On the Internal Results Management Framework
As noted in previous comments made to the draft IRMF, the inclusion of representatives from the communities the projects are designed to serve are a critical part of the monitoring and evaluation process. This is particularly relevant for those core indicators designed to measure systemic change, as well as for those core and supplementary indicators designed to establish the number of project beneficiaries. Rather than just suggesting increased multi-stakeholder participation in M&E activities, the IRMF should have a clear mandate and the proposed results handbooks should deliver clear processes and incentives for participatory approaches to be upheld.
Additionally, it is unclear how the GCF will deal with independent evaluations that contradict AE’s reported self-assessments, especially due to the potential for bias and overstatement of results by AEs. The issue of overstating results, and in some cases ignoring certain negative outcomes, is of particular concern when it comes to sustainable development contributions, since the IRMF claims alignment between core indicators and SDGs but does not elaborate how to adequately ensure it.
Furthermore, the proposed IRMF does not address in detail the need to establish baselines for the monitoring and evaluation of expected results. Though the funding proposal template will include scorecards to establish a baseline against the contribution to paradigm shift, this is not always straightforward for other indicators, especially core indicator 2, since many proposals have not identified potential beneficiaries beforehand, but expect to do so during project implementation. The IRMF should in principle, and given the reality of different contexts and varying indicators, uphold use of baseline assessments/ surveys.
Though there is recognition that projects should rely as much as possible on indicators already available in national systems, this proposal does not address the need for project M&E systems to feed into national systems, such as for evaluating progress towards their NDCs.
The IRMF does not provide a clear basis on why and when the GCF can conduct or commission verifications at the end of implementation to assess whether paradigm shift has occurred. As such, we propose development of clear justifiable terms or adoption of an overall mandate to conduct such paradigm shift assessments. Closely related to this, we are concerned with the Principle ‘ Learning Not Accountability’ under Annex III Measuring Paradigm Shift Potential. It is imperative that the GCF both learns from and accounts for its own contribution to paradigm shift : the principle should read ‘ Learning and Accountability’ to embody and prioritize both.
Though the proposal states that it has a clear focus on integrating gender and social inclusion, gender aspects are only integrated in core indicator 2, and only as a disaggregation of data on beneficiaries by sex. This is inadequate as it does not take either the gender-differentiated impacts of different technologies and practices for GHG emission reductions or an understanding of how these benefits actually translate differently for men and women into account. As for social inclusion, it is unclear how this is measured in the proposed core indicators, since it would entail an understanding of who the excluded groups are as part of a baseline based on criteria considered acceptable.
In terms of policy compliance, the key design principles of the IRMF and its focus on GESI does not take account of the GCF’s Indigenous Peoples Policy. The “Policy linkages” section leaves out the IP Policy from the otherwise comprehensive list. IRMF aims to disaggregate data using parameters such as sex BUT it has to have data about Indigenous Peoples at least in cases where a project is implemented in Indigenous Peoples’ territory and/ or impacting Indigenous Peoples. The updated funding proposal template must address this oversight.
On Addressing the Gaps in the Current Portfolio Management
We are grateful to see this initiative to address gaps in measurement in response to the IEU evaluation of the RMF. Accurate and timely reporting is critical to achieving GCF climate action goals. By committing to accountability, institutional learning, dissemination of best practices, and capacity-building, the GCF advances AEs’ ability to accurately select indicators, apply appropriate methodology, and report results and budget accordingly in their project proposals.
We agree with the Secretariat’s assessment of the “criticality of review for quality and evaluability, rather than compliance.” Just taking a check-box approach to any aspect of the funding proposal misses the mark. The strength of the Fund lies in how well the climate actions in its projects and programmes are designed, implemented, monitored, evaluated, and expanded upon–not in how many AEs are accredited, how many projects are approved, or how much money is disbursed.
