Info Service on Climate Change (Jul19/05)
GCF Board discusses its first performance review
Kathmandu, 16 July (Prerna Bomzan): The Board of the UNFCCC’s Green Climate Fund (GCF) discussed the Fund’s first performance review at its 23rd meeting in Songdo, South Korea which took place 6-9 July.
At its 21st meeting in October 2018, the Board had requested the GCF’s Independent Evaluation Unit (IEU) to conduct a ‘forward-looking performance review (FPR) of the GCF’, focusing on its progress, performance and portfolio. The FPR will also inform the first replenishment of the GCF, which is currently on-going.
The FPR was undertaken between October 2018 and July 2019 and was prepared by a team led by the GCF IEU consisting of IEU staff, consultants, interns and a consortium of two external firms.
Board Co-chair Josceline Wheatley (United Kingdom) invited the head of the IEU Jyotsna Puri to make a presentation on the FPR, following which the Board members were also invited to share their views.
Puri reported that the FPR was done with a “focus on informing how the GCF can be faster, smarter and better”. She acknowledged at the outset that the “GCF has achieved much in a very short time (five years or so)” with a USD 7.1 billion committed capital, 147 national designated authorities (NDAs), work in 120 countries and USD 5.3 billion committed on the ground. “These are really big achievements for the Fund to show”, she said, adding that the Fund was “very ambitious with its paradigm shift potential objective” and has an “extremely influential Board with equal representation (between developing and developed countries) and a strong voice”.
Puri however noted that since the Fund’s inception, “the world has changed” in different ways with not only the “needs of developing countries increasing exponentially” but also, with many actors, “bilateral and multilateral, especially in the mitigation space”. Against this background, she said that it was “more important” for the GCF to “focus on impact and speed”.
She further informed that the FPR looked at the key meta question of whether the “GCF is ready to deliver a paradigm shift in the climate change space” with four sub-questions addressing whether the Fund has an appropriate structure; is able to deliver large financial flows; whether it makes an impact on the needs of developing countries; and what could be its potential focus going forward.
Some of the key concerns highlighted by the IEU head included the following: overall strategy for accreditation of entities to access the Fund’s resources (given that it takes about 1000 days to be effective); a long delay in accessing resources (given more than 1000 days for the first disbursement to take place); reducing the burden on entities relating to compliance with policies of the GCF; creating a differentiated model for different access modalities, capacities and needs; financing still being very small (less than 1 %) to meet developing country needs for both mitigation and adaptation; re-emphasis on adaptation (give that twice the amount of GCF resources are provided to mitigation projects in comparison to adaptation projects); new strategic plan for delivery of impact and innovation; and delegated authority to the secretariat.
Puri then presented the IEU’s key recommendations, highlighting that for the GCF to “deliver better”, it should “transition from one-size-fits-all, compliance-driven and reactive processes” to “a proactive, strategic phase that emphasizes differentiation, impact and innovation”.
Among the recommendations for the GCF to deliver better for developing countries and climate, included: a “new” strategic plan with the GCF as a global thought leader, with a niche in addressing climate impact needs; a business model to deliver better for “transparency, speed and predictability”; focus to be re-emphasized on adaptation and innovation; and a re-examination of the enabling environment for better decision-making and separate supervision and management of the GCF via delegated authority.
Board Executive Director Yannick Glemarec also presented the GCF management’s response on the FPR. He noted that the IEU “recognized the achievements of the Fund in the last four years” and informed that by the end of year, “70% of its resources will be under implementation” which he said was a “major achievement”. He also agreed with the IEU on the need to “sharpen” the strategic focus, business model, operational mode and integrated results and resource framework of the Fund.
Glemarec further mentioned about “increasing efficiency” in relation to “policy and governance”, suggesting to have an annex of the “policy agenda” for the next four years in order to implement the strategic plan, such as, political policies that require the Board’s consensus as well as operational modalities that do not go to the Board. He added that “we will definitely like to put in place a compact with the Board” in relation to delegation of authority to the secretariat.
Board member, Ayman Shasly (Saudi Arabia) in his remarks reflected on some issues which he said were not in the evaluation. He underlined that the Fund is an operation entity of the Convention (UNFCCC) and therefore, there is a “commitment” by Annex 1 Parties to provide financing to developing countries without “shifting” the financing liability to developing countries, with ideas such as “co-financing and leveraging.”
He recalled the “historical responsibility” of developed countries responsible for climate change and said that as a “public Fund” “grants” must be the basis of the GCF, which he did not see as the “storyline” in the evaluation report.
