CSO Updates on the 30th Board Meeting of the Green Climate Fund – Day 4

DAY 4 – 7 October 2021

Read the full text of the interventions from the CSO Observer Network here.

It took a while for the Board to start the last day of B30 because of yet another agenda fight. The co-chairs presented a revised Day 4 agenda that other BMs object because important items such as matters related to SAP, have been removed. Other BMs argued that other items that do not require much time discussing should be moved towards the end. The co-chairs then took a few minutes to sort everything out, and started Day 4 with the Consideration of Funding Proposals pending their approval. All were quickly approved and the summary of discussions per FP is below:

Funding Proposal Information and Discussion

Status

FP170 Enhancing Climate Resilience in Thailand through Effective Water Management and Sustainable Agriculture

Country: Thailand

AE: UNDP

Total Project Cost: USD 33.9 million

GCF Financing: USD 17.5 million (grant)

Co-financing from MOAC Royal Irrigation Department: USD 16.2 million (grant and in kind)

Co-financing from Krungsri Bank: USD 114,000 (in kind)


 

Since Day 3, a small group of Board Members discussed the issues related to moving the timing of the condition with the UNDP. It was agreed that the condition be reverted back to its original condition, prompting the approval of FP170.

However, BM from South Africa reiterated and wanted to put on record that he remains concerned about the conditions set and imposed by the ITAP. He reminded the Board that the ITAP should stick to their recommending role, and the Board still has the final say whether or not the conditions set will be implemented.

APPROVED

FP174 Ecosystem-based Adaptation to increase climate resilience in the Central American Dry Corridor and the Arid Zones of the Dominican Republic

Country: Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panama

AE: CABEI

Total Project Cost: USD 268.3 million

GCF Financing: 174.3 million (USD 84.3 grant, USD 60million loan, USD 30 million guarantee

Co-financing from CABEI: USD 42.8 million (loan)

Co-financing from countries: USD 51.2 million (in-kind)


 

Since the discussions from Day 3, an online consultation was made between China and the Secretariat about issues raised related to the national circumstances of recipient countries. The objection remains, but BM from China registered its objection should not prevent the Board from reaching consensus in approving the project. Hence, FP174 was approved by the Board.

APPROVED

FP177 Cooling Facility

Country: Bangladesh, El Salvador, Kenya, Malawi, North Macedonia, Panama, Sao Tome and Principe, Somalia, Sri Lanka (listed as target countries)

AE: World Bank

Total Project cost: USD 879.84 million

GCF  Financing: USD 157 million (USD 32 million grant, USD 125 million loan)

Co-financing from WB: USD 563.4 million loan, USD 50million guarantee, USD 80.5 million grant

Co-financing from Global Financing Facility: USD25 million grant

Co-financing from health Emergency Preparedness and Response Trust Fund: USD 3 million grant

Co-financing from Pandemic Emergency Facility: UUSD 0.94. million (Grant)


 

After online consultations between the AE, the Secretariat and the BM from Germany, a revised text was presented. BM from Germany registered that it is willing to approve the FP with conditions, and then asked the secretariat to include in its Sectoral Guidance a provision about cooling facility and its compliance to the Montreal Protocol.

APPROVED

FP180 Global Fund for Coral Reefs Investment Window

Country: Comoros, Mozambique, Belize, Brazil, Guatemala, Mexico, Panama, Seychelles, Philippines (other countries listed, but haven’t signed NOLs)

AE: Pegasus

Total Project Cost: USD 500 million

GCF Financing: USD 125 million junior equity

Co-financing from Pegasus: USD 375 million + 1% GP commitment inn Senior loans


 

During the consultations, it has been clarified that FP180 seeks the board approval for countries that have secured their respective correct No Objection Letters (NOLs). The new decision text reads:

Takes note of the exceptional circumstances with regards to the matter of full compliance with the provision of the no-objection letters as they relate to programmes submitted to the GCF, and further confirms that FP180 does not set a precedent.

Confirms that only countries that have provided NOLs that is fully in compliance with the initial no-objection procedure approved by the Board by decision B.08/10 can be considered by the Board.

Sri Lanka was identified as one of the countries that failed to secure the NOL in a correct format and will be considered only as host country, thus will not be included in the implementation.

