Green Climate Fund - Only 1 per cent of pledges contributed, Board told

Songdo, 28 March 2015 (Meena Raman, Indrajit Bose)

The ninth Board meeting of the Green Climate Fund (GCF) heard an update about the status of resources contributed to the Fund, and also took several important decisions.

The meeting was held for the first time at the Fund’s headquarters in Songdo, South Korea, from 24th to 26th March.

The Secretariat informed Board members that so far, of the total pledges made in 2014 of close to US$ 10.2 billion, only about 1 percent or US$ 104 million of the pledges made have actually been legally committed with the signing of contribution agreements.

At the previous meeting of the Board held in October last year, it was agreed that 50 percent of the contributions to be pledged in November 2014, will have to be legally committed, no later than 30 April this year, for the Fund to become effective. (In November, at the official pledging session, US$9.3 billion was pledged.)

On the insistence of developing country Board members, the status of the initial resource mobilisation was added to the agenda of the meeting, and is to be a standing agenda item at future meetings.

On concerns whether the 50 percent would be realised by end April, Executive Director of the Fund, Hela Cheikhrouhou, informed the Board that if 9 countries signed legal agreements with the Fund by end April this year, comprising of France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom (UK) and Japan, the 50 percent mark would be realised, as this would mean about 56 percent of the funds pledged would have been committed to. The United States (US), whose pledge is the largest (of US$ 3 billion), made clear that it would not be able to complete the legal arrangements before end April this year. (For further details, see below.)

A key decision adopted by the Board was the accreditation of the first 7 entities that are allowed to access the Fund’s resources and to channel them to developing countries. (Access to GCF resources will be managed through national, regional and international implementing entities and intermediaries that have been accredited by the Board.)

Other decisions taken related to, among others, the following matters: the sub-criteria and methodology for assessing funding proposals under the initial investment framework; financial terms and conditions of the Fund’s instruments; legal and formal arrangements with the accredited entities; approval of the terms of reference of the independent Technical Advisory Panel (which will provide independent technical assessment of, and advice on, funding proposals for the Board); adoption of the policy on ethics and conflict of interest of the Board; and the adoption of the interim gender policy and gender action plan.

The Board also agreed to a decision that the existing Board members shall continue beyond the end of their term on 23 August 2015, until new Board members have been selected, no later than 31 December 2015.

During the discussion on the ‘Report of the Secretariat’, the developing country Board members stressed the importance of the funding for readiness and preparatory support for the national designated authorities (NDAs) to be expedited. (See details below.)
The current Co-chairs of the Board are Henrik Harboe (Norway) and Gabriel Quijandria (Peru).

Status of initial resource mobilisation

Several developing country Board members called for the issue of the status of initial resource mobilization (IRM) to be on the agenda. This included Ayman Shasly (Saudi Arabia), Nojibur Rahman (Bangladesh), Angel Valverde (Ecuador), Mariana Micozzi (Argentina), Jorge Ferrer Rodriguez (Cuba), Patrik McKaskie (Barbados), Zaheer Fakir (South Africa) and Dipak Dasgupta (India).

Shasly (Saudi Arabia) led the call for the status of resource mobilisation to be a separate agenda item, stressing that members from his constituency in the United Nations Framework Convention on Climate Change (UNFCCC) were “bombarding” him on where the Fund stood as regards resources. He reminded the Board that the UNFCCC Parties were negotiating a new agreement to be agreed in Paris later this year, and the issue of resources in the GCF was an important matter for developing countries.

Fakir (South Africa) agreed with Shasly and added that “Everything we are doing here is hinged on resources. Resources are the blood. In the absence of blood, we have a corpse.” He too stressed that in all the meetings there is a standing agenda item that deals with the status of resources and asked for it to be included in future meetings as well.

Dasgupta (India) said that the IRM is paramount and must be right at the top of the agenda as the Board could not plan its work without clarity on where the Fund is on resources. He emphasised that it could not be delegated for discussion under the report of the Secretariat, as was initially proposed by the Co-chairs.

Following these interventions, the Co-chairs agreed to the issue being added on the agenda. 

The Chief Financial Officer from the Secretariat informed that Board that the GCF would be effective when 50 percent of the contributions pledged during the November 2014 IRM session are reflected in fully executed contribution agreements by 30 April 2015. As of November 2014, 21 countries pledged US$9.3 billion. Additional pledges by 14 countries, equivalent to US$ 840 million, were made by the end of December 2014. So far, four countries, viz. the Czech Republic, Denmark, Luxembourg and Panama, have signed contribution agreements totalling US$ 80 million out of the US$ 9.3 billion. The Secretariat also informed that there would be a pledge tracker on the GCF website to track the status of the contributions, which would be updated weekly.

Fakir (South Africa) said that effectively, the Fund has 0.8 percent of the US$ 9.3 billion and another US$4.5 billion is needed by the end of April for it to be effective. He wanted to know what if the 30 April deadline is not met.

Shasly (Saudi Arabia) said if individual contracts for the contributions had conditions, the Board needs to know what those conditions are and to see if they are in line with policies of the Board. He spoke of having another deadline in case the 30 April deadline is missed.

