44th Adaptation Fund Board meeting: Important steps taken to triple outflows and scale up direct access in line with the NCQG

Woman collecting seaweed at low tide in Zanzibar, Tanzania. Photo: Gray Kotze / Shutterstock.com

At its 44th Board meeting on 10 and 11 April 2025 in Bonn, the Adaptation Fund (AF) took important decisions that put the Fund on the right track to fulfill its mandate in line with the New Collective Quantified Goal (NCQG), adopted at the Baku climate change conference (COP29) in November 2024. Among other decisions, the AF lifted the country resource cap to USD 40 million and set a resource mobilization floor of USD 300 million for the year 2025.

The NCQG recognizes that multilateral climate funds, including the AF, are key to supporting developing countries in addressing the adverse impacts of the climate crisis. At COP29, Parties to the Paris Agreement agreed that a significant increase in public resources should be provided through the climate funds operating under the United Nations Framework Convention on Climate Change (UNFCCC), including the AF. In this context, they decided to pursue efforts to at least triple annual outflows from these funds compared to 2022 levels by 2030 at the latest. The share of finance delivered through these funds is to be significantly scaled up in implementing the NCQG. Additionally, the NCQG calls on multilateral climate funds, including the AF, to strengthen their efforts to enhance access and promote effectiveness—particularly by scaling up and prioritizing direct access to climate finance.

Reaffirming its commitment to prioritize direct access

At its 44th Board meeting, the AF made an important decision reaffirming its commitment to providing direct access to its resources. The concept of ‘direct access’ allows national institutions in developing countries to receive funding directly, without having to channel it through multilateral implementing entities such as UN agencies or multilateral development banks, which currently manage a large share of climate finance. Direct access strengthens the capacities of national institutions to manage and oversee these efforts, thereby promoting country ownership and national decision-making power. The AF has pioneered this approach and remains the only fund within the international climate finance architecture that allocates 50% of its resources to direct access entities.

At its 44th meeting, the AF Board decided to reaffirm this vital commitment by maintaining the 50% allocation for direct access entities. In addition, key decisions were made to remove existing barriers that had been limiting demand from direct access entities. The Board agreed to raise the Fund’s country resource cap from USD 20 million to USD 40 million and to increase the maximum project size from USD 10 million to USD 25 million for single-country projects, and from USD 15 million to USD 30 million for regional projects accordingly. These revisions aim to support the Fund’s mandate to triple its outflows by 2030, as outlined in the NCQG decision.

How does the lifting of the resource caps further incentivize direct access?

Many countries had reached or were nearing the previous USD 20 million country resource cap, which significantly reduced their engagement with AF. Some accessed resources through a national implementing entity (NIE) via direct access, while others did so through multilateral implementing entities, leaving little incentive for national institutions to seek accreditation once the cap was met. In some cases, countries used a mix of both channels. Although the Fund has recently allowed countries to accredit a second NIE, few pursued this option, as their country resource cap had often been reached or concerns about competition between NIEs arose. Additionally, for many countries, the former USD 10 million project size limit and the restricted country cap made the administrative effort seem disproportionate to the available funding. As of the 44th AF Board meeting, 105 of 142 eligible countries can still nominate NIE candidates. By raising the country cap to USD 40 million and the project size limit to USD 25 million, the AF has taken key steps to boost incentives for both current and prospective direct access entities. How quickly this leads to greater interest and more funding proposals from NIEs remains to be seen.

Resource mobilization floor of 300 million USD for the year 2025

In contrast to other climate funds, the AF does not have a replenishment mechanism and relies on annual resource mobilization efforts. The Fund is expected to secure additional financial resources by receiving five percent of the emission reduction certificates traded under the new market mechanism established by the Paris Agreement. These certificates can then be sold at market value by the Fund’s trustee, the World Bank, to generate income. However, the Fund does not anticipate revenue from this channel before 2026 at the earliest. Past experience also shows that such revenues tend to be unpredictable and fluctuate significantly. As a result, ongoing voluntary contributions from donor countries will remain a crucial and reliable source of funding. The AF has fallen short of its USD 300 million resource mobilization target for both 2023 and 2024. In times of unpredictable cuts to Official Development Assistance (ODA)—of which financial pledges to the AF are typically a part—it is even more critical to protect and prioritize climate finance delivered through effective and high-quality channels like the AF. Support for such mechanisms should not be reduced, but rather should increase as a share of overall international climate finance provided by contributing countries.

