Updates from Day 2 of the 36th GCF Board Meeting
From The Asian Peoples’ Movement on Debt and Development (APMDD)
Scan the QR code above or click here to access the full copy of CSO updates for the 36th Board Meeting of GCF.
DAY 2 – 11 July 2023
The first item on the Board’s agenda for Day 2 of B36 was the Status of GCF Resources, Pipeline, and Portfolio Performance where the Secretariat provided an overview of key figures, issues, and actions related to the topic. It was reported that a total of USD 2.4 billion was made available for project commitments at this Board Meeting, but only projects worth USD 755 million were tabled for consideration.
On the GCF Pipeline and Portfolio, the Secretariat reported a balanced GCF funding for mitigation and adaptation projects in terms of grant equivalence. However, in nominal terms mitigation projects remain to exceed adaptation projects by at least 10%. Additionally, the share of GCF funding for approved projects by Direct Access Entities (DAEs) continues to be smaller at 22%.
The report also highlighted several challenges identified related to the implementation of GCF projects, which includes a number of financial, political, and country-specific issues, as well as the consequences brought by the COVID-19 pandemic, and currency fluctuations. However, they assured the Board that they are doing their best to overcome the challenges and continue to develop detailed approaches to address each of them.
The Board discussion began with the BM from Switzerland urging other developed countries to fulfill their pledges to the GCF in order to ensure timely delivery. This call was made in light of the Secretariat’s remarks that the commitment authority can only be fully realized if all pledges are delivered on time. Notably, the United States has yet to fulfill its USD 2 billion pledge, and the delay of the UK’s contribution last year caused the GCF to approve less funding proposals. In addition, the BM from Switzerland also requested the Secretariat to present a Private Sector Approach strategy in B37, which was supported by BMs from the UK, Sweden, and Georgia.
The Board also noted the improvement of the statistics around the GCF Readiness program, but many argued that the limited funding access of DAEs remains a problem. The BMs from Mali and Bhutan, both representing least developed countries (LDCs), raised concerns that the allocated USD 1 million readiness budget intended to support the National Designated Authorities (NDAs) and potential DAEs of developing countries, have so far not resulted in increased DAE access and projects for developing countries, particularly LDCs. This was echoed by the BM from Saudi Arabia, speaking on behalf of the Middle East and North Africa (MENA) region and reiterated the long-standing call for geographic balance in GCF funding. As a response, the Secretariat acknowledged the existing gaps raised and shared that there are still 25 developing countries with zero approved FPs, majority of which are LDCs. Despite these, the Secretariat assured the Board that significant efforts are underway to address these funding gaps.
The Board took note of the report and went on to discuss the Consideration of Funding Proposals (FPs). The Secretariat presented the batch of FPs for consideration at this Board Meeting, which is a total of 12 funding proposals with a combined amount of USD 755 million. The list of FPs are mostly adaptation projects in Africa, LDCs, and Small Island Developing States (SIDS).
Generally, the comments from the Board, both from the developing and developed country constituencies, reiterated the long-standing concern of limited funding to DAEs, and the lack of geographic and thematic/result area balance. The BM from Egypt also emphasized the need to allocate more funding to underfunded result areas such as transportation, rather than predominantly focusing on renewable energy financing as it currently does.
