Green Climate Fund 29th Board Meeting Notes

 Green Climate Fund 29th Board Meeting Notes

Virtual meeting (Getty image)

June 28 - DAY 1

GCF Co-chairs (Jose de Luna Martinez [Mexico] and Jean-Christophe Donnellier [France]) welcomed all the virtual participants and followed by the adoption of the Agenda and Organization of Work.

Paul Oquist, GCF Board co-chair in 2018, who recently passed away, was remembered through a minute of silence.

An objection was raised requesting the co-chairs to distribute a list of documents to be circulated outside the 21-day notice.

A report of the 28th Board Meeting was adopted without any comment from the BMs.

Documents approved by the Board in between B28 and B29 Board meetings:

1. Accreditation of Observer Organizations (April 12 2021)

2. Evaluation Policy for the GCF

3. Revised Policy on the Prevention and Protection from Sexual Exploitation, Abuse and Harassment (SEAH)

4. Administrative remedies and Exclusion policy

5. Appointment of member of the Independent Technical Advisory Panel (ITAP)

6. Launching the Second Performance Review of the GCF

7. Accreditation of Observer Organizations (June 15 2021)

8. Audited Financial Statement of the Green Climate Fund – Dec 2020

9. Selection Process for the Head of IEU 

10.  Amendment to the Evaluation Policy for the GCF: Updated Terms of Reference of the IEU 

Guidelines to facilitate Board consideration of Independent Redress Mechanism (IRM) reports on reconsideration requests, grievances, or complaints. 

- head of the IRM gave the Board a summary of the changes made to the guidelines including:

• Contents of IRM case reports were revised to maintain consistency with Procedures and Guidelines (PGs) adopted by the Board, and with the Rules of Procedure (RoP)
• Procedure for considering IRM Case Reports
• Board’s Role in Considering IRM Case Reports

GCF ED (Yannick Glemarec) presented the Report on the Activities of the Secretariat. Yannick reported that the GCF would meet or exceed 80% of the key performance indicators in 2021 

    - 95% of the annual programming and disbursement targets ($1.8 Billion - $2.2 Billion) may be met by mid-year. Cumulative disbursement is also expected to fall in the range of $2.2 – 2.7 Billion, exceeding the annual target of $1.8 Billion - $2.1 Billion.

 

A key challenge - achieving the objective to maintain a 50:50 balance between mitigation and adaptation allocations 

    - adaptation only accounts for 18% of the portfolio of Direct Access Entities (DAE’s) against 68% for mitigation

Progress made in implementing GCF policy on enhancing complementarity and coherence with other climate funds, particularly the Global Enhancement Facility (GEF).

    - comment on “nature-based solutions” (NBS) - instead use the term “ecosystem-based     approach” 

    - Secretariat to seek Specialized Agency Status for the GCF from the UN, which they         assert can ensure that the GCF is granted more Privileges and Immunities (P&Is) in         operating in countries. At present, the GCF enjoys bilateral P&Is in only 27 countries         despite applying to 141 countries. The Secretariat argued that the lack of P&Is in most      countries the GCF operates in increases systemic risk for the Fund. 

On the issue of maintaining a 50:50 balance between adaptation and mitigation

    - 3 adaptation project proposals were not presented to the Board due to their “weak climate rationale,” according to the independent Technical Advisory Panel (ITAP). 

Direct Access Accreditation issue

    - BMs believe the slow accreditation must be addressed by prioritizing and accelerating funding and implementation of readiness programs for DAEs and enhancing the coordination mechanism with the Secretariat. 

The US Board member assured the Board that they intend to fulfill the balance of the US’ 2014 pledge and that the US President’s budget request for the next fiscal year includes $1.25 billion for the GCF. 

CSO intervention concerns how low the current commitment authority is and urged the contributor countries, especially developed countries, to fulfill their outstanding and current pledges urgently. 

 

Integrated Results Management Framework (IRMF) was initially up for the Board’s decision last B28. It was deferred to B29 and the deferral of the 6 accreditation applications.  

The revised IRMF version presented has the following elements:

1. a financial package priced at USD 12.4 Million to support the implementation of the IRMF for developing countries and DAEs 
2. The Handbook to be used in implementing the IRMF will be presented for the Board approval
3. The current IRMF version was revised to be consistent with the GCF Investment Framework, the Governing Instrument (GI), and previous Board Decisions such as the Updated Strategic Plan (USP)
4. The sole purpose of the IRMF is only for results management. Its implementation will not result in new eligibility criteria that will create barriers in accessing climate finance from the GCF.
5. The paradigm shift is claimed to be defined as country-driven and is aimed to not interfere with the sovereignty of the recipient country

June 29 (DAY 2):

Day 1 ended with a lack of consensus on the agenda item Integrated Results Management Framework (IRMF), which prompted the French co-chair to instruct the BMs of Germany, Sweden, and Egypt to consult each other. However, the consultation did not happen.

