Synopsis

The Green Climate Fund (GCF) – with a mandate to accelerate climate action in developing countries – has great potential to support transformational investments in developing countries to achieve the goals set out in the Paris Climate Agreement. It is therefore crucial that the GCF succeed in its mission. However, the GCF is currently facing a crisis of confidence, illustrated most recently by the unproductive GCF Board meeting in July 2018 and the departure of its Executive Director.

Restoring confidence in the GCF demands renewed international commitment to strengthen the GCF and enable it to succeed. A new WRI working paper, Setting the Stage for the GCF’s First Replenishment, explores two sets of issues that are fundamental to restoring confidence in the GCF and should be addressed simultaneously: resources and governance. The focus on these issues is based on extensive discussions with stakeholders, recognizing that there are many other policy issues that are important. The paper analyzes key challenges with resource predictability and governance and suggests ways forward.

Key Findings

  • There is an urgent need to ensure that the Green Climate Fund (GCF) has both the financial resources and the effective governance to achieve its mandate: to support developing countries in reducing their greenhouse gas (GHG) emissions and adapt to climate change.
  • There are currently no criteria on how much the first replenishment of the GCF should aim to raise and how the financial effort amongst contributors should be shared.

  • This working paper argues that a more objective and transparent framework for determining contributions to the GCF is needed to strengthen the predictability of GCF resources, one that uses as a reference point a formula-based scaled indicative minimum threshold. This formula could be based, for illustrative purposes, on gross national income, cumulative GHG emissions, and GHG emissions per capita.

  • There is a need to strengthen the board’s effectiveness in making decisions, allowing dissenting opinions without holding up critical decisions, and agreeing to a decision-making procedure if efforts to reach consensus have been exhausted. An independent review of the board’s performance, as well as a self-assessment by the board, can also help improve its governance.

  • The GCF Board should enhance its representative function for both developing and developed countries’ constituencies by ensuring greater transparency in board member selection and promoting effective feedback processes between board members and their constituencies. The GCF Secretariat should have a more active role in supporting selection processes and in facilitating feedback processes between board members and their constituents.

Executive Summary

The Green Climate Fund (GCF)—with a mandate to accelerate climate action in developing countries—has great potential to support transformational investments in developing countries to achieve the goals set out in the Paris Climate Agreement. It is therefore crucial that the GCF succeeds in its mission.

However, the GCF is currently facing a crisis of confidence, illustrated most recently by the unproductive GCF Board meeting in July 2018 and the departure of its Executive Director. The level of trust in the GCF and its Board among developed and developing counties, civil society, accredited entities, and the private sector is at an all-time low.

The authors believe that restoring confidence in the GCF demands renewed international commitment to strengthen the GCF and enable it to succeed. We acknowledge that there are many other policy issues that are important, but based on extensive discussions with stakeholders, we came to two sets of issues that are fundamental to restoring confidence in the GCF and should be addressed simultaneously: resources and governance. This paper analyzes these key challenges and suggests several ways forward. We believe that our working paper will contribute to the debate on how to to restore confidence in the GCF.