CSO Update on the 34th Green Climate Fund Board Meeting – Day 3

Prepared by the The Asian Peoples’ Movement on Debt and Development (APMDD)

DAY 3 – 19 October 2022

Access the full intervention of GCF Observer Network HERE


The third day of the GCF B34 started with the agenda item Consideration of Accreditation Proposals, where the Secretariat and the head of the Accreditation Panel presented an overview of the status of accreditation and re-accreditation applications of the Fund.

As of September 2022, the GCF’s portfolio is comprised of 113 Accredited Entities (AEs), including 71 Direct Access Entities (DAEs) and 42 international access entities (IAEs), that are at varying stages of completing the process by having a signed and effective accreditation master agreements (AMA). Of these, 71 AEs have signed their respective AMAs, while 27 AEs approved to be accredited and re-accredited are still under negotiations to complete the AMAs. Since the previous Board Meeting, the GCF Secretariat has signed 8 AMAs including those with amended AMAs that are up for reaccreditation.

As for the status of application in the pipeline, a total of 143 entities are seeking accreditation to the GCF. Of these, 14 new applications are under the Accreditation Panel Review, while 94 applicants are still under the Stage 1 check. There are also 35 applicants that are in the process of settling their respective application fees in order to begin stage 1. The Secretariat also reported that they are continuously working with DAEs and NDAs to identify entities that may be nominated to seek accreditation to GCF in line with the role of an AE and in alignment with the country programming process


The head of the Accreditation Panel, Mark Alloway, then presented the applicants for accreditation and re-accreditation for B34. These are:


RAPL009 Ministry of Environment of Rwanda (MOE Rwanda)

Direct Access Entity – Rwanda

Applying for reaccreditation upon completion of required conditions, no change in accreditation type

RAPL010 National Bank for Agriculture and Rural Development (NABARD)

Direct Access Entity – India

Applying for reaccreditation, no change in accreditation type

RAPL045 PT Sarana Multi Infrastruktur (PT SMI)

Direct Access Entity – Indonesia

Applying for reaccreditation upon completion of required conditions, upgrade to medium size

RAPL037 XacBank LLC (XacBank)

Direct Access Entity – Mongolia, Private Sector

Applying for reaccreditation upon completion of required conditions, no change in accreditation type

RAPL049 World Wildlife Fund, Inc. (WWF-US)

International Access Entity

Applying for reaccreditation upon completion of required conditions, no change in accreditation type


APL 116 Zambia National Commercial Bank Plc (ZANACO)

Direct Access Entity – Zambia, Private Sector

Applying for accreditation upon completion of required conditions

Comments from the Board revolved around the issue of securing signed AMAs and how it serves as the biggest challenge for AEs to fully complete the accreditation process and proceed with the submission of Funding Proposals. The BM from Switzerland joined by other developed country BMs asked what the secretariat and the Accreditation Panel is doing to address and speed up the AMA signing negotiations, to which the Secretariat responded and said that Stage 3 legal process is usually where the bottleneck lies. It was only during B33 that the Secretariat was able to move fast and signed 8 AMAs of reaccreditation.

The CSO Intervention, delivered by developing country alternate Active Observer Kairos dela Cruz, noted that of the entities eligible for re-accreditation, 2 IAEs (i.e. WMO and KfW) decided not to apply for re-accreditation. In the case of KfW, this is the first time, but potentially not the last time, that an entity with an active portfolio of GCF-funded projects and programs will decide not to continue its relationship with the GCF as an accredited entity. While KfW has confirmed its commitment to continue the implementation of its GCF projects, the CSOs asked what options the GCF would have if a previously accredited entity reneged on its commitments.

As for specific comments in individual applications, the CSOs questioned the inadequate grievance mechanism of RAPL037, the proposed upgrade from small to medium size, and inclusion of a specialized fiduciary  standard for on-lending and/or blending (for equity and guarantees) of RAPL045, and suggested to urge APL116 to establish a robust E&S monitoring and reporting plan as the entity is believed to have a poor track record on transparency and information disclosure, environmental and social safeguards, as well as on project implementation especially in relation to hydropower projects.

After hearing the comments from the CSOs, BMs from Gabon and The Gambia defended APL116 and underscored that Zambia is an LDC country that is in dire need of access to GCF Funds. As the first DAE in Zambia, they urged the Secretariat to expedite the process of signing the AMAs, should the entity be accredited to the GCF.

