You can watch the GCF B39 proceedings live and on demand here: https://www.greenclimate.fund/boardroom/meeting/b39#videos

Full transcript of the interventions by the GCF Observer Network are available here: https://www.gcfwatch.org/resources/board-meeting-resources/39th-board-meeting-of-the-gcf 

DAY 1 – July 15, 2024

The 39th Board Meeting of the Green Climate Fund (B39) is happening from July 15 to 18, 2024, in Songdo, South Korea. This is the second Board Meeting of the year and immediately follows the recently concluded 2nd Board Meeting of the Fund for responding to Loss and Damage (FLD) held last July 9 to 12, also in Songdo.

The meeting commenced with Opening Remarks from the Co-Chair from the United Kingdom, Sarah Metcalf, in which they welcomed all Board Members, recalled the changes in Board composition, and reminded participants to observe the code of conduct. 

The Board then proceeded to adopt several items quickly such as the B38 Agenda and the Report of the Thirty-Eighth Meeting of the Board (B38. The co-chairs also noted without comments the Board Decisions Proposed between Board Meetings (B38 to B39) which included the Performance review and appointment of members of the Accreditation Panel – approved on May 13, 2024; and the Accreditation of observer organizations, approved on July 9, 2024. 

The Report on the Activities of the Secretariat was presented by the GCF Executive Director, Mafalda Duarte and outlined key elements that reflected new priorities and objectives for a “fit-for-purpose GCF”. Mafalda stated the Secretariat’s key priority is to enable a country-driven approach to GCF projects, through its operationalization of the Readiness Strategy. Regional Dialogues in 13 countries and Eastern Europe and Central Asia (EECA) had been conducted to engage countries and broader stakeholders on Readiness Strategy planning and pipelines. 

Board Members (BMs) from both constituencies expressed the need to clarify the timeline of the full launch of the Readiness Strategy and to tailor-fit Regional Dialogues to discuss country-specific issues. The Executive Director responded that internal timeline-setting is ongoing, with updates to come towards the end of the year. The BM from Mali highlighted that the Readiness Strategy must tangibly translate to more country-driven projects in the pipeline and Board approval, and that this should be the primary key performance indicator (KPI) in measuring country ownership, especially in adaptation.

The report also highlighted the mapping of underserved blind spots in adaptation finance, which found 59 countries without a single-country GCF funding proposal (FP), and 19 countries without programmatic funding to date, noting that many of these countries are highly vulnerable. Many BMs across developed and developing countries registered their concerns about the number of these blind spots, to which the Executive Director responded to say the Secretariat will further investigate the matter. The Report also presented Secretariat’s efforts to support the 4th Indigenous Peoples Advisory Group (IPAG) Meeting, and initiatives towards improving the GCF Gender Action Plan (GAP) as part of the Fund’s multi-year work programme for 2024-2027, which builds on the lessons from the first GAP for 2021-2023. In addition, the Executive Director shared that the Secretariat is holding consultations with countries on the No Objection Letter template and procedure, to which many BMs welcomed and expressed support.

Enhancing access through the GCF Project-Specific Accreditation Approach (PSAA) was also featured in the report. Consistent with the update from B38, the Secretariat is expecting the first 2 PSAA proposals to be brought to the Board by B40. Some developing country BMs expressed appreciation for the simplification of project templates, and highlighted the importance of a more streamlined process due to the challenges that developing countries face in terms of capacity, resources, and data. 

The Secretariat Report touched on the Executive Director’s proposal for Human Resources (HR) reforms as well, building on discussions about the GCF Compensation Philosophy last B38, and recognizing that the GCF HR guidelines have not been updated in 10 years since its inception. The discussion included details on Secretariat restructuring and establishing a dedicated monitoring, evaluation, and learning unit. The BM from Egypt raised the need for the proposed restructuring presented by the Executive Director to be approved by the Board and that it must be reflected in the decision text. However, the Co-Chair from the United Kingdom explained that the item is part of the Report on the Activities of the Secretariat, which does not require a decision text. 

