CSO Updates on the 29th Board Meeting of the Green Climate Fund – Day 4

DAY 4 – Jul 1, 2021

 

The last day of B29 started with another agenda fight. The daily agenda circulated several hours before the session was significantly reduced to items that needed Board decision, which includes the Funding and Accreditation Proposals. Some BMs requested the co-chair to reconsider adding important items like the discussion on the Accreditation Framework as suggested by BM from Norway, and how the Board plans to resolve issues around the Independent Technical Advisory Panel’s (ITAP) evaluation of Funding Proposals (FPs), as earlier suggested by BMs from Saudi Arabia and Liberia. The co-chair from Mexico did recognize the importance of the said items, but he explained that due to lack of time, both co-chairs decided to prioritize items that needed urgent action from the Board. He added that discussions and processes around the items mentioned by BMs will commence immediately after B29, and possibly be included in Board decisions in between Board Meeting (BBMs). The BM from Liberia refused to accept the suggested way forward and insisted to open the discussion regarding ITAP at B29. Other BMs started to intervene and convince him to just follow the original agenda, especially the consideration of Funding Proposals since the item was already opened in Day 2, and the Accreditation Proposals given that many of the applicants have waited for Board decision since B28. (Note: It can be recalled that the decision on the application of 5 entities from the last Board Meeting was deferred to B29).

After several back and forths, the co-chair decided to move on with the session and deal with the Consideration of Funding Proposals. Since the Secretariat presented the document on Day 2, the Board went straight to providing comments with the co-chair calling those who were unable to intervene last time. Some BMs reiterated the urgent need to address the imbalance between Direct Access Entities (DAEs) and International Access Entities (IAEs), and between adaptation and mitigation projects in the GCF Portfolio. Others mentioned that the GCF must also ensure geographical balance in approving Funding Proposals especially because the Latin America region remains to be the region with the least received GCF Funding.

Our CSO intervention, delivered by Erika Lennon, Active Observer from developed country CSOs, added that imbalance shown in grant equivalent terms does nothing to address the imbalance in nominal terms, and to increase equity which is essential to enabling already-disadvantaged developing countries to access climate finance that is rightfully theirs. We also noted that once again the largest portion of financial instruments for this batch of funding proposals are loans at 66 percent, with grants being only 18 percent, and we reminded the Board that climate finance is an obligation of developed countries and should never further burden people and sectors most vulnerable to the climate crisis, therefore the GCF must strive to ensure more funding proposals come in the form of grants not loans.

In a rather lengthy speech, BM from Liberia insinuated that the mentioned imbalance is partially due to the ITAP’s evaluation. While he recognizes the important function the ITAP provides in approving quality FPs, he believes the ITAP is becoming the biggest hindrance for developing countries to get the needed support from the GCF. He also reminded the Board not all countries are in equal footing in dealing with the climate crisis and urged them to revisit the Board’s guidance over ITAP and to give consideration for countries that do not have the same technical capacity as others, just like Liberia, which he added to have no means of producing certain information and data that the ITAP requires.

As a reaction to the debate regarding ITAP’s functions, the Active Observer from the Private Sector Organizations (PSO) highlighted the critical role that ITAP play in producing quality FPs. She added that there is a logical reason why certain FPs have not been endorsed and that the Board should look at them as a quality control measure so the GCF will support only the best projects in developing countries.

After hearing all interventions from BMs and observers, the co-chair moved on to deliberating the FPs one by one. Below is the summary of what transpired from the discussions.

FP Details

Discussion/Status

FP 165: Building Climate Resilient Safer Islands in the Maldives

Country: Maldives

Adaptation

AE: JICA

Category B

Total Amount: USD 66.0 Million

GCF Financing: USD 25.1 Million (grant)

There were no comments except our CSO Intervention, delivered by Eileen Cunningham, Active Observer from developing country CSOs. While the CSOs are happy with the ecosystems-based approach in coastal management that FP plans to implement, we raised concerns regarding the sustainability and effectiveness of beach nourishment and replenishment as proposed in the FP, as well as the adverse effects of offshore dredging that could harm the coastal and marine environment. We also urged JICA to include a clause that ensures project location changes are based on vulnerability and need-based, and to make its gender-sensitive grievance redress mechanism public.

