CSO Updates on the 32nd Green Climate Fund Board Meeting – Day 2

by Claire Miranda of APMDD – The Asian Peoples’ Movement on Debt and Development

DAY 2 – 17 May 2022

Check the CSO Observer Network Interventions here: B32 CSO Interventions

The second day of B32 started with the discussion on the Updated Work Plan for 2020-2023, specifically on the Strategic Planning and Programming Matters, an information document that is to be noted by the Board. As this agenda item is a proposal of the co-chairs, the Co-Chair from France presented the current status of the Updated Work Plan based on discussions and consultations made since B31.

The co-chair also enumerated some information regarding the the Board’s strategic planning, which concerns a potential update of the GCF Strategic Plan policy (USP) and the upcoming 2nd replenishment of the GCF (GCF-2):

  • The Second Performance Report (SPR) summary will be presented to the GCF Board by B34 based on the 2022 IEU work plan. The final report will be considered at B35 (likely to happen next year).

  • The process of GCF-2 is expected to commence this coming July 2022 (B33) and is expected to finish before the end of 2023.

The co-chair also noted the following issues that needs to be resolved:

  • Linkages of the GCF’s Second Performance Review (SPR) and the potential update of the Strategic Plan, and how based on initial discussion could affect the second replenishment process (GCF-2) process

  • The role, functions and working structure of the Board in the replenishment process (GCF-2)

  • Outstanding discussions on policy items such as the Private Sector Facility and Private Sector Strategy, which are crucial to the GCF-2

Developed country BMs were united in emphasizing the need for an updated Strategic Plan (USP) prior to the pledging conference. Similar to what they have demanded in the past, they believe the GCF must show efficiency and progress to assure contributor countries that their contributions to the Fund are justifiable. They believe an updated USP will give the “donor” countries, as mentioned by BMs from Germany and Norway, a clearer picture of the Fund’s direction and programme. This argument was even strengthened when BMs from Finland and Norway, raised the need to evaluate and assess the GCF through the Multilateral Organization Performance Assessment Network (MOPAN). This assertion was eventually clarified by the GCF Executive Director to be a matter that the Board decided in previous Board Meetings not to pursue.

Developing country BMs on the other hand, reiterated their B31 position and argued that while the USP is necessary to align the Fund’s future strategy, it should not serve as a condition to start the second replenishment process (GCF-2). BMs from Bhutan, Kenya, and Albania urged the Board to set a clear timeline of their work in order to simultaneously address pending items around the SPR, USP, and the GCF-2. They also highlighted the need for an inclusive GCF-2 process where meaningful participation of the private sector, Secretariat, and AEs as project implementers are ensured.

In the discussion, the GCF Executive Director (ED) Yannick Glemarec also registered that the drafts of the USP will be available for Board consideration at B34, in time for the pledging conference of the GCF-2 that is expected to commence in 2023.

The discussion was then followed by another information document – the Reports on the Activities of the Independent Units. The Co-Chair from South Africa allowed the heads of the 3 independent units of the GCF to present their reports to the Board. Key findings of the report are summarized below:

Independent Evaluation Unit (IEU)

As of the 1st quarter of 2022, the IEU was able to submit 3 reports:

  • Independent Evaluation of the Relevance and Effectiveness of the GCF’s Investments in the LDCs;

  • Report of the Synthesis Study: An EU Deliverable Contributing to the Second Performance Review of the Green Climate Fund

  • Rapid Assessment of the progress of the GF’s USP: An EU Deliverable Contributing to the Second Performance Review of the Green Climate Fund.

The head of the IEU also reported their recent efforts in conducting global evidence reviews on behavioral science and gendered impacts. The DataLab that was created last 2018 was reported to have provided support and quality assurance for the unit’s Second Performance Review (SPR) Synthesis Study, Rapid Assessment of the Progress of the GCF’s Updated Strategic Plan (USP) and the Evaluation Report of the African States. The IEU also shared that they continued their multi-year program called Learning Oriented Real-Time Impact Assessment (LORTA), which has produced a capacity-building online toolbox for DAEs and supported real-time impact evaluations. They are currently “onboarding” 4 Funding Proposals for LORTA in Mexico, Senegal, Nepal, and Barbados.

