat have already been working on strengthening the indicators and MRV approach to the frameworks. In addition to better-quality indicators in the RMF, CCAP has also noted it will be essential for the Fund to strengthen its guidance on proposal design, and its decision making process to assess and evaluate proposals. Supporting and requiring greater quality from AEs during proposal design and more consistency in proposal vetting could also improve the impact of the Fund. Developing these internal protocols for vetting proposals could be done by the Secretariat without further need for Board formal approval. For further recommendations, see CCAP’s MRV analysis.
- How the Fund partners with the private sector and grants access to the Fund via improvements to the “Accreditation Framework”.
What is this issue? The GCF relies on AEs to channel its resources. The Fund’s Governing Instrument includes a mandate to engage the private sector in the Fund’s activities, including by having private actors channel the Fund’s resources directly. A lengthy and resource-intensive accreditation process has, however, prevented many private sector actors, particularly at the domestic level, from engaging directly with the Fund. Further, it is not always easy for the private sector to partner with existing AEs for project origination. Thus, accreditation becomes the only way many have to tap into the Fund’s resources, though not many have the resources and time to undergo it.
Improving engagement with the private sector is critical for the Fund to mobilize more resources and at the necessary volume and scale to shift the trillions needed to address the climate challenge. However, the Fund has maintained the accreditation process must be thorough to ensure AEs are reliable fiduciaries to the Fund and reduce any potential reputational risks.
What will be considered at B22? The Board will consider various recommendations from the Secretariat, based on an analysis of the accreditation framework conducted by a consulting firm. A project-specific assessment approach (PSAA) has been identified by consultants as a feasible option to accelerate accreditation. The PSAA would allow a potential applicant to be assessed based on its ability to implement a specific proposed project/program presented to GCF rather than a hypothetical set of projects/programs that the entity may bring forward in the future.
What should the Board and Fund’s stakeholders take into account? Board members should consider an overall review of the accreditation framework to assess how AEs can be more effective fiduciaries to the Fund, and what the best way is for AEs to engage domestic partners. Expediting the accreditation process would also help, particularly a clearer mandate than what is already in the proposed decision around implementing PSAA.
- Define a sound framework to ensure that the Fund’s investments during the implementation phase of the next replenishment advance transformational outcomes, including via the updated “Strategic Plan”
What is the issue? Beyond the key objective of obtaining substantial contributions to the Fund for it to continue supporting transformation toward low-carbon, climate-resilient development, the replenishment process is also seen by many as an opportunity to take stock, address policy gaps and identify key priorities for the Fund going forward.
The replenishment process will be informed by or tied to a number of documents that may indicate key priorities for the Fund in the short, mid and long-term. At B22, the replenishment discussion will touch on the upcoming updated version of the Strategic Plan of the Fund, which will aim to provide a vision to achieve a paradigm shift, guide the operation of the Fund, including addressing policy gaps, and guide the programming of the Fund’s resources to invest in transformational climate action in a country-driven manner.
What will be considered at B22? The Board will, overall, consider updates on the replenishment processes, and some of the available inputs informing the process, such as the replenishment scenarios analysis completed by the Secretariat. Some Board members have submitted views on the potential focus of the reviewed Strategic Plan. The Board will likely request the Secretariat to present an updated Strategic Plan to the GCF for consideration by the Board by B24.
What should the Board and Fund’s stakeholders take into account? Ensure that key elements are included as input to the Strategic Plan and further developments around potential replenishment scenarios (the following list is indicative and not comprehensive):
- How the Fund measures the transformation of its investments, and how those changes can be quantified and reported at a portfolio level (what it means to change the paradigm)
- How country programmes can help elucidate national plans to strategically access a variety of funding sources in the climate finance architecture vis-a-vis the GCF
- How to use readiness funding effectively to engage domestic private actors and facilitate the greening of domestic financial systems
- How the Fund could avoid financing climate actions that could and should be financed by Development Finance Institutions (DFIs) in order to avoid crowding out additional sources of finance. We note there is also fundamental work to be advanced directly with DFIs to address this issue.
- How the GCF can support early stage idea development
- How to facilitate the engagement of non-accredited private sector entities with existing AEs