STATUS: APPROVED

FP 166: Light Rail Transit for the Greater Metropolitan Area (GAM)

Country: Costa Rica

Mitigation

AE: CABEI

Category A

Total Amount: USD 1.873 Billion

GCF Financing: USD 271.3 Million (USD 21.3 Million in grant; USD 250 Million in loan)

BM from Spain expressed her support for the FP, saying the project will not only help Costa Rica achieve its NDC targets, but will also boost the socio-economic needs of the Greater Metropolitan Area. After hearing no further comments from the BMs, the co-chair invited the Board to decide on the FP. It was only after the Board approved the project that our CSO Intervention deliverd by Erika Lennon, Active Observer from developed country CSOs, was heard by the Board.

Erika expressed the CSO support for the project, but noted the issue around financing transparency as we heard from our partners in Costa Rica that corruption cases and investigations have come out in recent weeks implicating the construction companies involved in the project.

STATUS: APPROVED

FP 167: Transforming Eastern Province Through Adaptation

Country: Rwanda

Cross-Cutting

AE: IUCN

Category B

Total Amount: USD 49.62 Million

GCF Financing: USD 33.8 Million (grant)

The FP did not receive any comments except from Eileen Cunningham, our Active Observer from developing country CSOs, who shared issues raised by partners in Rwanda about stakeholder consultation, and recommendations of providing the Gender Action Plan, apart from a gender assessment.

STATUS: APPROVED

FP 168: Leveraging Energy Access Finance (LEAF)

Country: Ethiopia, Ghana, Guinea, Kenya, Nigeria, Tunisia,

Mitigation

AE: AfDB

Category B

Total Amount: USD 959.9 Million

GCF Financing: USD 170.9 Million (USD 10.9 Million in grant; USD 80 Million in loan; and USD 80 Million in guarantee)

The FP received overwhelming support from the Board and some BMs (UK, Canada, France, and Sweden) noted how after consultations with AfDB from day 2, the FP is now committed to improve issues surrounding labor practices. AfDB also agreed to comply with the condition regarding the Fragility Assessment, which many developed country BMs were happy about. The BM from Italy also lauded how the FP is utilizing blended finance, which she believes the GCF can effectively consider in other FPs.

Although the BM from US expressed his overall appreciation for the participation of Private Sector in the project, he registered that the US cannot support the FP because of an existing US legislation to not support countries that condone Human Rights violations.

In response to the conditions set for this FP, the BM from Sudan raised a crucial point that also applies to other FPs. He said that the adding conditions may mean more difficulties for accredited entities submitting proposals, which could eventually cause delays not only for approval but also for project implementation.

The BM from Germany also reminded the Board that the CSO comments remain very relevant not only to this project, but to all FPs submitted to the Board and further urged the co-chair to hear CSO comments as the Board deliberate each FP. This was seconded by our CSO Intervention delivered by Erika Lennon, our Active Observer from developed country CSOs, where she raised our concerns against the lack of meaningful stakeholder engagement with CSOs and local communities in the formulation of the project. The CSOs recommended that the AFDB ensure civil society representation in the governance structures of the programme, alongside the subproject level consultations that are required in the ESMF, as well as the involvement of women’s and gender-focused organizations in the development of country-specific gender action plans.

STATUS: APPROVED

SAP 010 Multi Hazard Impact-Based Forecasting and Eraly Warning System for the Philippines (LandBank) – request for extension of deadline for the fulfillment of conditions until December 22,2021

STATUS: APPROVED

FP153 Mongolia Green Finance Corporation (XacBank) – request for extension of deadline for the fulfillment of conditions until November 8, 2021

STATUS: APPROVED

 

