A Tale of Four Funds
Climate finance is essential in catalyzing global and national efforts to safeguard the environment and people’s lives and to avoid serious climate change. It involves flows of public money intended to support developing countries to reduce greenhouse gas emissions and adapt to environmental impacts, such as droughts, flooding, and sea level rise.
Among the various delivery channels, multilateral trust funds have been established through intergovernmental processes and partnerships over the past decade, to pool and provide the demanded support.1 As an important conduit of climate finance, these funds are also delivering multiple social, environmental and financial benefits in relation to climate demands and results. By setting standards on transparency, accountability and integrity, multilateral funds also have the potential to drive transformations in strengthening the institutional governance for a multitude of financial intermediaries and beneficiaries, contributing to sustainable development in a world whose climate is changing.
Given these tremendous opportunities for impact, this report examines the best practices regarding the transparency, accountability and integrity policies and standards set by four multilateral trust funds with significant climate finance portfolios: the Adaptation Fund, the Global Environment Facility2 (GEF), the Climate Investment Funds3 (CIFs) and the Green Climate Fund (GCF). Based on desk research and consultations with each fund, the report takes stock of what policies these funds have in place and what standards they require of their finance delivery partners or implementing entities (in other words, those organisations accredited or otherwise contracted to carry out fund activities or projects with fund money). A wide range of policies is covered, including access to information, financial management, anti-money laundering, procurement, ethics and conflicts of interest, complaints-handling mechanisms, whistleblower and witness protection, and stakeholder participation and engagement.
In terms of both transparency and accountability, the report further assesses the extent to which the funds ease public access to the policies, standards, and processes implemented by both the funds and their delivery partners. When, for example, a member of the public wishes to make a complaint or ask a question, can he or she relatively easily identify how to do that when visiting a fund’s website? Finally, the report reviews the funds’ efforts to demonstrate their transparency, integrity and accountability policies and those of their implementing entities. This means to flesh out whether the funds go beyond having policies in place, and requiring that policies are in place, and to evaluate evidence of how effective the policies are in practice.
By drawing out main findings regarding best practice and by recommending actions to enhance policy development and improve implementation, this report aims to contribute to the overall goal of ensuring that climate finance achieves both long- and short-term results and sustainable development benefits. However, this report does not assess the actual policy effectiveness, especially with regard to the policies of the funds’ implementing partners. For example, it is beyond the scope of this report to evaluate how effective, transparent and effective stakeholder engagement policies and practices actually are on the ground. Such an assessment would usefully complement this report and should be considered for future study and recommendations to further advance the overall goal.
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