Info Service on Climate Change (Apr20/02)
Green Fund approves 6 funding proposals, amid Covid-19 pandemic
New Delhi, 9 April (Indrajit Bose+) - The Board of UNFCCC’s Green Climate Fund (GCF) approved USD 169.7 million for 6 projects at its 25th meeting held in Geneva from 10-12 March, including a project from Cuba that was approved despite objections from the United States (US). The GCF Board was meeting as the Covid-19 pandemic was unfolding in Europe.
The Board meeting was originally scheduled to be held in Songdo, South Korea, but was moved to Geneva due to the Covid-19 outbreak in South Korea. However, when the meeting took place in Geneva, Covid-19 cases in Europe including in Geneva were on the rise, and several safeguards in terms of social-distancing had to be put in place as the meeting was taking place. Much of the meeting time was spent discussing Covid-19, and its potential implications on future meetings of the Board. (See below for further details).
The Cuban funding proposal was entitled ‘Increased climate resilience of rural households and communities through the rehabilitation of production landscapes in selected localities of the Republic of Cuba (IRES)’ and was submitted by the Food and Agriculture Organization (FAO).
Objecting to the proposal, the US cited the “history of poor policy design and well documented mismanagement” of the agriculture sector in Cuba, adding that it was against US policy to support projects in countries where governments did not address “trafficking in persons”, but it did not provide any evidence for these allegations.
The US alternate member, Juliana Gabrovsky, who was initially at the Board meeting objected to the Cuban funding proposal, but left for the US midway through the meeting due to the Covid-19 pandemic. After her departure, even though the objecting member was not present at the meeting, remote consultations with the US Board member was carried out by Sue Szabo, the Board Co-chair from Canada and the project was put to a vote.
(Previous Board practice as well as the Board’s rules of procedure did not provide for nor require any remote consultations to be made with any Board member who is absent from the meeting). Hence, while the project was approved as a result of the vote by the members present (by a vote of 22 votes in favour and zero votes against), questions remain regarding the procedure followed by the Canadia Co-chair.
TWN learnt that some developing country Board members were unhappy with the procedure followed on the Cuban project being subject to a vote, especially since the objecting member was not present during the decision-making, and when the procedures for voting refer to members “present and voting”, i.e. that only members who are physically present at the meeting at the time when voting takes place are allowed to vote.
(According to the procedure on decision making in the absence of consensus, “if at least a four-fifths majority of Board members present and voting vote in favour of the draft decision, the draft decision shall be considered adopted, unless four or more developed country Board members or four or more developing country Board members vote against it.”)
Given the unusual procedure adopted by the Canadian Co-chair, it can be expected that clarification will be sought at the next Board meeting on the procedure that was followed on the Cuban project, including in reaching out to an absent Board member.
Other difficult issues at the meeting included the dates and venue of the next Board meeting and the GCF’s updated Strategic Plan for 2020-2023.
The Cuban Funding Proposal
The Cuban funding proposal was put to a vote as the US did not agree to approve the project. However, the project saw support from the rest of the Board members. The project sought USD 38.2 million in grants from the Fund.
Ashufta Alam, the alternate member from United Kingdom (UK) said that there were initial difficulties in understanding the “financial and economic case” of the project, but “conversations with counterparts in Cuba had helped them understand the broader context” and the UK thus decided to support the project. Alam further requested the Secretariat and the Independent Technical Advisory Panel (ITAP) “to have an economic appraisal delivered in a way that feels stronger in future”.
Juliana Gabrovsky (US) said that the US remained concerned that development funds channeled to Cuba’s agriculture sector “would not achieve the intended development impact given a history of poor policy design and well documented mismanagement of the sector and therefore does not join consensus to approve the project”. Gabrovsky added that the US also objected to the project in light of their policies relating to projects in countries whose “governments are not addressing trafficking in persons”.
