Last December in Paris, 195 countries came together and adopted a landmark agreement on climate change. The Paris Agreement is significant for a number of reasons, not least of which is the direction it provides on climate finance. It is now clear that the world needs to align financing pathways with the Agreement’s long-term goals, strengthen national institutions that will implement climate activities, and increase not just the volume of climate financing, but the quality of it. A key question now is what role international financial institutions like the Green Climate Fund (GCF) will play in supporting the implementation of the Agreement?
The GCF is the main global fund channeling climate finance, and it must play a central role in supporting mitigation and adaptation activities in developing countries. As the GCF looks ahead to 2016 and beyond, years that will be more focused on implementation than international policy, how will it enable greater ambition in climate goals? Will it be able to catalyze transformational investments? And in what ways can it improve its effectiveness, working with countries and stakeholders, to generate a more ambitious and innovative pipeline of proposals?
This week, the GCF Board will meet informally to discuss some of these important questions. The meeting in Capetown, South Africa, will cover a range of issues, with the foremost being the Strategic Plan of the Fund. A strategic plan offers the Board an opportunity to present a clear direction for the Fund that is guided by existing national and regional priorities, while remaining flexible to emerging priorities and lessons from early experiences. Aligning financial flows to a goal of keeping temperature rise to well below 2 degrees C (and aiming for 1.5 degrees C) will require a significant shift in economies and approaches to sustainable development.
Addressing Gaps and Providing Direction
While the GCF has many documents that provide direction to the Fund, there are important gaps that need to be filled by a Strategic Plan. For example, to be more effective, the GCF would benefit from identifying what transformation it seeks to achieve in different sectors or contexts. As such, the plan could highlight the importance of programmatic approaches to funding (rather than financing individual projects) that aggregate activities within a sector or across countries. It could also specify goals for factors that are necessary in promoting national ownership, such as strengthening national institutions, incentivizing domestic private sector engagement, and ensuring stakeholder engagement and participation.
Additionally, it may be useful for the Board to articulate what its theory of change is for scaling investments, and there is significant value in exploring a definition of scalability that goes beyond the size or replicability of an activity. WRI research shows that factors like potential for institutional partnerships (both public and private) and catalyzing additional investments, availability of human and technical resources, existence of effective knowledge management systems to share experiences more broadly, and the extent to which activities embrace community ownership and participation are also important.
Creating a Strong Strategic Plan for the Green Climate Fund
If done well, a strategic plan can be helpful in a number of ways, including:
Articulating a vision of transformation that guides all the Fund’s activities;
Identifying strategic investment areas or resource allocation goals, driven by national and regional priorities;
Defining a distinctive contribution relative to other development partners and climate funds;
Ensuring that funded activities have a positive impact on people and the environment;
Providing direction to readiness activities and strategic programming/pipeline development; and
Adopting institutional goals that support country ownership and enable learning from national/local experiences.
We hope that the informal Board meeting will be productive, and allow Board members time to reflect on these important issues. Ultimately, in order for the plan to effective, there are several factors the GCF has to grapple with, including changing dynamics of the Board, staffing of the Secretariat to ensure it has key competencies, engagement with countries to ensure national ownership, and empowerment of national institutions that can realize the strategic plan and priorities.
With a strong Strategic Plan and other elements in place, the Green Climate Fund has the greatest chance of success for attracting and delivering the finance the world needs to overcome the climate change challenge.