After approving all FPs, the Board went back to discussing the issues related to ITAP. Comments and suggestions to revisit ITAP’s functions were mostly coming from developing country BMs, especially those representing LDCs and SIDS. BM from Liberia emphasized that while he values ITAP’s role, he also believes that the panel is answerable to the Board and that the Board should ensure the ITAP is not overstepping its functions. He also mentioned that weak Climate Rationale has been the common reason of the ITAP for not endorsing FPs to the Board, and later urged the Board to clarify its definition alongside with the guidelines that the Board should impose upon the ITAP. He also cited instances of what he claimed as “unfair treatment” for small entities that were forced by ITAP to submit requirements that are impossible to procure, and later urged the Board to help LDCs like Liberia access the GCF. As a way forward, the BM from Liberia proposed to make a decision that will direct ITAP to forward all FPs to the Board, regardless of their recommendations, and will clarify ITAP’s functions – that they can provide recommendations and advise the Board on what to do about FPs, but they can never block or filter the FPs from reaching the Board.

This proposal was supported by several developing country BMs. BM from Tanzania agreed that such a move can also address matters related to adaptation, and furthered that the guiding policies will remind ITAP on how to prioritize adaptation projects, and projects coming from DAEs. BM from Sudan concurred and shared that he personally observed how questions around climate rationale did not make sense considering the national and local circumstances each country experiences and how such information cannot be confined in quantitative data. He also invited the Secretariat for their views on ITAP’s assessment as it has been evident that their evaluations on climate rationale are different from the ITAP’s. Building on the proposal from Liberia, the BM from Saudi Arabia proposed that until the issue around ITAP is resolved, all FPs coming from LDCs shall override the ITAP’s evaluation and be forwarded to the Board for deliberation.

On the other hand, developed country BMs took ITAP’s side and affirmed the crucial role of the panel as the gatekeeper for maintaining quality and impactful climate projects. They also added that the issues raised regarding the portfolio imbalance really boils down to the several policy gaps, including the guidelines for FP evaluation, that the GCF has yet to address. They also rejected the proposal to suspend ITAP’s evaluations and urged the co-chair to move forward to more pressing agenda items.

To respond to the concerns raised by developing country BMs, the head of ITAP, Daniel Nolasco explained that FPs that received non-endorsement from the Panel could have other weak elements, apart from Climate Rationale. He also recalled the FP from Liberia that was approved in B27 in response to the example cited by BM from Liberia. He clarified that the  ITAP’s recommendation recognizes the limited capacity of the AfDB to present the required climate data and that the panel recommended an exception to support the FP with conditions.

Since the ITAP issue was not part of the agenda, the co-chair assured the Board that the matter will be prioritized in the next Board Meeting and consultations will commence immediately after B29.

 

The Board then went on to the continuation of discussions around the Integrated Results Management (IRMF). It can be recalled from Day 3 that despite further consultations, no full consensus on the policy document version was achieved. On Day 4, the co-chair asked the GCF Secretariat to present the progress of the consultations to the Board, which is summarized below:

 

  • Consensus has been achieved by the small groups

  • No more further changes were done to contentious items that were resolved after day 3 consultations

  • It has been agreed that the handbook detailing the implementation of the IRMF will be presented to the Board for its approval upon finalization of a draft by the GCF Secretariat

  • The current version of the IRMF is now aligned with the GCF’s Investment Framework

  • The financial support allotted for the capacity building of Direct Access Entities (DAEs) and National Designated Authorities (NDAs) for the implementation of the IRMF which was priced at USD 12.4 Million has already been clarified as to how the amount was achieved. The amount was agreed to be allotted for the said purpose.

  • Supplementary indicators, aside from the main indicators, have now been explained and clarified and will constitute as part of the indicators to be measured or observed by the IRMF

  • A revised FP template to be filled by the accredited entities (AEs) seeking funding from the GCF will be implemented from B32 onwards.

 

Having no further objections, the IRMF was adopted by the Board. However, BMs who were mainly involved in the consultations gave statements focusing on the process of arriving at consensus. The BM from Albania emphasized how an extra day, as requested by many developing country BMs, made a difference in arriving at consensus, and thanked all BMs that believed in the process. The BM from Egypt, on behalf of the African Group, expressed their objection to the interpretation, both of the Co-Chairs and of the GCF General Counsel, on the GCF Board Rules of Procedure (RoP) and of the GCF Board Decision B.23/02. He believed the voting procedure on the determination of the Co-Chairs that not all means have been exhausted towards achieving consensus was not necessary and a complete waste of time. BMs from Saudi Arabia and Pakistan echoed this sentiment, but BM from Sweden argued that such a scenario could have been avoided if the Board improves its efficiency on how it conducts its business.

