UPDATES: 38th GCF Board Meeting
From The Asian Peoples’ Movement on Debt and Development (APMDD)
Note: The APMDD Team monitored the proceedings of the GCF B38 remotely. Some information and updates are from the efficient coordination of the GCF Observer Network. To know more about the CSO engagement with the GCF, check www.gcfwatch.org. You may also view the full transcript of the interventions of the GCF Observer Network here.
Administrative Matters
Opening of the Meeting
Originally scheduled to run from 4 – 6 March 2024, the 38th Meeting of the GCF Board was reduced to a 2-day meeting in Kigali, Rwanda. This was due to the sudden and unfortunate passing of the BM from Brazil, Daniel Machado da Fonseca due to a heart condition. The Board spent Day 1 commemorating the BM from Brazil, with a program and some remarks from the Minister of Environment of the Republic of Rwanda as well as from some members of the Board.
On Day 2, the Board is back in business led by the new co-chairs for 2024-2025. B38 was the first Board Meeting of the newly elected co-Chairs from the United Kingdom (UK) and the Dominican Republic (DR). However, due to an urgent family matter that the co-Chair from the UK had to attend to, the BM from the United States (US) was appointed by the developed country constituency to serve as a temporary Co-Chair in lieu of the co-chair from UK’s absence. It can be recalled that the BM from the US served as the Co-Chair from the developed country constituency in the previous year.
A number of BMs have also not been able to attend B38 in person, as announced by the Co-Chair from the DR.
Adoption of the Agenda and the Organization of Work
The GCF Secretariat, in consultation with the Co-Chairs, is mandated to develop the agenda that the GCF Board will tackle during Board Meetings. It has been a common practice for the Secretariat to consult the entire Board on each agenda item that will be included before the Board Meeting. However, the BMs from Saudi Arabia and Egypt noted that they were not consulted by the GCF Secretariat prior to B38 and reminded that BMs need to be consulted to make proceedings faster, and in accordance with the principles of transparency and accountability.
Administrative Budget and Accounting Framework
In response to the Board’s request in B34, the Secretariat presented a revamped budget system with the following features:
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Multi-year budgeting synchronized with replenishment periods
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Annual budget caps
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Contingency mechanism for Board-mandated activities lacking budgetary provisions
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Rollover of unspent funds into the next budget cycle for approved contracts
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Potential creation of a capital budget
While generally supportive, some developing country Board Members expressed concerns regarding GCF underspending, urging the Secretariat to align its budget proposal with the realistic pace of hiring processes. Tara Daniel, Interim Alternate Observer from Developed Country CSOs, echoed concerns from the Observer Network with regards to the transparency and accountability of a multi-year budget. The CSOs emphasized the urgency for the GCF Secretariat’s budgeting, staffing, and utilization to swiftly address the escalating impacts of the climate crisis.
Despite these concerns, the Board ultimately approved the new Administrative Budget and Accounting Framework proposed by the Secretariat.
GCF Compensation Philosophy
In order to improve the operations of the Fund, the GCF executive director (ED), Mafalda Duarte, proposed changes to the Fund’s Staff Compensation structure, as presented in the draft GCF Compensation Philosophy. The said move is aimed at enhancing the Secretariat’s talent pool and prioritizing competitiveness, equity, transparency, and predictability among the members of the Secretariat. It features performance-based salary increases and accountability, drawing a contrast with the compensation philosophies of the Asian Development Bank (ADB) and the World Bank Group.
Tara Daniel, Interim Alternate Active Observer from Developed Countries, emphasized the importance of including gender equity in the compensation philosophy. The Observer Network stressed the need for a fully-staffed Secretariat with diverse skills and awareness of various social and political issues needed for climate crisis-solving matters. This intervention was echoed by several BMs, particularly regarding gender equity, urging them to raise the need to bridge the pay gap between men and women and include staff benefits like work-life balance and health insurance. The Secretariat and the executive director acknowledged these comments and committed to add them as they further develop the Fund’s Human Resource framework.
Dates and Venues of Upcoming Board Meetings
The 39th Board Meeting of the GCF will be held on 15 to 18 of July 2024, at the Republic of Korea. The exact venue, whether it will be at the GCF Headquarters in G-Tower, Songdo, Incheon, South Korea, or in some other venue, is still to be determined a few weeks before the approved dates.
Consideration of Accreditation Proposals
The GCF Secretariat provided an overview of the GCF accreditation pipeline and updates on significant accreditation changes following the GCF’s new accreditations framework and strategy. The summary of presentation is below:
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The Secretariat and the Accreditations Panel is set to increase its accreditations processing capacity from 15 to 25 per year. The said expansion came from the B37 decision to streamline the accreditation process and extend the accreditation terms to up to 3 years, minimizing the need for reaccreditation. Since B37, the Secretariat and AP have endorsed 8 new applicants for Board consideration.
