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Sum of Parts

Making the Green Climate Fund's Allocations Add Up to its Ambition

This post is co-written with Neil Bird, Research Fellow in the Climate and Environment Program of the Overseas Development Institute (ODI), and Maliheh Birjandi-Feriz, former WRI intern with the Sustainable Finance team.

This working paper examines the resource allocation approaches of 15 climate, environment and development funds, drawing on these experiences to understand how they might inform the design of the Green Climate Fund’s allocation system.

Key Findings

Executive Summary

In 2010, parties to the United Nations Framework Convention on Climate Change established the Green Climate Fund (GCF) with the hope that it would become the primary global fund for climate change finance in developing countries. Through targeted financial support, the GCF aims to help countries develop and implement low-emission, climate-resilient development strategies that address the causes and consequences of climate change.

The magnitude of the GCF’s contribution to climate change goals will depend in large part on how its resources are allocated. The GCF’s Governing Instrument and associated decisions by the United Nations Framework Convention on Climate Change (UNFCCC) Conference of Parties lay out basic principles and guidance on how the GCF should allocate its resources. However, the GCF Board now must develop more detailed rules to operationalize these principles and guidance through a formal allocation system. In doing so, the GCF Board can draw upon the experience of other environment and development funds, which offer useful insights on fund allocation systems.

The World Resources Institute (WRI) has examined the allocation systems of 15 funds with a range of thematic focuses in order to understand how their allocation process might inform the GCF allocation system.1 Through reviewing the operational documents of these 15 funds and interviewing fund staff, WRI has identified two essential elements of all allocation decisions: a defined decision-making process, and criteria and indicators that support decision-making.

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