UPDATES: Day 2 of the 40th GCF Board Meeting

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 2 – October 22, 2024

The second day of B40 started with the Board going into a lengthy discussion about the Revised Accreditation Framework (RAF). It can be recalled that at B37, the Board had a discussion about accreditation process issues especially as several entities are about to end their accreditation terms. This prompted the Board to request the Secretariat to present a revised accreditation framework, aimed to serve the dual purpose of simplifying and speeding up accreditation process, and doubling the number of DAEs while maintaining risk management and accountability, and allowing other critical capacity-building and programming functions of the GCF.

The GCF Executive Director, Mafalda Duarte presented the said framework at this meeting, emphasizing that while the GCF has accredited a total number of 134 AEs, there are still 148 entity applicants in the pipeline. The number of DAEs may have increased, but their ability to submit funding proposals and access GCF funding remains limited. The Executive Director explained that the reason why the current accreditation process is lengthy is because it is being used as a capacity building tool, rather than an institutional assessment tool. For her, the process is not only inefficient in terms of time and use of the Fund’s resources, but it also poses a reputational risk to the Fund, citing its inability to timely provide the necessary support needed by developing countries. She emphasized the need to start fixing the problem and implement reforms by discussing at this Board Meeting the principles behind the proposed changes, and continue the discussions until B42 before the RAF takes effect in September 2025.

One of the changes mentioned in the RAF is the removal of the re-accreditation process, which was considered costly and not adding much value to the functions of the Fund.  The Executive Director added that the GCF resources will be better used if the Fund focuses its energies to accrediting entities and implementing better ways to ensure policy alignment without burdening them to repeat the same process all over again. This said approach is envisioned to also be applicable to DAEs, with the Secretariat ensuring they have the capacity to meet the necessary requirements. Another change being proposed involves the self-nomination of entities, enabling private sector DAEs and IAEs to no longer seek government endorsements before applying for accreditation at the GCF. 

While there was consensus about the challenges and need to fix the accreditation framework of the Fund, the Board had diverging views in many of the proposed changes, clearly showing the divide between developed and developing country BMs. A number of BMs representing contributor countries expressed support to the RAF, citing the urgency to do something about the 148 entities in the pipeline, many of which have submitted their applications for over 2 years and have not progressed. BMs from Japan, Norway, Sweden and the US stressed the reputational risk these delays are causing the GCF and added that the proposed reform under the RAF will send a message that the Board is taking much needed action to fix the problem. However, developing country BMs argued that while changes to avoid further delays are needed, there are proposals that may cause more problems, such as the proposed self-nomination process of private sector DAEs.

The BM from Antigua and Barbuda rejected the proposal as she believes this could result in an influx of private sector entity applicants, which at the current process are not required to disclose any documentation of their compliance. The BM from Mali added that the GCF’s partnership with the private sector often excludes non-state national entities, favoring only the banks. This point was strongly supported by the BMs from Nepal, Georgia and Egypt, with the latter saying that bringing in more private sector will lead to a mitigation-centric GCF Portfolio, as the private sector rarely supported adaptation projects. The BM from Finland and Sweden countered these arguments and emphasized the value of having more private sector entities taking part in GCF projects because they not only can provide additional resources, but they can also implement impactful adaptation projects as demonstrated by the 2 adaptation private sector projects submitted recently to the GCF. 

The issue around transparency was also raised by some developing country BMs especially when it comes to the status of the accreditation applications of entities stuck in the pipeline. The BM from Georgia believes that instead of keeping the entities in the dark, the Fund owes them explanation for the delays and information on the next steps to take to proceed with their applications. 

With regards to implementing more assessment measures, BMs from Finland and Sweden deem GCF partners should comply with highest standards, especially when it comes to their alignment with the Paris goal of 1.5C. They believe this is a core issue of the GCF, and the Fund must distinguish itself from other climate funds by ensuring its partners are strongly committed to achieving impactful climate action. Developing country BMs had a different take, citing that Paris compliance should not be factored in so long as the entity is committed to implement projects in their respective countries aimed to deliver results for adaptation and mitigation. The BM from Saudi Arabia added that the proposal to look into the portfolio of AEs under the Monitoring and Accountability Framework (MAF) should not be adopted.

