CSO Update: GCF Board Meeting 27 – Day 2

Day 2 started a few minutes late as it took a while for the Board to reach quorum. As soon as they reached enough number of participants, they immediately dove into the items that were not discussed yesterday, starting with the Report of the Activities of the Co-chairs. The item received only one comment from the BM from Norway, who reminded the co-chairs about the B25 agreement regarding the disclosure and circulation of Board documents 21 days prior to a Board meeting. There are a few documents tabled at this Board meeting that were not circulated on time and the Board member asked the co-chairs to avoid normalizing such instance and asserted that it is crucial for all members of the Board to carefully look at the documents before they meet.

Then the Secretariat presented their report on the Status of GCF resources, pipeline and portfolio performance, which are information documents that request for the Board to take note. There have been additional contributions that were noted by the Secretariat since the last Board Meeting and these are from Liechtenstein (50,000 CHF) and Austria (USD 100 million), and contributions that are to be finalized from the Qatar Fund and other institutions. According to the Secretariat there is a great chance that the USD 10 billion target of total committed pledges will be achieved by end of this year. Currently, the total amount delivered under GCF-1 is USD 3.8 billion, which includes the credits earned from early payment of some contributor countries.

In terms of overall portfolio, a total of USD 6.2 billion has been allocated to 143 approved funding proposals, while around USD 22 billion for 441 projects in the pipeline. Of the approved projects, 53% of grant funding falls under the theme of adaptation, while 47% for mitigation. But if we are to look at nominal terms, the fund portfolio is skewed to favor mitigation projects at 61% over adaptation projects at 39% of total GCF Funding.

The portfolio also shows how the Fund favors International Access Entities (IAEs) over Direct Access Entities (DAEs), with the latter receiving 79% of GCF funding and the former at 21% only. The Secretariat also noted that despite the improved efficiency and reduction of number of processing days for disbursement, the expenditure remains low due to implementation challenges brought by the Covid-19 pandemic that led to the delay in implementation for a number of projects, as well as transitions in some governments and co-financing arrangements. Overall, the Secretariat reported that the portfolio quality of the GCF deteriorated, but not as much as anticipated. The Secretariat proposed to continue the engagement with the accredited entities (AEs) and the National Designated Authority (NDAs) and make sure they do not lose the momentum of making the Fund accessible, especially to DAEs.

Comments from the Board were not different from the previous Board Meetings regarding this matter. While many recognize the challenge brought by Covid-19 impacting the Fund’s portfolio, some developing country BMs raised serious concerns particularly on the very glaring fact that the Fund is not meeting its 50:50 adaptation-mitigation target, as well as its goal to prioritize Direct Access Entities (DAEs). Others highlighted the fact that out of the 143 approved projects, the disbursement and expenditure remains very low, while some BMs appeal to increase the contributions to Fund as the amount reported under the status of GCF resources remains very low compared to the actual climate finance needs of developing countries. BM from Egypt reminded the Board this is not how the Fund was envisioned to evolve.

While developing country BMs repeatedly raise the need to do something about the fact that only a few IAEs are getting the chunk of GCF money, BM from Japan responded to defend that this issue is ought to be addressed by the Simplified Approval Process (SAP), which so far have targeted the most vulnerable countries, and have approved a number of Adaptation Projects.

Some developed country BMs recognized the improvement of the Fund portfolio after seeing increased interest in REDD+ projects, as well as projects that have private sector involvement, and those that leverage finance at scale. BM from Norway manifested interest in engaging with the GCF’s work on REDD+, while BM from Sweden encouraged the Fund to get more funding proposals focused on forest and land use.

Other comments of the Board came from Germany, who sought clarity on the compliance of gender policy of the 143 projects approved, to which the Secretariat responded that 13 approved funding proposals are currently on hold because their gender action plans are yet to be finalized, and that they maintain close coordination with the respective AEs so the project can move forward. These 13 are those that were approved during the early stages of Fund.

The Board also discussed the 9th Report of the Green Climate Fund to the Conference of Parties to the UNFCCC. Some developed country BMs led by Sweden and supported by BMs from Germany and France, highlighted the impartiality of the report as it failed to capture how the Fund is underperforming, especially in terms of filling the policy gaps. They went back to blaming the Board for the very slow progress in adopting a number of long overdue policies, hence the need to revisit the contents of the report.

Developing country BMs came in defense and reminded them the purpose of the report. BM from Saudi Arabia, who was supported by BMs from Tanzania and Belize, explained that the report to the COP is supposed to give an overall assessment of how the Fund is performing and should not present issues like disagreements at the Board level and a list of policy gaps that the Board failed to adopt. He added that the COP is not expected to micro manage the Fund and furthered that this year is a unique year that forced all matters to be dealt with slowly. Because of the pandemic, many of the Board members were forced to embrace the difficulties of meeting virtually, and as expected, this led to greater difficulties in adoption of outstanding policy documents. BM from Bhutan agreed and said the blame game will just make matters worse. The COP should see the Board working as one, rather than as a GCF Board with divergent views. He urged the Board to adopt the report.