The revision and lifting of the aforementioned resource caps will most likely lead to a significant increase in demand for the Fund. To ensure that this demand can be met and that the Fund can fulfill its mandate to at least triple its outflows by 2030 compared to 2022 levels, the Fund also needs to significantly increase its resource mobilization. To do so, an ambitious resource mobilization floor is key. There was agreement among AF Board members to no longer speak of a target, but of a resource mobilization floor instead, as this shift underscores a minimum commitment rather than an aspirational goal. However, the amount of such a floor will always reflect a political compromise between developed and developing countries, rather than the actual demand for resources. Despite disappointments in past years regarding to resource mobilization, the AF Board has agreed on a resource mobilization floor of USD 300 million for 2025, indicating renewed efforts to enhance funding..

AF governance in times of geopolitical challenges

The AF Board comprises 16 members, each representing a specific constituency, along with alternates who may participate in discussions but not in decision-making. It includes two members from each of the five UN regional groups (Africa, Asia-Pacific, Eastern Europe, Latin America and the Caribbean, and Western Europe and Others), two from Annex I Parties (industrialized countries as of 1992), and two from Non-Annex I Parties (mainly developing countries) under the UNFCCC. Additionally, one seat each is reserved for Small Island Developing States (SIDS) and Least Developed Countries (LDCs). Depending on Eastern European representation, between 62.5% and 69% of Board members are from developing countries.

Throughout the Fund’s 15-year history, all Board decisions had been made by consensus, although voting is formally allowed if consensus cannot be reached. In such cases, decisions may be adopted by a two-thirds majority of members present, based on the principle of “one member, one vote.” The mere possibility of voting may have fostered a stronger willingness among members to reach consensus, knowing that decisions forced through a vote might lack broader legitimacy.

At the 44^th Board meeting, a decision was taken by vote rather than consensus for the first time in AF history. The current geopolitical tensions, the breakdown of formerly stable partnerships, and ongoing uncertainties in United States (US) politics are now affecting even traditionally less politicized bodies like the AF Board. At its 44th meeting, the US blocked the approval of several adaptation project proposals on geopolitical grounds. These proposals had already been recommended for approval by both the AF Secretariat and the Fund’s Project and Programme Review Committee. As a result, several Board members called for a vote to approve the contested projects. In a closed session, the Board voted in favor of the projects, overriding the US opposition.

Notably, the Board seats for the Annex I and Eastern European constituencies currently remain vacant. Russia, a member of both constituencies, appears to be blocking the election of new representatives, resulting in four unoccupied Board seats. As a consequence, only two Board members (currently the US and Italy) and their alternates (Sweden and Spain), from the Western European and Others Group, are representing developed countries. However, Italy – which also holds the AF Board Chair – was absent during the 44th Board meeting. Other developed countries, such as Germany and Switzerland, which had previously held Board seats, attended the meeting only as observers.

Composition of AF Board played an indirect role at the meeting

The difficulties in electing representatives for the Annex I and Eastern Europe constituencies are among the reasons why developed countries are pushing for changes to the composition of the AF Board. The current structure of constituencies has become increasingly problematic and appears unsustainable under the current geopolitical circumstances. However, developing countries are concerned that reopening the discussion on Board composition could result in them losing their majority representation. The fact that trust between developed and developing countries has been severely eroded—particularly in the context of climate finance negotiations—further complicates the prospect of reaching an agreement on this issue. The UNFCCC’s Subsidiary Body for Implementation (SBI) has been tasked with considering matters related to the composition of the AF Board, as necessary, in light of the Fund’s transition to serving exclusively under the Paris Agreement. The issue is scheduled for negotiation at the June Climate Meetings (SB62) in Bonn.

Despite these challenges, the AF Board demonstrated at its 44th meeting that it remains capable of functioning effectively. It took important decisions that move the Fund closer to fulfilling its mandate under the NCQG.

Environmental and Social Policy Update and Guidelines for Active Civil Society Observers Postponed

Several items originally scheduled for discussion at the 44th Board meeting had to be postponed due to time constraints, as other agenda items required extended debate. Among the deferred items were the approval of the draft update to the AF’s Environmental and Social Policy and the adoption of guidelines for active civil society observers. The AF Board had already agreed in principle to introduce the role of active civil society observers, in line with best practices from other climate funds. However, the actual implementation of this role can only begin once the Board formally approves the relevant guidelines. Both items are now expected to be taken up for discussion and approval at the next AF Board meeting in October 2025.

Julia Grimm, Germanwatch