In response, Ronald Jumeau (Seychelles) spoke about the untold challenges of food security in Small Island Developing States (SIDS). “Most of us are net food importers. This (the Cuba) project is one of those which sounds a lot like what is happening in many SIDS from the Caribbean, to the Atlantic to the Indian ocean all the way to Pacific…you will find similar stories,” said Jumeau. He added further that the project targets women, youth and not just climate change but also food security, nutrition, health, well-being and security of people in small islands, and stressed that he saw this as a very “SIDS-specific” project. Jumeau also said that this time around, it was Cuba, and the next time it might be another country belonging to the SIDS asking the “world through the GCF to help us produce the food that we need under very challenging circumstances, which are being made worse by a problem we did not create”.
However, with the US alternate Board member’s continued objection to the approval of the project, Co-chair Szabo (Canada) who chaired the proceedings said she and her fellow Co-chair Nauman Bashir Bhatti (Pakistan) would consult with Board members and alternate members on the next steps in relation to determining whether all efforts in reaching consensus had been exhausted on the issue and would return to the item during the course of the meeting.
Following consultations, in the morning of 12 March, Szabo informed the Board that the objecting alternate Board member had been called back to capital due to the Covid-19 virus outbreak but that the US alternate Board member had continued to object to the approval of the proposal. “Therefore, additional remote consultations were held with the objecting Board member Mathew Harsaager, in order to see if the objection could be lifted. He indicated that the objection would not be lifted,” said Szabo.
(The primary member of the US on the GCF Board is Mathew Harsaager, while Gabrovsky, is the alternate representative. Harsaager did not attend the Geneva Board meeting at all, but he was consulted via telephone by Szabo as regards the Cuban funding proposal.)
Szabo then told the Board that the Cuban project would be put through a vote, since all efforts at determining consensus had been exhausted.
Some developing country representatives had suggested that since the sole objecting Board member was not present and since there were no other Board members objecting to the proposal, the Co-chairs should have concluded that consensus existed and that no vote was necessary.
In the vote that followed, Yannick Glemarec, the Executive Director of the Fund announced that all the 22 members present voted in favour of the project, and there was no one against the project (given that the US was not present during the voting process). Szabo then repeated the vote tally 22-0 and said that the project was approved. At that point, however, Glemarec said to Szabo that the US objected, so that would be one vote, and Szabo responded “No, the US did not vote”.
Besides the Cuban project, the following funding proposals were also approved:
— USD 39.8 million for ‘Strengthening climate resilience of subsistence farmers and agricultural plantation communities residing in the vulnerable river basins, watershed areas and downstream of the Knuckles Mountain Range Catchment of Sri Lanka,’ with International Union for Conservation of Nature as the Accredited Entity (AE).
— USD 30.2 million for ‘Strengthening the resilience of smallholder agriculture to climate change-induced water insecurity in the Central Highlands and South-Central Coast regions of Vietnam,’ with United Nations Development Programme (UNDP) as the AE.
— USD 26.6 million for ‘Building Climate Resilience of Vulnerable Agricultural Livelihoods in Southern Zimbabwe,’ with UNDP as the AE.
— USD 25 million for ‘Arbaro Fund – Sustainable Forestry Fund,’ with MUFG Bank, Ltd. as the AE.
— USD 9.9 million for ‘Scaling Smart, Solar, Energy Access Microgrids in Haiti,’ with Nordic Environment Finance Corporation as the AE. This project approval was under the Simplified Approvals Process (SAP).
Concerns over Covid-19 on dates and venue of next meeting
While the discussions on the implications of Covid-19 on future meetings of the Board happened behind closed doors among members away from the sight of observers, some of the concerns spilled over into the open when consultations on dates and venue of the next meeting took place.
(Sources said that in the closed-door sessions, developed country Board members, led by France and Sweden, insisted on virtual meetings. However, developing countries said virtual meetings were just not feasible. Their reasons ranged from Internet and telephone connectivity issues to actual participation itself. Concerns were raised over the participation of Board members from Cuba, Iran and Sudan, whose countries faced economic sanctions imposed by the US, which made it difficult or impossible for them to access remote conferencing technology to take part in virtual meetings.)