The Co-Chair from Mexico proposed the following to reach a consensus on the IRMF:

• Further consultations are made between the end of Day 2 and before the start of Day 3
• Each constituency are to assign 3 BMs to represent their constituency in the consultations
• The GCF Secretariat will manage the meeting rooms for consultations 
• Each constituency shall present their positions and agreements to the Board at the start of Day 3
• Should there be any remaining disagreements, the co-chairs will then consult again with each other and their respective constituencies on the way forward.

Consideration of Funding Proposals (FPs)

The presentation showed the following figures: 

• Of the 7 FPs submitted by the GCF Secretariat for the ITAP’s evaluation, only 4 FPs amounting to USD 501 million were recommended for Board’s approval at B29. 

• If the Board approved all the 7 FPs, a total of USD 321.1 Million will be added to the adaptation portfolio of the Fund. Therefore, it could result in a 49% adaptation portfolio based on grant equivalent terms. 

• Of the 4 FPs, 3 are submitted by IAEs and 1 from a DAE. If approved, the overall GCF portfolio will have a total of USD 858.4 Million (15%) GCF Funding for DAEs. 

• If all 4 FPs will be approved, the GCF Portfolio will have the following figures:
• By financial instruments - 44% Loans, 42% Grants, 6% Equity, 6% for Results Based Payments (RBP), and 2% for Guarantees;
• By geographical distribution - 37% for Africa, 37% for the Asia-Pacific, 21% for the Latin American Countries, and 4% for Eastern Europe; 
• By thematic areas - 34% for Adaptation and 66% for mitigation in nominal terms (not in grant equivalency terms)
• By sectoral access - 67% for the Public Sector and 33% for the Private Sector in nominal terms (not in grant equivalency terms)
• By access modality - 81% of all GCF funding will be for IAEs while only 19% will be for DAEs, in nominal terms (not in grant equivalency terms)
• By result areas - 30% of all GCF funding will be for energy access and power generation, 6% to low-emissions transport, 15% to building cities, industries, and appliances, 15% to forestry and land use, 12% to the most vulnerable people and communities, 9% to health, well-being, and food and water security, 7% to infrastructure and built environment, and 6% to the ecosystem and ecosystem services

The developing country BMs urged the Board decision on ITAP’s evaluation of FPs and suggested developing clear guidelines regarding the function and scope of ITAP’s work.

Private sector finance was strongly opposed by developing country BMs. They reminded the Board how the Fund is not a business or an investment fund and should be primarily for granting climate finance. 

The ITAP complies with the Board’s directives. However, until the guidelines are adopted, they will abide by existing policies and practices reflected in the B17 and B23 decision that de-facto mandates the ITAP to “veto” FPs that did not pass their assessment.

June 30 (DAY 3):

It started thirty minutes late, and the entire session was spent on a procedural debate/discussion between developed and developing country BMs on the suspended discussion on the Integrated Results Management Framework (IRMF)

fundamental changes made to the document from the Board consultations:

1. Paradigm shift potential - Sustainable development will now be the context in which paradigm shift potential is expected to be occurring within.
2. Different dimensions of a paradigm shift - In the new version, scale, replicability, and sustainability are the different dimensions of paradigm shift observed.
3. Enabling environment is now seen as a separate outcome level from the mitigation and adaptation impact indicators. 
4. Texts and languages that refer to paradigm shift potential and sustainable development have been aligned with past GCF Board policies.

The debate on the IRMF went for more than 4 hours. As there are other agenda items lined up for Day 3, including the Consideration of Funding Proposals and Consideration of Accreditation Proposals, the co-chair requested the Board for an hour extension but was objected and so ended five minutes past the agreed time. 

July 1 (DAY 4)

The last day of B29 started with arguments/debates on another agenda. Some BMs requested the co-chair to include other items like the discussion on the Accreditation Framework and how the Board plans to resolve issues around the Independent Technical Advisory Panel’s (ITAP) evaluation of Funding Proposals (FPs).

However, the co-chair from Mexico explained that due to lack of time, both co-chairs decided to prioritize items that needed urgent action from the Board

Consideration of Funding Proposals

Some BMs reiterated the urgent need to address the imbalance between Direct Access Entities (DAEs) and International Access Entities (IAEs) and between adaptation and mitigation projects in the GCF Portfolio. Others mentioned that the GCF must also ensure geographical balance in approving Funding Proposals, especially because the Latin America region remains the region with the least received GCF Funding.

 

CSO intervention:

“… imbalance shown in grant equivalent terms does nothing to address the imbalance in nominal terms and to increase equity which is essential to enabling already-disadvantaged developing countries to access climate finance that is rightfully theirs. We also noted that once again, the largest portion of financial instruments for this batch of funding proposals are loans at 66 percent, with grants being only 18 percent, and we reminded the Board that climate finance is an obligation of developed countries and should never further burden people and sectors most vulnerable to the climate crisis; therefore the GCF must strive to ensure more funding proposals come in the form of grants, not loans.”

 

BM from Liberia mentioned that the imbalance is partially due to the ITAP’s evaluation. While he recognizes the vital function the ITAP provides in approving quality FPs. He believes the ITAP is becoming the biggest hindrance for developing countries to get the needed support from the GCF. 

