You can watch the GCF B39 proceedings live and on demand here: https://www.greenclimate.fund/boardroom/meeting/b40#videos 

Full transcript of the interventions by the GCF Observer Network are available here: https://www.gcfwatch.org/resources/board-meeting-resources/40th-board-meeting-of-the-gcf 

DAY 1 – October 21, 2024

The 40th Green Climate Fund Board Meeting (B40) is happening from the 21st to 24th October in Songdo, South Korea. This is the last Board Meeting for the year, before members of the Board and the Fund Secretariat attend the COP29 in Baku, Azerbaijan.

On the first day of B40, the co-chairs Milagros de Camps German from the Dominican Republic and Sarah Metcalf from the United Kingdom, welcomed the new board members who are attending the meeting for the first time and outgoing board members that have served the maximum time allowed by their respective constituencies. For the complete list of current members of the GCF Board, see here.

They went to adopt a number of items quite quickly without any comments from the Board. These items include the Adoption of the B40 Agenda, Report of the 39th GCF Board Meeting, Report on the Activities of the Co-chairs and Board Decisions made in-between meetings, which comprised the approval of the latest batch of accredited observer organizations.

The Board was also asked to note the Report of the Independent Units namely the Information Appeals Panel (IAP), Independent Integrity Unit (IIU) and the Independent Redress Mechanism (IRM). Unlike in previous board meetings, the item did not receive any comments from the Board. Only the Observer Network provided detailed comments, which was delivered by the Active Observer from developed country CSOs, Tara Daniel. The intervention raised concerns about the disagreement of the Secretariat with the IRM on the Environmental and Social Policy (ESP) compliance of FP039. The Secretariat argued that the ESP is subordinate to the Accreditation Master Agreement (AMA), and that the terms of the AMA preclude its application to the implementation of FP039, including the Secretariat’s own monitoring of FP039. The observers believe that rather than ensuring that GCF projects and programmes are complying with policies designed to prevent harm and ensure better environmental, social, and sustainable development outcomes, the GCF is hiding behind technicalities and shirking responsibility. The IAP report highlighting the need to strengthen the Secretariat’s capacity as well as the Information Disclosure Policy was also noted by the observers and clarified that access by communities and stakeholders to relevant reports are crucial in order for them to monitor project implementation happening in their respective countries throughout its lifecycle.

After noting the comments from the observers, the Board moved to discuss the Risk Appetite Statement (RAS), which is a document that shows proposed updates to make the Fund’s risk appetite fit-for-purpose and to respond to the Board’s strategic directions based on the Updated Strategic Plan for years 2024–2027 (USP-2). The changes were made to reflect the evolution of the GCF, together with its updated policies and priorities while maintaining alignment with the Fund’s Governing Instrument. In the Secretariat’s presentation, notable changes from previous RAS were noted which include the addition of a section highlighting the risk landscape that the GCF and its partners face. The new RAS also aimed to integrate reputational risk management throughout all Fund activities and introduce changes in zero risk tolerance for behaviors and activities. For the risk management levels, key institutional and programme risks were identified and were matched by corresponding levels of tolerance (i.e. low, moderate and considerable). 

Many members of the Board commended the Secretariat for its work in updating the RAS, citing that the changes proposed are crucial in enabling the effective decision-making and Fund operations. Global North BMs in general believe that such a move highlights the critical role that GCF plays to catalyze finance for climate action, which they argue could attract more “investments” especially from the Private Sector. BM from Japan added that disseminating the RAS among all stakeholders is important so the GCF can further promote the mobilization of private sector finance. 

 

Other BMs expressed concerns as to how the RAS will be communicated to all stakeholders. Aside from having the Risk Dashboard containing periodic updates, the BM from Mali requested the Secretariat to develop a communications plan, incorporating the Fund’s goal to still support high-impact projects in very challenging environments. The BMs from South Africa and Pakistan on the other hand, believe it will also be important to show in the communications how the proposed RAS will trigger revisions for other policies, asking the Secretariat to provide a list of relevant GCF policies that might be affected.

The BM from Pakistan also raised an important point related to risks around funding contributions. While the RAS provided detailed information about managing charges for timely contribution payments, the BM argued that the non-fulfillment of pledges poses a bigger risk for the Fund. He then asked if this issue was factored in the document. The Secretariat recognized that the matter is an outstanding issue for the GCF and explained that they have been consistently requesting the contributor countries for timely payments.

