Green Climate Fund Moves Forward; Will Soon Disburse Climate Finance through 7 Institutions
The Green Climate Fund (GCF), which is expected to become the main vehicle for securing and distributing finance for climate adaptation and mitigation, moved one step closer to disbursing funds this week.
The Fund’s Board accredited seven institutions, allowing them to submit proposals to access the Fund’s resources. Once proposals are accepted, these institutions will be able to start delivering funding to the communities most vulnerable to the impacts of climate change. This funding will support a range of activities that reduce emissions or foster resilience—such as installing renewable energy, enabling subsistence farmers to grow drought-resistant crops, and reducing or avoiding deforestation.
Why Is Accreditation Significant?
In order to access funding from the GCF, institutions have to go through a rigorous process of “accreditation,” designed to ensure that they are capable both of strong financial management and of preventing unforeseen environmental or social harm (see box). The GCF’s multi-tiered accreditation process is unique in that it allows a wide range of institutions—from small community-based organizations in developing countries, to the world’s largest national and multilateral development banks—to access and deploy funding in line with their respective strengths and capacities.
Criteria for Institutions Seeking to Access GCF Resources
- Be a legally established entity (sub-national, national, regional or international; public or private) that operates in the fields of climate change mitigation or adaptation in developing countries
- Apply for accreditation through the Fund’s Online Accreditation System, in which the entity demonstrates that its institutional policies and track record are sufficiently strong to meet the Fund’s fiduciary standards, environmental and social safeguards and gender requirements.
- Go through a rigorous assessment process, first by the Secretariat of the Fund and then by an independent technical Accreditation Panel, to ensure that it meets the required standards.
- If recommended by the Accreditation Panel, be accredited by the GCF Board
The seven institutions that passed the difficult test this week represent a diverse mix of backgrounds and strengths.They will be instrumental in ensuring that the GCF can channel its funds to a wide range of activities that will put developing economies onto a climate-resilient, low-carbon growth trajectory.
Particularly significant is the accreditation of two national institutions (from Senegal and Peru), one regional entity (from the highly vulnerable Pacific region), and one development-focused impact investment fund, proving that smaller and less conventional actors can meet some of the world’s toughest standards for accessing funds.
The institutions include:
Centre de Suivi Ecologique (CSE), a small agency in Senegal that works to strengthen participatory environmental and natural resource management for long-term economic development. In 2010, CSE was the first national institution to be accredited and to implement a project through the Adaptation Fund , the first international climate fund to take the pioneering step of accrediting developing country institutions. CSE has demonstrated that a relatively small national institution can punch above its weight in delivering adaptation results in ways that empower vulnerable communities and build capacities at the country level.
Peruvian Trust Fund for National Parks and Protected Areas ( PROFONANPE), a non-profit environmental trust in Peru that supports conservation. It has raised more than US$ 140 million from international and domestic sources over the past 20 years for the conservation of the biodiversity in Peru’s protected areas. Like CSE, PROFONANPE is also accredited to the Adaptation Fund, and is now breaking new ground in demonstrating that developing country institutions can meet the highest international standards for financial management, transparency and environmental and social safeguards.
The Secretariat of the Pacific Regional Environment Programme (SPREP),an intergovernmental organization of Pacific Island countries and territories, based in Samoa. It promotes cooperation in the South Pacific—a region comprised of tens of thousands of small islands disproportionately vulnerable to the impacts of climate change—to protect the environment and to ensure sustainable development for present and future generations. SPREP was accredited to the Adaptation Fund in 2013. In becoming accredited to the GCF, SPREP will be able to ensure that funding can reach some of the most vulnerable countries in the South Pacific.
Acumen, a well-respected private venture capital fund that invests in developing country entrepreneurs and businesses working to alleviate poverty and advance sustainable development. By providing debt or equity investments in local enterprises that supply low-income consumers with access to products and services such as healthcare, water, housing, renewable energy or agricultural inputs, Acumen helps to scale up companies that are creating social impact. Acumen operates in a range of countries in South Asia and East and West Africa. Its accreditation to the GCF will be instrumental in allowing GCF to channel funds to small businesses and social enterprises advancing low-carbon, climate-resilient development in some of the poorest parts of the world.
The Asian Development Bank (ADB), a well-established and respected multilateral development bank headquartered in the Philippines. The ADB will extend the Fund’s potential reach across the Asian continent, and has the capacity to take on some of the largest projects through its diversity of financial instruments.
The German Development Bank, KfW, a large bilateral development bank that provides grants and loans for development projects in countries around the world. KfW will enable the GCF to reach a wide range of countries, and, like ADB, fund larger projects through grants and loans.
The United Nations Development Programme (UNDP), a well-known development agency that works in more than 170 countries and territories to advance sustainable development. UNDP can extend the Fund’s potential reach to developing countries around the world.
Together, these seven institutions represent an excellent starting point for scaling up low-carbon, climate-resilient projects in developing countries around the world.
However, the Fund’s work to accredit institutions has just begun. In order to truly have impact at the scale and depth necessary, the GCF will need to ensure that it continues to accredit a diverse range of institutions, including those in developing countries. Ultimately, every developing country should be in a position to work through its preferred institutions to access funds that will shift economies towards low-carbon, climate-resilient growth paths.