Sensing the frustration repeatedly raised since Day 1 regarding the policy gaps, the co-chair from Pakistan explained in detail where the Fund is in terms of finalizing outstanding policy documents. He said at the beginning of the year, the co-chairs were given 42 documents that are for consultations and eventually adoption by the Board. Of these, 14 are already approved, 13 are yet to be finalized, and another 13 are still either with the independent units or the secretariat. He asked the Board’s indulgence in understanding that this year has been difficult and the co-chairs are trying their best to complete the tasks at hand virtually.

The report was eventually adopted by the Board and then they proceeded to the Consideration of Funding Proposals.

The Board is requested to consider the approval of 16 Funding Proposals that are equivalent to a total of USD 1 billion of GCF funding. Of the 16, 10 are public sector projects including 3 projects under the Simplified Approval Process (SAP). This batch of proposals is also again skewed towards mitigation at 81% equivalent to USD 821.12 million, and 19% to adaptation for only USD 190 million GCF funding. Majority of the projects (11 out of 16) are again coming from IAEs, while only 5 projects are from DAEs.

In terms of result areas (RA), many of the projects are listed under the Building Cities and Industries and Appliances RA, followed by Forestry and Land Use.

Some of the comments from the Board focused on the fact that there is no funding proposal coming in to the Fund under the Low Emission Transport result area. BM from Germany believed that the Covid-19 showed the world how important the transport sector is, thus the potential of reducing emissions in the transport sector must be tapped by the Fund.

In response to the concerns raised regarding the low amount of funding allocated to DAEs as presented in the Fund portfolio, some developed country BMs like Germany and France were happy to note that in this batch of FPs, a significant amount is allocated to DAEs. However, this is mainly due to the large-scale project from one of the DAEs. The significant amount for DAEs mentioned still does not resolve the stark imbalance of approved projects between IAEs vs DAEs.

Other comments touched on the fact that that despite the reduced processing time for project approval, the quality of FP assessment seem to be compromised as some of the assessments made by the Independent Technical Advisory Panel (ITAP) appears to be inconsistent. BM from Tanzania and Senegal, after expressing their concern about the low number of projects from Africa in this batch of proposals, added that the ITAP should not serve as a hindrance for developing countries’ access to the Fund. BM from Norway echoed the earlier appeal of the BMs to review the ITAP processes in future board meetings.

Erika Lennon, the Active Observer from developed country CSOs was called to deliver our intervention where she highlighted our concerns about the limited information shared on Private Sector proposals and the vague definition and scope of MSMEs for those FPs promoting medium-small sized businesses. We also included in our intervention a very crucial concern regarding the governance structures of some projects and potential conflict of interest for those whose AEs are also the project’s Executing Entities, or those whose NDAs also serves as the executing entity. NDAs are expected to apply due diligence and oversight in the issuance of No Objection Letters for projects submitted to the GCF. It will certainly be problematic and impossible to be non-biased if the NDA is involved in the project as an executing entity.

The Board then moved to the deliberation each Funding Proposals. Below is the summary of discussions and status of whether it has been approved or suspended:

SAP017: Climate Proofing Food Production Investments in Imbo and Moso in the Republic of Burundi
Accredited Entity: IFAD
Total project financing: USD 31.7 million
Total GCF funding requested: USD 9.9 million (grant)
Co-financing: USD 21.72 million (grant) from IFADDeveloped country BMs raised a number of concerns regarding the status of water projects in the region, and some potential environmental risks of the project. BM from US manifested his objection to the approval of the project as Burundi remains to be under the list of countries not meeting the US government’s minimum standards in eliminating human trafficking.Developing country BMs Tanzania and Senegal expressed their support to the FP and expressed how the vulnerable communities in Burundi will benefit from the results of the FP.

Because there was no consensus to approve the FP, the co-chairs decided to suspend the deliberations for later.

DELIBERATION SUSPENDED FOR LATER
SAP018: Enhancing Climate Information Systems for Resilient Development in Liberia (Liberia CIS)
Accredited Entity: AfDB
Total project financing: USD 11.43 million
Total GCF funding requested: USD 10 million (grant)
Co-financing: USD 1 million from GoL (in kind), USD 0.43 million from AfDB (grant)No comments
APPROVED
SAP019: Gums for Adaptation and Mitigtation in Sudan: Enhancing adaptive capacity of local communities and restoring carbon sink potential of the Gum Arabic belt, expanding Africa’s Great Green Wall
Accredited Entity: FAO
Total project financing: USD 9.975 million
Total GCF funding requested: USD 9.97 million (grant)BM from US believed that the project is well designed especially as it involves convergence with the private sector, and added that the FP could strengthen the agriculture sector in Sudan. But he again registered his objection to the project as Sudan remains to be tagged by the US Secretary of State as Sponsors of Terrorism.BM from Japan manifested his support for the project and believe it will promote sustainable agriculture that is badly needed by people of Sudan.