This is why we support the Secretariat’s effort to reach out to AEs and hope that the Board will fulfill the Secretariat’s budgetary request for remediation activities when presented at a future meeting. All AEs, especially those seeking re-accreditation, should take the Secretariat up on this opportunity to strengthen their measurement capacity. Having appropriate M&E frameworks and requisite budget allocation should be a standard aspect of the proposal review process by the Secretariat as well as ITAP.
Given that reductions and avoidance of GHG emissions is one of the primary goals of GCF investments, we are concerned about how the GCF assesses, ex-ante, the mitigation potential of projects and programmes, as well as how it tracks progress ex-post, especially in light of a number of projects and programs, including FP164 which was approved yesterday, overstating GHG emissions potential based on assumptions and with a set-up and investment period that does not allow for ex-post accounting. In this context, iIt is worrisome that the Secretariat´s re-examination of the existing portfolio against widely used GHG estimation methodologies has concluded that previous estimates were often overly optimistic. We hope that concerted exercises arising from this gaps evaluation will ensure that the methodologies, and especially the assumptions, that will be used to measure GHG emissions reductions, both ex ante and ex post, are appropriate and avoid the practice of overstating expected results. We understand that the Secretariat expects to institutionalize and streamline the GHG accounting in the Results Handbook to be prepared after approval of the IRMF. This Handbook should be developed through broad consultations and ensure participation of experts, including civil society.
As stakeholder engagement strengthens proposals, participatory monitoring strengthens implementation, and the Monitoring and Accountability Framework provides for such monitoring. Communities should be able to engage and raise red flags and be included in the selection of meaningful indicators for implementation progress and successful outcomes..
We are interested to learn how this initiative can contribute to increased AE accountability, including through the release of all the annual performance reports in which they are tasked to measure their progress in implementation towards achieving project goals.
On Consideration of Accreditation Proposals
We appreciate the information on the status of accreditation and the growing network of GCF accredited entities, including the encouraging information on large numbers of DAE applicants in the pipeline and the support provided by the Secretariat through readiness to get them accredited. It is likewise encouraging to see that the majority of applications and approved proposals under the Project Preparation Facility are benefiting DAEs. This is important to ensure that the sheer number of DAEs finally translates into a larger share of approved funding.
In this context, it is important to get more information about the extent to which the 33 international access entities mentioned in the report are fulfilling their requirement under decision B.10/06 to support DAEs. More important than the report that they have to fill out annually — where it is unclear what if any follow-up actions are being taken — would be to include respective actions, such as a commitment to joint project development and implementation with DAEs, in the multi-year work programmes of international access entities currently under discussion. This is what compliance with B.10/06 should focus on.
We also note that the Secretariat expects 12 AEs to be presented to the Board for re-accreditation at B.29 and B.30. We urge you to ensure this process is fully transparent and that there be disclosure of their re-accreditation assessment by the AP, in line with accreditation applications, to the observers and the public before the Board’s consideration.
We strongly support the efforts, including by proposing a common approach for all, to assess the overall portfolio shifts of accredited entities. However, the best approach is likely not the proposed methodology for establishing a baseline which is based narrowly on accounting for carbon emissions or beneficiaries and is largely focused on projects, whereas the vast majority of the portfolios of large financial institutions is not project-based, such as bonds, policy loans and equity investments. The pilot approach has also revealed the difficulty of applying the methodology to blended finance approaches such as those the GCF increasingly pursues. None of the big commercial banks and MDBs among the GCF’s accredited entities has chosen to participate in this pilot, although it was their accreditation that provided the political impetus to pursue accountability via the broader portfolio shift assessment to avoid greenwashing through an affiliation with the GCF. The baseline approach used must be designed to evolve over time and to incorporate the most advanced and appropriate methodologies such as “science-based targets” like implementing the recommendations of the Task Force on Climate Related Financial Disclosure or the 2 degree Investment Initiative for the banking sector.