Each of the 12 funding proposals was presented by the Secretariat individually for the Board’s consideration. Below is the summary of discussions, and progress on the FPs for the Board’s consideration:
|
Funding Proposal (FP) Details |
Board Discussion |
Status |
| FP206: resilient Homestead and Livelihood support to the vulnerable coastal people of Bangladesh (RHL)
Country: Bangladesh Project Type: Adaptation AE: Pali Karma-Sahayak Foundation (PKSF) Total Financing: USD 49.9 million GCF Financing: USD 42.2 million (grants) Co-Financing USD 7.6 million (PKSF | loans and in-kind) |
The BM from Denmark repeated the ITAP’s recommendation to allocate resources for more reinforcements in the physical infrastructure. While category 5 hurricanes may be infrequent, the possibility of their occurrence, particularly in the context of climate change, is not negligible thus requiring stronger infrastructure. | APPROVED |
| FP207: Recharge Pakistan: Building Pakistan’s resilience to climate change through Ecosystem-based Adaptation (EbA) and Green Infrastructure for integrated flood risk management
Country: Pakistan Project Type: Adaptation AE: World Wildlife Fund – Pakistan (WWF-Pakistan) Total Financing: USD 77.9 million GCF Financing: USD 66 million (grants) Co-Financing: USD 11.18 million (WWF-Pakistan; USAID; The Coca-Cola Foundation | in-kind and grants) |
Erika Lennon, Civil Society Active Observer (CSO AO) from developed countries, delivered an intervention on behalf of the GCF Observer Network, expressing support for the project, as well as for Ecosystem-based Adaptation (EbA) in general. Prior to the consideration of this FP, the Accredited Entity (AE) WWF-Pakistan engaged in a dialogue with the CSO Observer Network to address their concerns regarding the project. During the meeting, it was revealed that the GCF Secretariat had postponed the project’s Board consideration as it initially requested the AE to first secure co-financing from the Government of Pakistan before being included in the roster of FPs for Board consideration. However, the said co-financing requirement was later waived due to the grave flood impacts that hit Pakistan the previous year. Given the urgency of the matter, any form of co-financing from the Government of Pakistan had been challenging. The CSO Intervention emphasized the fact that government co-financing is not a requirement for GCF projects. | APPROVED |
| FP208: Enhanced climate resilience in the Trois-Rivières region of Haiti through Integrated Flood Management
Country: Haiti Project Type: Adaptation AE: United Nations Development Programme (UNDP) Total Financing: USD 31.29 million GCF Financing: USD 22.42 million (grants) Co-Financing: USD 8.86 million (Heifer International Haiti; UNDP | grants and in-kind) |
During the discussions about the overarching document on funding proposals, some BMs asked the Secretariat regarding the GCF’s policy and approach when implementing projects in conflict-stricken areas. The Secretariat responded by assuring the Board that it has a conflict sensitivity approach for such cases, and that it will keep the Board updated through disclosures on the progress of the approach’s implementation specifically, particularly for FP208. Most BMs are in agreement that conflict areas are also vulnerable to climate change and security risks should not be a barrier in achieving meaningful and responsive climate action.
|
APPROVED |
| FP209: Climate Change Resilience through South Africa’s Water Reuse Program (“WRP”)
Country: South Africa Project Type: Adaptation AE: Development Bank of South Africa (DBSA) Total Financing: USD 1.47 billion GCF Financing: USD 235 million (USD 200 million in loans, USD 35 million in grants) Co-Financing: 1.23 billion (National Treasury; Private Developers; Private Debt Capital Partners; DBSA Partners; Development Corporations | grants; equities; senior loans; loans; guarantees) |
CSO AO from developing countries Kairos dela Cruz shared the Observer Network’s intervention on the project. He expressed our concerns around the lack of information about potential sub-projects, and mentioned that these sub-projects should focus on socio-economic statuses of beneficiaries as a key criteria for financing. As the project seeks to consider water as a “new asset class”, the FP’s privatization-like approach to South Africa’s water infrastructure should ensure that water rate hikes are prevented, water access to all is ensured, and that gender equality is upheld. | APPROVED |
| FP210: Kawisafi II (KS2)
Countries: Côte d’Ivoire, DR Congo, Kenya, Nigeria, Rwanda, Uganda, Zambia Project Type: Cross-Cutting AE: Acumen Fund Total Financing: USD 210 million GCF Financing: USD 52.5 million (USD 40 million junior Equity, USD 10 million senior equity, USD 2.5 million grants) Co-Financing: USD USD 157.5 million (USD 150 million in equity, USD 7.5 million in grants)
|
The BM from Honduras raised a question regarding the financial instruments utilized by the project, emphasizing the need for clarification on their definitions.