The co-chair then decided to move forward with adopting the draft decisions on the accreditation and re-accreditation applications and the corresponding amendments to the AMAs of the re-accreditation applicants.

In summary, all applications were approved, including the requests for amendments to the AMAs. Further amendments to reflect the RAPL045 PT-SMI’s efforts to significantly reduce its investments in fossil fuels were also added, as suggested by the BMs from Germany and France. Although the BM from Pakistan raised a concern to such articulation as it may set a precedent for other re-accreditation applications to comply with another layer of condition, the Board decided to adopt the proposed changes.


The discussion was followed by the agenda item Secretariat Work Programme and Administrative Budget for 2023, which was facilitated by the co-chair from South Africa. The Secretariat presented three key 2023 work programme drivers, namely, (1) the final year of GCF-1 programming and USP implementation, which entails committing 95% of available resources to meet GCF-1 portfolio target; (2) 13 new operational policy decisions to implement, including the private sector strategy and other new strategies and guidelines; and (3) the growing GCF portfolio and expectations on access.

The Secretariat then proceeded to identify its objectives for the 2023 work programme, which includes the following:

  1. Advancing developing country capacity and tools to translate nationally determined contributions (NDC), national adaptation plans (NAP), and long-term strategies (LTS) into climate investments.

  2. Building a pipeline of ambitious funding proposals that meet the GCF’s portfolio targets, a key component of which is implementing new initiatives and instruments to facilitate the fuller exercise of the GCF’s risk appetite to support innovation and catalytic impact, and benefit the most vulnerable.

  3. Strengthening delivery of climate results. Fourth, enhancing access to GCF financing. Fifth, nurturing world class climate finance expertise and organizational performance. Sixth, Helping to deliver a successful second GCF replenishment.

To meet the said objectives, the Secretariat proposed an annual programming target of USD 1.6 to 2.1 billion of funding proposals submitted to the iTAP. The proposal aligns with the projected USD 1.2 to 1.7 billion available for approval of funding proposals under GCF-1 financial plan and depends on availability of sufficient commitment authority. The Secretariat added that the GCF’s 2023 targets also drive toward adaptation, DAE, and private sector portfolio targets while also taking account of state and maturity pipeline. Furthermore, the Secretariat also proposed an annual disbursement target of USD 728-1.063 billion.

As for the annual budget, the Secretariat requested a marginal increase to meet policy, access, and portfolio responsibilities, and to cover the need for increased staff to meet the target of having 315 positions filled by the end of 2023, reduce consultancies, increase professional service to support expanded range of modalities & policies, and to invest on ICT and travel to enhance access. This led to a total proposed administrative budget of USD 102.2 million in 2023, which is a 1.9% increase from the previous year. Of this, the proposed Secretariat budget is USD 93.6 million (2% increase from 2022), the proposed Board budget is USD 5.4 million (13.6% increase from 2022), and the proposed trustee budget is USD 3.12 million (14.5% decrease from 2022).

The co-chair then opened the floor to BMs for comments and questions. Several developing country BMs, namely from South Korea, Antigua and Barbuda, and Ghana, expressed their concern over the low targets for DAEs and emphasized the need for more ambition in this regard. They also opposed the metrics used to set FP targets based on the number of FPs submitted to iTAP, and suggested that it should be based on the number of FPs submitted to the Board.

Developed country BMs on the other hand expressed their full support to the Secretariat for its proposed work programme and budget and the BMs from Switzerland and Austria pointed out the need to improve transparency and governance in GCF institutions, and to reduce administrative costs.

The BM from Pakistan raised several concerns on the objectives presented by the Secretariat. He pointed out how the objective 1 of the work programme document has framed the role of the GCF as catalytic Fund, which he believes is a deviation from the GI’s language and framework. He added that objective 2 only talks about adaptations for SIDS and LDCs when the GI was very clear that climate finance was for all developing countries. On objective 6, he asserted that the strategic plan was never sufficiently linked to the replenishment process and therefore cannot provide a clear target on this. Although the BM from Pakistan appreciated the Secretariat’s thrust in moving away from consultant dependency, he asked for more rationalization of the IEU’s 30% increase in budget and contractual service use.

