Green Climate Fund

Green Climate Fund

Summary

The Green Climate Fund (GCF) was adopted as a financial mechanism of the UN Framework Convention on Climate Change (UNFCCC) at the end of 2011. It aims to make an ambitious contribution to attaining the mitigation and adaptation goals of the international community. Over time it is expected to become the main multilateral financing mechanism to support climate action in developing countries.

Basic Description

Name of Fund Green Climate Fund (GCF)
Official Fund Website http://www.greenclimate.fund
Date fund proposed: December 2009. December 2010 decision to establish the GCF made.
Date fund made operational: The GCF became fully operational in 2015. May 21, 2015 marked the “effectiveness date” of the GCF after the conversion of a pledge from Japan brought the Fund over the 50% threshold of funding promises from the Berlin Pledge Conference converted into signed contribution requirements. The GCF was then able to start allocating its resources.
Proposed Life of Fund The termination of the Fund is not set, but would be required to be approved by the COP based on a recommendation of the Board.
Administrating Organisation The GCF is a legally independent institution with a fully independent secretariat headed by an Executive Secretary. The World Bank serves as the interim trustee of the GCF, and the Fund functions under the guidance of and remains accountable to the UNFCCC Conference of Parties.Technical experts from the UNFCCC and the GEF comprised an interim secretariat to provide technical, administrative and logistical support to the Board until the independent secretariat of the GCF is established. The Independent Secretariat, located in Songdo South Korea, began its work in December 2013. The Secretariat is currently divided into four units – country programming, mitigation and adaptation, private sector facility, and support services – but a proposed reorganization would place the two mitigation and adaptation divisions and the PSF into portfolio development and portfolio management divisions, respectively.
Objectives The GCF will contribute to the achievement of the ultimate objective of the United Nations Framework Convention on Climate Change (UNFCCC). In the context of sustainable development, the Fund will promote the paradigm shift towards low-emission and climate-resilient development pathways by providing support to developing countries to limit or reduce their greenhouse gas emissions and to adapt to the impacts of climate change, taking into account the needs of those developing countries particularly vulnerable to the adverse effects of climate change. National ownership is intended to be central to the GCF approach.

The Fund will strive to maximize the impact of its funding for adaptation and mitigation, and seek a balance between the two, while promoting environmental, social, economic and development co-benefits and taking a gender-sensitive approach.

Activities Supported The GCF will support projects, programmes, policies and other activities in all developing country parties to the UNFCCC.
The GCF finances activities to both enable and support adaptation, mitigation (including REDD+), technology development and transfer (including CCS), capacity-building and the preparation of national reports.
Countries will also be supported in the pursuit of project-based and programmatic approaches in accordance with strategies and plans (such as low-emission development strategies, Nationally Appropriate Mitigation Actions, National Adaptation Plans of Action, National Adaptation Plans and others).
Conditions and Eligibility Requirements The GCF is an operating entity of the UNFCCC’s financial mechanism. Recipient countries can submit funding proposal through National Designated Authorities (NDAs).  Recipient countries will be allowed direct access through accredited sub-national, national and regional implementing entities they propose and set up as long as these implementing entities fulfil certain fiduciary standards.GCF funds can also be accessed through multilateral implementing entities, such as accredited multilateral development banks and UN agencies. See a current list of accredited implementing entities here.

A private sector facility will also be established that allows direct and indirect financing by the GCF for private sector activities. National Designated Authorities, which can object to private sector activities, are to ensure that private sector interests are aligned with national climate policies.

Accessing the Fund All developing country Parties to the Convention are eligible to receive resources from the GCF. The GCF gives recipient countries access to funding through accredited national, sub-national and regional implementing entities and intermediaries (including NGOs, government ministries, national development banks, and other domestic or regional organizations that can meet the Fund’s standards). Countries can also access funding through accredited international and regional entities (such as multilateral and regional development banks and UN agencies) under international access. Private sector entities can also be accredited as implementing entities.

Some funds will be distributed through Enhanced Direct Access, in which developing country-based accredited institutions receive an allocation of GCF finance and then make their own decisions on how to program resources. The EDA model differs from other arrangements, in which finance is only accessible through discrete projects and programs approved by the GCF board. In November 2015, the GCF approved USD 169 million for its first eight projects, which included two private sector and two mitigation projects and six public sector projects focusing on adaptation or crosscutting mitigation and adaptation.

Fund Governance

Decision Making Structure A broad framework and general direction for operationalising the GCF exists in the Governing Instrument approved by COP 17 in Durban and produced by a Transitional Committee (TC), established following COP 16 in Cancun in 2010. The TC was comprised of 25 representatives from developing countries and 15 from developed countries.The GCF Board of 24 members is comprised of an equal number of representatives from developed and developing countries selected by the UNFCCC regional constituencies. It includes one dedicated seat each for the Least Developed Countries (LDCs) and Small Island Developing States (SIDs). Two Co-Chairs of the Board are elected by Board members to serve a period of one-year, with one from a developing country Party and one from a developed country Party.

The World Bank will act as an interim trustee for the first three years of the GCF, functioning under the guidance of and accountable to the COP. A permanent trustee will be selected thereafter in an open and competitive process.

Non-Government Stakeholder Participation Stakeholders are defined in the GCF Governing Instrument as private sector actors, civil society organisations, vulnerable groups, women and Indigenous Peoples.The governing instrument includes two civil society and two private sector representatives as active observers to all Board Meetings although they will not be able to vote on decisions. The rules for such participation will need to be decided, as will further modalities for stakeholder engagement and participation. The GCFinterim secretariat has invited submissions on modalities for observer participation. The Board has issued initial best practice guidelines and options for country coordination and multi-stakeholder engagement for the Fund. At its 11th meeting, the Board approved an initial monitoring and accountability framework for GCF accredited entities, which highlights an oversight role for National Designated Authority and local stakeholders through participatory monitoring approaches.

Civil society representatives attended the Transitional Committee meetings and were engaged in discussions through text submissions and expert testimony.

Information Disclosure The comprehensive information disclosure policy is still under development, but operates under the “presumption to disclose.” Form and function is to be decided, but the GCF information disclosure policy is intended to perform in a transparent manner. An independent fraud unit and a redress mechanism to address complaints related to Fund operations will also be established. The Secretariat’s communication strategy to set parameters for sharing information with the public will be formally considered in early 2016.
Issues Raised
Our Climate Finance Fundamental on the GCF presents an overview of the governing instrument.

Relationship with Official Development Assistance

Inclusion as Official Development Assistance  The GCF aims to channel new and additional financial resources through a replenishment process, but does not define these terms.
Financial Instrument/ Delivery Mechanism Used (e.g. grant, loan)  The GCF aims to channel new and additional financial resources through a replenishment process, but does not define these terms.
Nature of Recipient Country Involvement The GCF aims to channel new and additional financial resources through a replenishment process, but does not define these terms.