GCF Board Meeting
The 17th Green Climate Fund (GCF) Board meeting was held in Songdo, the Republic of Korea on July 3-4 (informal meeting), 5-6 (formal meeting) with items including the consideration of the candidate entities for accreditation to the Fund.
DAY 1: GCF Board Meeting (B.17)
Just before the meeting started, members of the CSO called for the rejection of Japan International Cooperation Agency (JICA) and the Bank of Tokyo-Mitsubishi (MUFJ)’s applications to the GCF. Both entities have track records of funding coal projects.
BM17 started with the celebration of co-chair Ewen Donald’s birthday and the welcoming of new board members. They then proceeded to adopt the agenda and hearing reports of activities of the co-chair, secretariat, and the progress of tasks by various committees and panels.
The Secretariat’s work on the fund’s gender policy was taken note of by the BMs. While most commended her work, the BM from Canada urged the Board to think beyond gender analysis and focus more on achieving concrete results and make the fund a tool to achieving women’s empowerment.
Liane Schalatek, the current active observer for the CSOs, requested the secretariat to provide a staff directory file so that members know whom to address for certain inquiries.
The complementarity and coherence of the GCF with other existing Funds, as part of matters related to the COP guidance, was discussed multiple times. According to the secretariat, harmonization was established with other funds (GEF, Adaptation Fund, and Climate Investment Funds). The BM from India suggested that the Fund must also work with UN related agencies but that the Fund’s resources should be withheld. The BM from Sweden suggested considering the monitoring and reporting of policies like on gender and stakeholder engagement. The BM from South Africa, on the other hand, urged the secretariat to put more actionable steps regarding coherence with other funds.
A significant amount of time was spent discussing matters related to support REDD+ and initiatives taken by the Fund so far in coming up with REDD+ preparations. Many BMs think that complementarity and coherence with other REDD+ related funds are essential, while some mentioned that the communities and the rights indigenous peoples remain the heart of REDD+ discussion, hence active engagement with them must be ensured.
Four items of the REDD+ Results Based Payment were discussed: the size of the RFP, the eligibility date, possible distribution of payments and application of the scorecard. BM from Canada admitted that the document was still at its pilot stage to which many BMs believe as a good initial document. However, a number of BMs reiterated important points such as consistency to the GCF policies. Other Issues raised were on the lack of strength of the Cancun safeguard policy, the importance of equity and that the Fund must ensure there is a balance between countries needing REDD+ finance.
The Risk Management Framework is another important document discussed. The item encourages the Fund to invest in high-risk projects to achieve greater mitigation and adaptation impact. Some BMs were concerned that the Fund has not set any risk policy on Accredited Entities. In the CSO intervention, the Fund’s “zero tolerance” approach was reiterated. This method is quite weak as sanctions are said to be given only to countries and failed to include international firms. The vagueness of sanctions to “compliance breaches” was raised and measures that would address breaches related to the Gender Policy and Action Plan and the forthcoming IP Policy was suggested.
The Secretariat presented the status of the GCF Portfolio regarding Projects in the Pipeline and Approved Projects (PAP). As of July 2017, there are 58 projects in the pipeline worth 3.8 Billion USD, 64% which is under grant financing. More than half of these projects are coming from LDCs, SIDS, and Africa with more mitigation proposals than adaptation. Also, projects in the pipeline now have included concept notes in their submissions. There have been 196 Concept Notes received so far. As with the approved projects, there are 43 projects in total amounting to USD 2.2 Billion.The Secretariat also reported that requests for GCF Funds still come mainly from international entities and very few from direct access entities. Regarding result areas, the majority of the committed funding is directed to energy access and generation, very few to the ecosystem, forestry, and land use, and zero on transport. While the need to approve more projects coming from direct access entities has repeatedly been raised, the BM from Germany reminded that proposals must still be aligned with the Funds policies, especially on gender and IP. Also, proposals must still reflect country priorities and not be influenced by result areas.
The BM from South Africa questioned the consistency of the data presented by the secretariat and what was posted in the GCF in the Status of the Initial Resource Mobilization Process. There was a major incongruence on the contribution of the US. The BM from the US confirmed that the US already paid USD 1 Billion and that the correct interpretation is that the US is committed to giving USD 3 Billion.
DAY 2: GCF Board Meeting (B.17)
Day 2 of the BM17 can be best described as very disordered due to the co-chair’s obsession of finishing on time, which as expected, compromised the chance of BMs to think through the decisions and deliberately ignored active observers’ opportunity to speak.