BM from Argentina defended Sri Lanka by saying that even without the correct NOL, Sri Lanka must be included. She urged the Board to look at what is in Paragraph 11 of the no-objection procedure and understand that the technical issues encountered in Sri Lanka’s case is not enough reason to reject its involvement in this project.

Developing country BMs clarified that while they were the ones pushing for securing NOLs, they agree how important this FP is to the people and communities of Sri Lanka. However, BM from Liberia believes the view and consent of people in the recipient countries are documented properly because ultimately the GCF should support projects that are identified by the recipient countries as their priorities. BMs from Egypt and Tanzania emphasized the value of Country Ownership and FPs that involve multiple countries should at least make it a point that the recipient countries are 100% on board with the project.

FP180 was then approved by the Board.

APPROVED

The Board also approved the deadline extension of SAP018 Enhancing Climate Information Systems for Resilient Development in Liberia from 2021 to 6 February 2022.

The Board then proceeded to discuss the Consideration of Accreditation Proposals. No new applicants were presented, only 4 entities seeking re-accreditation subject for Board approval. Before discussing each re-accreditation applicant, the GCF Secretariat provided a brief overview of the GCF Accreditation and Re-accreditation Pipeline, as well as a focus on increasing the number of DAEs.

The following are highlights of the GCF Secretariat’s presentation on the status of GCF Accreditation Applications:

  • There are a total of 125 entities currently in the GCF Accreditation Pipeline seeking accreditation. The pipeline is mostly composed of National and Regional DAEs seeking accreditation.

  • 2021 is the first batch or stage or re-accreditation with 2 already re-accredited last B29 and 4 this B30. 23 entities are due for re-accreditation by the end of 2022 where 9 are National DAEs, 6 are Regional DAEs, and 8 are IAEs.

  • The Digital Accreditation Platform (DAP) is operational for accreditation applications as well as re-accreditation applications.

  • Efforts such as workshops and modules are given to AEs and NDAs on how to perform their roles effectively throughout the accreditation process and as an entity. For NDAs, assistance is provided by the GCF Secretariat to identify potential AEs, and partner AEs for programming through the Country Programming Guidance and review of Country Programs.

The BM from Tanzania raised an issue that some members of the Accreditation Panel (AP) have not been accomplishing their jobs, and stressed the importance of accrediting entities efficiently. He asked the Co-Chair from France on how this will be addressed and when such action will be taken. The Co-Chair from France refrained from answering specifics and mentioned that since the issue raised contains sensitive confidential information, the Board will have to enter into an executive session to discuss such matters. The Co-Chair from France proposed to discuss the raised issue at the “Other Matters” agenda item, which was scheduled towards the end of B30. However, no executive session regarding the raised concern occurred throughout the day.

The BM from Mauritius intervened on the overall state of GCF Accreditation and emphasized the need to adopt an Accreditation Strategy. He added that the GCF should aim to also increase the capacities of AEs, particularly the DAEs in applying for accreditation and complying with the difficult and costly accreditation application process of the GCF. He also suggested that the GCF should support DAEs in preparing concept notes, that Key Performance Indices for the Secretariat should be built and observed, and that there needs to be an appropriation of the amount of support that DAEs receive through review of financial volumes.

The Board also briefly touched on the issue around the United Nations Development Programme (UNDP) and how it has been embroiled in corruption scandals in its Global Environment Facility (GEF) projects. In the past BMs, several members of the Board have been very critical on approving UNDP projects due to the scandal. This prompted BM from Albania to ask the GCF Secretariat on what is the current relationship between the GCF and UNDP. And then the Private Sector Active Observer asked the GCF Secretariat if the public sector AEs receive the same level of high scrutiny that private sector AEs receive from the GCF, as contextualized by the re-accreditation application of UNDP.

In our CSO intervention delivered by Erika Lennon, Active Observer from developed country CSOs, we raised concerns on the procedural weakness of the re-accreditation process such as lapses and lack of public transparency on monitoring and reporting of the re-applying AEs. As 23 AEs are up for re-accreditation by the end of 2022, we called upon the GCF Board and the Secretariat in preventing the 23 AEs from opting out of the fossil fuel portfolio assessment. We also asked for the full disclosure and streamlining baseline settings,  citing the inclusion of all financial instruments and activities that the AEs have operationalized since their accreditation in the GCF. Other concerns were also included in the intervention such as the question on the effectiveness and accessibility of grievance mechanisms for potentially impacted people, and the disadvantages that applicants with less capacity encounter in the entire accreditation and re-accreditation processes.