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The Project-Specific Accreditation Approach (PSAA) is underway, aiming to accredit entities solely for specific projects. The Secretariat aims to present the first PSAA project for Board consideration by B40.
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So far, there are 155+ applicants, with 129 being national and regional direct access entities (DAEs), including 19 from the private sector. Per the Secretariat, this addresses the demand for more accredited direct access entities (DAEs), as continuously raised by several BMs and the GCF Observer Network in the past.
Despite these advancements, some developing country Board Members expressed concerns over long accreditation timelines and limited DAE capacity to complete the process and access funding. The Secretariat confirmed that resources have already been approved for capacity-building programs tailored to meet the needs of the entities. Additionally, the Secretariat emphasized the importance of regional balance and active engagement with the entities in expediting the accreditation process.
In the CSO Intervention, Kairos dela Cruz, GCF CSO Active Observer from Developing Countries highlighted the Network’s long standing engagement with the GCF and raised concerns about allowing applicants to apply their own systems and policies over the prescribed GCF policies on environmental and social safeguards, gender, redress, and stakeholder engagement. The CSOs underscored that a self-reporting setup could potentially bring reputational risks to the Fund should there be misalignment of policies and standards applied by the entities that have already been accredited by the GCF. The Secretariat failed to address this concern when they responded to the comments made.
The Board then proceeded to consider the 8 new applicants, which were all easily approved with very few comments from the Board. The summary and status are below:
Name and Details of Applicant |
Country |
Type |
Size/ESS Risk Category |
Status |
APL125 – Banco de Comercio Exterior de Colombia, S.A. (Bancòlodex) |
Mexico |
Direct Access, National |
Medium Category B, I-2 |
APPROVED |
APL126 – Banco Nacional de Obras y Servicios Públicos, S.N.C. (BANOBRAS) |
Colombia |
Direct Access, National |
Medium Category B, I-2 |
APPROVED |
APL127 – Cities and Villages Development Bank (CVDB) |
Jordan |
Direct Access, National |
Medium Category B, I-2 |
APPROVED |
APL128 – Community Development and Investment Agency of the Kyrgyz Republic (ARIS) |
Kyrgyzstan |
Direct Access, National |
Medium Category B |
APPROVED |
APL129 – Nepal Investment Mega Bank (NIMB) |
Nepal |
Direct Access, National |
Medium Category B, I-2 |
APPROVED |
APL130 – Corporación Interamericana para el Financiamiento de Infraestructura, S.A. (CIFI) |
Latin America and the Caribbean |
Direct Access, Regional |
Medium High, I-1 |
APPROVED |
APL131 – Terra Global Capital, LLC (Terra Global) |
United States (based in) |
International Access |
Small Category B, I-2 |
APPROVED |
APL132 – International Tropical Timber Organization (ITTO) |
Japan (based in) |
International Access |
Micro Minimal to no risk |
APPROVED |
There were only a few comments from the Board, but the CSOs raised very important concerns as expressed by Interim Alternate GCF CSO Active Observer from Developed Countries Tara Daniel. The CSOs noted that APL131 – Terra Global Capital, LLC (Terra Global) is primarily involved in a carbon offset project development, but its accreditation application failed to disclose this information. As repeatedly raised in the past, carbon offsetting remains as a false and unproven “solution”, and a dangerous option and distraction from responsive and just solutions to the worsening climate crisis, and entities that are directly engaged in such activities bring immense reputational risks to the GCF. Despite this strong intervention, the CSO intervention was merely noted and Terra Global Capital was accredited by the GCF Board. Before closing the agenda item, the Board noted the conditions set for the accreditation of the 8 applicants.
Consideration of Funding Proposals
Before deliberating the Funding Proposals (FPs) one by one, the GCF Secretariat provided an overview of the overall GCF project pipeline, as well as some information about the FPs for consideration at B38. Summary of the presentation is below:
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Regional balance: Current GCF portfolio shows a 38% allocation of GCF funding to Africa, 34% to Asia-Pacific, 24% to Latin America and the Caribbean, and 4% to Eastern Europe
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Financial instruments: 42% of GCF funds are in the form of grants, 40% loans, and 12% in the form of equity. The remaining 6% come in the form of guarantees and results-based payments.
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Mitigation-Adaptation Balance: GCF remains far from the 50:50 mandate, with only 44% of funding going to Adaptation and 56% to Mitigation
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Result Areas: Energy access and power generation continues to receive the bulk of GCF funding by over USD 3 billion. This is followed by adaptation funding, as well as buildings, cities, industries, and appliances. Low emission transport, as well as ecosystems and ecosystem services remain as the lowest recipient of GCF funding, only over USD 1 billion.
