CSO Updates on the 31st Green Climate Fund Board Meeting – Day 3

Prepared by: The Asian Peoples’ Movement on Debt and Development

DAY 3 – 30 March 2022

Read the full text of CSO interventions for B31 here 

 

On day 3 of B31, the Board had a lengthy discussion about the Matters Related to Accreditation, which covers the Updated Accreditation Framework (UAF) that had been pending approval for years due to opposing views of BMs. This time, only the BM from Pakistan raised objections on the document, particularly on the references made to the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT). He argued that it was unnecessary and inappropriate to reference it in the document as the UAF is guided by policies and standards set by the Board, which are already consistent with the principles of the AML/CFT. He added that removing the references would not contradict the existing policies and standards that have been approved by the Board.

After consultations with the Secretariat, the references were removed and the decision text was approved.

Upon approval, many BMs gave positive feedback with the adoption of the UAF but also raised the issue about the delays in the circulation of B.31 documents. They urged the co-chairs and the Secretariat to avoid setting a precedent and work to avoid this in future Board Meetings. The BM from Kenya also argued that while the approval of the UAF indicates progress, this does not mean that all the barriers to accreditation, particularly those faced by Direct Access Entities (DAEs), have been resolved. She then cited the fact that DAEs still take months and years just to get accredited, that they remain underrepresented in the pipeline of GCF funding proposals, and that only 37% of GCF-eligible countries have DAEs.

For the CSO Intervention, Elieen Cunningham, Active Observer of developing country CSOs,  raised our concerns over the UAF document’s inconsistent paragraphs, especially those suggesting that all entities do not have to comply with all 8 Environmental and Social Safeguards (ESS). She added that the lack of mention of the GCF’s Indigenous Peoples Policy is unacceptable and that compliance to the IP Policy by all accredited entities must be ensured. The CSO intervention also proposed that the UAF must establish modalities for third party input and verification, including from affected communities, Indigenous Peoples, and civil society, in the accreditation and re-accreditation process to enhance the Accreditation Panel’s assessment.

 

The Board then proceeded to discuss the Second Performance Review (SPR).  The Board had decided in 2021,  to launch a process via the Independent Evaluation Unit (IEU) that will conduct the SPR,  to look at the progress of the GCF in fulfilling the Updated Strategic Plan 2020-2023 (USP) and preparing towards the GCF-2 or the GCF’s Second Replenishment Period.

 

At this Board Meeting, Andreas Reumann, the ad interim Head of the IEU, gave a presentation to the Board and said that the SPR is required by the GCF Governing Instrument (GI) and by the USP. Its purpose is to inform the Board on the progress and performance of the GCF based on the resources delivered under the GCF-1. The SPR is also  aimed at evaluating  the paradigm shift outcomes of all GCF activities.

 

The IEU presented the Synthesis Report of the SPR and showed its initial findings, as well as the potential direction that could be taken by the review. The final and full SPR version is expected to come out at B35.

 

The findings of the SPR Synthesis Report focused on the following areas:

  • Access to the GCF – the IEU noted that the accreditation process in the GCF is protracted and inefficient, as it takes more than 2 years for an applicant to be accredited. While there has been an increase in the number of direct access entities (DAE), the majority of funded projects still skew towards international access entities (IAE) at 87%. Lack of DAE capacity, as well as ineffective GCF initiatives for DAEs are presented as key challenges.

 

  • Programming in the GCF – the IEU reported that goals presented in the country programmes and the AE work programmes have not been delivered and are not fully aligned with the GCF goals. While the Project Preparation Facility (PPF) have been useful for DAEs, other GCF initiatives in speeding up funding proposal approval process (e.g. Simplified Approval Process (SAP), Private Sector Facility (PSF), and Request for Proposals (RFP)) were not maximized. The IEU recommended that the “programmatic approach” could improve and “hasten” the bottlenecks in the FP pipeline of the GCF. However, as previously expressed by CSOs in past BMs, the said “programmatic approach” allows for FPs to implement the “funds of fund” approach, which lessens democratic participation, transparency, and accountability of the GCF for projects.