The Report was then adopted. However, the BM from Egypt requested to put on record — in the official documentation of the meeting and a footnote in the document — that the proposed Secretariat restructuring must be endorsed by the Board, with the clarification that there is no objection to the proposed reforms. The BM from Egypt clarified that the need for Board endorsement seeks to avoid setting a dangerous precedent where the Executive Director can simply exercise discretion and make drastic changes to the Secretariat structure without the approval of the Board, which clearly is a departure from previous Board practices. Many developing country BMs echoed this concern. The Co-Chair from the United Kingdom responded that the footnote request cannot be accommodated as it was stated after the closure of the agenda item, but the Secretariat will note these concerns in the documentation.

When the Administrative Budget of the Secretariat was presented, the Executive Director highlighted that it is on track to execute at least 94% of the 2024 approved budget — an updated figure from the one stated in the Report. Additionally, plans to update the Fund’s risk appetite statement and accelerate programming investments to meet USP-2 targets were also mentioned to which many developing country BMs contended. The BM from Egypt expressed particular concern that the raison d’etre of the GCF, as a unique Fund meant to fill a gap not served by existing financial systems, must not be lost in pursuit of a greater risk appetite aligned with the USP-2. They added that adaptation is central to the Fund’s work as reflected in its Governing Instrument and COP Guidance.

The Report also looked into the Secretariat’s efforts to making the GCF more efficient through its internal project review processes, simplification of documentation while ensuring completeness, reform of its climate investment committee to focus on risks and opportunities, and introduction of a “1 project 1 voice” approach where the GCF will streamline consistent engagement with partners by assigning a focal point per project. 

Many BMs agreed that the GCF must improve on its communications strategy, particularly in terms of its external-facing visibility. They believe the various improvements and corresponding results from GCF activities must be communicated more strategically to enable appreciation from governments, the public, and the UN system. The BM from Egypt, however, noted that the current communications strategy being employed by the Secretariat was never discussed with the Board, and then requested the Secretariat to conduct further dialogue with the Board on the matter.

Kairos Dela Cruz, CSO Active Observer from Developing Countries, highlighted the need for more detailed reporting on the Readiness Strategy, updates on the Secretariat restructuring, support for regional presence, and expansion of capacity and expertise on environmental and social safeguards (ESS), gender equality, and Indigenous Peoples’ rights. The CSOs urged the inclusion of broader stakeholders in the consultations about the No Objection Letter, the new multi-year work programme which includes the Gender Action Plan, and general stakeholder engagement efforts. They also specifically noted the absence of details on staffing levels and their gender and geographical balance, and highlighted the need for the contact names of the “1 project 1 voice” focal points to be made transparent on project web pages. Lastly, the CSOs urged the Secretariat to enhance monitoring, evaluation, and learning functions to prioritize improving project design and implementation to benefit communities, and not just promote the GCF.

Still under the Report of the Activities of the Secretariat, a Progress Update on Regional Presence was presented to the Board. In B38, the Board instructed the Secretariat to develop proposals for establishing regional presence to simplify GCF access, enhance capacity in developing countries, and increase the visibility of GCF initiatives. Carolina Fuentes from the GCF Secretariat shared updates on initial consultations, highlighting key stakeholder concerns and the timeline for finalizing the proposal into a Board policy document.

Consultations with Board Members, Active Observers, and National Designated Authorities (NDAs), and a wide variety of GCF stakeholders identified eight major themes of concern and consideration:

1. Country Ownership: Stakeholders emphasized improving NDA capacity beyond issuing no-objection letters to coordinating direct access entities and building country pipelines. They also called for a more explicit role for civil society and indigenous people in GCF initiatives.
2. Efficiency: Readiness, capacity building, accreditation, and funding proposal processes with the GCF are slow and prolonged. Stakeholders expect regional presence to expedite these processes, with progress measured numerically.
3. Delegation of Authority: Stakeholders anticipate regional presence will bring a degree of decentralization and improved reporting from regional establishments.
4. Tailored Approaches: Regions have different contexts and challenges; stakeholders expect regional presence to effectively account for these differences with tailored strategies.
5. Complementarity and coherence: Future regional establishments should respond to regional initiatives and maximize partnerships with local organizations
6. Costs: Stakeholders emphasized that the additional costs and benefits of regional presence must be quantified.
7. Host Country Criteria: Stakeholders advocate for selecting a host country that demonstrates significant climate ambition.
8. Access: Enhanced access and country programming should result from regional presence.