The BM from Egypt raised several concerns regarding the total funding amount requested for the batch of FPs considered at B38. He believed USD 489.8 million is too low and not consistent with the ambitious goals set forth under the second replenishment of the Fund (GCF-2), to which the Secretariat confirmed that a low commitment authority is once again the reason why only a smaller number of FPs are being considered for this Board Meeting. It can be recalled that during the past BMs prior to GCF-2 the problem of having a low commitment authority affecting the number of FPs being considered came up. As a response, the Secretariat shared that ongoing efforts to seek the early encashment of pledges from contributor countries are already underway in order to increase the commitment authority for the succeeding GCF Board Meetings.
The BM from Egypt also raised concerns about the adaptation components of cross-cutting projects and emphasized the need for projects to directly address adaptation needs. While the Secretariat assured adherence to GCF standards in evaluating adaptation components, the BM from Egypt underscored the importance of ensuring effective utilization of adaptation funds as such funds are already very meager in the first place.
Other Board Members also echoed the concern raised regarding the need to increase funding allocation for projects in the transportation sector. The BM from Kenya stated that finance for energy is still important to drive development in many African countries, to which the Secretariat echoed, in response to the intervention of the BM from Egypt that the GCF must shift its focus from funding energy projects to adaptation projects. The Secretariat also mentioned that there are improvements in balancing GCF spending across different result areas throughout different replenishment periods.
The BM from Saudi Arabia and some BMs from both developed and developing countries focused on the prioritization of the FPs and how capacity-building resources could help Direct Access Entities (DAEs) in submitting more quality FPs. The Secretariat argued that its prioritization process remains to be consistent with the GCF’s Investment Framework, and efforts are being made to proactively capacitate the DAEs
CSO Active Observer from Developing Countries, Kairos dela Cruz, highlighted concerns raised by the Observer Network regarding inconsistencies in applying GCF policies in the FPs. The CSOs emphasized the importance of seeking the views of various stakeholders in the development of sectoral guides, and in ensuring robust gender action plans and stakeholder engagements in FP development especially since these have been noticeably absent in the recent FPs approved by the Board. Additionally, the CSOs stressed the need for consistent evaluation of the supply chains of GCF funded activities and its respective impacts on human rights, the environment, and vulnerable groups to ensure the integrity and effectiveness of GCF-funded projects.
The following table details the funding proposals approved in B38:
Funding Proposal Details |
Comments and Discussions |
Status |
Country: Cook Islands AE: Ministry of Finance and Economic Management (MFEM), Cook Islands Type: Adaptation ESS Risk Category: C Total Financing: USD 13.4 million GCF Contribution: USD 12.51 million (grants) Co-Financing: USD 0.88 million (in-kind) |
No comments from the Board |
APPROVED |
SAP035: Building the Adaptive Capacity of Sugarcane Farmers in Northern Belize (BaC-SuF) Country: Belize AE: Caribbean Community Climate Change Centre (CCCCC) Type: Adaptation ESS Risk Category: C Total Financing: USD 38.84 million GCF Contribution: USD 25 million (grants) Co-Financing: USD 13.84 million (in-kind) |
The BM from China expressed that the AE should not violate the “One China Policy” when implementing SAP035. This was said by the BM from China for the record. |
APPROVED |
SAP036: Sierra Leone Coastal Resilience Project (SLCRP) Country: Sierra Leone AE: Save the Children Australia (SCA) Type: Adaptation ESS Risk Category: C Total Financing: USD 26.86 million GCF Contribution: USD 25 million (grants) Co-Financing: USD 1.86 million (grants) |
No comments from the Board |
APPROVED |
SAP037: Avaana Sustainability Fund Country: India AE: Small Industries Development Bank of India (SIDBI) Type: Cross-Cutting ESS Risk Category: I-3 Total Financing: USD 120 million GCF Contribution: USD 24.5 million (equity) Co-Financing: USD 95.5 million (equity) |
The BM from China expressed that GCF funds should not be used in disputed areas such as mountains and seas. The BM from Switzerland asked how the project will bring income-generating opportunities for women, to which the Secretariat answered by stating that 50% of the employment that will be created by the proposal will go to women. Tara Daniel, Interim Alternate CSO Active Observer from Developed Countries, conveyed the Network’s rejection of the proposal approval due to its risky financial model and the indicative pipeline of subprojects, which pose high risks. The Network emphasized concerns about the lack of clarity regarding how the proposal plans to manage these risks. |
APPROVED |
