Margaret Ann Splawn, Executive Director of the Climate Markets & Investment Association (CMIA) reports from Korea on the latest GCF Board meeting (“B.22”). CMIA is one of two Active Private Sector Observers at the GCF and is represented in the Boardroom by Alexandra Tracy, who contributed to this report of the meeting that took place at the Fund’s HQ at Songdo from 26-28 February
We kick off with some surprises
A bit surprisingly, the GCF had opened the B.22 meeting the previous afternoon, for the purpose of selecting a new Executive Director – the previous ED having resigned abruptly at the end of B.20 last summer. The new Executive Director is Yannick Glemarec, a French national who joins from UN Women.
The first full day started off with reports from the Secretariat, board committees, panels, groups and from the ‘independent units’ that work alongside the Secretariat. Two new Co-Chairs were in the driving seat, Nagmeldin Goutbi Elhssan (from Sudan, for the developing world ‘constituency’) and Josceline Wheatley (of the UK, for the developed world). Unlike some previous incumbents, the Co-Chairs have been incredibly efficient at time management of the agenda, even in the face of yet another prolonged discussion on one of the GCF’s favourite controversies – how it should make decisions in the absence of consensus.
Many board members were open to voting in the absence of consensus and it was pointed out by several participants that no financial institution would have total unanimity as a requirement in their governance for decision making. However there was push back from other board members who pointed out that the GCF is a UN body and that the UN acts on consensus.
What about the money? (Aka ‘replenishment’ in GCF speak.)
The replenishment of the GCF is on the forefront of the Board’s mind – they need the money. They’ve got two replenishment meetings coming up, in April and August, with a pledging conference in October. Germany and Norway have already committed to additional funding and work is being done on a comprehensive strategic programming document that forms part of the replenishment discussion.
New Executive Director Yannick Gemarac has his work cut out for him. Let’s hope he’s a people manager, strategist and decision-maker, all in one, as the GCF needs an effective leader who holds the trust and confidence of the Board and can guide the Fund through a successful replenishment process.
(Interestingly the GCF has also announced that they’ll be bringing a high profile “champion” to drum up support to fill their coffers. Identity TBC – hmmmm…could it be that hottie Leonardo di Caprio ??! #ivolunteertohelp)
What’s it like being here?
The GCF building was designed to be a low-carbon, eco-friendly building with green technology including LED lighting and solar water heaters.
The observer room itself is packed. Imagine a university lecture hall comprised of about 17 rows of long desks with approximately 10 seats per row. Practically every seat is filled with participants many who are observers to the GCF. Currently there are 276 Civil Society Organisations (CSOs), 81 Private Sector Organisations and 73 International Entities that have been registered as observers. Not every organization or entity attends every board meeting and other participants in the observer room include staff supporting board members representing their country. It’s a mixed bunch of people all actively watching televisions dotted around the room. And there’s only one channel: GCF TV / B.22.
The day kicked off with a review of the funding proposals and it was announced that the Chinese proposal (FP082) that had caused such a stir at B.21 was withdrawn once again.
Nine projects were up for approval and eight were passed ‘off the bat’. Two of these were adaptation projects in Benin and Namibia and were submitted under the Simplified Approval Process A ground-breaking project that will scale up renewable energy in the Sahel and was forwarded by a Direct Access Entity was approved too. Direct Access Entities are sub-national, national or regional organisations that have been nominated by developing countries and may be eligible to receive GCF readiness support funding. In all, there were three private sector proposals, all energy projects in Africa.
At the end of the day, the ninth project, submitted by Brazil, also got approved despite controversy in the boardroom over it earlier. It’s the first REDD+ project and it was sent for further consultation during the morning sessions because board members were concerned that the claimed CO2e reductions took place in 2014-2015 and were worried about the risk of reversal under the Bolsonaro government.