Many developing country BMs also came in strong to point out the policy implications that the RAF may bring to the GCF. The BM from Georgia agreed with the much needed reform, but emphasized that it will take a long process since the RAF will affect the entire business cycle of the GCF. Echoing this point, the BM from Egypt mentioned that a total of 23 Fund policies will need revisions if the RAF is adopted. He then requested the Secretariat to provide an overview of the policy implications so the Board can carefully deliberate before deciding to accept or amend the proposed changes under the RAF. The BM from Saudi Arabia concurred and cited a potential conflict between the proposal to take accreditation decisions in between board meetings (BBM) and what was written in the Rules of Procedure, where accreditation decisions are to be done at in-person Board Meetings. The BM from Canada argued that while he sees value in looking at the role of RAF against the 23 GCF policies, he believes the urgency of the matter must be taken with utmost importance, reiterating once again the reputational risks to the GCF if its accreditation process does not improve

While developed country Board Members (BMs) repeatedly emphasized urgency and reputational risks, developing country BMs argue that the Fund’s core issue is the lack of commitment authority and unfulfilled pledges to the GCF. The BM from Saudi Arabia noted that, regardless of how many entities the Fund accredits, insufficient resources will ultimately hinder the disbursement of GCF funds to developing countries. The BM from Egypt added that efforts by the Board and Secretariat to improve access and partnerships will be in vain if the Fund lacks the resources to implement projects. He emphasized that this poses a greater reputational risk that the Board must address.

The Observer Network concurred with developing country BMs in their call to not adopt the RAF as it stands. Delivered by Tara Daniel, the Active Observer from developing country CSOs, the CSOs believe the RAF does not solve accreditation but instead takes a sweeping approach that has the potential to create more problems. According to them, solutions to the problems of accreditation should prioritize DAEs that were to be a hallmark of the GCF’s operationalisation as a fund. The proposed changes do not differentiate enough between the needs and capacities of large, international entities and those smaller, national and local ones for whom more flexibility and fit-for-purpose approaches are needed. The only solution to these different realities only sends more entities to capacity building, without providing any clear pathway towards access to GCF funding.

The discussion on RAF continued with several back and forths until the co-chair gave the GCF Executive Director the time to respond to some of the concerns raised. The Executive DIrector acknowledged the need to continue the conversation until they arrive at a better RAF that is aligned with the mandate of the GCF. Seeing that more consultations are needed, the co-chair decided to suspend the item.

The Board then asked the Executive Director to once again present a key agenda item of the meeting, which is the Secretariat Work Programme and Annual Administrative Budget for 2025-2027. The presentation showed the 3-year plan of the Secretariat to deliver the priorities outlined in USP-2, and highlight the focus for this year around setting new foundations and transitioning towards an efficient GCF. The work programme objectives include:

  1. Enhancing Country Ownership and Access which will involve streamlining the accreditation approach, strategic country partnerships, structured support for NDAs and DAEs and improve efficiency in the GCF by reducing delays in processing funding proposals.

  2. Delivering Impact and Results that is aimed to achieve 40% increase in programming levels and portfolio size under GCF-2, mobilize capital that will intensify engagement with Private Sector and co-investors, robust monitoring, evaluation and learning (MEL).

  3. Focus on people and institutional strengthening that entail new organizational structure, risk-informed management, data driven, effective governance and GCF-3 ready secretariat

In order to meet these objectives, the following budget allocation for years 2025-2027 is requested by the Secretariat:

2025

2026

2027

GCF Secretariat

USD 112,502,291

USD 122,571,804

USD 130,232,818

Administrative Budget for the Board 

USD 5,394,893 

USD 5,439,904

USD 5,514,530 

Trustee

USD 4,750,000

USD 4,895,000

USD 4,538,000

A clear divide between developed and developing country BMs emerged once again during discussions on the Secretariat’s budget. While many BMs supported the Secretariat’s restructuring plan to make the GCF more efficient, developed country BMs questioned the proposed budget increase. They sought stronger justification, especially given that many of the Secretariat’s planned activities are aimed at enhancing programming results. The BMs from France and Japan requested clarity on how the budget aligns with the Work Programme. The BM from the US scrutinized staff salaries, suggesting a cap on senior-level positions due to their higher remuneration. Others explored ways to reduce costs, including cutting travel expenses and proposing virtual or hybrid Board meetings. There were also proposals to hold only one in-person meeting per year and to conduct all meetings at the GCF headquarters in South Korea.