FP225: E-Mobility Program Countries: Armenia, Georgia, Indonesia, Kazakhstan, Kyrgyz Republic, Nepal, Uzbekistan AE: Asian Development Bank (ADB) Type: Cross-Cutting ESS Risk Category: B Total Financing: USD 454.5 million GCF Contribution: USD 169.92 (USD 64.92 million in grants; USD 105 million in loans) Co-Financing: USD 284.48 million (USD 240 million in loans; 44.48 million in grants) |
The BM from Denmark raised the concern that consultations for the development of the proposal were done in 2018. She asked if such consultations remain relevant given that 6 years have passed since then. This was answered by the AE by stating that they are still closely engaged with the recipient countries from then until now. The BM from Egypt raised the concern that the claimed resilience and adaptation components of the project seems “a bit of a stretch”, in comparison to other more pressing resilience and adaptation that needs to be addressed. He called the attention of the Secretariat on the framing of the project as cross-cutting given this observation. The AE defended that resilient transport infrastructure is important towards the success of the program, and this was echoed as well by the Secretariat. Lastly, the Secretariat stated that it rigorously examines each adaptation component, ensuring that such are aligned with the GCF’s policies. Left unconvinced, the BM from Egypt did not object to the proposal’s approval, but stated for the record that he is “protective” of the very meager amount of grant dollars going to adaptation and wants to make sure that adaptation funding are grants-based. Kairos dela Cruz, GCF CSO Active Observer from Developing Countries, delivered critical comments regarding the lack of information on critical mineral sourcing for batteries, environmental and social risks, and inadequate stakeholder consultations. The Network also highlighted concerns about the proposal’s impact on the debt burden of target countries, urging for measures to mitigate adverse effects. |
APPROVED |
FP226: Resilient Puna: Ecosystem Based Adaptation for Sustainable High Andean Communities and Ecosystems in Peru Country: Peru AE: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Type: Adaptation ESS Risk Category: B Total Financing: EUR 78.32 million GCF Contribution: EUR 40.79 million (grants) Co-Financing: EUR 37.53 million (EUR 10.31 million in grants; EUR 17.83 million in-kind; EUR 9.39 million in loans) |
Kairos dela Cruz shared the Network’s appreciation for the adaptation approach but raised concerns about consultation equivalence to FPIC and the proposal’s gender action plan. The Network emphasized the importance of genuine engagement with indigenous communities and ensuring meaningful participation of all stakeholders. |
APPROVED |
FP227: Increase Resilience to Climate Change of Smallholders Receiving the Services of Inclusive Agricultural Value Chain Programme (DEFIS+) Country: Madagascar AE: International Fund for Agricultural Development (IFAD) Type: Adaptation ESS Risk Category: B Total Financing: USD 150.85 million GCF Financing: USD 53.86 million (USD 41.04 million in grants; USD 12.81 million in loans) Co-Financing: USD 96.99 million (USD 37.43 million in grants; USD 59.55 million in loans) |
Some developing country BMs raised the concern about the high loan component of the project, citing potential issues of debt sustainability to be faced by Madagascar which is a least developed country (LDC) that is already struggling with loan repayments. The AE mentioned that they have already considered the debt sustainability aspect when designing the financial setup of the proposal, and assured the Board that the concessionality from the GCF loan component will be passed onto countries accordingly. They also assured the Board that smallholder farmers will get access to grants. Tara Daniel emphasized the Network’s opposition to loans for adaptation initiatives in LDCs, raised concerns about climate-smart agriculture technologies, and called for explicit mechanisms in the gender action plan to support women’s participation. The Network stressed the necessity of prioritizing the needs and rights of vulnerable communities in climate adaptation efforts. The AE, in an attempt to answer the outstanding concerns of CSOs, only mentioned that CSA, in this regard, will include fertilizers, and that food sovereignty will be addressed through ensuring the access of beneficiaries to nutritious food. |
APPROVED |
FP228: Cambodian Climate Financing Facility Country: Cambodia AE: Korean Development Bank (KDB) Type: Cross-Cutting ESS Risk Category: I-2 Total Financing: USD 109 million GCF Contribution: USD 55 million (USD 50 million in loans; USD 5 million in grants) Co-Financing: USD 54 million (USD 50 million in loans; USD 4 million in -kind) |
No comments from the Board |
APPROVED |
FP229: Acumen Climate Action Pakistan Fund Country: Pakistan AE: Acumen Fund, Inc. Type: Cross-Cutting ESS Risk Category: I-2 Total Financing: USD 90 million GCF Contribution: USD 28 million (USD 25 million in equity, USD 3 million in grants) Co-Financing: USD 62 million (USD 55 million in equity; USD 7 million in grants) |
No comments from the Board |
APPROVED |
FP230: Kuali Fund-GCF Countries: Brazil, Colombia, El Salvador, Guatemala, Honduras, Mexico, Panama AE: Compañia Española de Financiación del Desarrollo (COFIDES) Type: Mitigation ESS Risk Category: I-2 Total Financing: EUR 128.2 million
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