A draft regional presence policy and decision is expected to be presented to the Board at B41. In the meantime, the Secretariat committed to undergo more intensive consultations, conduct a cost-benefit analysis with the help of a consultancy firm and perform legal analyses in considering hosting arrangements for regional presence and in compliance with GCF policies. The Secretariat will update the Board by B40 on the progress of these analyses and consultations.

Most BMs from both constituencies agree on the need for increased regional presence, but several considerations were raised to look into budget implications and its complementarity and coherence with various organizations. Other BMs believe the matter should include the prioritization of multilingualism and ways to enhance country ownership due to increased awareness of local contexts, and equitable regional presence. The BM from Austria, speaking on behalf of the Board budget committee, emphasized the importance of the cost-benefit analysis particularly on how impacts and outcomes of the regional presence will be justified. It was proposed that the Board’s Budget Committee will look into the matter, and many BMs from developed countries expressed support. The BM from Egypt however argued that the Board must also go beyond quantified costs and look into how the Regional Presence will lead to the Fund’s increased visibility allowing for greater accessibility through multilingual support, enhanced efficiency due to physical proximity and better knowledge of regional contexts, especially for LDCs and SIDS.

On the timeline, the BM from Kenya acknowledged the urgency of the matter, however urged the Secretariat to be more flexible in anticipation of potential disagreements at the Board level in B41. Many developing country BMs echoed this, emphasizing that the item is a major decision.

The Secretariat then noted all points raised by the Board and committed to relay the points from the discussion to the consulting firm that will conduct the cost-benefit analysis.

The Board then proceeded to hear more information documents from the Secretariat starting with the GCF Head of Human Resources Officer-in-Charge, Melly Preira, and HRBP and Compensation and benefits Specialist, Raymundo Juan, who presented the Secretariat Revised Salary Structure. They discussed that the proposed structure will be based on a job classification system (characterized by 4 levels of progression namely basic, medium, high, and top) that determines the relative value of a job and assigns an appropriate grade to match. The said proposal aims to move away from the models of the World Bank (WB) and the Asian Development Bank (ADB). The Secretariat added that there were staff consultations throughout the salary structure revision process. Many developed and developing country BMs registered the need for a clear transition plan on the matter. They urged the Secretariat to continue consultations with staff and add new job descriptions that reflect the changes from restructuring, all of which the Secretariat committed to doing.

This discussion was followed by the presentation of Audited Financial Statements of the GCF stating the outcome of an unqualified opinion that financial statements were represented fairly. The Deputy CFO recalled the previous Board decision that the term of Nexia Samduk, a South Korea-based auditing firm and part of the 8th largest auditing network in the world, served as the External Auditor for the GCF financial statements for the year 2023. 

The Board noted the information reports in line with the Report on the Execution of the Administrative Budget for 2023 and 2024 agenda item. However, some developed country BMs flagged the significant increase in travel costs of staff members to participate in the Board Meetings for years 2023-2024. The said overspending showed 219% and 140% increase respectively. The Secretariat clarified that the headcount of staff members traveling actually reduced, however costs of airfare increased significantly post-pandemic, hence the increase in overall travel costs. This prompted the BM from Sweden to request the Budget Committee to look into the matter and come back to the Board with more information.

On the agenda item for Appointment for External Editor for the Financial Statements for 2024 to 2026, the auditing firm Deloitte was appointed and was the sole applicant out of the several auditing companies that the GCF reached out to. The Secretariat clarified that most auditing firms, except Deloitte, prefer longer-term contracts according to market standard, which is contradictory to what was requested by the GCF. 