 

After hearing all comments and statements, the co-chair gaveled the agenda item to signal Board adoption of the IRMF and closed the session.

 

With less than only half an hour left, the Board opened the Consideration of Accreditation Proposals. Given the limited time, the co-chair appealed for a 45-minute extension to deliberate on the proposals one by one, to which many BMs agreed to, except the BM from Liberia. He insisted on closing B29 on time as the issue of time constraint was really due to the poor facilitation of the co-chairs. After several exchanges and taking up more than half an hour debating on whether or not the Board should extend, the co-chair decided to move on and take up the item. The Secretariat briefly presented the 10 applicants seeking accreditation, which is summarized below:

 

Applicant Details

Discussion/Status

APL106 Development Bank of the Philippines (Direct Access)

APPROVED

APL107 Development Bank of Zambia (Direct Access

APPROVED

APL108 Infrastructure Development Bank of Zimbabwe (Direct Access)

APPROVED

APL109 Moroccan Agency for Sustainable Energy S.A., (Direct Access)

APPROVED

APL110 Vietnam Development Bank (Direct Access)

APPROVED

APL111 Korea International Cooperation Agency (Direct Access)

APPROVED

APL112 Nacional Financiera, S.N.C., Banca de Desarrollo (Direct Access)

APPROVED

APL113 Joint Stock Company TBC Bank (Direct Access)

APPROVED

APL114 InterAmerican Institute for Cooperation on Agriculture (Direct Access)

APPROVED

APL100 Sumitomo Mitsui Banking Corporation (SMBC) (International Access)

APPROVED

Agency for Agricultural Development of Morocco (Direct Access)

APPROVED FOR REACCREDITATION

Secretariat of the Pacific Regional Environment Programme (Direct Access)

APPROVED FOR REACCREDITATION

International Fund for Agricultural Development (International Access)

APPROVED FOR REACCREDITATION AND UPGRADE

 

Of the applicants, the Board provided their comments only to APL100 Sumitomo Mitsui Banking Corporation (SMBC). It can be recalled that SMBC submitted its application in B26 and re-submitted it on B28 but the decision to approve was deferred to B29 due to concerns raised by CSOs. Through a letter addressed to the Board, signed by more than 450 Civil Society Organizations globally, SMBC’s track record on fossil fuel finance was exposed, which urged the Board to reconsider its accreditation. On May 12, 2021, SMBC announced its revised climate policy and affirmed its commitment to end coal finance as a step towards improving its portfolio and aligning it with the GCF. This pronouncement was welcomed by BMs and prompted their support to accrediting SMBC at B29. BM from Sweden furthered that the move made by APL100 is proof that the GCF can pave the way for entities to shift their overall climate finance towards a low carbon emission pathway and believe that the partnership will allow the SMBC to eventually shift away from fossil fuels.

 

Unfortunately, our CSO Intervention delivered by Eileen Cunningham, the Active Observer from developing country CSOs, was heard by the Board AFTER the accreditation was approved. But for recording purposes, we reiterated our strong objection to SMBC’s accreditation and emphasized how SMBC’s revised climate policy remains to contain contentious provisions and that it does not prevent them from funding fossil fuels and other false solutions.

 

The GCF Board has also decided that the dates and venues of the upcoming GCF Board Meetings, specifically B30, will be held from 4 to 7 of October 2021 and will still be conducted in a virtual format. This is in consideration of the strict travel restrictions implemented by the Republic of Korea where the GCF Headquarters is located, as well as the relatively low vaccination percentage of the Korean population as of the moment. The GCF Board, in their decision text, instructs the GCF Secretariat to be cognizant of the developments and improvements of the COVID-19 situation, both in South Korea and internationally, so that the feasibility of an in-person Board Meeting can be considered by the Board.

Day 4 of B29 ended 30 minutes past the scheduled time. You can catch the recorded proceedings of the GCF B29 at: https://www.greenclimate.fund/boardroom/meeting/b29#videos

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