Getting the GCF We Fought For

I’ve just returned from attending the 13^th meeting of the Board of the Green Climate Fund (GCF). Many of us GCF old-timers[1] can’t help but feel a sense of sincere disappointment. How can anyone who, perhaps naively, looked to the GCF as a people’s alternative to the World Bank not feel at least a bit deflated? Most of the GCF’s resources look to be captured by the same old, same old (i.e. World Bank, Inter-American Development Bank, UNDP, etc.) or worse — banking behemoths with troubling records on fossil fuel financing, human rights, and financial scandal, like HSBC and Deutsche Bank.

The Fund We Wanted

We wanted a GCF that actually focused on the most vulnerable — that channeled public money to those places where private money was least likely to go, that saw itself in service to subsistence farmers in Malawi and women and girls in Yemen. We wanted a Fund that did not limit the definition of country ownership to national government dictates but equally valued the contributions of rural communities, Indigenous Peoples, civil society, women, workers, municipal/village governments, informal private sector, etc. With some exceptions, that’s not the GCF we have now.[2]

But as several incredible colleagues from the Global South have reminded me, we have to fight for the GCF to be the institution that we want it to be – because the need for climate finance and climate justice is so great and so grave.

A Return to the GCF’s Founding Mothers and Fathers

Which brings me back to the words of the GCF’s founding document – the Governing Instrument – which says, “The Fund will pursue a country-driven approach and promote and strengthen engagement at the country level through effective involvement of relevant institutions and stakeholders.” If the GCF were truly a country-driven institution, I think we’d have a decent shot at realizing a GCF that resembles what we actually want.

And, as it happens, the Board has an important opportunity to set the GCF on a better path at its next Board meeting in Ecuador, in October, when it will decide upon country ownership guidelines and an accreditation strategy.

Back to the Basics: National Designated Authorities

National designated authorities (NDAs) were supposed to be the primary in-country unit of the GCF, and the real drivers behind the Fund. Unfortunately, the Board failed to allow NDAs this primary role, and now instead we find accredited entities[3] setting the Fund’s direction and dictating its financing. It’s quite revealing that some of the newer Board members are quite confused about what the role of the NDA is even supposed to be.

Much of the GCF’s time and energy has been invested in accredited entities, not NDAs. Instead of loci of activity in-country, many NDAs – which have no ability to even propose projects for funding – appear to largely serve as rubber stamps for letters of no-objection.[4] Indeed, in some countries, rather than a vibrant agent-of-change, the NDA merely consists of a single part-time staff person.

The reason for this situation sits largely with the Board’s failure to set up minimum standards for what constitutes an NDA. Some countries complained that the GCF shouldn’t dictate the composition or functions of an NDA, that somehow this could impinge on national sovereignty. That’s like saying there should be no basic standards that qualify a doctor to practice medicine; each person should decide for her/himself what the requirements are for a medical license. Similarly, the need to set minimums for what constitutes an NDA should be a no-brainer.

Opportunity #1: Country Ownership Guidelines

Fortunately, the Board can fix this in October. With a decision on country ownership guidelines on the agenda, the Board can and should set minimum standards for NDAs that actually make them inclusive, innovative engines driving the GCF. The Global Alliance for Incinerator Alternatives, Friends of the Earth US, and Institute for Policy Studies actually wrote a paper that covered this very topic back in 2012 – The Green Climate Fund’s “No-Objection” Procedure and Private Finance: Lessons Learned from Existing Institutions. The Board and Secretariat might want to dust it off and take a look.

In the months leading up to and during the next GCF meeting, the Board should devote serious time, thought, and resources to the revision of the current notion of NDAs; they can’t simply be an afterthought for each country to define for itself.  As a possible model for NDAs, the Board should seriously consider the Country Coordinating Mechanisms (CCM) of the Global Fund to Fight AIDS, Tuberculosis, and Malaria. CCMs serve as the chief decision-making body of the Global Fund in-country. CCMs must comply with six eligibility requirements and established minimum standards. Though not perfect, CCMs put a premium on local ownership and participatory decision-making. As UNDP notes, “CCMs have representatives from the public and private sectors including governments, multilateral or bilateral development agencies, NGOs, faith-based organisations (FBOs), academic institutions, private businesses, key populations and people living with and affected by the diseases…CCMs should have equal representation of men and women and possess strong expertise on gender balance in order to ensure effective responses to the three diseases.”

Like CCMs, NDAs – and through them genuine country ownership – should be the DNA of the Fund. To that end, the GCF should make meaningful multi-stakeholder engagement by the NDAs mandatory (not voluntary, as is currently the case), with detailed, international-best-practice guidelines for consultations. 

Opportunity #2: Strategy on Accreditation

In order to actualize country ownership, developing countries must be able to directly access GCF funds without having to go through developed country, multilateral, or international private institutions. To help accomplish this at its next meeting, the Board must establish a transparent, unambiguous process to prioritize direct access entities within the long accreditation applicant queue, with clear guidance on prioritization provided to the Secretariat.[5] This requires unambiguous decision-making by the Board and a pivot away from the present open-ended process of permanent expansion.

As a simple first step toward a more efficient, effective accreditation process, the Board should make applications for accreditation public as soon as they are filed. Notwithstanding the need to improve the GCF’s practices in transparency, public knowledge of which entities are currently in the queue would allow for a more strategic approach to accreditation.

In addition, the Board urgently needs to clearly define what constitutes direct, regional, and international access, as what we have now is sloppy and confusing.[6] Direct access entities should be domestic, developing country institutions that focus on implementing activities in that same country. Regional direct access entities should be limited to special circumstances, like those of small island developing states, where it would be difficult to have national entities in individual countries. Other than that, developing country entities interested in implementing GCF activities outside their own borders should be considered on the international access track. The purpose of direct access is to enable actual direct access to finance for domestic institutions, not to create a new set of developing country intermediaries.

[1] I’ve been a GCF wonk for 8 years, more or less, well before the GCF was an actual institution but rather an idea to be fought for.

[2] I say “with some exception” because the Board has approved a number of seemingly good projects. At last week’s Board meeting, for example, two of them – adaptation projects in Tuvalu and Sri Lanka – appear to be especially promising. Indeed, for the first time, we saw civil society from the home country rally for support for a project –  22 Sri Lankan CSOs wrote to the GCF Board.

[3] Accredited entities are the institutions within the GCF’s structure that submit funding proposals. They can receive and manage GCF funds.

[4] NDAs must provide letters of no-objection to demonstrate their endorsement of a funding proposal put forward by an accredited entity.

[5]Expanding eligibility for fast-tracking, as some Board members have suggested, is the wrong course of action. 

[6]For example, why is Acumen Fund, Inc, which is based in the United States, a regional direct access entity? Why is the Export-Import Bank of Korea applying for accreditation as a national, direct access entity?