 

  • Implementing and Managing for Risks and Results – the IEU noted that monitoring the implementation remains few, unverified, and are currently self-reported by AEs. It added that in evaluating achieved impacts based on results areas, GCF support is concentrated on energy access and power generation. The concept of paradigm shift also remains vague for most stakeholders, making it difficult for the IEU to evaluate its achieved impacts.

 

  • Institutional Architecture and Performance – the review noted that the GCF fares relatively well under the indicators for good governance, but it can be improved by closing the policy gaps. The IEU added the Fund’s efficiency is impacted by the lack of agreement among Board members, notably during consensus-based decision-making. The GCF is also faring well with regards to the participation and engagement of CSOs and Indigenous Peoples, but the review noted then Fund’s accountability challenges especially since its performance can only be independently assessed to a very limited extent. The IEU also noted the positive changes in the functions of the GCF Secretariat, but it can further improve, with proper Board guidance.

 

The co-chairs then asked for comments from the Board. Developed country BMs expressed agreement with the IEU about several points including the need to close policy gaps and the Fund’s lack of accountability. They urged the Board to address these issues the soonest and work to see more progress on the implementation of the USP, specifically on paradigm shift.

 

Other BMs suggested specific items to consider in the review. The BM from Antigua and Barbuda, representing Small Island Developing States (SIDS), raised the need to shorten the PPF and SAP timeframes, develop a fully defined Private Sector Guidance (PSG), and implement a programmatic approach for SIDS.

 

Giving the CSO Intervention, Eileen Cunningham, the AO for developing country CSOs, urged the IEU to ensure that consultations with peoples’ communities and IPs are done throughout the course of the SPR. The CSOs also questioned the SPR’s definition of “strong” CSO and IP participation given the lack of financial and operational support of the GCF to observer participation.

 

The intervention from the Private Sector AO revolved around prioritizing the Private Sector Strategy and in considering more Private Sector FPs. She also concurred with addressing Board efficiency issues that will eventually speed up the investment discussions in the GCF.

 

The Board then discussed the agenda item, Evaluation of the Adaptation Portfolio and Approach of the GCF, which was again presented by the IEU. Key findings are below:

 

  • The GCF has a unique position in adaptation to finance projects at scale with a high-risk appetite. It is highly beneficial if the adaptation initiatives are appropriate and consistent with country needs.

  • The GCF has not clarified its role beyond its adaptation projects and among other adaptation funds.

  • Requirements for proposals and capacity concerns of AEs remain as challenges in accessing initiatives.

  • The GCF, still has a lot of potential to utilize its large fund size and high risk appetite given its wide variety of financial instruments (loans, grants, guarantees, results-based payments, equity)

  • The GCF’s ability to source and support private sector projects has stalled with only 18 cents per 1 GCF dollar generated as co-financing from the private sector

  • The GCF adaptation portfolio consists of very few FPs under the programmatic approach (4 out of 67 projects) and is highly dominated by IAEs (6 IAEs receive 50% of all adaptation financing of the GCF)

  • Lack of available data, guidance and understanding the climate rationale, and complexity of adaptation projects all remain as challenges in adaptation project initiatives

  • The GCF remains challenged in reaching the most vulnerable and least ready countries for adaptation (59 countries have not received GCF adaptation finance)

  • Measuring the adaptation impacts is difficult since the only indicator currently used is the number of beneficiaries

  • The GCF has no project that solely focuses in the impacts of climate change on health

  • The GCF remains to have no systematic approach in assessing the depth of adaptation impacts

  • The GCF should trace how an adaptation investment is meeting a national priority for beneficiary countries.

 

The IEU recommended the following for the GCF’s adaptation approach:

  1. On positioning, the GCF should clarify its role and vision for climate adaptation and should implement adaptation methods with enhanced complementarity with other climate initiatives

  2. On capacity, the GCF should clarify its role the RPSP plays in adaptation planning towards addressing technical challenges and monitoring of results.

  3. On private sector, the GCF should define its approach in catalyzing private sector finance such as coming up with a strategy, inclusion of micro, small, and medium enterprises (MSMEs,) and a focused PSF.

  4. On accessibility and business model, the GCF should urgently respond to its policy gaps, organize its use of financial instruments, and clarify its requirements and guidelines on certain issues, among others, such as the issue on “climate rationale” and the programmatic approach.

