Noel Casserly, SmartEarth CEO, writes about the Green Climate Fund as the Board meets in Korea this week and is facing tough challenges to meet funding and capacity building targets.
The Board of the Green Climate Fund meets in Korea 8th to 10th March where it will make a number of key decisions on the programming of funds and the designation of new accredited entities. Expectations of the GCF are high as it aims to fulfil its ambitious objectives. The Board of the GCF has set itself a goal to allocate $2.5 billion in 2016 but project funding allocated in 2015 still remains to be paid out. Direct access to funding remains a key concern of many developing countries and the GCF Board will decide whether to accredit 13 new agencies that have sought authorisation to implement projects, in addition to the 20 that have already been approved.
At a Board meeting last November, the GCF approved funding totalling $168 million for its first set of eight projects including two private sector and two mitigation projects and six public sector projects focusing on adaptation or crosscutting mitigation and adaptation. Projects range from green bonds to incentivise energy efficiency in Latin America and the Caribbean to improved early warning of extreme weather in Malawi. This funding has yet to be paid out and is not expected to be handed over until later this year, when all the conditions for payment should be in place.
The Board of the GCF has repeatedly stressed that country ownership and a country-driven approach are core principles of the Fund. For a country to directly access GCF finance, it must first nominate a National Designated Authority (NDA) – usually an existing government department like the finance or environment ministry. An NDA, or a focal point, acts as the main point of contact for the Fund, and is mandated to develop and propose individual country work programmes for GCF consideration and ensure the consistency of all funding proposals. By the end of 2015, 136 countries had designated an NDA or focal point. Countries have flexibility on the structure, operation and governance of NDAs, though the Board has issued initial best practice guidelines and options for country coordination and multi-stakeholder engagement for the Fund.
The GCF readiness and preparatory programme helps NDAs and Focal Points engage with the Fund. Supporting national, sub-national and regional implementing entities and intermediaries to meet GCF accreditation standards has been identified as a priority of the programme. With $30 million available to help countries prepare to access its funding, so far 97 requests for support have been received, and 43 approved.
The GCF has already agreed on a broad accreditation framework with a three-step accreditation process. Implementing entities and intermediaries from both the public and the private sector must have in place best practice social and environmental safeguards and meet strong fiduciary standards to ensure good financial management.
The difficulty for many national entities lies in demonstrating that these institutions comply with the GCF’s fiduciary and gender policy standards, and that they can apply the relevant environmental and social safeguards. These measures – to guard against corruption, among other problems – are outlined in the 52-page application form. Institutions must prove they have: a track record of delivering mitigation and adaptation projects, and have appropriate audit and procurement arrangements in place.
So far, of the 20 agencies that have received accreditation, the majority are regional, international and U.N. organisations. Only a quarter are national level, including Rwanda’s Ministry of Natural Resources, Namibia’s Environmental Investment Fund and India’s National Bank for Agriculture and Rural Development.
Developing countries have called for simplifying the accreditation process and the GCF is making some efforts to ease the pathway to accreditation through the readiness and preparatory programme and a “fit-for-purpose” accreditation approach. Under this system, the application of fiduciary standards and environmental and social standards are categorised and matched to the risk level, complexity and size of the project or programme that is to be implemented. The applicant entities choose which category of accreditation they seek and whether they want to be accredited to provide additional intermediating functions.
There are calls however to accelerate direct access to a wider range of organisations including civil society groups and local authorities to amplify the transformative impact of the Fund. Making climate finance available to local organisations would allow the GCF to address local priorities and engage a much wider selection of stakeholders, thereby achieving a more profound form of ‘country ownership’. Significantly, resourcing civil society organisations in developing countries would empower communities to challenge power imbalances and drive transformative change.
The GCF could channel climate finance through a small grants mechanism or to umbrella bodies of smaller organisations, whether industry associations, municipal development funds or alliances of civil society groups. Regional approaches for smaller states with minimal administrations could be encouraged. There are existing best practice models, for example, the Secretariat of the Pacific Regional Environment Programme (SPREP), or civil society groupings such as the Pan African Alliance for Climate Justice.
Our mission at SmartEarth, is to assist developing countries access climate finance and technology, through capacity building and training to strengthen governance and institutional arrangements, putting them in a stronger position to meet the challenges of climate change.