This blog is Part 3 of a three part series. See here for Part 1: Private Sector Engagement and Part 2: Use of Financial Instruments.
The Green Climate Fund (GCF) Strategic Plan for 2020-2023 is up for consideration by the Board at its upcoming meeting in Geneva, Switzerland. Why are we paying attention? The Strategic Plan sets the vision, goals, and framework that will guide the programming of the Fund’s first replenishment for the next four years. The priorities outlined in the Plan send important signals to developing countries represented by National Designated Authorities (NDAs) as beneficiaries of the Fund, to GCF fiduciaries (accredited entities), and to stakeholders overall. The Board will consider the draft document and decide on its approval (or not) next week during its twenty-fifth meeting.
We have analyzed the document and chose to highlight three key elements that are essential in the GCF agenda-setting process. This post focuses on the vision for accreditation as a means to engage with the Fund. The aim is to assess what the Plan is prioritizing, and also (deliberately or inadvertently) failing to clarify about GCF priorities for the next four years.
Accreditation
What is the key issue? One of the strategic priorities of the Plan is improving access to Fund resources. As a key action under this area, the Fund has included the development of alternative accreditation modalities, including a project-specific assessment approach (PSAA) as an alternative and complementary option to institutional accreditation.
The Forward-looking Performance Review of the GCF conducted in 2019 to inform the Fund’s first replenishment found that, as it is, the accreditation framework is not fit-for-purpose for three main reasons: (i) slow, unpredictable, and not fully transparent process, (ii) a backlogged pipeline which presents reputational and operational risks, and (iii) a one-size-fits-all model that does not sufficiently differentiate by type of country, entity or project with respect to compliance with GCF policies.
Furthermore, prior research conducted by CCAP in support of the GCF revealed that it is sometimes hard for Nationally Designated Authorities to promote certain projects that are of key importance to the country, but do not align with the pipeline of existing accredited entities, which prioritize their own projects. It also showed that the lengthy accreditation process deters key private actors from engaging with the Fund.
At its twenty-third meeting, the Board agreed to the PSAA principle, but deferred the operationalization of the approach. In its current state, the GCF Accreditation Committee has proposed a pilot framework for PSAA that assesses whether an entity can undertake a proposed project/program in line with the fiduciary standards and environmental and social safeguards for the GCF accreditation. The PSAA would apply only to projects in risk categories C (low) or B (medium).
What is the angle in the Strategic Plan 2020-2023? Operationalizing PSAA was included among key actions to improve access to the Fund. This sends a valuable signal to stakeholders on the strategic importance of engaging partners that are unwilling to go through the accreditation process.
What is the subtext? Those concerned about PSAA have argued that it can be used as a way to by-pass the Fund’s standards, for instance through the use of joint ventures or special purpose vehicles that do not have the right track record on environmental and social standards. Others say that it may put those that underwent the accreditation process at a disadvantage. We do not find sufficient merit in these arguments.
PSAA will benefit those looking for swifter decision-making from the Fund, and not looking for a long-term relationship with it. It would also benefit countries and NDAs seeking to promote a project of national importance for which no existing accredited entity can lead. The pilot approach can take precautions to ensure that environmental and social standards are upheld, without curtailing the possibility that key actors, including domestic private actors and others that the Fund needs to engage with, can access the Fund’s resources.