BMs from developing countries on the hand supported the work programme presented and raised no issues with regards to the requested budget. The BM from Saudi Arabia argued that so long as the expected output is consistent with the budget, the Secretariat should be allowed to spend according to what is needed in order for the GCF to bring transformative changes. The Observer Network also supported the work programme and budget requested by the Secretariat. Kairos dela Cruz, the Active Observer from developing country CSOs, emphasized the importance of ensuring that the GCF has the appropriate and necessary staff capacity to implement fully its plans, including staff that will help DAEs increase access to financing, ensuring monitoring and accountability, and promoting meaningful stakeholder engagement through readiness and all other GCF processes. The CSOs believe that hiring additional staff must be prioritized, and the GCF fund cannot be effective as its portfolio continues to grow without investments in Secretariat capacity, noting the Secretariat has been understaffed for years.

Noting the questions raised, the co-chair decided to suspend the item to allow further consultations between the concerned BMs and the Secretariat, prompting the Board to hear the presentations of the Reports of the GCF Independent Units, namely the Independent Evaluation Unit (IEU), Independent Integrity Unit (IIU), and Independent Redress Mechanism (IRM). 

The summary of their work programme, priorities and budget for 2025 are below:

Work Plan

Budget for 2025

IEU

  • Undertake evaluation reports (i.e. GCF’s Approach to Gender, GCF’s Approach to and Portfolio of Climate Information and Early Warning System Interventions, GCF’s Approach to Country Ownership, GCF’s Simplified Approval Process)

  • Launch the 3rd GCF Performance Review

  • Impact Assessments with support from AEs and country partners

USD 7.8 million

IIU

  • Investigations – currently seeing rise of wrongdoings (34 open internal and external cases)

  • Proactive Integrity Reviews (PIRS) – crucial to identify integrity risks before a violation arise

  • Capacity building

  • International Stakeholder Management

USD 3.9 million

IRM

  • Complaints/Grievances and Reconsideration requests

  • Capacity building

  • Communication and outreach

  • Operational expense (i.e. interns, translation and interpretation)

USD 2.7 million

Although Board comments for this agenda item were minimal, several BMs questioned the IEU’s budget allocation of USD 1.7 million for report writing. Others sought clarification on why all units included budget items for capacity building, to which the heads of the independent units responded and explained its importance, particularly as the unit expands with the addition of new personnel. The Observer Network also expressed support particularly for the workplan and budget of the IIU, emphasizing the value of IIU’s work and the necessary support it needs in light of the increased cases it is handling.

Given the outstanding queries addressed to the IEU budget, the co-chairs decided to suspend the approval of its budget. The work plan and budget requests of the IIU and IRM, were then approved by the Board.

The last agenda item for the second day of B40 is the Consideration of Funding Proposals. While the item usually takes a longer period of time for deliberations, the co-chairs decided to open and consider the partial list of FPs as two Accredited Entities that submitted FPs for B40 will no longer be in the meeting the next day. The Secretariat then presented an overview of the batch of FPs for consideration at this Board Meeting and the key findings are summarized below:
  • 16 FPs amounting to a total of USD 1 billion GCF financing

  • 5 FPs from DAEs, 11 FPs from IAEs, one first time DAE proposal from Pakistan

  • 12 FPs are single-country proposals amounting to USD 470 million

  • First PSAA Project SAP045 from Burundi

  • 8 FPs are adaption only projects

  • 49% are grants, 49% are loans

  • 69% of adaptation funding are for LDCs, SIDS and African States

  • 72.4 metric tonnes of CO2 – mitigation impact

  • 120.6 million beneficiaries – adaptation impact

  • GCF Portfolio will have 54% Mitigation, 46% Adaptation in nominal terms if all B40 FPs are approved