The draft decision presented to the Board on the issue saw a lot of disagreement among the Board members, especially a paragraph authorizing “the co-chairs, on an exceptional basis…to make a determination on whether to change the venue for B.26 to an alternative location based on the options identified by the Secretariat; or to hold B.26 by way of videoconference, teleconference or net meeting, and to communicate, with the support of the Secretariat, their determination to members and alt members, their advisers and active observers by 13 April, and to publish such details on the GCF website.”
Several developing country Board members expressed concerns about the paragraph and said that it did not meet their expectations.
Wael Aboulmagd (Egypt) said it was problematic the way the draft decision had been presented, in that if a physical meeting was not possible, the option was a virtual meeting. Aboulmagd added that there is a likelihood that a physical meeting may not be possible on the dates that had already been agreed last year (23-25 June), so, the decision is “effectively asking us to prepare for videoconferencing”, which he had expressly opposed, adding that the best was to postpone the meeting as it would allow more time to see how things evolved.
Richard Muyungi (Tanzania) said videoconferencing and teleconference would not work and he sought clarification on what “net meeting” meant. Muyungi also said that the situation regarding Covid-19 was evolving, and any decision must take into account the evolving nature of the situation. He further said that the situation must be monitored and that the Board needs to be flexible regarding dates and venue.
Cyril Rousseau (France) said his preference would be to change the dates and venue through a decision between meetings and that he was ready to adopt the decision as presented as it gave rhythm to the GCF direction and that a clear date in the decision would give a message that “while we are facing a global health crisis, this Fund will continue the fight against climate change, which is another important global crisis”. Rousseau also said that if no options were possible, then a decision between meetings could be taken or the meeting could be postponed, “but the key message is we are not going to let some process thing regarding how to organise our meeting go against the goal of keeping the pace of our climate action and keeping the pace of delivering climate funding,” said Rousseau.
Lars Roth (Sweden) said he did not think that the draft decision ruled out the possibility of a change in the date and venue later and stressed that the Board must confirm the date of the next meeting, as is mandated in the rules of procedure. Any further change could be done in a decision between Board meetings, he said.
Jeremiah Sokan (Liberia) said the draft decision should give Co-chairs the mandate to explore all viable options, instead of going into details. Philip Weech (Bahamas) agreed that the option presented takes just one route rather than presenting a whole range of options available, including cancelling or postponing. Cheikh Sylla (Senegal) agreed. Liangjun Dai (China) stressed the importance of all members and alternate members of the Board to participate in Board meetings.
Given the disagreement and the time crunch (as the Board had to vacate the room by 7 p.m. due to Covid-19 restrictions imposed by Swiss health authorities), Szabo urged Board members to see if they could arrive at a consensus, failing which no decision would be possible.
Rousseau said they should confirm in the decision that the 26th meeting of the Board would take place from 23-25 June 2020, and that no decision needs to be taken on the venue of the meeting. He also said that further decision could be taken between Board meetings.
Following further discussions, Walter Schuldt (Ecuador) proposed a new paragraph that said that Co-chairs would continue to monitor developments around Covid-19 and would “consult with the Board on a possible change of date or venue of B.26” and to make such “determination by 13 April 2020”. Rousseau, however, insisted that he could not agree to a decision without the mention that any change in date would be decided between Board meetings. This, he repeated, would give “pace to the work of the Secretariat”.
The paragraph further changed to reflect the following: “Requests the cochairs to continue to monitor the developments with regard to Covid-19 virus and on an exceptional basis and…to consult with the Board on a possible change in date/and or venue for B.26, and make a determination by Monday, 13 April, 2020, through a decision without a Board meeting”.