Because there was no consensus to approve the FP, the co-chairs decided to suspend the deliberations for later.

DELIBERATION SUSPENDED FOR LATER
FP141: Improving Adaptive Capacity and Risk Management of Rural Communities in Mongolia
Accredited Entity: UNDP
Total project financing: USD 79.3 million
Total GCF funding requested: USD 23.1 million (grant)
Co-financing: USD 20 million from MET, USD 3 million from NEMA, USD 33.2 million from MoFALIBM from Switzerland welcomed the approval of the project and then requested the AE, UNDP to conduct stakeholder consultation and ensure complementarity with existing projects in the country.In our intervention delivered by Eileen Cunningham, the Active Observer from developing country CSOs, we raised several issues regarding the rights of herding households and manifested that the AE must ensure democratic participation of the herding households in formulation of development plans and provide safeguards and programs in how herding households and communities will be protected against predatory pricing of potential corporate partners of the project, among others.

Because there was no objection from any of the Board members, the FP was approved.

APPROVED
FP142: Argentina REDD+ RBP for 2014-2016
Accredited Entity: FAO
Total GCF funding requested: USD 82 million (RBP)Developing country BMs from the Latin America region were happy to see this project for Argentina, and that the project is very much aligned with the NDC targets of the country. BM from Uruguay also reiterated what was previously manifested by other BMs regarding the potential expansion of REDD+ work in the GCF. BM from Japan added that the project will be beneficial especially with the increase in forest fires in the region.Our CSO intervention, delivered by Eileen Cunningham had a different take about some of the important details of the project. Aside from the fact that the FREL submitted by Argentina to the UNFCCC is only a sub-national FREL, therefore the AE should strive to develop a national FREL, we are also concerned with the lack of clarity in terms of avoiding potential leakage and emissions displacement and no risk assessment and measures to avoid perverse incentives for larger ranchers, among others. We added that the despite the Gender Action Plan presented in the FP, the AE failed to consult national and regional eco-feminists and women’s environmental organizations in the country.

The comments made by Eileen was echoed by the BM from Norway and added that  has reservations with the FP because of the criteria used in the scorecards. But there was no objection and he said that he is open to discuss the matter further with FAO.

With this, the Board approved the FP.

APPROVED
FP143: Planting Climate Resilience in Rural Communities of the Northeast (PCRP)
Accredited Entity: IFAD
Total project financing: USD 201.5 million
Total GCF funding requested: USD 99.5 million (65 million loan, 34.5 million grant)
Co-financing: USD 30 million from IFAD (loan), USD 59.8 million from BNDES (loan), USD 13.72 million from participating states (cash or in kind)BM from Mexico expressed her support for the FP and added that the project took years to develop as a result of collective international action to help the agriculture sector and local farmers in revive the food production in Brazil. Despite having a loan component she added that the GCF’s grant funding will be a huge help for the farmers.Hearing no objections, the Board approved the FP.
APPROVED
FP144: Costa Rica REDD+ RBP for 2014-2015
Accredited Entity: UNDP
Total GCF funding requested: USD 54.2 million (RBP)There were no major comments from the Board, thus the FP was approved.
APPROVED
FP145: RELIVE – Resilient Livelihoods of vulnerable smallholder farmers in the Mayan landscapes and the Dry Corridor of Guatemala
Accredited Entity: FAO
Total project financing: USD 66.68 million
Total GCF funding requested: USD 29.84 million (grant)
Co-financing: USD 7 million from Korea International Cooperation Agency (grant), USD 5.74 million from MAGA (cash or in kind), USD 24.10 million from INAB (grant)There were no comments from the Board, thus the FP was approved.
APPROVED
FP146: Bio-CLIMA: Integrated climate action to reduce deforestation and strengthen resilience in BOSAWAS and Rio San Juan Biospheres
Accredited Entity: CABEI
Total financing: USD 115.7 million
Total GCF funding requested: USD 26.1 million (grant) and USD 37.9 million (loan)
Co-financing: USD 19 million from CABEI (loan), USD 24.3 million from FCPF RBP (RBP), USD 8.3 million from GEF-7 (grant)Comments from the Board started with the BM from US manifesting opposition to the approval of the FP. It was then followed by BM from Germany who requested the co-chairs for more time as she is currently in the process of discussing matters with the AE, particularly on stakeholder engagement and how the FPIC was ensured especially because the FP involved indigenous peoples. Alternate BM from France followed suit and expressed that she is not ready to approve the FP due to concerns raised by CSOs and groups from the ground, and that she is looking forward to set tighter conditions before the project moves forward.Our CSO intervention echoed what many of the developed country BMs raised, especially on the lack of FPIC and the need to carefully monitor project implementation to ensure that the project does not exacerbate existing tensions or contribute to harm of Indigenous Peoples or environment and human rights defenders. We are also concerned as to how the project will benefit large livestock farmers (as those are the ones named in the proposal) rather than small-holder, local farmers, further exacerbating deforestation while failing to address one of its most important drivers.