Overall, the Board expressed appreciation for the batch of Funding Proposals (FPs) presented at this meeting, noting the increase in adaptation-only FPs and the geographical balance achieved through single-country recipients. Some BMs highlighted the earlier point about private sector involvement in adaptation projects, referencing specific Adaptation FPs that include private sector participation. The BM from Mali acknowledged the increase in DAE-led FPs but reiterated the concern that DAEs receive a disproportionately small share of funding compared to International Access Entities (IAEs), which receive over 80% of total GCF funding. The BM from Gambia agreed, adding that even in the Simplified Approval Process (SAP), designed to help DAEs access GCF resources more quickly, IAEs have begun submitting proposals under this track. The BM from Egypt also noted that while 12 out of the 16 FPs are single-country projects, the GCF portfolio is still dominated by multi-country projects led by IAEs.

The Observer Network added to the points raised around the batch of FPs for consideration at this Board Meeting. While the CSOs appreciate that the majority of the proposals are single-country projects, it must be noted that just two private sector programmatic proposals comprise 45% of the total funding requested. The consistent issues with programmes remain, including unknown subprojects and unaccountable adherence to standards related to gender, Indigenous Peoples, and environmental and social safeguards. The CSOs argued that when countries, much less sites, remain to be determined, meaningful stakeholder and rightsholder engagement cannot be conducted or gauged.

The CSOs also raised concerns about how the sectoral guides, which were not finalized through transparent processes with the Board, seem to continue to influence the Secretariat’s priorities, as well as AE preferences. Agricultural projects defined by cycles of loan-based access to inputs and technologies for smallholder farmers remain to be considered by the GCF, wherein resiliency is being reduced to a measure of income, instead of focusing on agroecological approaches that respect and promote human rights, gender equality, and food sovereignty, while driving the most robust ecological and climate outcomes. The emergence of carbon sequestration as an emerging trend for FPs was also raised by the CSOs, cautioning the tendency to overlook community displacement in forests and forest lands assignments. The Observer Network urged the Board and the Secretariat to ensure transparency and accountability, to address such potential risks from these projects.

The Board then went to deliberate two out of the 16 FPs for Board consideration. Both FPs were approved, and the summary of the FP information and discussions are below:

Funding Proposals

Comments

Status

FP250: Achieving emission reduction in the Central Highlands and South Central Coast of Viet Nam to support National REDD+ Action Programme goals (RECAF)

Accredited Entity: IFAD

Total financing: $96million

Total financing from GCF: $35million
Co-financing: $61 million (government and IFAD

The Observer Network raised concerns on the FP’s approach to provide coffee small-scale producers with loans that do not seem to be in concessional terms. The FP will also pilot a forest land allocation system of encroached or disputed forestlands to communities, but it was unclear whether FPIC were obtained. 

APPROVED

FP248: Land-based Mitigation and Adaptation through a Jurisdictional Approach in West Kalimantan

Accredited Entity: GIZ

Total financing: EUR 100 million,

Total GCF Financing: EUR 59.5million

Co-financing: EUR 40.7million co-finance (Ministry of Environment, BMZ, KfW, Solidaridad)

The Observer Network highlighted the letter from CSOs in West Kalimantan that was also sent to the Board. The letter details the concerns of local communities regarding the project, asking that the approval of the project be declined. 

The concerns raised the FP’s involvement in palm oil business expansion and its supply chain, which will further trigger deforestation and is clearly contrary to climate change mitigation and adaptation efforts. 

The FP is also believed to lead to the expropriation of Indigenous Peoples’ lands, forests, and resources and negatively impact their customary rights, and for these reasons the CSOs urged the Board to reject the approval of the FP.

GIZ was given the time to explain the accusations and claimed that they have conducted wide consultations with all stakeholders at the national and local levels, including the private sector and IP communities. They also affirmed that GIZ nor its partners in the project do not support the expansion of Palm Oil and will not convert agricultural lands. Instead, they claim to support farmers with their land management structures and provide capacity building.

The Secretariat also responded and expressed appreciation to CSOs for raising the issues, but there is evidence provided that stakeholder consultation was done by GIZ since March 2020 and the assessment showed full compliance with the policy on Indigenous Peoples among others.

APPROVED

Day 2 of B40 adjourned at 18:34 KST.

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