Erika Lennon, CSO AO from developed countries, echoed the concerns expressed by the independent Technical Assistance Panel (iTAP) regarding the inclusion of support for biofuels in the project. Both the Observer Network and the iTAP view biofuels as environmentally and socially unsustainable. In addition, the CSO intervention emphasized that it is not the GCF’s role to establish carbon markets and highlighted that waste-to-energy sub-projects are false solutions and should not receive GCF funding. The lack of clarity in the adaptation activities, stating that the project’s adaptation objectives appear to be an afterthought, was also mentioned, as the activities are not effectively designed to achieve adaptation results. In agreement with these points, the BM from Saudi Arabia requested an inclusion and exclusion list of subprojects that may be funded under this funding proposal, along with their compliance with current GCF policies. However, despite the criticisms raised, Margaret-Ann Splawn, the Private Sector AO, expressed full support for the project’s approval on behalf of the private sector. She cited Acumen’s positive track record and the utilization of innovative financial approaches as the basis for their support. As more BMs inquired about the technical aspects of the project, the BM from China requested additional time to review the funding proposal and consult with the AE. Consequently, he proposed to suspend the consideration of the FP, to which the Board agreed to. |
SUSPENDED |
| FP211: Hardest-to-Reach (H2R)
Countries: Benin, Burkina Faso, Burundi, Chad, Democratic Republic of the Congo, Guinea, Guinea Bissau, Lesotho, Malawi, Mozambique, Niger, Sierra Leone, Somalia, Tongo, Uganda, Zambia Project Type: Cross-Cutting AE: Acumen Fund Total Financing: USD 250 million GCF Financing: USD 65 million (USD 50 million equity; USD 10 million reimbursable grants; USD 5 million non-reimbursable grants) Co-Financing: USD 185 million (USD 130 million equity; USD 55 million reimbursable and non-reimbursable grants) |
Similar to FP210, the GCF Observer Network, in its intervention delivered by CSO AO from developing countries Kairos dela Cruz, mentioned that adaptation seemed like an afterthought rather than a direct and main outcome of the FP’s activities. The BM from Egypt echoed this and expressed “serious worries” to warn the Secretariat that global adaptation finance is already low and any attempt to inflate the figures should not be done at the expense of LDCs. Despite the outstanding dissatisfaction on the FP’s current form, the GCF Secretariat responded to the concerns raised by saying that they already made the project’s adaptation components “stronger”.
Kairos added that the Free Prior and Informed Consent (FPIC) requirement under the GCF Indigenous Peoples’ Policy was not fully complied with by the FP, as it assumed that a bottom-up approach is already considered as FPIC. Lastly, the CSO intervention also emphasized the lack of progressiveness and innovation in the gender action plan (GAP) of the FP as it only showed gender-specific sales and marketing quotas rather than systemic transformation towards gender equality. As the FP also used new and unfamiliar financial instruments and terms for the project, the BM from China asked for the legal basis of the project activities and financing terms. Despite the AE’s attempt to address the concerns of the BM from China, the BM from China persistently asked that the consideration of the FP be suspended for more time to study the FP and consult with the AE. The Board decided to suspend the consideration of the FP. |
SUSPENDED |
| FP212: &Green Fund (&Green)
Countries: Brazil, Cameroon, Colombia, Cote d’Ivoire, Democratic Repiblic of Congo, Ecuador, Gabon, Indonesia, Lao PDR, Liberia, Zambia Project Type: Cross-Cutting AE: Dutch Entrepreneurial Development Bank (FMO) Total Financing: USD 981.6 million GCF Financing: USD 189.3 million (USD 180.7 million in subordinated loans; USD 8.6 million grants) Co-Financing: USD 780.7 million (USD 180.7 million subordinated loans; USD 600 million senior loans; USD 3 million general partner contribution) |
During the discussion, the BM from Switzerland raised how the FP failed to guarantee the achievement of food production sustainability in the target countries. However, he acknowledged the merits of the project and suggested that it should be approved with certain conditions to address this.