In support of the CSOs, the BM from Canada raised the value of having the Active Observers included in the discussions around the RAS, citing the contributions of the Observer Network to the Board over the years. Kairos dela Cruz, the Active Observer from developing country CSOs then delivered the intervention on behalf of the Observer Network, which raised grave concerns on the risk categorization for policy breaches by partners. For the CSOs, breaches by AEs that lead to violations of human or Indigenous Peoples rights, or harm to communities, are not unavoidable. They are often the result of actions or omissions by entities that can be prevented at all stages of the project’s cycle. In the same way that the GCF intends to promptly respond to allegations or incidences of behaviors and activities for which it has determined to have zero tolerance, the CSOs believe the GCF should act in the same swift and decisive manner when non compliance leads to harm to communities or violations of their rights. Therefore, compliance breaches by AEs should still fall under the zero tolerance categorisation.

After hearing all comments, the Board then approved the RAS from its current form and requested the Risk Management Committee to ensure the alignment of the document with the Risk Management Framework (RMF) of the Fund. 

Another key agenda item that the Board looked into on Day 1 of B40 was the item on Financing Results Based Payments (RBP) for REDD+. It may be recalled that in 2017 the GCF established a Pilot Programme on REDD+ RBPs with a $500 million budget for Request for Proposals (RFP). Under this pilot programme, resources were allocated in 2019 and 2020 to eight countries and were exhausted two years before the pilot programme ended in 2022. At B39, the Board decided to continue supporting REDD+ projects and requested the Secretariat to develop a proposed Policy to “mainstream” REDD+ RBPs in the GCF project activity cycle, which was presented at this Board Meeting.

The Secretariat highlighted that the proposed Policy aimed to build on the mandate adopted at B35, which included the agreement to maintain the use of scorecards with some improvements, keeping the recent baselines, the need for full consistency and compliance with all GCF policies (.e.g. ESS, Gender Policy, Indigenous Peoples Policy) and the need for regular assessment and periodical revisions. Upon the adoption of the Policy, the Secretariat committed to provide separate guidance and templates for concept notes and project design.

The Secretariat also shared that the Policy was designed to achieve geographical balance, ensure equitable access to a wider range of countries and to allow the Fund to have enough fiscal space to support more REDD+ projects by providing results period for short and long-term access. The Policy will be integrated into the Fund’s Readiness Program, especially in explaining technical items such as the Forest Reference Emission Levels (FRELs).

There was consensus from the Board to approve the Policy, and many recognized that the Paris goal of achieving 1.5C will not be possible without the forests. The BM from Norway, as a staunch advocate of REDD+ projects and reforestation efforts even outside the GCF, believe that the Fund is taking the right direction in mainstreaming REDD+ in its project cycle especially with the corresponding potential mitigation impact forests bring. The BM from the US added that REDD+ RBPs could help countries achieve their NDC targets. The BMs from Brazil and the Philippines also noted that the $8/tonne carbon pricing is a reasonable price that could attract the participation of more countries, with the latter emphasizing the need for a review of the said price per programme period.

However, there are some BMs who raised concerns about the eligibility of some countries in accessing the RBPs given that a level of technical capacity is required to understand the reference periods and scorecards. The BM from the Gambia was particularly worried about the LDC countries that need to recalculate their FRELs, and requested the Secretariat to provide standard guide and case studies demonstrating the necessary procedure for LDCs. This point was echoed by the BM from Mali who believed that the GCF Readiness Program will be crucial in cascading the information to NDAs, to which the Secretariat strongly agreed and affirmed that the GCF REDD+ team will work closely with the Readiness Program to ensure capacity building provision.

Upon the adoption of the agenda item, the Board then proceeded to look into the Consideration of Accreditation Proposals. The Secretariat introduced the items and presented a snapshot of where the GCF is at in terms of accrediting new entities for 2024. 

The Secretariat together with the Accreditations Panel (AP) shared that they aim to further increase its capacity to process at least 25 new applicants per year. It was shared that through the Project Specific Assessment Approach (PSAA) and a streamlined review process, the Fund was able to increase the number of applications it processed for this year. As of September 30, 2024, a total of 134 entities have been accredited and considered GCF partners, of which 116 have signed their Accreditation Master Agreements (AMAs) and are eligible to submit FPs and implement projects. However, the number of applicants in the pipeline remains significant at 148.