Shasly also explained that the great deal of attrition in the secretariat staff in the last three years had resulted in actual delay of the results, adding that there was a need to “stabilise” this by creating a better environment in the secretariat to deliver results. He hoped that the IEU’s future assessments carry a “different storyline”, clearly linked to and rooted in the Convention.
Wael Aboul-Magd (Egypt) echoed Shasly and “prefaced” his remarks regarding the main objective of the GCF, as being part of the global effort under the UNFCCC to address the needs of developing countries, particularly, in terms of “receiving finance”. He therefore cautioned about the notions of “co-financing and leveraging”. Responding to the fact that twice the amount of money goes to mitigation rather than adaptation, he underscored that developing countries did not cause the climate problem in the first place but “are paying a very high price,” and despite this, mitigation actions are being prioritized. He added that Egypt “gives utmost prioritization to adaptation”, referring to the ‘adaptation and resilience’ track that Egypt co-chairs with the United Kingdom in relation to the UN Secretary-General’s Climate Summit in September, New York.
Richard Muyungi (Tanzania) focused on the fact that the Fund is currently providing “less than 1% of the needs of developing countries” and urged to “probe” further on how to “improve” more resources to developing countries given the replenishment process.
Jeremiah Garwo Sokan (Liberia) stressed on the “efficiency” of “readiness support” in terms of access to resources especially for least developed countries (LDCs) and small island developing states (SIDS). He encouraged for an increase in public finance, especially the “grant component”.
Paul Oquist (Nicaragua) stressed the need for an “indicative time management system” and was pleased to see the “mapping” of the processes in that direction.
Lars Roth (Sweden) said that in terms of impacts, he would like to see how can the GCF “contributes to shifting the billions to the trillions which is essentially needed”, to accomplish the paradigm shift and was “concerned” about the numbers presented, with USD 5 billion invested so far in mobilizing additional financing of about USD 17 billion. He further said that “it is the private sector essentially which has to contribute” and that “it is not about co-financing but shifting the financial flows”. He added that to accomplish this, there was need for “a clear definition of what paradigm shift means,” referring to this as “a policy gap”. He also lamented that the current investment criteria of the GCF lacked “a clear climate dimension”.
Frank Fass-Metz (Germany) said that “we need to be very clear that the GCF is an instrument of the Convention to achieve its objectives” and that it was critical to raise sufficient resources for the replenishment of the Fund as this was the “means of implementation” (for climate actions). He further added that the GCF was “still working below its potential” and therefore, “the task ahead is to bring it up to what it can deliver in order to achieve the transformation in line with the objectives of the Convention, the Paris Agreement and the GCF’s Governing Instrument”. He also said that there was “room for much more improvement through engaging with the private sector in leveraging resources for achieving a higher impact for the public resources that the GCF is providing”. Cyril Rousseau (France) seconded Fass-Metz’s intervention.
Wenxing Pan (China) said that despite being an effective organization, one major problem was “efficiency” and this was closely related to the “prioritization” of issues. He also pointed out the need for a “delegation of power” to the secretariat on operational issues while the Board sticks to “political decisions”. Regarding the issue of “paradigm shift,” he said that on the scale of resources provided, current figures show an average of only USD 2-3 billion annually, which was less than 1% of the total needs, adding that this was “alarming”. In this regard, he said there was need for a “more realistic and more meaningful comparison” of the total support of the GCF with that of other financial institutions, including multilateral development banks, since part of the Fund’s resources are in loans. Pan also said that when talking about paradigm shift, “we need to be cautious about introducing more and more policy requirements”.
Cheick Sylla (Senegal) stressed the importance of a country-driven approach and the need to push the accreditation of direct access entities. He also commented that analysis on small-, micro- and medium-size applicant entities was missing in the key findings of the IEU evaluation.
Following the interventions, Co-chair Wheatley invited the Board to consider the draft decision for approval.
However, Shasly (Saudi Arabia) objected to the use of the term “welcoming” the evaluation report and instead suggested to “take note” of it. Roelof Buffinga (Netherlands) countered that he will “not block consensus on a different language” but remarked that he had not heard anybody not welcoming the report and found it strange to not do so.
Given Shasly’s suggestion, the draft decision was adopted by taking note “of the first review of the performance of the GCF Board by the IEU” as well as the “findings and recommendations presented.” The decision also requested the secretariat to “provide a management response to the …performance review of the GCF to the Board at its twenty-fourth meeting”; and also decided to continue the consideration of this matter at the next Board meeting.
Edited by Meena Raman