As a response, the BMs from Norway and Germany averred that they saw the work programme as consistent with the USP, GI, and decisions made in the last two Board Meetings. The Secretariat also argued that the framework of the presented work programme reflected immediate experience in the development pipeline, and that most if not all elements of the work programme is consistent with previous Board decisions and the GI, adding that the focus on SIDS, LDCs, and African states emanated from a GCF-1 portfolio target. The Secretariat then committed to do further consultation with BMs on all issues raised in the work programme and budget.

Before the agenda item was closed for further offline consultations, the BM from Pakistan reiterated once again how the objective 1 of the work programme is problematic and not able to reflect country ownership. He further suggested to the Secretariat not to deviate from the GI in discussions of eligibility of entities.


The Board then called upon the GCF Executive Director (ED) to present the Report of the Activities of the Secretariat, an information document that provides the Board updates on progress, challenges and actions taken in undertaking the Secretariat’s work from June to August 2022. The report highlighted the GCF-1 financial plan, which showed the low level of GCF funds available that is primarily due to the unfulfilled pledges made by contributor countries and the recent volatility of currency fluctuations. The Executive Director confirmed that the Secretariat had to hold back several Funding Proposals for Board consideration as the Fund is left with only USD 1.4 million for Funding Proposals, to also accommodate other costs for Readiness and PPF (USD 185 million), and the fees for AEs, foreign exchange management, and administrative matters (USD 411 million).

As for project implementation, the Secretariat is positive that the target of having 90% of the projects reach the implementation stage by the end of GCF-1 is achievable. However, the ED is also anticipating challenges related to disbursement and expenditures given the uncertainty of when the funds will be available.

The Secretariat also worked on further consolidating policy and governance frameworks, having 9 policy decisions taken by the Board between B31 to B33, and 2 more prepared for Board consultations (i.e. Programmatic Approach and Policy to minimize the effect of currency fluctuations).

Issues around recruitment capacity were also presented as well as the GCF Private Investment Conference for Climate that the ED boasted to be very successful and helpful in drafting the updated USP. Other items mentioned in the report include the Secretariat’s efforts to update the GCF website and make the guidance tools available in order to address issues around access and simplification measures, and launch the Open Data Library.


A number of developed country BMs expressed their support to the Secretariat for all the progress made since the last Board Meeting, particularly on its efforts to consolidate the GCF’s policy framework. The BM from Norway underscored the importance of ensuring the sector guidelines, while the BM from Spain welcomed the efforts done to increase transparency and measures to secure accountability on accreditation.

While the CSOs see the Secretariat’s efforts to conduct more country engagements as beneficial, the intervention delivered by Erika Lennon questioned the lack of support for CSOs to attend the Global Programming Conference this year, when in 2019 the Secretariat offered sponsorship of several developing country civil society and Indigenous Peoples observers and worked to ensure the participation of developed and developing country observers in the overall program. The intervention also underscored that a “comprehensive” update of the USP is incomplete without allowing for review and input from stakeholders especially given their perspectives and knowledge and how these can help NDAs, AEs, and others appreciate the necessity of meaningful stakeholder engagement.

The CSOs also raised concerns about the deployment of Project Preparation Facility (PPF) resources to support IAEs, including private sector IAEs with significant resources, and reminded the board that supporting DAEs with project preparation that prioritizes meaningful stakeholder engagement should be the first focus of the limited PPF resources.

The BM from Pakistan questioned the alignment of the Key Performance Indicators (KPIs) with the Board-approved secretariat goals. He asked the Executive Director to clarify the scope and progress for fulfilling the KPIs, to which Yannick Glemarec responded and clarified that each of the KPIs presented were taken from the 2022 programme that was approved by the Board. He then shared that the Secretariat is thinking of ways to phrase or word the KPIs that will signify its connection with the goals and objectives of the Fund.

Since the item was an information document, the Board noted the report.


The Board also discussed the agenda item Policy to minimize the effects of currency fluctuation on the commitment authority. It can be recalled from B33 that both the Board and civil society have been disappointed about the potential losses of the GCF from fluctuations of foreign exchanges (Forex) rates, which is estimated to be around USD 1.2 billion. As a response, the Secretariat presented options for the Fund to address the matter.