Below is a break down of the following projects and programmes that were approved at B.22:
- $96.5 million for REDD+ results-based payments for results achieved by Brazil in the Amazon biome in 2014 and 2015 (UNDP)
- $8.0 million for Resilient Rural Belize (Be-Resilient) (IFAD)
- $29.6 million for Mali solar rural electrification project (BOAD)
- $18.8 million for Promotion of Climate-Friendly Cooking: Kenya and Senegal (GIZ)
- $100 million for Nigeria Solar IPP Support Program (AFC)
- $69.6 million for BOAD Climate Finance Facility to Scale Up Solar Energy Investments in Francophone West Africa LDCs (BOAD)
- $100 million for Embedded Generation Investment Programme (EGIP) in South Africa (DBSA)
The following projects were also approved under the Simplified Approval Process (SAP):
- $9.0 million for Enhanced climate resilience of rural communities in Benin through the implementation of exosystem-based adaptation (EbA) in forest and agricultural landscapes (UN Environment)
- $8.9 million for Building resilience of communities living in landscapes threatened under climate change through an ecosystems-based adaptation approach in Namibia (EIF)
What’s the vibe in the board room re the Private Sector?
Many board members are now emphasizing the crucial role of the Private Sector Facility (PSF) to bring forward adaptation projects. The Private Sector Advisory Group (PSAG) responded that they have a new colleague who has joined with expertise on this and also that the PSAG is working on two papers that examine private sector engagement on adaptation and LDCs & SIDS.
Alexandra Tracy made an intervention as CMIA’s Active Private Sector Observer that when we look at the comparison of funding allocations by result area, it is very striking that areas relating to infrastructure and cities are underrepresented. IFC estimates that cities in developing countries around the world have the potential to attract more than $29.4 trillion in climate-related investments by 2030 in six key sectors: renewable energy – but also waste, public transport, water, electric vehicles and green buildings. The private sector can play a central role in supporting cities to make the low-carbon shift through a combination of innovation, expertise, financing and new service delivery models. We encourage the GCF to increase engagement with the private sector on these result areas.
This is the final day of B.22 and many items earlier on the agenda that weren’t agreed first time round will need to be discussed again after ‘further work’. I’m sitting in the boardroom as Active Observer today and first up was the approval of ‘accredited entities’ with all getting the nod to have dealings with the GCF in future. These nine additional approvals brings the total up to 84 accredited entities, with a pipeline of over 200 entities currently in process in the GCF ‘s accreditation system. This process is long and cumbersome, as well as expensive. There is an ongoing review to improve the accreditation framework, but the Board did not have time at B22 to make any decisions with regards to streamlining the accreditation process.
The rest of the day was largely filled with trying to gain consensus on strengthening the operations of the GCF, reinforcing standards and closing policy gaps. Some progress was made on operational improvements, for example new investment criteria indicators will strengthen the implementation of the investment framework, whilst a policy on cancellation and restructuring of projects will further reinforce the management of its portfolio of projects.
However matters related to the Fund’s prohibitive practice policies and standards for the implementation of the Anti-Money Laundering and Countering the Financing of Terrorism Policy have still not been agreed by the Board. The lack of agreement of these policies creates a bottleneck for related policies around risk management and compliance. Because of the requirement for consensus on all decisions, one or two individuals can, and do, stop progress on these much needed operational guidelines.
Progress was made at this meeting. The GCF has expanded its portfolio to a total of 102 projects and programs committing $5 billion of GCF resources for climate action in 97 developing countries.
Overall, the Board worked together in a new positive spirit, and this was noted by many stakeholders. The Co-Chairs did a good job of not wasting time when things came to an impasse. The Brit’s Joss Wheatley was particularly adept at keeping things moving, and he commented at the end of proceedings that it was the first time in four meetings that the Board had got through all the items on the agenda. Mind you, they hadn’t actually agreed on several items, but in previous board meetings they’d get so far behind the agenda that some items on it never got raised at all. This wasn’t the case at B22.
One thing that did take a full hour was agreeing the date of the next meeting, which had to be changed. It’s now on 6th-8th of July, in Songdo again.
The official record of outcomes published by the GCF can be found here. This post-meeting summary appears to be a new initiative by the GCF