The IEU has also scaled up its partnerships and communications with the Incheon National University and Fondo Mexicano para la Conservacion de la Naturaleza, as well as with several new potential partners. They also reported the full membership of the IEU in the United Nations Evaluation Group (UNEG), confirmed in January 2022, and shared the capacity building initiatives done by the unit to increase staffing, data analysis capacity, and strengthen its operational capacity.

Independent Integrity Unit (IIU)

The IIU shared that there were significant declines in cases submitted this year compared to 2021. As of April 2022, there were 5 open cases and the IIU was able to close 6 cases. Investigation standards have also been improved and the case management system is now fully operational to manage the intake functions and investigations process. The IIU also launched an online multilingual integrated reporting platform, and was able to issue 9 integrity advisories during the reporting period ranging from conflict of interest and implementation of GCF policy framework. Their links with more AEs and new partners have also improved, with 33 MoUs among accredited entities established and ongoing negotiations with 32 more. Finally, they reported their ongoing initiatives for awareness raising and communications and enhancing operational efficiencies.

Independent Redress Mechanism (IRM)

The IRM reported that there have been zero complaints received during the reporting period, but currently there are 2 ongoing complaints being processed. These are from FP146 Nicaragua, which is in the compliance investigation stage, and FP001 Peru, which is in the monitoring stage. The IRM also shared updates on staffing, expenditures and budget utilization, which as of March 31, 2022, is at 14%.

There were other IRM matters that the Board discussed over an executive session. But after hearing all the presentations, the Board noted all 3 reports of the independent units.

The Board then proceeded to discuss the Report on the Activities of the Co-chairs, which was reduced to three pending items that needed Board decision. The first item covers the Steps to be taken by the Board in the event that a virtual Board Meeting leads to a non-consensus decision. In such an event, the Board agreed to let the co-chairs conduct further consultations with opposing BMs. If after such consultations the opposing BMs still cannot join consensus, they may opt to choose the options set out in the Decision-Making Procedures of the Board in order to allow the relevant decision to be adopted. If the opposing BMs do not wish to make use of any such option, section V of the Decision-Making Procedures shall apply mutatis mutandis to the decision appointing the relevant Board-appointed official.

The second item covers the Guidelines for the operation of Board Committees, to which the BM from Spain expressed strong concerns over paragraph 22 that states Committee Chairs will report to the Board should the committee be unable to reach consensus. She argued that the Committee Chairs should take a more decisive role to avoid delays in committee actions. The BM from Spain also believed the language in paragraph 8 on gender is outdated and inappropriate. This point on gender was then echoed by many BMs with some suggested textual edits.

The BM from US also opposed the proposed guidelines and added textual edits to reflect that the Secretariat can convene meetings in consultation with the Co-chairs in the event that the co-chairs are unavailable, just so the committees can continue working on achieving consensus. He added that the participation of CSOs via the Active Observers must be ensured, to which the alternate BM from Denmark concurred.

Other BMs raised issues related to the delays in circulation of decision texts, the lack of rules of conduct for committee work outside Board Meetings, and then called for a more pragmatic approach with regards to the constitution of Board committees.

Given the number of points raised, the BM from Saudi Arabia asked the co-chairs how they plan to move forward in revising and approving the document. This prompted the co-chair from France to ask BMs to submit all their textual edits so the small group working with the co-chairs can incorporate and come up with a revised decision text for Board consideration later.

The CSO Intervention, delivered by the Active Observer of developing country CSOs, Eileen Cunningham, echoed the points raised related to inappropriate language on gender and recommended removing gender-specific terms such as “chairmanship”. The CSOs also argued for participation in committee sessions on a case to case basis.

The third sub-item which covers the Guidance on which decisions may be made without a Board meeting was met by comments from Sweden, who requested for the expansion of the types and categories of Board decisions. He also acknowledged the valuable inputs of the observers, particularly the CSOs, and urged the Board to go beyond considering their interventions as merely information, and that their inputs should be promptly circulated similar to other Board documents. This point was supported by the BM from the US who suggested adding a text reflecting the prompt circulation of observer comments to the Board.