To set a common understanding among Board Members, the Secretariat provided an overview of how pledges become part of the GCF’s pool of available funds for projects or the “commitment authority”. They explained that as pledged amounts are in United States Dollars (USD), the GCF may receive such pledges in both USD and non-USD currencies. There may be some level of reduction of value for non-USD pledges, especially as exchange rates fluctuate over time. This affects the GCF’s commitment authority.


Given this, the Secretariat suggested continuing the Fund’s current strategy of planning its expenditure, and spend only when currency exchanges match the value when the pledges were made or when the exchange rates are favorable to the GCF. The Secretariat also recommended maintaining the GCF’s Forex reserves as a buffer. This is so that the GCF will have ample reserves against lower exchanges in the future. Exploring forex hedging instruments was also recommended, and using the Euro as an accounting currency was also mentioned, although not recommended by the Secretariat due to administrative costs and complexity.


Of the suggested options, the Secretariat recommended pursuing forex hedging instruments on top of maintaining the GCF’s planned expenditure and forex reserves. Forex hedging will mean the GCF could potentially enter into contracts with financial entities that will exchange currencies at an agreed rate and over a period of time. The Secretariat suggested that the GCF may choose to hedge by itself, outsource the hedging to the GCF trustee, or partially or fully outsource the hedging to a third-party hedging service provider. They clarified, however, that the GCF currently has no in-house capacity to run a successful hedging program and that the GCF Trustee, which is the World Bank, already does different Forex functions for the GCF. The Board was then presented the option to either contract a third-party hedging firm for the hedging services or further engage the World Bank for the GCF’s hedging needs.


The Secretariat reported that having a third-party hedging service provider is estimated to cost the GCF USD 85 thousand for legal fees, USD 500 thousand for transactional and operational costs, and USD 50 million as collateral. As the financial costs were high, the Secretariat stressed that the benefits of hedging outweigh the cost since it will address the volatility and increase the predictability of the GCF’s commitment authority.


Several hedging risks were also presented by the Secretariat such as the need to provide upfront cash as collateral, exposure to derivative contracts, and potential losses in cases when contracts are abruptly terminated.


Given the presentation of the Secretariat, the Board is set to approve the requested budget, and decide whether the GCF engages with the World Bank or with a third-party Forex hedging service provider that is able to meet the credit rating requirements and approval protocol outlined in the annexes of the policy. While some matters related to this issue will be under the mandate of the Board’s Risk Management Committee (RMC), the BMs agreed that the Board shall temporarily take on the functions of the committee in its absence. Should the Board approve to hire a third-party Forex hedging service provider, the selection will be under the authority of the Executive Director (ED).


Many BMs from developed countries supported the proposal and highlighted the urgency of the policy given the current developments in the global world market and the currency performance of the USD. The BMs from Austria, Norway, and South Korea supported the idea that the World Bank can serve as the Fund’s Forex hedging service provider.


Since there were no objections to the proposal, the agenda item, the Policy to minimize the effects of currency fluctuation on the GCF’s commitment authority was adopted by the Board.


The Board then continued the discussions around the Strategic planning and programming matters: Second Performance Review (SPR) summary findings, as presented by the IEU head below:


  1. Institutional architecture and performance – the IEU highlighted the evolution of the Fund under GCF-1 in terms of policy institutionalization and the USP. It averred that the remaining challenges were slow policy work and differences in strategic vision. The review pointed out that the current governance design brings legitimacy but compromises efficiency and that there was a need for a common understanding for norms and informal rules. Accountability, observer input, and gender balance could also be further improved and that the responsibilities between governance and management functions were often blurred. Overall, the IEU assessed that the GCF’s role is important in country-level climate finance but it should not be overstated.


  1. Access to the GCF – the IEU noted the network of diverse partners of the GCF, however, there is a lack of vision and strategy for a manageable AE network of capable and diverse entities. While there is an increase in direct access accreditation, countries still struggle to identify entities and entities struggle with accreditation. The Secretariat capacity support and IAE support to DAEs have also yet to show results. The review noted that the Fund has a protracted and inefficient accreditation process that is not yet optimized for direct access.


