Can the Green Climate Fund defeat its teething troubles?

by Megan Rowling | @meganrowling | Thomson Reuters Foundation
Monday, 7 March 2016 19:48 GMT

A street-side restaurant owner holds a bundle of Indian currency notes in New Delhi, Feb. 29, 2016. REUTERS/Adnan Abidi

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The fund has issues to iron out before it can disburse large sums to help developing nations tackle climate change

Ahead of the year’s first formal meeting, the heads of the Green Climate Fund board said the budding climate finance giant is in “good shape to deliver” on its mission to back efforts to combat global warming and help communities adjust to its effects.

After approving a first set of eight projects before December’s Paris summit, where a new global climate change deal was agreed, the fund’s board held informal discussions in Cape Town in February to cook up a broader strategic plan.

“We left the meeting with a shared commitment and operating as one team — a united board, secretariat, observers and implementing entities, working to deliver against our aspirational funding target of $2.5 billion in 2016,” said South African co-chair Zaheer Fakir, preparing the ground for this week's session in Songdo, Korea.

But that rosy picture is at odds with what people who know the inner workings of the Green Climate Fund (GCF) report. There is a sense that the huge pressure it was under to approve projects before Paris caused it to rush decisions before all the necessary policies were in place.

"Other funds, like the Adaptation Fund, did not have that incredible political timetable of being tied to the Paris Agreement," said Liane Schalatek of the Heinrich Böll Foundation North America, before heading off to Songdo as an observer.

"They had a little bit more freedom to deal with their in-house quarrels out of the limelight and without the time pressure the GCF was facing,” she added.

The decision by the GCF's first executive director, Héla Cheikhrouhou, to leave when her initial term ends in September has added to the uncertainties it faces - and to the long list of administrative and policy tasks the board must wade through this week.

The board will not approve any new projects before its three other meetings this year, starting in June, and will concentrate for now on resolving some of the fund's policy and implementation gaps.

Topics on the agenda this week include the work plan for 2016, the longer-term strategy, a request to expand the under-staffed secretariat, the search for Cheikhrouhou's successor, the approval of new agencies to implement projects, and sorting out legal and procedural issues so that money can actually be disbursed for projects.

But with so much still to straighten out before large amounts of money can flow to developing countries  to help them curb their emissions and adapt to more extreme weather and rising seas, the jury is still out on whether these are teething troubles the $10.3 billion fund can overcome.

Will the GCF establish itself as the major channel for the $100 billion in annual climate change funding wealthy governments have promised to mobilise from 2020 onwards? Or will it just become one of a pack of similar funds vying for the attention of government donors and investors?

Much will depend on the decisions made in Songdo this week, experts say.


What civil society activists want to know is whether the GCF is really interested in doing things differently by using its cash and clout to assist the poorest communities facing the worst impacts of climate change.

They are not convinced by moves to accredit more global banks to carry out projects, with 172 non-governmental groups urging the board to reject applications by HSBC and Crédit Agricole this week.

"Creating new business for big banks with large fossil fuel portfolios and poor records on human rights and financial scandal would undermine the very purpose of the Fund,” Karen Orenstein of Friends of the Earth U.S. said in a statement on Monday.

The GCF has a mandate to work directly with developing country institutions – and that is what is innovative about it, the groups say. They argue its money should be targeted at helping build skills and expertise in poor nations, allowing governments to better meet the needs of the most vulnerable people.

But when it comes to actual accreditation to handle the money, of the 20 agencies that have been approved so far, the majority are regional, international and U.N. organisations.

Only a quarter are national-level institutions, including Rwanda's Ministry of Natural Resources and India's National Bank for Agriculture and Rural Development.

One key problem facing the GCF is that it needs to push funds out of the door fast so that it can stick to a timetable for going back to donors to ask for more in 2018. But most national players so far are not accredited to implement projects of over $50 million, and some are limited to $10 million.

That has led to fears the GCF could end up approving projects led by big, international institutions just to meet its $2.5 billion funding goal for 2016.

"If the fund is trying to ultimately empower different actors to be implementers – including  a lot more national or regional implementers – then that is not going to work with the mandate to approve that much within this year," said Schalatek.


The co-chairs think they can hit the target - though Cheikhrouhou told the Thomson Reuters Foundation last week it is still too early in the year to tell.

Yvo de Boer, who was the U.N. climate chief when the fund was first agreed in Copenhagen in 2009, said the board had spent too much time quibbling over how to share out the money between different sets of developing nations rather than designing how the fund would work.

“The focus has been too much on creating a political instrument than a financial instrument,” he said.

Others blame a surfeit of bureaucracy, and say an insistence among developing nations on hammering out the fine print has, somewhat ironically, delayed cash coming their way.

Either way, fierce haggling over how the fund should operate, together with pressure to show results, has led to rather a lot of finger pointing, much of it carried on in private.

Environment and development groups that monitor the fund say it should be more transparent, and have been calling - unsuccessfully - for its board meetings to be webcast.

"Having the (GCF) term itself as a transformational and a paradigm-shifting fund, we would like to see improvements that would make it the best-in-the-class on issues of transparency and accountability and civil society participation – and we are not there yet," said Schalatek.

For the time being, the best way to keep up with the action at board meetings in (almost) real-time is via Twitter on the hashtag: #GCFund 

(Additional reporting by Reuters environment correspondent Alister Doyle in Oslo)

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