He also reminded them to consider countries that do not have the same technical capacity as others, which have no means of producing specific data that the ITAP requires.

 

Active Observer from the Private Sector Organizations (PSO) highlighted the critical role that ITAP play in producing quality FPs

 

The co-chair moved on to deliberating the FPs one by one. Below are the funding proposals that the Board members approved to receive funding from the GCF:

 FP 165: Building Climate Resilient Safer Islands in the Maldives

Country: Maldives

Adaptation

AE: JICA

Category B

Total Amount: USD 66.0 Million

GCF Financing: USD 25.1 Million (grant)

FP 166: Light Rail Transit for the Greater Metropolitan Area (GAM)

Country: Costa Rica

Mitigation

AE: CABEI

Category A

Total Amount: USD 1.873 Billion

GCF Financing: USD 271.3 Million (USD 21.3 Million in grant; USD 250 Million in loan)

FP 167: Transforming Eastern Province Through Adaptation

Country: Rwanda

Cross-Cutting

AE: IUCN

Category B

Total Amount: USD 49.62 Million

GCF Financing: USD 33.8 Million (grant)

FP 168: Leveraging Energy Access Finance (LEAF)

Country: Ethiopia, Ghana, Guinea, Kenya, Nigeria, Tunisia,

Mitigation

AE: AfDB

Category B

Total Amount: USD 959.9 Million

GCF Financing: USD 170.9 Million (USD 10.9 Million in grant; USD 80 Million in loan; and USD 80 Million in guarantee)

SAP 010 Multi-Hazard Impact-Based Forecasting and Early Warning System for the Philippines (LandBank) – request for extension of the deadline for the fulfillment of conditions until December 22, 2021

FP153 Mongolia Green Finance Corporation (XacBank) - request for extension of the deadline for the fulfillment of conditions until November 8, 2021

ITAP Issues:

BM from Sudan concurred and shared that he observed how questions around climate rationale did not make sense considering the national and local circumstances each country experiences and how such information cannot be confined in quantitative data. 

BM from Saudi Arabia proposed that until the issue around ITAP is resolved, all FPs coming from LDCs shall override the ITAP’s evaluation and be forwarded to the Board for deliberation.

 

On the other hand, developed country BMs took ITAP’s side for maintaining quality and impactful climate projects. 

    - Portfolio imbalance boils down to the several policy gaps, including the guidelines for FP evaluation, that the GCF has yet to address. 

 

Integrated Results Management (IRMF)

On Day 3, despite further consultations, no full consensus on the policy document version was achieved. On Day 4, the co-chair asked the GCF Secretariat to present the progress of the consultations to the Board, which is summarized below:

The small groups have achieved consensus

• It has been agreed that the Handbook detailing the implementation of the IRMF will be presented to the Board for its approval upon finalization of a draft by the GCF Secretariat
• The current version of the IRMF is now aligned with the GCF’s Investment Framework
• The financial support allotted for the capacity building of Direct Access Entities (DAEs) and National Designated Authorities (NDAs) for implementing the IRMF, which was priced at USD 12.4 Million, has already been clarified how the amount was achieved. Therefore, the amount was agreed to be allotted for the said purpose.
• Supplementary indicators, aside from the main indicators, have now been explained and clarified and will constitute as part of the indicators to be measured or observed by the IRMF
• A revised FP template to be filled by the accredited entities (AEs) seeking funding from the GCF will be implemented from B32 onwards.

Finally, the Board adopted the IRMF. 

Consideration of Accreditation Proposals

The Secretariat briefly presented the 10 applicants seeking accreditation, which is summarized below and were approved by the Board members:

APL106 Development Bank of the Philippines (Direct Access)

APL107 Development Bank of Zambia (Direct Access

APL108 Infrastructure Development Bank of Zimbabwe (Direct Access)

APL109 Moroccan Agency for Sustainable Energy S.A., (Direct Access)

APL110 Vietnam Development Bank (Direct Access)

APL111 Korea International Cooperation Agency (Direct Access)

APL112 Nacional Financiera, S.N.C., Banca de Desarrollo (Direct Access)

APL113 Joint Stock Company TBC Bank (Direct Access)

APL114 InterAmerican Institute for Cooperation on Agriculture (Direct Access)

APL100 Sumitomo Mitsui Banking Corporation (SMBC) (International Access)

Agency for Agricultural Development of Morocco (Direct Access)

Secretariat of the Pacific Regional Environment Programme (Direct Access)

International Fund for Agricultural Development (International Access)

CSO intervention was delivered but only after the Board approved SMBC’s accreditation. The CSOs emphasized that SMBC’s revised climate policy remains questionable and whether they can continue funding fossil fuels or not. 

Dates and venues of the upcoming 30th GCF Board Meeting

Dates: 4-7 October 2021

Venue: virtual 

Access:

Recorded Video: https://www.greenclimate.fund/boardroom/meeting/b29#videos 

Prepared by:

Abraham Sumalinog