Big development banks dominate Green Climate Fund, new study finds
WASHINGTON, D.C. – The Green Climate Fund (GCF) risks becoming a sideshow to big development banks and other multilateral institutions unless it rapidly changes course, according to the findings of a new study by Friends of the Earth U.S. and the Institute for Policy Studies (IPS).
Green Climate Fund: A Performance Check, launched ahead of the 18th meeting of the GCF Board in Cairo, Egypt, found that only seven percent of the $2.2 billion in funds already allocated to projects and programs will pass through national or subnational (“direct access”) developing country institutions.
“The Green Climate Fund was supposed to learn from the failures of big development institutions like the World Bank, not channel most of its funds through them,” said Oscar Reyes of Institute for Policy Studies. “There’s plenty of evidence that devolved decision-making is the best way to meet the needs of vulnerable communities at the frontlines of climate change. The GCF has already supported some excellent ‘direct access’ projects, but these should become the rule not the exception.”
The GCF, established under the UN Framework Convention on Climate Change, is intended to be the world’s leading international channel of public climate finance.
“The Green Climate Fund must do better to meet developing countries’ needs as they face the climate crisis, especially when it comes to the most vulnerable communities,” said Karen Orenstein of Friends of the Earth U.S. “If the Board puts science, justice, and the needs of ordinary folks at the center of its approach, the GCF could still be the fund that so many of us fought for.”
Over half of allocated GCF funding is managed by just three international partners: European Bank for Reconstruction and Development, United Nations Development Programme and European Investment Bank. The European Bank for Reconstruction and Development alone manages over a quarter of all GCF funds.
Just seven of the 43 activities funded so far account for over half of the allocated funds. All of these are managed by international development banks.
This concentration comes despite the fact that “country ownership” (through devolved decision-making) was one of the main reasons for setting up the GCF in the first place.
The report also revealed mixed results as regards the Fund’s ability to meet the climate adaptation and mitigation needs of developing countries.
Just 27 percent of GCF funds are allocated toward adaptation, well short of its 50 percent goal. There is also evidence of bias against adaptation projects addressing the underlying socioeconomic factors that make marginalized populations more vulnerable to the impacts of climate change.
The GCF is also missing the mark in other areas measuring the GCF’s reach of those more vulnerable to climate change. Only 4.7 percent of the total GCF funds allocated so far have energy access as a primary focus. And the GCF has yet to live up to its potential as a global pioneer in integrating gender responsiveness into all its financing.