In a strong intervention, CSO AO from developed countries Erika Lennon called on the Board to reject the approval of this FP. She raised concerns about the track record of the implementing entity, the &Green Fund, which had previously provided financing to corporations responsible for significant deforestation in Brazil and Indonesia. The CSO Observer Network argued that by providing funds to corporations to prevent deforestation, the project would not achieve its intended outcomes, and would instead undermine the land rights of indigenous people and enable greenwashing corporations to flourish. Erika emphasized the Observer Network’s position that the GCF should not be an enabler of greenwashing. The GCF Observer Network had sent a detailed letter to Board Members prior to B36, providing evidence and outlining why FP212 should not be approved. In contrast, Private Sector AO Pedro Carvalho expressed full support from the private sector for the approval of the project, as they believed it would assist major food producers in greening their supply chains. Given the numerous concerns raised about the project’s methods, the Accredited Entity, FMO, made a general statement expressing their commitment to ending deforestation and promoting green economies. Ultimately, despite the controversies raised, the FP was approved. |
APPROVED |
| FP213: The Blue Green Bank (BGB)
Country: Barbados Project Type: Mitigation AE: Pegasus Capital Advisors (PCA) Total Financing: USD 30.5 million (equity) GCF Financing USD 15.5 million (USD 5.5 million equity, USD 10 million convertible subordinated loans invested in BGB) Co-Financing USD 15 million (equity) |
Kairos dela Cruz, CSO Active Observer from developing countries delivered the GCF Observer Network’s intervention that the AE does not have a green banking experience and that the investment criteria for sub projects have not yet been disclosed. While no investment criteria has been disclosed, he strongly mentioned the Observer Network’s position that GCF money should never be used to retrofit existing dirty energy projects and that such should be reflected in the FP’s list of projects that it will not fund.
The project was then approved by the Board and a video of Barbados Prime Minister (PM) Mia Mottley was played, encouraging the GCF and other climate finance institutions to continue supporting SIDS and financing projects that leverage private sector finance. It can be recalled that Barbados PM Mia Mottley proposed the Bridgetown Initiative which sought to mobilize USD 100 trillion from multilateral development banks (MDBs), the private sector, and governments for climate action. |
APPROVED |
| SAP026: Extended Community Climate Change Project – Drought (ECCCP – Drought)
Country: Bangladesh Project Type: Adaptation AE: Pali Karma-Sahayak Foundation (PKSF) Total Financing: USD 29.96 million GCF Financing: USD 24.96 million (grants) Co-Financing: 5 million (PKSF | grants and in-kind) |
The Board had no discussion on this FP and resulted in the FP’s quick approval. | APPROVED |
| SAP027: Solomon Islands Knowledge-Action-Sustainability for Resilient Villages Project (SOLKAS)
Country: Solomon Islands Project Type: Adaptation AE: Save the Children Australia (SCA) Total Financing: USD 31.83 million GCF Financing: USD 24.97 million (grants) Co Financing: USD 6.87 million (Government of Australia; Government of New Zealand; and Government of the Solomon Islands | grants and in-kind) |
The Board had no discussion on this FP and resulted in the FP’s quick approval. | APPROVED |
| SAP028: Women-Adapt: Enhancing the climate change adaptive capacity of smallholder farmer communities in the Poro Region, focusing on vulnerable women and youth
Country: Côte d’Ivoire Project Type: Adaptation AE: World Food Programme (WFP) Total Financing: USD 9.99 million GCF Financing: USD 8.99 million (grants) Co-Financing: USD 1 million (WFP | in kind) |
The BM from France shared his concern over the limited amount asked by the project despite the huge need highlighted in the FP document. The AE responded that it is only allowed to access the amount it proposed due to the restrictions brought forth by its accreditation type with the GCF.