  1. Programming in response to country needs – the review showed that despite individual success stories, the country programmes (CP) and entity work programmes (EWP) inefficiently consume limited resources and result in unpredictable value. On the other hand, the readiness and preparatory support programme’s (RPSP) scope was found broad and relevant but lacks a clear pathway or prioritization approach for countries to follow. The simplified accreditation process (SAP), request for proposals (RFP), and project preparation facility (PPF), have been found to have limited effectiveness so far. On the project appraisal and approval cycle, there are growing volumes, process improvements, and increasing quality but it is still widely perceived to be bureaucratic, lengthy, inconsistent, and non-transparent. Funding activity agreement (FAA) negotiations are still lengthy as well. The IEU also found that the results and risk management strategies are underdeveloped to serve the GCF’s need to demonstrate results as its portfolio matures. The approach to second-level due diligence is not reconciled with scale and diversity.


  1. Results and impacts of GCF investments – the review showed progress towards delivery of the USP strategic objectives, however adaptation allocation and Private Sector Facility (PSF) targets are unlikely to be met. There were also minimal improvements in speed and predictability of processes, and the results for implementation programs in mature projects are still forthcoming. However, the IEU found that there is poor measurement and reporting of project results. The GCF is likely to meet from 1.4% to 2.6% of mitigation needs and 1.2% to 2.3% of adaptation needs stated in countries’ new or updated NDCs. The review also noted the progress made on co-financing, gender equality, and IP engagement in GCF-1, but there were limitations on the precision of the results.

Based on the preliminary review, the IEU identified emerging areas of recommendation:


On the strategy and role of the Board, the IEU believes the Board has an opportunity to set clearer strategic direction and provide a focus through the USP-2 to clarify operational priorities and the operating model. Stakeholders do not share a common vision for the Fund, leading to an overly broad “do it all” approach. In light of the Fund’s limited resources, the IEU recommended clarifying the GCF’s role in certain areas, such as the balance between the urgency of the challenge and the long-term need to build climate finance capacity in countries and entities. The GCF’s role is sometimes to work through its partners or it takes a more direct and strategic role (e.g. to influence climate finance flows, or convene partners around NDC investment planning processes). The IEU found these are not mutually incoherent roles.


On processes, the IEU proposed to ensure streamlined and fit-for-purpose systems and pivot to results and learning orientation. On governance, they recommended to clarify the blurred lines of governance and management. A stronger delineation of roles and responsibilities among governance and management bodies, including the Board and its committees, Secretariat and independent units, would also reduce uncertainty and inconsistency and lead to more streamlined policymaking and decision-making.


Lastly, the IEU advised to support trust-building and self-reflection among Board members and to revisit the observer function by clarifying processes for observer consultations. This is to ensure that input is systematically sought at an appropriate time during deliberations, and financially supporting the developing country CSO active observers to travel to Board meetings.

Majority of BMs welcomed the report of the IEU, with the BMs from Netherlands, Norway, and United States noting that the Board Meeting could have begun with the report to guide discussion on strategic planning and programming matters. The BMs from Norway and France also sought a deeper assessment of the IEU on governance issues.

BMs from Sweden, The Gambia, Ghana, United States, and Netherlands spoke on the need to address constraints on overcoming the adaptation gap and to maintain the 50:50 balance between mitigation and adaptation. The BMs from US, Sweden, and Switzerland proposed to have an equally rigorous assessment of the inability to meet the gap in private sector investment and accreditation. As a response, the Secretariat explained that when expressed in grant equivalent terms, the 50:50 balance target can be achieved, but not in nominal terms. According to them, if not expressed in grant-equivalent terms, there is a USD 50 billion portfolio requirement to fill the adaptation gap that cannot be filled by private sector finance since it makes use of non-grant instruments.


Other BMs also asked the IEU to look into the reasons behind low accreditation, project conception and approval in many developing countries, and provide recommendations as to how to address the accreditation imbalance between IAEs and DAEs.

The BM from Pakistan asked for clarifications on matters related to the uncertainty of the GCF’s role and functions especially since the GI is clear on what the role of the Fund is. While he agreed with the point that the GCF cannot do everything in the climate finance landscape, he also remained firm on the fact that part of the Fund’s mandate is to ensure direct access and country ownership, therefore, the GCF cannot change into a mere catalytic fund. He sought further information on the evidence and data used by the IEU to come up with its conclusions, and insisted that presumptions cannot be presented as facts lest it cause destabilization.