In response to the CSO intervention, the Accreditations Panel (AP), explained more about the baseline study and shared that all entities up for re-accreditation have been asked to submit new information on their baselines. The first batch of re-accreditation applications this year will be part of the pilot and will be subjected to further fine-tuning of the re-accreditation process by the end of 2022. They claim that they are monitoring the AEs closely and that these are used towards further developing the baseline methodology.

The BM from Saudi Arabia pointed out that the Board has not yet approved any baseline methodologies and asked why and when did the GCF Secretariat started implementing it since it was just “noted” by the Board last B28 without clear guidelines. He raised that this matter is important, since it concerns how AEs and their other non-GCF-related work impact the development strategies of developing countries.

Without clear response from the Secretariat, the Board moved to approve the re-accreditation application. Of the 4 applicants, only one was not approved and stirred debate between Board Members. The summary of the discussion is below.

RAPL008: Environmental Investment Fund (EIF)

Type: DAE

Country: Namibia

Size: Micro

ESS Risk Category: Low (Category C/I-3)

RE-ACCREDITED without changes to accreditation type

RAPL024: Development Bank of Southern Africa (DBSA)

Type: DAE

Country: South Africa

Size: Large

ESS Risk Category: High (Category A/I-1)

After the technical sessions conducted a week before B30, the BM from Sweden submitted conditions for the re-accreditation of DBSA. Since DBSA has a history of involvement in fossil fuel activities, the conditions demand the applicant to shift away from fossil fuel activities and present a net-zero strategy. The set of conditions was incorporated at the last minute in the decision text presented to the Board on Day 4, and not in the pre-Board documents. While developed country BMs supported the additional conditions, many developing country BMS pushed back and objected to the lack of transparency on how the condition text was incorporated into the draft decision text.

BMs from Saudi Arabia and the Africa Group of Nations (AGN) argued such a move made by BM from Sweden was immoral and questioned how the Secretariat could have allowed such language and procedure to take place. The BM from Saudi Arabia furthered that this is blackmailing and holding hostage the access of developing countries to climate finance and other development pathways. BMs from the AGN added that the conditions are inconsistent with GCF policies and its Governing Instrument, the Paris Agreement, and UNFCCC as the net-zero strategy for emissions reductions should not be the burden of developing country governments and institutions like DBSA. In the end, the Board ran out of time and the Co-Chairs did not discuss DBSA further.

RE-ACCREDITATION SUSPENDED

RAPL031: International Union for Conservation of Nature (IUCN)

Type: IAE

Country: Switzerland (Headquarters)

Size: Medium

ESS Risk Category: Medium (Category B/I-2)

RE-ACCREDITED without changes to accreditation type

RAPL007: United Nations Development Programme (UNDP)

Type: IAE

Country: United States of America (Headquarters)

Size: Medium

ESS Risk Category: Medium (Category B/I-2)

RE-ACCREDITED with small changes for it to be allowed to award grants and be  eligible for projects with funding allocation mechanisms.

The Board also took significant time in discussing the Independent Assessment of the Simplified Approval Process (SAP) and the SAP Update. The Independent Evaluation United (IEU) has submitted its evaluation of the SAP for the Board’s consideration. There were also several recommendations that are to be approved by the Board under the SAP Update.

As discussed by the IEU, the following are the highlights of the Independent Assessment of the SAP:

  • There are several criteria in the SAP which are not properly defined

  • The submission, processing and approval durations for SAP and normal FPs are the same. On the average, SAP takes 365 days while FPs take 399 days from concept note submission to Board approval. There are also no substantial simplifications observed in SAP processes as both the SAP and FP are under the same level of scrutiny.

  • For simplification, the IEU suggests the following:

    • Simplify documentation requirements

    • Better define key GCF concepts such as climate rationale

  • For acceleration, the IEU suggests the following:

    • Develop and enforce transparent and predictable standards for every step of the SAP process

    • Provide one set of consolidated comments for each concept note and proposal

    • Develop key performance indices (KPIs) for the GCF Secretariat that incentivizes processing of projects through SAP

    • Focus on developing processes for post-approval stages

In response, the GCF Secretariat argued that 4 out of 10 of the recommendations mentioned, deal with policy gaps that should be addressed by the Board.