The project was approved by the Board. |
APPROVED |
| SAP029: Ecosystem-based Adaptation (EbA) for Reducing Community Vulnerability to Climate Change in Northern Pacific Small Island Developing States (SIDS)
Countries: Micronesia, Palau, and Marshall Islands Project Type: Adaptation AE: Micronesia Conservation Trust (MCT) Total Financing: USD 9.94 million GCF Financing: USD 8.89 million Co-Financing: USD 1.04 million (MCT; PAN Fund; MIMRA, RMI | in kind and grants) |
CSO AO from developing countries Kairos dela Cruz shared the GCF Observer Network’s support for this FP and its EbA approaches. Furthermore, the intervention highlighted how the project is well-written and developed as it demonstrated how indigenous peoples’ knowledge in adaptation is necessary in achieving responsive climate action. | APPROVED |
Changes to previously approved FPs are also being considered by the Board. The following summarizes the changes proposed:
|
FP Details |
Changes Proposed |
Status |
| FP010: De-Risking and Scaling Up Investment in Energy Efficient Building Retrofits
Country: Armenia Project Type: Mitigation AE: UNDP Total Financing: USD 116.1 million GCF Financing: USD 20 million (grants) Co-Financing: USD 96.07 million (grants and loans) |
Change of FP’s Environmental and Social Safeguards (ESS) Category from C to A due to the inclusion of “building a sustainable energy market” among the proposed project activities.
This proposed change was approved by the Board. |
APPROVED |
| FP098: Development Bank of South Africa (DBSA) Climate Finance Facility
Country: South Africa Project Type: Cross-Cutting AE: DBSA Total Financing: USD 170.6 million GCF Financing: USD 55 million (loans) Co-Financing: USD 114.96 million (grants, loans) |
Proposed changes for the FP are deemed confidential and were deliberated in an executive session. | UNKNOWN |
| FP197: Green Guarantee Company (GGC)
Countries: Brazil, India, Lao PDR, Rwanda, Gabon, Philippines, Trinidad and Tobago Project Type: Cross-Cutting AE: Mitsubishi UFJ Financial Group (MUFG) Total Financing: USD 363 million GCF Financing: USD 40.5 million (equity) Co-Financing: USD 322.5 million (equity) |
Proposed changes for the FP are deemed confidential and were deliberated in an executive session.
It can be recalled that in B34, the Board criticized the project for the multiple no-objection-letters (NOL) that it failed to obtain, and that the project had a lot of financial risks. After numerous back and forths, the FP was approved but the full amount asked by the AE was not approved. MUFG was asked to come back once they obtained more NOLs and that other co-financiers had fully delivered their equity pledges. |
UNKNOWN |
After extensive discussions on funding proposals, the Board turned its attention to the Terms of Reference (ToR) for a feasibility study on the Regional Presence of the Green Climate Fund (GCF). The Secretariat presented a draft ToR, which included exploring options for regional presence beyond establishing GCF regional offices.
Many BMs from developing countries emphasized the need for GCF regional offices. They highlighted the challenges such as time zone differences, language barriers, and unfamiliarity with regional contexts, faced by National Designated Authorities (NDAs), Accredited Entities (AEs), and Board Members when dealing with the GCF, that is currently based in South Korea.
However, most BMs from developed countries encouraged the Board to wait for the results of the feasibility study before concluding the necessity of physical regional offices. Some BMs from developed countries even suggested that there might be alternative ways to achieve stronger regional presence.
The CSOs as expressed by Titilope Ngozi-Akosa, a Civil Society Organization (CSO) Active Observer representing developing countries, support for the establishment of physical GCF regional offices. The CSO intervention emphasized that any such offices must be purposeful, community-driven, and contributory to locally-led climate action and gender equality. Furthermore, she reminded the GCF to evaluate its current regional presence as part of the feasibility study.
The Board approved the proposed ToR, and the Secretariat was requested to present for Board consideration, the feasibility study by B37.
As the GCF is in its second replenishment (GCF-2) phase, the Board is mandated to develop its Policy for Contributions for GCF-2. During the second consultation on the policy, the Board discussed whether there should be a minimum contribution amount and whether enforcement measures should be included in case a contributor fails to confirm or deliver their pledges.