To respond to the concerns raised by the BM from Pakistan, the IEU stated that the data came from a deep review of related literature, 500+ interviews, and surveys. Most of these will be fully presented in the final report expected at B35. The IEU also added that despite what is written in the GI, countries and partners do perceive the character and form of the GCF to be unclear and recommended that strategic clarity is needed for operational efficiency.

Since the item is an information document, the Board concluded the discussions by noting the report.


The Board then discussed the Policy for contributions from alternative sources. While the GCF currently only receives contributions from sovereign countries or cities, the governing instrument (GI) allows the Fund to receive contributions from other sources such as philanthropic foundations, charities, individuals, businesses, and through Special Drawing Rights (SDRs). However, there is no existing GCF policy for this, that is why the Secretariat was requested to present the policy for Board adoption at this Board Meeting.


According to the Secretariat, alternative contributions may come in either direct or indirect contributions. Direct contributions are when non-government entities such as foundations or corporations contribute directly to the GCF’s commitment authority. Indirect contributions, on the other hand, is when institutions provide financing for GCF projects without having to pass through the GCF’s commitment authority. Indirect contributions may come in forms of co-financing of projects and in the form of forming a parallel fund which is dedicated to hold and manage funds that are from alternative sources.


In direct financing, the Secretariat highlighted that challenges may arise – from donor “earmarking” to needing more Secretariat resources for due diligence (e.g. prepare reports, set accounting standards, and ensure compliance with existing GCF policies such as the policy on anti-money laundering and combatting the financing of terrorism). The Secretariat noted that fundraising requires additional resources and that the interest for funding the kind of projects that the GCF is engaged in has low appeal to philanthropic activities. According to the Secretariat, policy reforms in the GCF to allow earmarking will probably result in more interest in donating to the GCF.


Most developed country BMs are supportive of the concept of receiving contributions from alternative resources, but are wary of the potential issues raised by the Secretariat. The BM from Norway shared his experience as a board member of other climate finance institutions and mentioned that earmarking brings a lot of governance issues since philanthropic organizations are also governed by their respective Board committees. He added that alternative sources may change the way current contributors to the GCF come in and contributor countries may be complacent in fulfilling their pledges. This point was also raised by the BM from China, who reminded the Board that while the GI allows for alternative contributions, developed countries should still provide and maintain their contributions to the Fund as reiterated in the COP26 decision that mandates developed countries to provide climate finance as part of their obligation.


While not discussed by the Secretariat during their presentation, the paper mentioned that SDRs, which is an asset created by the International Monetary Fund (IMF), may be considered as among the alternative sources due to its value-like characteristics. The BM from the US asked the Secretariat to provide the pros and cons of using SDRs as an alternative, but the Secretariat failed to respond to this query.


Titilope Gbemisola Akosa, alternate active observer for developing county CSOs intervened on behalf of the CSO Observer Network, that while there is a need for significantly more climate finance, developed countries should remain as the primary source of climate finance due to their unfulfilled climate finance obligations to the Global South. She mentioned that climate finance should be provided directly to the GCF, in the form of grants, and with more flexibility on how developing countries wish to use it. This is due to the worsening debt crisis that is already faced by the Global South.


The CSOs called out the document’s preference for indirect contributions which are in the form of catalyzed finances, which is also present in other GCF documents. The intervention reminded the Board catalyzed finance is not an alternative source of contributions, as written on paragraph 30 of the GI and further stressed that should the GCF accept contributions from alternative sources, it must be done carefully and must ensure that accountability and country ownership are ensured, along with adherence to the GCF’s mandate to maintain the adaptation-mitigation balance and its focus on direct access. The CSOs also pointed out that any approach to alternative contributions should not undermine what has been secured under past GCF policies and should not result in a reconfiguration of the Board composition based on financial contribution.


As the discussion concluded, the Board noted the document and encouraged the Secretariat to come back to the Board to present how such a policy may be operationalized.


The Board moved on to discuss the consideration of the Independent Redress Mechanism (IRM) compliance report. As the matter was deemed confidential, the Board entered into an executive session where only the Board and select individuals are allowed within the Board room. The webcast was suspended indefinitely and the Board did not resume the webcast to ceremonially close Day 3 of B34.


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