BMs from the Latin America region expressed their support for the FP. BM from Dominican Republic reminded the Board that such project is what the country needs especially with the recent typhoon that hit the country and damaged the forests of Nicaragua. BM from Spain also defended the proposal and urged the Board to look at the merits of the project and not look at the GCF as a tribunal that will prove if the allegations raised are true or not.

Given the objection and reservations manifested by some members of the Board, the co-chairs decided to suspend the approval of the project.

DELIBERATION SUSPENDED FOR LATER
FP147: Enhancing Climate Information and Knowledge Services for resilience in 5 island countries of the Pacific Ocean
Accredited Entity: UNEP
Total project financing: USD 49.93 million
Total GCF funding requested: USD 47.4 million (grant)
Co-financing: USD 2.38 million combined from 5 project countries (in kind), USD 0.15 million from UNEP (in kind)There were no comments from the Board, thus the FP was approved.
APPROVED
FP148: Acumen – Participation in Energy Access Relief Facility
Accredited Entity: Acumen
Total project financing: at least USD 60 million
Total GCF funding requested: USD 30 million (equity)
Co-financing: USD 30 millionIt was only Erika Lennon, the Active Observer from the developed country CSOs, who gave comments for this project. Our CSO intervention focused on the lack of clarity with regards to the respective roles of Acumen, SIMA/EARF and with Climate CF acting as the financial intermediary for the ring-fenced GCF-support loans. We also raised that there is nothing in the proposal that would include representatives of the end users and customers of the supported companies (households using the distributed energy) in the monitoring and learning component. This is an oversight that must be remedied before approval.Hearing no objections, the Board approved the FP.
APPROVED
FP149: Green Climate Financing Facility for LFIs in Latin America
Accredited Entity: Corporacion Andina de Formento (CAF)
Total project financing: USD 150.2 million
Total GCF funding requested: USD 95 million (senior loans), USD 5 million (grants)
Co-financing: USD 50 million from CAF (senior loans), USD 0.2 million in from CAF (grant)Only comment for this FP came from our CSO Active Observer, Eileen Cunningham, who underscored the need to revise the definition of SMEs in the proposal. Currently, the proposal defines SMEs as companies “that sell up to US$100 million” which is an extremely concerning definition, and not in keeping with how MSMEs are usually defined in the host countries, where the maximum annual turnover for medium-sized enterprises is normally set between US$2.5 to 5 million. We also suggested that the proposal include targetting for micro-scale enterprises in a revised MSME definition, and that lending targets for micro and small enterprises, as well as preferential access for women-owned or women-led micro- and small enterprises, be established as a condition for the approval of this proposal.As there were no objections from the Board, the FP was approved.
APPROVED
FP150: Promoting Private Sector investment through large scale adoption of energy saving technologies and equipment for Textile and Readymade Garment (RMG) sector in Bangladesh
Accredited Entity: IDCOL
Total project financing: USD 340.5 million
Total GCF funding requested: USD 250 million (senior loans), USD 6.5 million (grants)
Co-financing: USD 33 million (senior loans), USD 1 million from IDCOL (in kind), USD 50 million from LFIs (senior loans), USD 0.02 million from Sustainable and Renewable Energy Development Authority (SREDA) (in kind)BM from Germany manifested her support for this FP, which will be the first mitigation project targeting the textile sector in Bangladesh. However, there were additional conditions requested as a result of discussions with IDCOL. The conditions focused on prioritizing equipment with the highest energy saving potential and requesting the AE to monitor and report to the GCF the actual energy consumption of the equipment and technology used in the project.After IDCOL confirmed to comply with the conditions set, the FP was approved by the Board.
APPROVED

Day 2 ended 35 minutes past its scheduled adjournment. Co-chairs informed the Board that they will continue with unopened items, particularly the remaining FPs the next day.

You can catch the proceedings of the GCF B27 at https://www.greenclimate.fund/boardroom/meeting/b27#videos from 9PM – 1:00AM KST.

*Full text of CSO Interventions for B27 can be accessed here.

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