It is tough to be the new kid on the block, especially when you are trying to do things differently than those who have been around the block a couple of times. Especially when those other guys still want to stick around — even though they were invited to the block party only for a little while — and are playing by a different set of rules.
ECO has been reminded of this during the past few weeks with the Green Climate Fund (GCF) seeking its first formal replenishment this year, while the Climate Investment Funds (CIFs) are pondering recapitalization at the same time. The CIFs were set up 10 years ago to be temporary players in the block party of multilateral climate finance, with the expectation that they would eventually gracefully move out of the way (aka “sunset”). This was supposed to happen once the GCF had shown that it is ready to fulfill its birthright — namely to be the main kid on the block for helping developing countries implement climate actions and raise their ambition under the Paris Agreement. Some 102 approved projects and programs worth USD 5 billion later, there can be no doubt that the GCF is ready to do just that. So, there is no need for the CIFs to stick around any longer.
Making matters worse, the CIFs are playing under very different kinds of rules than the GCF. CIFs are not governed under the Climate Convention and its principles, and don’t receive or follow COP guidance. In contrast to the CIFs’ governance structure, the GCF has a “country-driven approach.” It is accountable to the institutions and people in developing countries, and has placed a premium on providing readiness support to developing country entities, becoming in the process the largest multilateral funder of such support. Additionally, most CIF funding, some 86 percent in fact, was earmarked to be allocated to mitigation. In view of the real climate emergency affecting the poorest people and vulnerable countries, even threatening their survival, multilateral funds can and must do better. The GCF has not only committed to an even split between adaptation and mitigation finance, it also safeguards half of all adaptation spending for SIDS, LDCs and African states.
While the GCF is working hard to invite many to its climate finance party as partners (it has now 84 of them, with 48 coming from developing countries which can access GCF funds directly), the CIFs only allows a handful of multilateral development banks (MDBs) to its finance pots. Extending the life of the CIFs would allow just a few privileged players (some might even call them block bullies) to get more than their fair share of public climate finance as implementers. In effect, with the MDBs having exclusive access to CIF funds, and also receiving funding for implementation from the GEF (including the LDCF and SCCF), the AF, and, yes, the GCF, it’s clear to ECO that they have overstayed their welcome. Have the MDBs never heard that it is impolite to double- (or even triple-) dip from the public climate finance dish?
The GCF in many ways is the new and improved kid on the climate finance block, as it applies lessons learnt from other funds, including the CIFs, and pushes itself to improve further. It commits to a gender-responsive approach to its funding – the first climate fund to do so from the outset of its activities. While the MDBs still have issues with committing outright to upholding human rights, the GCF has strong human rights-based principles enshrined in its environmental and social policies, as well as a separate Indigenous Peoples Policy. And let’s talk a bit more about accountability to people and communities, and transparency of actions. The GCF’s independent redress mechanism, which enables people and communities to raise complaints, has the most forward-looking features of any comparable mechanism and is setting new international best practice. The GCF is also more transparent than the CIFs, including by making recordings of Board meetings publicly available to watch at any time.
So let’s move out of the way, CIFs, for good, by sticking to your own (sunset) rules, and moving the MDBs out of fossil fuel financing for good. Funds directed to the CIFs should instead go to the GCF —ECO thinks that would be the better contribution to the implementation of the Paris Agreement. It would give the GCF the room that it needs to become the biggest kid on the climate finance block, to signal to developing countries that support is there for them to raise their ambition next year, and to raise confidence that the developed countries’ commitment to mobilize USD 100 billion annually by 2020 can be reached. Don’t crash the GCF replenishment party.