We note that all five new applicants considered for the first time at B.28 are direct access entities with substantial financial intermediary capabilities. This is helpful, especially to the extent that their financial intermediation facilitates access to local level public and private sector activities that many international entities and banks accredited with the GCF are not prioritizing for engagement, such as MSMEs and local public authorities. All of them are proposed for accreditation with lists of conditions of varying lengths. We urge close monitoring and documentation of fulfillment of these conditions, such as proving the effectiveness of relatively new policies and procedures for audit, oversight, environmental and social management, information disclosure, and grievance procedures.
We stand firm in rejecting the application for accreditation of APL100. As stated in the letter signed by more than 400 organizations that was sent to the Board during B26, and sent again for B28, we believe an institution considered as the world’s 3rd largest coal financier, still does not meet the GCF standards of environmental and social governance.
Approval of its accreditation application entails huge reputational risk and makes a mockery of the mandated objectives of the Fund. A dirty company that continues to support fossil fuel projects cannot be a legitimate partner in the implementation of climate projects in developing countries. There is no justification for GCF to consider giving a dirty company access to public funds that are needed, now more than ever, for urgent climate action.
On the Update of the Simplified Approval Process
While the SAP needs to be improved to provide a truly simplified process, the changes proposed are unlikely to achieve that aim as these updates do not address the primary problem of the SAP: the long and burdensome project preparation process, which is the primary hurdle for many DAEs. Of the three key updates proposed here, two are unmerited and another requires additional thought.
First, the proposed expansion of SAP activities to those that entail “limited” adverse environmental and/or social risks and impacts is inappropriate and unmerited. The expansion is not an attempt to address the identified problem; instead, it likely could displace existing pipeline projects. Indeed, the number of projects in the pipeline under existing eligibility is more than adequate for years of approvals under the aspired-to rate of 20-25 SAPs per year. Furthermore, expanding SAP eligibility for higher risk projects than Category C poses a risk that environmental and social assessments will be given less attention during the approval process. The SAP is not an appropriate vehicle for Category B projects, which can and do carry considerable risk and cover a wide-range of projects, as shown by independent accountability mechanisms, including the IRM, receiving quite a few complaints related to category B projects. If the Board still feels a risk expansion is appropriate, it should be considered only as a second step after a pilot period with measurable improvements to the existing SAP that increase the speed at which Category C micro-scale projects move through the pipeline.
Secondly, the proposal to authorize the Executive Director to approve, on a rolling basis, SAP funding proposals is also inappropriate and unmerited. Devolving decision-making of projects of up to $10 million USD to the Executive Director is not necessary to quicken approval times. This suggested change is unprecedented within this fund and weakens the Board’s prerogative and obligation under the Governing Instrument to make all funding decisions. It also creates a slippery slope where more and more decisions on funding proposals, accreditation, etc. are decided not by the Board, but the Executive Director. Additionally, this can complicate, rather than simplify, the overall process by creating multiple pathways by which projects are approved.
Lastly, the proposal for SAP approvals in-between Board Meetings holds promise, but it is a partial solution to the larger problem of long project preparation times. A no-objection process between Board meetings will inherently involve less scrutiny of projects than those brought before the Board. While information disclosure to the Active Observers is specified in this process, this problem is compounded by the failure to specify a mechanism by which civil society, Indigenous Peoples, and local communities can have their analyses and perspectives “heard” by Board Members prior to decision-making, a standard that moves beyond information disclosure and the opportunity to comment. Also, a decision on SAP approval in-between Board meetings should be considered only following the Board discussion and approval of a process on decision-making in between meetings (also under discussion at B.28).
We do believe the SAP can and must be improved to be a truly streamlined process especially for DAEs, and this can happen without unnecessarily increasing risk and scale through additional project categories, or by eliminating opportunity for the valuable analysis and expertise of civil society, Indigenous Peoples, and local communities, and we would welcome the opportunity to share our proposals with the Secretariat during a consultation. The SAP could then again be reviewed after a two year pilot to assess whether it has been simplified sufficiently and/or what additional measures can be taken to simplify it.