Erika Lennon, the Active Observer of developed country CSOs, expressed the CSOs’ concern on the expanded list of decisions allowed between meetings. The CSOs believe this could compromise transparency in Board operations.

After a long back-and-forths, the co-chair from France closed the session with a promise to confer with his fellow co-chair in revising the decision texts.

The Board then proceeded to discuss Matters Related to Accreditation: Report to the Analysis of the Accredited Portfolio, an item presented by the Secretariat which contains a number of issues related to the accreditation process. The Board is asked to take note of the report, with the following key findings:

  • There are major gaps between AEs’ capacities and the GCF’s programming expectations. The GCF needs to strengthen its institutional capacity to allow more AEs to develop FPs in various GCF result areas, especially those that were unpopular (transportation, health and mobility). The lack of clarity in the GCF’s programming guidance also leads to inconsistency of the quality and the non-aligment of FPs with the Fund’s goals, which is a major factor in the delay of the accreditation process.

  • There is also a need for additional resources to augment the capacity of the GCF Secretariat and the Accreditation Panel (AP) to facilitate the accreditation process more effectively.

The comments from developed country BMs were focused on the need to streamline the AE pipeline. They called upon the Board to work on the Fund’s programming priorities and to make the AEs well informed on the result areas that the GCF wants to focus on. The BMs agreed this will not only speed up accreditation applications by narrowing the criteria in the evaluation process, but also increase the interest of entities that wish to be GCF partners.

To further speed up the evaluation of accreditation applications, the BM from Finland proposed to have an exclusion list of activities, while the BM from the US believe DAEs must be encouraged to develop FPs using financial instruments like guarantees and equities to maximize GCF resources.

Developing Country BMs on the other hand, repeatedly raised the longstanding issue of lengthy and complex accreditation process, especially on how these greatly disadvantage the DAEs. Some of the BMs feel like the Secretariat is not taking urgent steps to increase the finance received by DAEs. BM from Bhutan furthered that the majority of the DAEs from LDCs are stuck in the “micro” category, limiting them to submit FPs with a relatively smaller scope. He then asked for clarification on steps taken by the Secretariat to DAEs with “micro” classifications to increase their capacity towards getting an FP approved.

Still on issues around DAE, the CSO Intervention delivered by Eileen Cunningham, raised concerns over a number of DAEs that have not yet submitted any FP despite being nominated by their Nationally-Designated Authorities (NDAs). Many of the DAEs are stuck in the post-Board approval stage, and are still unable to submit their first FP due to capacity constraints. The intervention also highlighted how the document promotes non-grant financial instruments such as equity, guarantee, and the proposed insurance coverages. The CSOs emphasized that such a proposal can further marginalize DAEs and reminded the Board that the GCF is not an investment bank. It is an institution mandated to allow developed countries to fulfill their finance obligations by supporting developing countries with their climate needs.

After hearing the various comments with zero objections, the co-chair from France gaveled and adopted to note the report.

The Policy Consultations on the Guidance in the approach and scope for providing support to adaptation activities was also part of the Day 2 discussions. Here, many BMs reaffirmed their commitment and the GCF’s mandate to scale up and accelerate adaptation finance in order to meet or exceed the 50:50 adaptation-mitigation balance of the Fund’s portfolio. The BM from Norway was quick to report the Norwegian government’s commitment to triple its adaptation support, while BMs from Canada, Norway, Italy, Finland, USA, and UK repeatedly mentioned the role of the private sector and the Fund’s need to diversify its financial instruments to include guarantees, equities, and insurance policies for adaptation. BMs from Canada and Luxembourg added that nature-based solutions relative to adaptation, should also be considered by the Board.