Arnaud Buisse (France) said that there is a lot of technical and legal work to be done and that France is working very hard to sign the contribution agreements with the GCF.

Stefan Schwager (Switzerland) said its case was rather simple because it is a grant-only contribution. “We know our contribution alone will not help reach the 50 percent target. So we call on the developed countries to speed up as much as we can,” said Schwager. He said that he would hate to shift and decide on another deadline since that would mean less pressure to speed things up to meet the 30 April deadline.

Shuichi Hosoda (Japan) said Japan needs to sort out the technicalities and there is need for a Cabinet decision to register the contributions to the GCF. Hosoda added that they are trying “very hard” to get the approval.

Leonardo Martinez (the US) said his country too is working hard but clarified that given the US’s budget cycle and application processes, it “will not be able to complete by 30 April, but that we will do soon after”. To allay concerns, he added that the contribution agreement will not be in contravention with the policies adopted by the Board. (The Board had decided at its last meeting that the contributions cannot be earmarked or targeted for specific purposes.) 

Andrea Ledward (the UK) said that there were constraints such as the UK election but they were working hard to meet the 30 April deadline. “We don’t intend to bring additional sets of conditionality and in the spirit of transparency all contribution agreements should be made public,” she added.

Georg Børsting (Norway) said their lawyers had been told of the urgency of the matter and that Norway is trying to conclude the agreements by 30 April. Børsting was also against a new deadline.

Ludovica Soderini (Italy) said that Italy was trying its best. Ingrid Gabriela Hoven (Germany) was optimistic about meeting the deadline. Clare Walsh (Australia) said Australia is trying to endeavour to meet the deadline and its lawyers have been working with the Secretariat. Jacob Waslander (the Netherlands) said they should be ready to sign the contribution agreement soon. Jan Cedergren (Sweden) said Sweden would make it by end of April.

In response, Shasly said the question of not meeting the deadline still remained and did not want the matter to be left open ended. To this Co-chair Henrik Harboe (Norway) intervened to say that the matter was not being left open ended and that there was still five weeks to go. He said the Board members should stick to the ambitious target of meeting the deadline.

The Executive Director Cheikhrouhou said the contribution agreements would be made public on the website. On the deadline, she said that 30 April deadline was a policy of the Board and as a new entity it was better if the Board did not breach its policy.

Hoven (Germany) added that she did not want to encourage a discussion on what if the deadline is not met. “We will keep ourselves informed and we have time in between meetings. We won’t like to take a decision that pre-empts failure in meeting the deadline,” she added.

Following these exchanges, the Executive Director added that if nine countries viz. France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, UK and Japan signed contribution agreements with the Secretariat, the contributions would amount to about 56% of the total.  

Co-chair Harboe (Norway) further reiterated that setting a fall-back date would send a signal of reduced ambition, which he did not want to do. “We will track the situation. There will be a tracker on the website. For transparency, all agreements will be public,” said Harboe. He asked the members to stay updated till 30 April and depending on the situation, the Co-chairs would take action at that stage. In response, Shasly declared that the Co-chairs would bear responsibility on how to deal with the situation if the deadline was breached.

Readiness and preparatory support

In presenting its report of activities to the Board, the Secretariat informed the Board that 101 developing countries have appointed their national designated authorities (NDAs) or focal points. Of the 101 countries, 52 countries requested for readiness and preparatory support, including support for national entities that a country is seeking to accredit. The Secretariat said that it was working with such requests to better understand the needs of countries and to help them effectively. The Secretariat said that it was aiming to provide capacity building support to 30 countries for their NDAs, help with country programmes for 20 countries, support with accreditation for 30 countries and provide programme preparation support to others. It also said that half the NDAs were only recently appointed and the goal was to organize six regional events.

(At the previous meetings of the Board, the Secretariat was requested to report in detail, twice a year, on activities undertaken by the readiness and preparatory support programme, and the progress of committing and disbursing available funds. The Board had allocated US$15 million for readiness and preparatory support. The Board had also decided that “readiness commitments to individual developing member countries will be capped at US$ 1 million per calendar year” and that the Fund can provide up to US$ 300,000 of direct support to help establish an NDA or focal point. As of end December last year, close to US$ 400,000 has been spent on readiness activities.)

Fakir (South Africa), commenting on the first bi-annual readiness report of the Secretariat’s implementation of the work programme on readiness and preparatory support, said that part of the bi-annual reporting process is to enable the Board to allocate additional resources from the readiness funds as well as to address the overall readiness envelope as part of the Board’s resource allocation framework.

Fakir expressed unhappiness with the Secretariat report, adding that it seemed the Secretariat has created “readiness among consultants” and had “proliferated a consultants’ industry” rather than empowering NDAs or focal points. He stressed further that the Secretariat report lacked details and asked it to issue a revised detailed report to enable the Board to get a sense of the status of operationalization of the Board’s decisions.

