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The Green Climate Fund just became the top contributor of funding to developing countries: do we know the money is being spent well? – Climate Funds Update

The Green Climate Fund just became the top contributor of funding to developing countries: do we know the money is being spent well?

The Green Climate Fund just became the top contributor of funding to developing countries: do we know the money is being spent well?

by Charlene Watson (ODI) and Liane Schalatek (HBS)

The Green Climate Fund now has approved more funding for climate change action in developing countries than any other multilateral climate fund. With the Board decisions taken at its 22nd Board Meeting at the end of February 2019, the Fund’s 102 projects, including the nine approved last week in Songdo, have a total approved value of USD 5,045 million. It has now surpassed the Clean Technology Fund which had approved USD 4,989 million by the end of 2018.

We should celebrate the successes of the Green Climate Fund…

As the Climate Funds Update – an independent website showing the spending of key multilateral climate change funds side by side – releases 2018 data, it shows the Green Climate Funds has not only signed off on more funding for developing countries to implement climate action than any other multilateral climate fund, but it also has:

  • became the largest funder in the sub-Saharan African region in 2018, the region least responsible but most vulnerable to the impacts of climate change, a title previously held by the Least Developed Countries Fund;
  • approved more funding to Small Island Developing States (SIDS) than any other multilateral climate change funds for the past two years, since 2003, SIDs have been promised funding for projects totalling USD 1,689 million across twelve multilateral climate change funds. The Green Climate Fund has cumulatively approved USD 608 million of this since just 2015;
  • accredited more national and regional entities than any other multilateral climate change fund. By October 2018, the Green Climate Fund had 75 accredited implementing entities – acting as delivery partners for projects – of which 34 are international, 30 national and 11 regional. This reflects growing capacity to programme climate finance in national and regional-level institutions, while also fostering greater national ownership of climate finance. At the end of February, another nine entities – six national, one regional and two international – were added, bringing the total to 84 implementing entities.

…but, we mustn’t ignore the potential inconsistencies or new challenges for its spending.

The Clean Technology Fund took 10 years to get nearly $5 billion in project approvals, an anniversary that was  celebrated in January this year with a big bash in Morocco. The Green Climate Fund has taken less than half this time to reach the same funding amount. In its early days, the Clean Technology Fund was subject to much scrutiny of its effectiveness. This led to course correction in some instances, on transparency in decision making, expanding the role of observers, and on gender considerations for example.

While it is true that the Green Climate Fund is firmly in the public spotlight – as main public financing instrument for the implementation of the Paris Agreement and accountable to the UNFCCC COP, how could it not be? – we, the climate finance community has yet to look as closely at the spending practice of the Green Climate Fund as we placed on other funds nearly five years ago to ensure this money is being spent well. For example, Climate Funds Update shows us that:

  • Standing to lose the most, the SIDS were given special priority in the Governing Instrument of the Green Climate Fund and in it’s allocation framework, which reserves half of all adaptation spending for SIDS, Least Developed Countries and African states. The top 10 Small Island Developing States receive almost half of all funding to SIDS, however, meaning there still might be SIDS losing out despite growth in Green Climate Fund spending to these States.
  • Despite the majority of Green Climate Fund partners now direct access entities, the route that funding is taking to developing countries has been slow to catch up with the increase in sub-international implementing entities. As of February 2019, 19% of all approved funding flows through direct access entities, with 81% (4,092 million) flowing through multilateral implementing entities (like the European Bank for Reconstruction and Development and UNDP).

By the end of this year, the Green Climate Fund will have gone through its first replenishment to refill the coffers. Those that know us will know we are  advocates for the Green Climate Fund, despite the work that remains to be completed and the ongoing challenges of depoliticising the board. Alongside the formal replenishment process, there will be an in-depth performance review by the Fund’s own Independent Evaluation Unit, as well as a strategic vision reset by the fund’s Board. Wouldn’t it be great if accompanying these processes we reflected a bit harder on Green Climate Fund spending as an independent research community to ensure that the Green Climate Fund spends scarce public money in pursuit of effective and equitable finance for climate action in developing countries?