Members of the CSO continued their call for the rejection of JICA and the Bank of Tokyo’s applications to the GCF, due to their track records of funding coal projects.
The discussions started with brief updates on the development of anti-money laundering policies and policies on financing for terrorism. It was followed by the Country Ownership Guidelines where activities took thus far, and the progress of consultations were discussed. It was pointed out by the secretariat that the document is weak and how it failed to address the ignorance of NDAs about country ownership.
The Private Sector Engagement and the Recommendations from the Private Sector Advisory Group (PSAG) were also discussed. The Secretariat presented the progress made by PSAG thus far, the barriers that limit the Private Sector potential in the Fund, and recommendations on how to further mobilize private sector engagement. Some of the barriers identified were a lack of awareness and capacity of institutions involved, limited market capabilities, scarce flexible financial instruments, and high costs of concessional capital and technology. It recommended the fund to develop a strategic plan on multi-stakeholder engagement, have a flexible financial structure that would tap small communities (i.e. Feed-in-Tariffs) and explore instruments that promote Public-Private-Partnership (PPP). Board Members were very keen to increase the involvement of the private sector in the Fund and were happy with the introduction of PPPs.
Then the board had an Executive Session and discussed the Accreditation Master Agreements (AMAs) and Performance Management Agreements for the Board.
It was then followed by extension of the deadline for the signing of the AMAs by the European Investment Bank (EIB) for the GEEREF project and by the World Bank (WB) for the Tina River Hydropower Development Project, both projects approved in B16. The board adopted a proposal of 120 days extension. However, BMs raised concerns that the non-compliance of these AEs may mean the cancellation of the project, which will hurt the National Designated Authority (NDAs) who are expecting to implement the project soon. Many BMs feel that to avoid such scenario; the Fund must develop its policy on cancellation.
The Readiness and Preparatory Support was discussed over lunch. The secretariat presented updates on the readiness proposals received (115 worth USD 32.7 Million so far), the various workshops conducted and basically shared how the Fund is reaching out to NDAs to assist them in developing funding proposals. BMs were concerned about the disbursement of the readiness funds. The Board then looked into the proposed Readiness Work Programme. Many were quite reluctant to adopt the document and feel that it can be improved further regarding its structure. The Board decided to defer the item to B18 including the item on the Terms of Reference for the Independent Evaluation of the Readiness Programme.
Then came the consideration the Consideration of Accreditation Proposals. For BM17, there were 6 entities for consideration, 2 of which we have opposed as both have bad track record on coal financing and human rights violations.
- CDG Capital (Morocco), direct access national, private – large project size, risk category B
- Infrastructure Development Company Limited (Bangladesh), direct access national, public – medium project size, risk category B
- Small Industries Development Bank of India (India), direct access national, public – large project size, risk category A
- Micronesia Conservation Trust (Micronesia), direct access regional, public – micro project size, risk category C
- Bank of Tokyo‐Mitsubishi UFJ (Japan), international access, private – large project size, risk category A
- Japan International Cooperation Agency (Japan), international access, public – large project size, risk category A
The co-chair decided not to take more general comments about the 6 entities. Most developed country BMs led by Sweden, Germany, and Denmark were direct in saying that despite the information they received from the CSOs about the negative track record of the two entities they have not named. This decision was justified with the reason being that an accreditation to the Fund does not guarantee automatic approval of funding proposals. Hence there is nothing wrong with granting them accreditation.
At this point, CSO Active Observers were waiting for their turn to give their interventions about 3 applicants – to express CSO opposition to the accreditation of JICA and Bank of Tokyo Mitsubishi, and to welcome the accreditation of Micronesia Conservation Trust. However, Ayman refused the CSOS a chance to speak and quickly moved to adopt the decision. It was only after the decision was approved, Ayman then called on Karen to speak but emphasized that she cannot name the entities that she is referring to in her intervention.
Then the Risk Management Framework was deliberated. The co-chairs hoped the item would be adopted quickly. However, some BMs have issues about the concentration risks and reputational risks of the AEs. As discussed in Day 1, BMs opposed the concentration risk patterned to the CTF. They have proposed to follow the concentration risks of the Adaptation Fund and the GEF. After all of the comments were incorporated, the Board decided to adopt the RMF document.
Board Meeting video recording can be viewed here.
Upcoming GCF Board Meeting
Venue: Cairo, Egypt Date: 30 September – 2 October
Thanks for reading
Summary by: Jay Won Lee