Green Climate Fund (GCF)

Clear signal for ambitious replenishment of the Green Climate Fund (GCF)

Reporting from the GCF Board Meeting in Songdo © Brandon Wu, ActionAID

The 23rd meeting of the Green Climate Fund (GCF) Board faced a challenging situation. Many feared that the Fund might fail in the face of high expectations and the meeting could end in a politically motivated deadlock. At this critical time – with the Fund calling for its first replenishment – doubts arose as to whether it is in fact capable of acting, and above all making decisions, under difficult circumstances. Looking back on the most recent session, we can now answer that question with an unequivocal “yes”!

Developing “procedures for adopting decisions in the event that all efforts at reaching consensus have been exhausted” – as provided for in the GCF statutes (see GCF Governing Instrument paragraph 14) – was one of the central questions addressed at the July 2019 meeting. The issue of the decision-making process, which has prompted confrontations within the Board on several occasions in the past, has been on the agenda repeatedly since 2014. In the run-up to this year’s meeting in Songdo, the opposing sides seemed firmly entrenched.

Some industrial nations even considered the Fund to be in a crisis and warned that its public image would suffer if decisions on project approvals or GCF processes and modalities were postponed time and again. Based on the experience of recent years – especially the difficult and fruitless 20th Board meeting in July 2018 – they feared that the principle of consensus without such a decision-making mechanism could lead to deadlocks and the inability to act, especially at a time when more and more financial resources need to be approved for climate protection and adaptation measures.

By contrast, a number of developing countries considered these warnings to be exaggerated and were convinced that the Fund would be capable of action, even if consensus were stipulated. Some countries saw the introduction of majority voting as a threat to equality, as it could increase the risk of smaller countries being pressured by more influential ones.

This already politically-charged situation was exacerbated when some donor countries hinted ahead of the meeting that an agreement on decision-making without consensus was a precondition for their approval of an ambitious replenishment of the Fund. This fueled concerns about political influence and power politics on the part of some countries. The developing countries noted that conditionality is not a basis for negotiation.

The relief was all the greater at the news that the Board did indeed find a solution in Songdo, thus putting the ball back in the court of the international community in three different ways:

GCF governance strengthened

By establishing procedures for adopting decisions in the absence of consensus, the Board put a further pillar in place to stabilize the decision-making process. The Board adopted a comprehensive package that defines not only the necessary majorities and blocking minorities, but also suitable rules to determine at which point efforts at consensus have been exhausted, and which decisions will continue to be excluded from majority voting in the future. This will enable the Board to settle future confrontations in a fair and constructive process and possibly even make unanimous decisions more likely.

Capacity to address difficult challenges demonstrated

By adopting these measures, the Board has shown that it is able to meet the expectations placed on it with the necessary discipline and seriousness. Thus, doubts and mistrust in the ability of the Board to act, which became apparent in the demand for conditionality, proved unfounded. The outcome shows that the Board has been able to balance national and regional interests and find an international compromise that has strengthened the GCF for the coming years.

Doubters among the donors can now be countered with the successful record of a constructive and fruitful meeting. In addition to adopting procedures on decision-making in the absence of consensus, projects worth USD 267 million were confirmed and four additional organizations accredited, including three with national or regional direct access to the Fund. Furthermore, a new policy on ethics was approved and a procedural decision was taken to adopt a revised gender action plan.

The path to ambitious replenishment cleared

With a strengthened administrative structure, documented capacity to act and compromise, and the adoption of further decisions, international attention should now be fully focused on the donor community. The goal is nothing less than an ambitious replenishment of the GCF so that it can assume even more responsibility in the future. Germany and Norway have already set the benchmark for other donors, by which they should at least double their contributions over those of the GCF’s initial funding in 2014. With the outcomes of the most recent meeting, the remaining reservations and excuses standing in the way of a solid replenishment of the Fund are no longer tenable.

Based on the 1.5°C target, the IPCC Special Report states that global demand for climate-specific investments for the transformation of the energy sector alone amounts to USD 2.4 trillion per year. The parties to the Paris Agreement have pledged USD 100 billion annually for mitigation and adaptation from 2020. The replenishment of the Green Climate Fund is a welcome opportunity to support the implementation of modern social and environmental standards, strict transparency criteria and the objectives of adaptation and mitigation equally. The Climate Action Summit in September under the auspices of UN Secretary General Antonio Guterres will be an appropriate moment for donors to step forward and announce new pledges to replenish the Green Climate Fund. The time for excuses is over. Now is the time to deliver and strengthen the maturing international climate finance structure.

Till Eichler and David Eckstein, Germanwatch