TWN Info Service on Climate Change (Mar18/02)
6 March 2018
Third World Network

World Bank to continue as Green Climate Fund interim trustee

Kuala Lumpur, 6 Mar (Hilary Chiew) – The Green Climate Fund (GCF) Board extended the term of the World Bank as its interim trustee for an additional period of one year or until such time when a successor trustee is selected, whichever occurs earlier.

At its 19th meeting, held in Songdo South Korea, from 26 February to 1 March, the Board reached the decision to ensure that there will be no discontinuity in the service of the trustee as the existing contract with the World Bank terminates on 30 April while the process of selecting the permanent trustee has yet to be launched. The process to appoint the permanent trustee was supposed to conclude by the end of 2017.

The Board decision also confirmed that “the selection of the permanent trustee of the GCF shall be undertaken through an open, transparent and competitive bidding’ process.”

Deliberations on the selection process hit a roadblock at the 18th meeting of the Board as members differed on how to treat the World Bank, which, according to sources, was against an open bidding system.

The Board further adopted the terms of reference (TOR) of the permanent trustee, the selection process and the timeframe for the selection process. The Board’s ad-hoc ‘Trustee Selection Committee’ will present a recommendation of the final nominee for approval at the 21st meeting of the Board (to be held in October 2018 in Manama, Bahrain).

The selection process, as set out in the decision adopted by the Board, will consider all public international financial institutions that meet the criteria of the terms of reference (TOR). The GCF Secretariat will also solicit expressions of interest, by way of public advertisement and by invitation, the participation by any other public international financial institutions, through the publication of the process and the TORs for the permanent trustee on the GCF website, and advertising in appropriate international publications.

Several developing countries’ Board members argued passionately to uphold the principles of a transparent selection process while developed countries’ Board members expressed deep concern on consequences of the imminent discontinuity of service of the trustee, without an extension of the service of World Bank as an interim way forward.


Highlights of exchange on ‘matters related to the Trustee’

Zaheer Fakir (South Africa) recalled that at the last Board meeting, consensus on the selection process was not reached as the sticking point was that “a certain institution” (in an apparent reference to the World Bank) did not want to be subjected to an open bidding process, and that it should be automatically considered irrespective of whether it responds to the advertisement placed by the GCF.

He said further that he could not consider the extension of the tenure of the interim trustee without solving the issue of the permanent trustee. Fakir questioned what the principles of the Fund were and whether the Board was “prepared to forgo the principle of fairness, equity and competitiveness because of an institution’s (demands).”

Omar El-Arini (Egypt) expressed unhappiness that the Secretariat presented the case for the extension of the interim trustee instead of concluding the process for the selection of the permanent trustee. He said it was up to the Board to choose the trustee, adding that he did not like to be threatened with the bleak scenarios of an eventual discontinuation of the service of the interim trustee. “I am not prepared to bend backwards or over in order for one institution to make up its mind whether it wants to apply or not. We have the TOR and the text for the advertisement; so I propose to go ahead to post the announcement. If we had done that (last) October, we would have the selection completed and not landed in this situation of having to extend (the interim trustee’s contract),” he lamented.

Ayman Shasly (Saudi Arabia) said it’s not a matter of extension of the interim trustee services versus selection of the permanent trustee). “We do not want to hold the operations of the Fund hostage but we want to adhere to the guidance from the COP (referring to the meeting of the Conference of Parties to the UN Framework Convention on Climate Change).”

“It is clear that we have to do it (the selection process) in an open and transparent manner. We are simply doing just that to make sure that nobody can say that this Fund is selective about principles,” he stressed further. Shasly also wished to hear directly from the World Bank that it was not ready to go through a formal bidding process, as there was no formal communication from the institution.

Jorge Ferrer (Cuba) also said that there was need to agree to the selection process according to the rules and mandate of the COP and to renew the services of the interim trustee for some time, “as a way out of this difficult situation.”

Geoffrey Okamoto (United States) said that he was not optimistic that the matter can be resolved any time soon but an arrangement is needed for the Fund to function after April this year. “The consequence is critical ... the inability of the Board to resolve this issue will present legal and reputational risks,” he cautioned.

Tamaki Tsukada (Japan) recalled having heated discussions around the principles but urged Board members to be responsible as projects and other important things were at stake. “We need to take a two-step approach ... take a decision on extension first but this does not mean we do not discuss the issue of permanent trustee. It can happen in parallel,” he added.

Presiding over the discussions, co-Chair Lennart Bage (Sweden) said the issue was contentious and he did not want to be in a situation where there was no agreement.

Following consultations among Board members, among other matters, a decision was taken to “invite the World Bank to continue serving as the interim trustee until a permanent trustee is appointed.”

Edited by Meena Raman