  5. On results and impact measurement, there needs to be more clarification on how these are measured

 

Board members  had opposing views after hearing the presentation. Developing country BMs, led by BM from Egypt emphasized how the report reflects the major inaction of the Fund when it comes to adaptation. He noted that the GCF has allocated only 4-8% of its resources since 2010 to adaptation, that adaptation projects take much longer time to be approved compared to mitigation projects and that so far, 40% of adaptation FPs have been withdrawn because of weak “climate rationale”, lack of data, and other legal issues. Citing the UNEP estimates that says at least USD 400 billion annually is required for adaptation funding, the BM from Egypt urged the Board to mobilize more resources under GCF-2 for adaptation.

 

The BM from Bhutan concurred and added that mobilizing the private sector for adaptation is much more difficult for LDCs. He also mentioned the hardships of LDCs in the project preparation process and urged the Board to address the “climate rationale” issue, which was noted to be blocking adaptation projects in the pipeline. This point was supported by the BM from China, who reiterated the need for a balance between mitigation and adaptation finance.

 

The BMs from US, Norway, and Spain on the other hand, focused on giving importance to the role of the private sector in adaptation projects and financing.

 

Given the varying views, the co-chair asked the Board to take note of the presentation, and revisit the item to deliberate on a decision text that will be presented on the last day of B31.

 

Another contentious item covered by the Board on its 3rd day of Board Meeting is the Consideration of Accreditation Proposals. The discussion began with the Co-Chair from South Africa declaring his conflict of interest with the application for re-accreditation of RAPL024 Development Bank of South Africa (DBSA). The floor was then given to the Secretariat to report on the overall status of accreditation proposals.

 

As of March 25, 2022, the GCF had a total of 112 Accredited Entities (AEs), 77 of which have effective Accreditation Master Agreements (AMAs) while 10 are in the process of finalization. At the beginning of the year, 20 AEs applied for re-accreditation, while 9 AMAs have already lapsed primarily due to the AEs’ failure to meet the set deadline for reapplication. In total, there are 137 AEs seeking re-accreditation, most of which are DAEs.

According to the Secretariat, a growing number of re-accreditation applications is expected in the coming months and this may affect their processing capacity for new and upgrade applications. As a step to improve the re-accreditation process, the Secretariat reported that they have enhanced the Digital Accreditation Platform (DAP) with new modules launched for new applicants. They are also providing earlier and enhanced guidance to AEs on re-accreditation, which include training and workshops about the process and methodologies for AEs to use. The Secretariat has also given support to NDAs in developing approaches that will help them identify potential DAEs and partner AEs for programming, including through Country Programming Guidance.

The Chair of the Accreditation Panel (AP) then presented the accreditation and re-accreditation applications for Board Approval. These are:

 

Entity Information

Request

Status

RAPL001 Centre de Suivi Ecologique (CSE) – DAE National, Senegal

Re-accreditation

APPROVED

RAPL002 the Peruvian Trust Fund for National Parks and Protected Areas (PROFONANPE) – DAE National, Peru

Re-accreditation

APPROVED

RAPL004 Acumen Fund, Inc. (Acumen) – DAE Regional, based in the US

Re-accreditation and upgrade to IAE

APPROVED

APL115 Jamaica Social Investment Fund (JSIF) – DAE National, Jamaica

Accreditation

APPROVED

 

The re-accreditation of RAPL024 Development Bank of South Africa (DBSA) was also presented to the Board, but BMs did not reach consensus in approving it based on the formulation of the decision text. BMs from developed countries – Sweden, Switzerland, Spain, France, and Germany – proposed to include DBSA’s net-zero commitment in its portfolio similar to what was requested during its previous attempt for re-accreditation. The BM from Sweden even expressed dissatisfaction with DBSA’s progress in achieving this commitment. In contrast, developing country BMs led by Egypt, China, and Pakistan objected to the said proposal and argued that there is no policy that requires net-zero as a standard or requirement for accreditations. The Secretariat concurred and said the GCF currently has no net-zero policy.