In response Aboulmagd said he could live with Rousseau’s proposal of adding “between meetings”, and added that they too were worried about climate change and the work of the Fund. “Of course we want to continue to function as much as possible. For the Board to do its business, it has to be enabled with representation. I would not worry too much about the optics or the reputational side…countries are shutting down to deal with the eventuality (of Covid-19),” said Aboulmagd.
Rousseau, however, objected again to say that there was no need for the co-chairs to make a determination and that they did not need to do anything. Co-chair Nauman Bashir Bhatti (Pakistan) said he would not sign off to any responsibility when the guidance to them was not clear. “We will continue to monitor the situation and recommend a decision between board meetings to take action. This is the final observation I can make at this stage,” said Bhatti.
Thus, with no agreement, the Board could not adopt a decision on the matter. According to the General Counsel of the Fund, the decision taken at the 24th meeting of the Board on the dates and venue of the 26th meeting stands. (At the 24th Board meeting, the Board had decided that the 26th Board meeting would convene from 23-25 June 2020.)
Updated Strategic Plan
The Board also deliberated on the updated Strategic Plan (USP). Co-chair Nauman Bashir Bhatti (Pakistan) said the USP document was a draft presented by the Co-chairs. He also said that the USP was discussed earlier during the informal meeting of the Board held in Liberia in February 2020, and that the Co-chairs’ draft had benefitted from the views exchanged in Liberia. However, disagreements remained and six sticky issues were identified.
A small open-ended group of Board members, alternate members, and advisers was tasked with discussing the sticky issues below:
· Strategic objectives for 2020-23: The areas of contention included balanced funding across mitigation and adaptation and increased focus on new and innovative financing for adaptation, as well as promoting direct access programming.
· Shifting financial flows: The contentious issue was around the GCF’s role in operationalizing Article 2.1 (c) of the Paris Agreement which refers to making financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.
· Project prioritization: The key questions included how the Fund should prioritize projects and the relevance of national climate strategies of countries and GCF’s investment framework and indicators.
· Diversifying instruments: The task was to resolve how the GCF could make full use of the range of instruments to mobilize finance for developing countries.
· Accreditation Prioritization: The central question was on how should the GCF prioritize the accreditation and re-accreditation of applicants.
· Efficient Process management and delegation: The areas of discussion were on improving efficiency in the light of increase in workload of the Board and what role could “delegation” play.
According to sources, during the discussions in the small group, several developed country Board members focused on making the USP reflect a mandate for the GCF to work more with the private sector in general, while developing country Board members stressed that the Governing Instrument remains the guide for the Fund and care must be exercised to not depart from its principles so as to ensure that the Fund remains true to its mandate of channeling climate finance from developed to developing countries as an operating entity of the financial mechanism of the UNFCCC and its Paris Agreement.
Sources also said that during the discussions in the small group, some developed country Board members expressed unhappiness with the Co-chairs’ draft of the USP and they wanted assurance that the Secretariat would be involved in the next draft of the USP and wanted the Secretariat to produce the document.
Sources said that this may be linked to the issue of delegation of authority to the Executive Director of the GCF Secretariat, although it was not clear what delegation meant or why they were discussing this as part of the Strategic Plan.
(Earlier, during discussions on the agenda item on the report of the Secretariat, the GCF’s Executive Director had said, “Another thing that is very important is empowerment. And here the Board can play a key role. And that is the reason I have mentioned several times delegation, because delegation means empowerment. Absence of delegation means absence of empowerment when it comes to staff.” Several developing country Board members who spoke to TWN emphasized that the GCF is an equal Board of developing and developed country Board members and the Board takes decisions, and there is no confusion in relation to “delegation” because everyone’s responsibilities are amply clear.)
Following discussions on the USP, the small group reported back to the Board that they have arrived at solutions on the issues of diversifying instruments and accreditation prioritization, but that the other issues need more time for deliberation.
The Co-chairs concluded that consultations on the issue would continue at the 26th meeting of the Board based on the discussions at the Board’s 25th meeting in Geneva.
(+ TWN attended as an observer)