The report, according to Fakir, must address the Secretariat’s capacity and management of the process; assess the delivery and implementation of readiness and preparatory support resources; assess the cost effectiveness and current spending on readiness; and address any potential conflicts of interests and matters affecting the integrity of the Fund from the delivery of the readiness programme. On the way forward, Fakir proposed a simple decision requesting the Secretariat to clarify the matters he had raised and re-issue their first report with more details as soon as possible and for the second bi-annual report to be presented at the Board’s next meeting in June, with a view to considering an increased allocation of readiness resources.

Nojibur Rahman (Bangladesh) said the NDAs from least developed countries (LDCs) have been stressing on direct access. This has to be appropriately understood by the Secretariat. They want to see a situation where their national entities are quickly accredited. The current accreditation standards seem to pose a disadvantage for the LDCs, he said, adding that the Secretariat needs to factor this in in its psyche.  The readiness report needs to be more comprehensive and taking on from Fakir, Rahman said that it would be a good opportunity for the Secretariat to spell out its needs. It is important that the Board delivers these resources to the ground, he said further, adding that LDCs are in dire need of these resources.

Dasgupta (India) said this year is different from previous years since the Board is engaged in operationalizing the Fund, adding that readiness is at the heart of the matter. In stressing the importance of disbursing funds for readiness activities, he said there was need for a report at this Board meeting on how the readiness programme can be turned much faster with results that can be monitored. “We need to see timelines to strengthen NDAs and focal points now,” he added, expressing disappointment with the Secretariat’s presentation that had a timeline of the end of the year. Dasgupta also said that the Secretariat’s transaction costs in this regard are high and suggested that the costs should be reduced and money be disbursed with a standard list of expenses with an ex-post verification.

Jorge Ferrer Rodriguez (Cuba) expressed concern with the state of implementation of the readiness programme and the delay in disbursements to the NDAs. Citing readiness as central to the purpose of the Fund, he said that there should be steps taken urgently to ensure sovereign entities could request accreditation.

Shasly (Saudi Arabia) underlined the importance of messaging that goes out from the Fund and said that readiness support is the first signal the Fund could send out to the international community. He said that he would have liked to hear about GCF’s linkages with other bodies of the Convention, as per the guidance from the UNFCCC’s Conference of Parties, in the Secretariat’s report.

In response to the Secretariat’s report, Hoven (Germany) found it remarkable on how much outreach had happened since the last Board meeting. She encouraged the Secretariat to do more and help the NDAs with multi-stakeholder engagement workshops and with whatever else the NDAs feel is appropriate.

Tosi Mpanu Mpanu (Democratic Republic of Congo) underscored the importance of readiness and said the work of readiness is quite simple given that the first task is to capacitate the NDAs well and warned that if the foundation is not well laid out, it would have an impact for the Fund.

Angel Valverde (Ecuador) said it would be very useful to know the resources available and to allocate additional budget.

Patrick McKaskie (Barbados) said there needs to be efforts by the Secretariat to strengthen the NDAs through workshops or by inviting all the NDAs together on to a common platform. “Some of them do not understand what their role is,” McKaskie added.

Following these interventions, the Secretariat responded that it would re-issue a more detailed report by the end of April and that it was working to spread awareness about the Fund, changing its website and developing an NDA user guide and through regional events. At this point, the Board members clarified that the activities cannot only be about outreach.

Dasgupta (India) reiterated that when he looks at the Secretariat report, he will be looking at what resources have been disbursed and how the Secretariat has responded to the requests of the NDAs.

Fakir (South Africa) asked for the report to be re-issued and for the revised biannual report to be presented at the June meeting. Fakir stressed that the Fund lacks a business plan. “If I have a business plan, I know how I am allocating my resources. I know my benchmarks. I know how to evaluate,” he said and added, “on readiness, all the Secretariat has been communicating is there is a consultant to help you, rather than let the NDA gain control over the issue.”

McKaskie (Barbados) agreed with Fakir and asked for a monitoring and evaluation report to be presented as well and added, “If we fail to plan, we must plan to fail.”

The Secretariat clarified that it would re-issue a more detailed report in June, which addressed the concerns raised by Board members. The report at the end of April would have figures on disbursement.

Accredited entities

The first 7 entities that were accredited to access the funds of the GCF are the following entities: Centre de suivi écologique (CSE) from Senegal, which focuses on combating desertification and protecting coastal areas; Fondo de Promoción de las Áreas Naturales Protegidas del Péru (PROFONANPE) that specializes in funding biodiversity conservation and managing protected areas; the Secretariat of the Pacific Regional Environment Programme (SPREP) based in Samoa, which focuses on protection and sustainable development of the Pacific region's environment; Acumen Fund, Inc., a social impact investment fund, that works on improving the lives of low income communities in Africa and Asia in healthcare, agriculture and clean energy; the Asian Development Bank (ADB), the United Nations Development Programme (UNDP); and  Kreditanstalt für Wiederaufbau (KfW), which is a German government-owned development bank.

(Further reports to follow.)

Resource mobilisation Climate Change

TWN Info Service on Climate Change Mar15/01

UNFCCC / Green Climate Fund / 9th GCF Board Meeting
24 April - 26 April 2015, Songdo, Republic of Korea
by Meena Raman, Indrajit Bose
Songdo, 28 March 2015