Recognizing that inaccessibility of the GCF was a recurring issue in the Board discussions, the Board then proceeded to discuss the proposed Partnership and Access Strategy. The Secretariat reported that applicants for direct access typically spend around 30 months to be accredited, and then another 24 months before their first funding proposal is considered by the GCF Board. To address this issue, several policy changes were proposed by the Executive Director, as summarized below: 

Selina Wright from the GCF Secretariat presented the proposed strategy, outlining its goals:

1. Clarifying the GCF’s partnership model.
2. Reforming GCF access policies and processes.
3. Identifying collaboration opportunities within the climate finance architecture.

To achieve these goals, the Secretariat proposed five action lines:

1. GCF-Developing Country Partnerships: GCF and developing countries would form partnerships to improve the current NDA setup and create project pipelines based on shared goals.
2. GCF-Readiness Partnerships: Selected developing countries would undergo the readiness and preparatory support program (RPSP) to incubate direct access entities (DAEs) with limited capacity.
3. GCF-Programming Partnerships: Accreditation would be simplified to a screening process, and gaps in the GCF portfolio would be addressed.
4. Strategic Partnerships: The GCF would mobilize more finance by convening public, private, and investment partners and leading collaborations with other climate funds.
5. Partnership Ethos: The client experience would be improved through the “Efficient GCF” program and a restructured Secretariat.

The Secretariat provided an initial list of policies for the Board to adopt or revise:

1. Country ownership guidelines: Scheduled for the first half of 2025
2. Risk appetite statement: B40
3. Revised accreditation framework: B40
4. Updated fiduciary standards: B41
5. Monitoring and accountability framework: B41
6. Review of policy coherence for policies assessed at accreditation: 2025
7. Regional presence feasibility study (includes multilingual support): ongoing

To start the revision of relevant policies, the Secretariat requested authority to draft a revised accreditation framework based on the following principles:

• Simplified accreditation tools with due diligence, capacity building, programming fit, and implementation capacity.
• Simplified screening of prospective partners.
• Support for direct access candidates who did not meet minimum requirements.
• Shift to “principles-based” policies, in comparison to rules-based policies for accreditation requirements (e.g., environmental and social standards, gender policy, fiduciary standards) 
• Reform of the monitoring and accountability framework, requiring AEs to self-report their GCF activities annually.
• Harmonization of requirements across the climate finance architecture to enhance complementarity and coherence.

Most developed country BMs appreciated the presentation and were ready to adopt the decision, praising the intent to enhance complementarity and coherence and leverage the international financial architecture for climate finance mobilization. However, a number of developing country BMs found the presentation and decision text vague, argued the need for efficiency and capacity building and requested for further consultations on the item. The BMs from Saudi Arabia and Egypt questioned how the proposed strategy would affect developing countries and sought clarification on the “principles-based” policies with a concern that such policies can potentially dilute GCF standards. The BM from Pakistan also requested for further explanation about how the new strategy will address the co-financing requirement and financial instrument guidelines. BMs from LDCs also raised issues regarding country ownership and proposed country platforms, arguing that country platforms should be country-owned and should not be considered as instruments to expand the agenda of Multilateral Development Banks (MDBs). The BM from Ecuador also highlighted the importance of considering local contexts to ensure successful partnerships rather than a top-down approach.

Similarly, the GCF Observer Network deemed the agenda item contentious. The document was initially on limited distribution and was only fully accessible to the public a few days before the Board meeting. The Network then shared written comments with the Board prior to the start of B39 and reiterated them in the CSO intervention at the Board Meeting.

Tara Daniel, CSO Active Observer from developed countries, expressed the concerns of the  CSOs and argued that the proposed accreditation strategy has overlooked the real reason behind the GCF inaccessibility. There was never mention of the value of civil society, Indigenous Peoples and local communities as partners in the project and program development, which is vital and clearly reflected in the GCF investment criteria and Strategic Plan for 2024-2027. The proposal to reform the Monitoring and Accountability Framework without extensive assessment of its current implementation was also argued to only undermine efforts in ensuring project and program evaluation. 

The CSOs also echoed the points raised by other BMs and argued that shifting to “principles-based” policies without clearly defining what these mean, might endanger human rights, the environment, and gender standards. The Secretariat responded to the intervention and affirmed that under the proposed Accreditation Strategy, CSOs, indigenous peoples, and local communities could serve as executing entities and assured that minimum requirements would remain unchanged.