This was the concern raised by most BMs from developing countries. They argued that having a minimum contribution does not exclude a wider donor base and that trust alone is insufficient, given past instances where contributors failed to timely fulfill their pledges to the GCF. Examples were mentioned, such as the pending delivery of the United States’ $2 billion pledge and delayed contribution payments from the United Kingdom.
The BMs from Egypt and Saudi Arabia added that developed countries have an obligation under the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement (PA) to provide climate finance to the GCF. They insisted that this obligation should be reflected in both the GCF’s actions and the language used in GCF policies and documents, and furthered that the current draft of the Policy for Contributions for GCF-2 and the summary of proceedings for GCF-2 interchangeably used the terms “donors” and “contributors.” As strongly raised in the past, the GCF is mandated to mobilize resources from “contributors” that have the financial obligations to support climate action, which are the developed countries according to the UNFCCC and the Paris Agreement.
On the contrary, most BMs from developed countries assume that philanthropic foundations, the private sector, and individuals might be prevented from contributing if there are minimum contribution requirements. They also expressed concerns about the practicality of implementing an enforcement mechanism, stating that trust in contributors is sufficient to ensure the delivery of contributions.
As the Board could not reach a consensus on the draft decision text and policy, they decided to suspend the item to allow for further consultations and in finding common ground on the outstanding issues.
Following the stark contrast in positions between BMs from developed and developing countries regarding the policy for contributions, the Replenishment Facilitator, Mahmoud Moheildin, was invited to present his Summary of the Second Consultation Meeting for the Second Replenishment of the GCF. He reported that the Board had intense discussions during the meeting on the very same issues mentioned.
Furthermore, the Facilitator highlighted ongoing efforts to raise contributions for the GCF, with some resulting in pledges. He mentioned various international events where the Secretariat had been showcasing the achievements of the GCF and the potential progress that could be made with replenishment. The Facilitator welcomed the pledges from Austria (EUR 160 million), Czech Republic (EUR 160 million), Germany (EUR 2 billion), and Monaco (EUR 3 million) for GCF-2.
Most BMs from developing countries emphasized the need for a robust replenishment for political and practical reasons. They believe a strong replenishment signifies the serious commitment of developed countries to address the climate crisis and indicates progress to achieving ambitious progress in the New Collective Quantitative Goal, Global Goal on Adaptation, Just Transition Work Programme, and Loss and Damage Fund–all in line for the 28th Conference of Parties (COP28).
On the contrary, many developed country BMs opposed the idea of having a minimum contribution requirement and an enforcement mechanism in the policy for contributions. The BM from Switzerland specifically mentioned that removing the minimum contribution threshold encourages participation from countries with “emerging markets,” to which the BM from France echoed and argued that not having a minimum contribution requirement would also encourage the non-Annex 1 contributor countries that had contributed to the GCF initial resource mobilization (IRM).
This point was strongly opposed by the BMs from Egypt and Saudi Arabia, and reminded the Board that only Annex 1 countries are obligated to deliver climate finance according to the UNFCCC and PA, and these are actually their obligations, and not merely donations or part of any assistance. They emphasized that terms such as “emerging economies” are not aligned with the UNFCCC and PA and should not be used in official GCF documents.
The Facilitator then closed the discussion by assuring the Board that the GCF-2 is committed to uphold the principles of Common But Differentiated Responsibilities (CBDR), under the UNFCCC. He also reminded the Board that while GCF-2 might seek to make the contributor base broader, additional contributions will never be a substitute for contributions that are obligatory. His remarks was then accepted by the BMs and the report was noted.
The Co-Chair from Pakistan requested the Board to extend a few more minutes to take on the Consideration of IRM Compliance Report C-0006, which was done in an executive session. This prompted the suspension of the webcast and excluded the observers from the discussions.
Day 2 ended after the said executive session. You can catch GCF B36 via webcast and on demand here: https://www.greenclimate.fund/boardroom/meeting/b36#videos.
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