“We are building the plane as we fly it.” This is a phrase often repeated by GCF Board members Leonardo Martinez of the U.S. and Tosi Mpanu Mpanu of the Democratic Republic of Congo, referring to the ongoing work of putting in place the Fund’s policies and procedures even as it opens its doors to business.
The GCF has made impressive strides, including approval of the second round of funding proposals during June’s Board meeting in Songdo, South Korea, worth $250 million. However, there is more to be done to meet the Fund’s ambitious aspirations, including delivering $2.5 billion in funding in 2016. Besides disbursing funds, the GCF is also expected to play a keystone role in supporting the Paris Agreement, including helping countries implement their climate pledges as well as contributing to a broader shift in global financial flows toward climate-compatible investments.
How far has the GCF come, and what are the missing links? Over the coming months, CCAP will look at some of the central issues being discussed by the GCF Board, and consider opportunities to advance the objectives of the Fund.
Invest in building the pipeline: As they approved the Fund’s second round of projects, many Board members and observers voiced concerned about the volume of funding requests and the quality of proposals. Early and meaningful support coupled with a streamlined proposal approval process are needed to strengthen the GCF pipeline. To this end, the Board took steps in Songdo to enhance the Readiness program and agreed on guidelines for a dedicated Project Preparation Facility. The GCF must now accelerate readiness and project preparation support by simplifying access and providing clear guidance on the process.
Enhance transparency of the proposal review process: Once a proposal is presented to the Board for consideration, it may be politically difficult to turn it down. A transparent and staged process can help the Board make well-informed and merit-based decisions, and provide greater clarity to countries and institutions looking to partner with the GCF. Following the practice of other multilateral funds, the GCF should introduce a public comment period, provide information on proposals early to Board members for review, and allow the Board to defer proposals that aren’t up to par.
Give countries choices: In Songdo, Board members considered a draft strategy on accreditation, but were unable to agree on key issues, including how to manage the number and type of entities accredited and a potential “exclusion list” that would bar certain types of institutions from partnering with the Fund. The GCF needs to speed up the accreditation of national and regional entities, while making sure countries have the option to work with the partner that best suits their needs, whether national or international. The Fund should also consider how it can build a broader network beyond its pool of accredited entities, including strengthening the capacity of a diverse set of public and private domestic institutions, as well as partnering with existing climate finance institutions to delivery support.
Move from projects to programs: There was broad agreement in Songdo that the GCF must go beyond one-off projects to programmatic approaches that deliver funding at scale. Yet guidelines for programs were deferred amidst concerns of how such approaches can ensure consistency with a country-driven approach. However, these need not be at odds. As CCAP’s Bill Tyndall discusses in his latest blog, broader programs and replicable models can help countries take advantage of cost-effective technologies, support small-scale activities that boost local economies, and contribute to national development priorities. The GCF should consider how they can engage with national and international partners to develop these kinds of replicable approaches across different sectors and geographies.