Despite the significant increase of accredited DAEs, some BMs reiterate that progress has been limited and the need to enhance their capacity remains. The BM from the Gambia mentioned that despite outnumbering the IAEs, DAEs still receive only 20% of the total GCF Funding, compared to the 80% accessed only by a few IAEs. She also expressed disappointment seeing only two DAEs from LDC countries accredited, one of which was tabled only at this Board Meeting. The BM from Mali pointed out that most of the DAEs accredited are national banks, cautioning the Secretariat how the primary business model of banks may not be suitable for the GCF especially for adaptation projects. He then urged the Secretariat and the Accreditation Panel to consider a diverse range of DAEs and not favor only banks. 

Recalling the supplementary budget approved by the Board to support the Secretariat’s work related to accreditation, the BM from Sweden sought clarity on how the resources were used to address potential bottlenecks for moving applicants in the pipeline in the accreditation process. The Secretariat then explained that the budget was used to hire an independent firm to update the Accreditation Framework and further capacitate the Accreditations Panel. They also shared that the main challenge for AEs not progressing is due to the unresponsiveness of some entities.

Tara Daniel, on behalf of the CSO Observer Network also clarified why prior to B40, 19 entities were accredited even without the signed Accreditation Master Agreements (AMAs). The CSOs additionally raised that under the Fund’s new system of pass/fail screening, there may be entities that would either fail to be approved, or would become AEs without any systematic check on their ability to enact GCF policies because the post-accreditation process would primarily look at how such policies were enacted in relation to specific activities rather than across the institution. The CSOs believe that the screening in the accreditation process must help organizations develop better gender standards, capacity to implement environmental and social standards, and grievance redress mechanisms.

After hearing the comments from the presentation, the co-chair then invited the Board to approve the accreditation new applicants for consideration:

• APL 139: Banco Desarrollo Productivo – Sociedad Anónima Mixta – DAE from Bolivia

• APL 140: Bank of the Cook Islands Limited (BCI) – DAE from Cook Islands

• APL 141: Banque Nationale de Développement Agricole (BNDA) – DAE from Mali

• APL142: Asian Infrastructure Investment Bank (AIIB) – IAE based in China

• APL 143: United Nations Children Fund (UNICEF) – IAE

The Board was also requested to approve the upgrade request of the Caribbean Development Bank (CDB), allowing it to undertake larger sized projects and programmes.

Only the BM from Sweden and the Observers raised comments to the applications presented. Recognizing the current political situation in Mali, the BM from Sweden asked the Accreditations Panel about potential challenges that APL141 might encounter in fulfilling its obligations in implementing GCF projects. The member of the Panel then assured the Board that based on research and interviews conducted, there are no disruptions in the operations of the applicant and there is no reason for the GCF to deny BNDA of the accreditation. While the BM acknowledged the explanation, he requested to record his abstention from the approval of BNDA’s accreditation.

On the accreditation of APL 142, Kairos dela Cruz on behalf of the Observer Network raised concerns about the accreditation of AIIB without any conditions especially given several complaints raised against AIIB’s grievance mechanism and its track record in supporting fossil fuel expansion. The CSOs raised that AIIB’s Project-Affected Peoples Mechanism has significant shortcomings. The Mechanism has yet to accept a single case, with the five submissions made to it all deemed ineligible, and despite the fact that other institutions’ accountability mechanisms have received 34 complaints regarding AIIB’s co-financed activities. Its Energy Sector Strategy is also questionable as AIIB continues to implement fossil fuel expansion, including further extraction of oil and gas, as well as the use of synthetic fuels like hydrogen and ammonia, and technologies such as Carbon Capture and Storage. The CSOs believe the GCF has an important role in pushing AIIB towards a paradigm shift away from all forms of fossil fuels, to achieve the transformative impact that the Fund seeks to deliver through its accredited partner network.

After hearing no further comments, the Board approved all accreditation applications and the upgrade request.

The Review of the Board Committees, Panels and Groups is another agenda item that showed the diverging views of Board Members. The document is part of the co-chair’s proposal to increase the efficiency and effectiveness of Board Committees, especially in light of the goals specified in USP-2. Acknowledging that issues were noted with regards to reaching quorum, consensus-based mode of committee operations, lack of transparency, and outdated committee structure, the co-chairs proposed changes to enhance their ways of working and requested the Board to adopt. These changes include:

• Reduction of quorum from ⅔ to ½

• Changing consensus-based decisions at the committee level

• Implementing open-inclusive and consultative committee meetings that allow other non-member BMs and alternates to observe

• Setting the maximum committee size from 6 to 8 and allowing for joint committee meetings

Many BMs were in favor of the proposed changes citing these would lead to effective governance, enhance the work of the Board and ultimately attract contributions to the Fund. BMs from Canada and Antigua and Barbuda were in favor of the proposed changes and added the need to bring in the Active Observers in the committee processes as well. BMs from Italy, Norway and Japan also expressed support, believing that Board advisers can also be considered to represent the BMs in the committee meetings. 