Developing Country BMs in general agree with the IEU assessment and affirmed that the SAP policy and procedures are not simple from the perspective of DAEs, especially those in Small Island Developing States (SIDS). They argued that the current SAP failed in serving the urgent climate action and finance needs of developing countries, especially SIDS and LDCs, and that there should be a point-to-point progress map, with clear instructions on how a DAE can access GCF funds through the SAP.

In terms of the proposed SAP update, the secretariat presented the following:

  • Initially, the proposed SAP update includes the delegation of authority to the GCF Executive Director in approving SAP projects. This is now removed in the draft SAP update for the Board’s consideration

  • Options to increase the limit of SAP project amounts are provided. SAP projects were originally capped at USD 10 Million and are now proposed to be capped at USD 20 to 50 Million. The final cap amount is subject to the final decision of the Board.

  • SAP projects may now be approved through decisions in-between Board Meetings (BBMs) with further clarification on the process of how SAPs will be approved through BBMs.

  • An option to make SAP concept notes voluntary instead of being mandatory is being proposed

  • An option to allow SAP projects to be Category B in Environmental and Social Safeguards (ESS) Risks Level was also proposed.

After hearing the update, the CSO intervention delivered by Eileen Cunningham, Active Observer from developing country CSOs, pointed out that SAP projects should not be categorized as Category B. We added that an increase in the amount of SAP projects must be grounded in keeping the eligibility of the projects within Category C ESS risks. We suggested that concept notes should continue to be optional and the development of SAP proposal templates should involve consultations with NDAs, CSOs, Indigenous Peoples, and Communities. SAP projects that are to be approved in between Board Meetings (BBMs) following a no-objection basi should also have clear guidelines and ensure a transparent process that will actively include the participation of stakeholders.

The Board was united in wanting to ensure that CSOs and AO participation shall be strictly observed during SAP approvals done in BBMs. However, they had conflicting views with regards to conducting SAP approvals in between meetings. Developed country BMs supported the idea, while BMs from developing countries, specifically BMs from the AGN, objected and believed that opportunities to raise comments to certain SAP projects may not be possible or be limited in BBMs. The Board also had varying ideas on the cap amounts for SAP projects with no apparent objection to the increase, as well as on the proposal of allowing SAP projects to be categorized under Category B of the ESS.  BMs from SIDS argued that the improvement from the proposed SAP update focuses on the SAP projects and not on the process, and believed that the SAP continues to be complicated.

While the Board seems to be in consensus and in support for updating the SAP, there were no resolutions proposed with regards to the contentious items such as the agreed upon amount cap and the approval of SAP projects through BBMs. BM from Tanzania, suggested taking these to a voting procedure but the co-chair explained that they cannot proceed due to the limited number of BMs present (Note: the Board had already extended their time for more than 2 hours when this was proposed). Given this, the SAP Update was suspended. The Co-Chair from Mexico asked the GCF Secretariat to facilitate discussions and consultations among disagreeing BMs towards fine-tuning the details of the SAP Update so that a draft document will be presented to the Board as soon as possible.

As the Board struggled to make use of their limited time, they also quickly adopted the decision text for the Work programme and budget of the independent units for 2022 without major comments. As for the Work Programme and Administrative Budget for 2022, the Secretariat presented a revised decision text that reflected the concerns of BMs on the direction and expansion of DAE programming. It also included a motion to update the GCF’s salary structure which was first requested by the BM from Sweden.

The BM from Korea expressed that the efforts in revising the GCF’s salary structure by comparing it with ADB and World Bank salary structures should eventually lead to the development of a GCF’s own salary structure. After noting this intervention, the Board approved the agenda item.

The Tenth report of the GCF to the Conference of Parties to the UNFCCC, as part of the Board Decisions in between B29 and B30 was also adopted. However, the Updated Accreditation Framework, which the Board is requested to also approve under this agenda item, was not opened. It was unclear whether this will be taken up in BBM again or at future Board Meetings.

Other agenda items like Dates and Venues of future board meetings were also not discussed.

GCF B30 ended almost 4 hours past the scheduled time.

You can catch the recordings and live stream of the proceedings of the Board at:

https://www.greenclimate.fund/boardroom/meeting/b30#videos

Read the full text of the interventions from the CSO Observer Network here.

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