Given the concerns raised by some members of the Board, the Co-Chair suspended the item for further consultations between the Board and the Secretariat.

Still related to the issue around access in the GCF, the Board also discussed the Action Plan on Complementarity and Coherence. This item is among the many policies the Executive Director is proposing, which are envisioned to be aligned with the USP-2 and the COP28 Joint Declaration of Multilateral Climate Funds (MCF).

The proposed Action Plan aims to:

• Enhance climate finance access by promoting efficiencies and streamlining processes.
• Increase the impact of our support for developing countries’ climate goals
•  Work together as a system in a coordinated way.
• Play an enabling role in the international climate finance architecture.

To achieve these objectives, the Secretariat outlined the immediate plans of the MCFs:

• Establishing the MCF system.
• Coordinate joint presence at COP29.
• Explore opportunities for simplification and harmonization.
  • Map the operational and programming cycles.
  • Examine alignment of result indicators and engage with other IFIs.
  • Consider opportunities for accreditation processes
• Strengthen country support.
  • Coordinate support for country-owned investment planning
  •  Contribute to country platforms.
  • Ongoing complementarity and coherence on geographic and thematic projects.
• Design a project explorer common platform.
• Outline the MCF’s contribution to international financial architecture.
• Report on the action plan and revise it based on governing bodies’ feedback.

The Secretariat reported that the Boards of the Global Environment Facility (GEF) and Climate Investment Fund (CIF) have already instructed their Secretariats to support the complementarity and coherence initiative among MCFs and undertake the necessary preparations. The GCF Secretariat then requests the GCF Board to take further action on the matter.

Many BMs raised concerns about the vagueness, content, scope, and lack of consultation done by the Secretariat in bringing forward the document. BMs from Saudi Arabia, South Africa and Pakistan argued how the proposed plans may affect the policy and process changes. Regarding the scope and content, BMs from The Gambia and Mali emphasized that the GCF should not fixate including MDBs within the scope of the action plan. They noted that the GEF and CIFs already favor MDBs, and argued that the Fund should stay true to its mandate by focusing more on communities and direct access, and the need for more capacity building and readiness. 

The limited consultation conducted among Board Members was also a common concern raised by developing country BMs. According to the BM from Saudi Arabia, the Board only received the document on May 28, with a consultation period lasting until June 11. Active observers, including the CSOs, only received the document on a limited distribution basis, with the full document being released a few days before B39.

Despite having limited access to the document, the GCF Observer Network managed to submit written comments to the Secretariat and Board members, which also served as the basis for the CSO intervention during the Board discussion. Bertha Argueta, alternate CSO Active Observer from developed countries, raised issues on scope, accountability, and the misalignment with the GCF’s vision. The CSOs emphasized that the CIFs should not be included among the MCFs as they answer to shareholders rather than the UNFCCC—a point echoed by some developing country BMs. In contrast, the CSOs urged the GCF to add plans of engagement with the Fund for responding to Loss and Damage (FLD), which is another financial mechanism under the UNFCCC. They also noted that the action plan’s understanding of gender equality is limited to participation regardless of quality, and concrete outcomes. 

The GCF Observer Network also expressed concerns regarding the proposed “coordination of observer and stakeholder engagement efforts,” which entails a revision of the GCF observer guidelines to consider the “best practices” of observers from other funds. The CSOs argued that this proposal undermines the self-determination process of the observers as reflected in the GCF Governing Instrument, and urged the Board to reject the action plan and conduct more consultations, especially with indigenous people and a broader set of stakeholders.

Despite these numerous comments, the Executive Director noted that the document might have provided different interpretations, and clarified that there would be no lowering of standards and dilution of policies. The proposed action plan was developed to to set the Secretariat on the path to determine further details for the Board’s consideration. The Co-Chairs acknowledged the need for further consultation and suspended the consideration of the action plan.

This matter was the last agenda item for Day 1 of B39.  The meeting adjourned at 18:00 KST and is expected to resume the following day at 9:00 KST.

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