Strong opposition from a number of BMs were however noted. BMs from Egypt and Pakistan attest that they have never encountered the issues mentioned and do not see the need to implement these changes. They are concerned that some of the proposed changes may not be aligned with the Rules of Procedure. Expanding the maximum committee size may also not be advisable especially for developing country BMs who have limited capacity to join several committees. The BM from Pakistan pointed out that the sharing of seats per constituency among developing country BMs is different from developed countries who have more flexibility in sharing the seat with their alternates coming from the same country. BM from South Africa echoed this concern and emphasized that the reduction of quorum can potentially compromise the balanced representation of developed and developing country BMs in committees, and may be unnecessary.

The Observer Network generally supports the proposed changes, however they emphasized the need to include Active Observers in the committee processes especially since many policy proposals are discussed in respective committees first. Tara Daniel, the Active Observer from developed country CSOs delivered the intervention and noted how most CSOs have extensive history in the GCF, from which the Board and the relatively new Secretariat can benefit from. 

As some BMs expressed disagreement with the adoption of the decision on this item, the co-chair decided to suspend the Board decision and proceed with the Status of the GCF Resources, Pipeline and Portfolio, which are information documents that the Board took note of.

Key information from the Secretariat’s presentation are as follows:

• USD 33.1 billion = total amount pledged from IRM, GCF-1 and GCF-2

• USD 18.9 billion = total amount received from IRM, GCF- and GCF-2

• USD 1.4 billion = total amount received from the $12.8 billion pledges under GCF-2

• USD 632 million = Approved funding amount for GCF Readiness Programme

• There was overall decrease in the duration from funding proposal approval to disbursement

• USD 62 million = total committed Project Preparation Facility (PPF) requests. This represents the 100 approved PFFs, which meant increased support to AEs, DAEs and on Project Specific Assessment Approach (PSAA) for FP preparation

• 6 out of 270 GCF projects have been completed

• 71.2 million tonnes emissions reductions achieved from projects under implementation

• 140 million people benefitted from adaptation and cross cutting projects under implementation

The presentation received mixed reactions from the Board. Many BMs from developed countries were happy to see the numbers, especially the figures that show the total emissions reductions and adaptation impacts. BMs from Sweden and Germany believe that these will be helpful in attracting “investments” from the Private Sector and put the GCF in a favorable position in the financial landscape. However, some BMs questioned the calculation of the said figures as there was no clear explanation how these were derived. The BM from France was curious which metric was used to calculate the mitigation impacts, while the BM from Egypt requested for clarification about the direct and indirect beneficiaries of adaptation projects and the BM from Mali questioned whether counting the number of people is the right metric to measure enhanced resilience against climate impacts. The BMs from Antigua and Barbuda and Canada also urged the Secretariat to go beyond quantitative measures and show the qualitative impacts of GCF projects in the report. As a response, the Secretariat committed to provide more information to Board Members, although the time when these will be clarified was not clear.

Tara Daniel on behalf of the Observer Network raised concerns on the Fund’s alarmingly low resources, reiterating that only $1.2 billion of the $12.83 billion pledged under GCF-2 has been delivered so far, while only $4.12 billion of the pledges have been confirmed, leaving two thirds of pledges unconfirmed. Additionally, a significant number of concept notes and funding proposals remain stuck in the pipeline, with 48% of CNs and 62% of FPs submitted more than two years ago. The CSOs highlighted that this downward trend in fulfillment of pledges in the GCF, compounded by the growing backlog of concept notes and funding proposals in the pipeline should be addressed sooner rather than later. 

The intervention of the Observer Network was then applauded by the BM from Egypt, emphasizing that the unconfirmed and undelivered pledges from IRM, GCF-1 to GCF-2 has been a perennial problem of the Fund. He echoed the points made by the CSOs and asked the Secretariat about measures they are taking to resolve the matter, to which the Secretariat explained that constant follow-ups are being done to urge contributor countries to fulfill their pledges. Along the same lines, the BM from Mali pointed out the significant delays in fund disbursement that was noted in the presentation. The progress presented under the Project Preparation Facility (PPF) appears to be inconsistent with the delays in the disbursement of funds, prompting him to ask the Secretariat whether the problem lies with the capacity of recipient countries to meet certain conditionalities.

After hearing all comments, the co-chair asked the Board to note the information documents. It was the last item of the day, and the Board adjourned the meeting at 17:56 KST.

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