The Board’s main point of contention under this agenda item was whether the approach and scope for providing support to adaptation as described in the document is enough to be adopted by the Board. The BM and Alternate BM from the UK and US asserted need to come up with a decision soon in order for the adaptation action to be accelerated. However, developing country BMs, particularly from African states, Bhutan, and Saudi Arabia believe the document still has a lot of room for improvement before it can be adopted by the Board. The BM from Bhutan asserted that hastily adopting the document without considering all modalities will lead to several problems in the future. The BM from Gabon agreed and added approach provided in the document failed to present long-term solutions, particularly on issues dealing with climate specificity. He further recommended that the document should supply solutions and plans for the following:

–    Consolidation of GCF’s unique position in adaptation finance, including the mandate to finance projects at scale and with a high-risk appetite;

–    Promoting efficiency by pushing more coordination with NDAs, AE, and local stakeholders in national, regional, and local levelsl;

–    Developing a set of best practices from stakeholders;

–    Promoting single and multi-country programs and provision to streamline process of project approvals;

–    Recognize regional aspect of adaptation;

–    Realize potential of regional DAEs;

–    Approach to diversify financial instruments it should use for adaptation projects.

The BM from Gabon also proposed to develop a long term adaptation strategy and action plan from 2022-2030 that will request the Secretariat to conduct a strategic mapping exercise and assess adaptation priorities submitted by developing countries as part of their NDCs and adaptation communications.

The US Alternate BM argued that issues on climate rationale and specificities raised by other BMs should be discussed in a separate document. However, other developed country BMs did not support this idea and joined the developing country BMs to defer the adoption of the document as it significantly lacks information and analysis regarding adaptation. The BM from Luxembourg was not convinced that the document is concrete enough to guide implementation, while the BM from Finland believed the gender dimension is weak. BMs from Japan, Germany, and Italy also expressed their desire for more details and elaboration, especially in terms of adaptation solutions.

Throughout B32, the co-chairs have been calling the Active Observes last. Under this agenda item, Erika Lennon, the Active Observer of developed country CSOs delivered the CSO intervention that strongly opposed the increased programmatic approach through the Private Sector Facility and the great interest that the Board gives to private sector finance for adaptation. The intervention also asserted that the approach is misguided and gives unfair priority to direct and mobilized private sector finance over the engagement of people and the promotion of resiliency of social systems that support them. More importantly, the document seemed to equate transformational adaptation (a concept taken from the IPCC AR6 report) with scaled-up adaptation finance through private finance mobilization.

The CSOs also pointed out that the document does not address what the GCF approach is to ensure that project decision-making and evaluation are transparent, informed, or inclusive. This is especially concerning given the emphasis on private sector finance using “innovative” approaches and technologies, and the increased interest in the use of equity funds, given the current lack of transparency, accountability and inclusive decision-making linked to such proposals. The document is also noticeably silent on the continued role of providing public grant financing, including full cost grant financing (in line with para. 35 of the Governing Instrument), as required for adaptation measures. The intervention also emphasized the need to highlight the central role of the experiences, needs, and knowledge of local communities and Indigenous Peoples as part of climate information data and modelling requirements.

Taking note of the comments and suggestions, the co-chair from France concluded the agenda item.

The Board’s final agenda in Day 2 was the Guidance from the 26th Session of the Conference of Parties, a document that presents the actions to be undertaken by the Board in 2022 based on the recommendations and output of COP26 in Glasgow. There were no comments from the Board except from the BMs from Germany and the US, who added texts in the decision text to reflect the guidance about various financial instruments. One of the decisions agreed upon by the Board is for the Secretariat to present an information paper on financial instruments including parametric insurance for climatic events at B34. Throughout B32, the idea of parametric insurance came up several times and many developed country BMs have shown interest in making this financial instrument part of the GCF.

After the Board made a decision on this agenda item, the co-chair from Africa called the Active Observer from developing country CSOs, Eileen Cunningham for the CSO Intervention. Eileen reminded the Board about the longstanding issue of ensuring Free Prior and Informed Consent (FPIC) among Indigenous peoples and local communities, which is also an issue mentioned by the Independent Evaluation Unit (IEU) in the GCF’s Second Performance Review. The CSOs urged the Board to go beyond merely putting these words on paper, and take concrete steps to address these issues. The intervention also mentioned the need for the GCF to enhance adaptation activities, achieve balance between mitigation and adaptation, as well as strengthen the integration of gender considerations into its activities.

Day 2 of B32 ended at 5:24 PM in Antigua and Barbuda.

You can watch the live webcast and proceedings of B32 from 9:00 AM to 6:00 PM in Antigua and Barbuda here: https://www.greenclimate.fund/boardroom/meeting/b32#videos