This debate was followed by the CSO intervention delivered by Erika Lennon, the Active Observer for developed country CSOs, who was again called after the Board decided to approve all accreditation applications. Erika asserted that the CSO interventions are crucial in helping the Board decide on approving accreditation applications, hence should be heard prior to Board decisions. She also shared that CSOs welcome the approval of APL115 but noted that all the entities up for re-accreditation seemed to present issues with the independence, transparency and accessibility of their redress mechanisms, potentially leaving those that might have been or could be negatively affected by projects funded by the GCF without one important avenue for access to recourse or redress. She also added that the GCF needs to be more proactive in ensuring that entities accredited and seeking re-accreditation comply fully and meaningfully with the Fund’s Environmental and Social Policy, as well as other relevant policies. These concerns were particularly relevant to RAPL004 and RAPL002.

Erika also raised the CSOs concerns about the portfolio shift assessment applied to entities seeking re-accreditation, due to the lack of a baseline methodology set at the time of accreditation of these entities. Citing RAPL004, CSOs believe that the re-accreditation of parent companies, based on the assessments of their subsidiaries, might add additional difficulties, and allow entities to be re-accredited with minimum oversight on the compliance of their activities, policies, and overall portfolio with the GCF policies and mandate.

Since there was no Board consensus on how to articulate the decision text for RAPL024, the Co-Chair from France suspended the decision until a solution to the impasse could be formulated.

 

The Board also revisited the agenda item under the Updated Work Plan of the Board, Appointment of Board appointed officials and performance-related matters (Agenda 9.a). The Co-Chair from France invited the Board to approve the Selection process of the Heads of the Independent Units. There were no comments from the Board, and the document was quickly adopted.

 

This was then followed by another matter that was opened on Day 2 under the same agenda item, Institutional Matters (Agenda 9.d). The Co-Chair clarified that this session is intended to look at the work of the Board in relation to the Updated 4-year work plan and Updated Strategic Plan (USP), and the Trustee arrangement that is scheduled to expire in April 2023.

 

The BM from the UK affirmed the importance of discussing Trustee arrangements further and believed the discussion about the Salary Scale of the Secretariat should build on what the Secretariat started a few Board Meetings ago. BM from Bhutan concurred and requested for a detailed review of the existing salary scale and the HR framework. The BM from Spain reiterated the need to reestablish the private sector strategy in order to advance the private sector role in the Fund.

 

Taking note of the points raised by the Board, the Co-Chair suspended the item and assured the Board for a decision text the next day.

 

The Board’s last item for Day 3 of B31 was to continue the discussions related to Decisions between Board Meetings, specifically on the revised version of the Updated Guidelines for Board Committees. The co-chair from Africa explained that this item was opened on Day 1 but due to an objection from one of the BMs, the co-chairs conducted consultations and revised the decision text. When the revised version was presented to the Board, many developed country BMs led by the BM from Sweden believe the proposed changes are a bit far-reaching and that there are many items that remain unresolved in the document. BM from US, Italy, Albania and the UK concurred and suggested forming a small-group among BMs to further improve the document. BM from Pakistan on the other hand, supports the revised version and reminded the Board that they no longer have enough time left to form a small group and do back-and-forth revisions. He also insinuated that it is already late in Pakistan, and it will be challenging for him to engage in further consultations.

 

Eileen Cunningham, the Active Observer of the developing country to CSOs, was called  to deliver the comments made by Civil Society Organizations. Eileen raised our objections in excluding the participation of active observers in Board Committee proceedings unless stipulated in the respective committee’s terms of reference as proposed in paragraph 28. We proposed that AOs be given the chance to engage with Board committees directly and added that the Board must strive to maintain gender balance in alignment with the UNFCCC decisions on women’s full participation in all levels of decision making relevant to climate change.

 

Due to diverging views and comments from the CSOs, the co-chair from Africa decided to suspend the item and discuss it with the co-chair from France. He proposed to present another revised version of the document after they have conducted consultations with the opposing BMs. However, the BM from Sweden refused to accept the proposed action and insisted on forming a small group who will work on the revisions in the next couple of hours. The co-chair from South Africa remained firm, reiterated the proposed actions of the co-chairs, and then decided to suspend the item.

 

The Board is supposed to cover the Report on the activities of the co-chairs as its last agenda item for Day 3, but since the co-chairs only requested for a 30-minute extension, some of the BMs want to end the session and deal with the said agenda item the next day. The meeting adjourned 40 minutes 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

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