Last week, the Green Climate Fund’s (GCF) board meeting ended in anticlimax as it failed to approve almost a billion dollars of funding for proposed projects. It also culminated with the resignation of its Executive Director Howard Bamsey.
News outlets around the world referred to the meeting in turns as “disappointing”, “a meltdown”, and that “the honeymoon is over”. The headline from Climate Change News read, “UN climate fund chief resigns for personal reasons while board meeting collapses”.
Full disclosure, the GCF is a Convergence member. While we can’t comment on the inner workings of the fund, we do think these headlines and the general response to the meeting are unnecessarily alarmist.
Many people are disappointed in the outcome of the board meeting, and understandably so. Over 11 proposals amounting to over a billion dollars in funding were up for approval. These proposals outlined ambitious initiatives that could play a critical role in climate change adaptation and mitigation.
What impact would this funding have had? One such proposal was for the Climate Finance Facility (CFF), which is expected to be the first application of the Green Bank model in a developing country. The proposal is sponsored by the Development Bank of Southern Africa (DBSA), who is working in close collaboration with the Coalition for Green Capital (CGC) to develop the CFF. The CFF also received a Design Funding grant from Convergence earlier this year.
The GCF’s participation in the facility would not only have been groundbreaking in its support of the Green Bank model, but it would have brought the CFF to 2/3rds of target first close, alongside DBSA’s anchor investment, bringing the CFF significantly closer to being operational. Once operational, the CFF can begin catalyzing private finance in clean energy solutions throughout the Southern African region.
Despite the disappointment stemming from the recent meeting, we think it is worth taking a step back and acknowledging the importance of the GCF in addressing climate change in developing countries, and the ambitious approach the fund is taking.
The GCF is not only playing a critical role in addressing climate change, it is also a significant player in blended finance. Blended finance - the use of catalytic capital from public or philanthropic entities to attract private investment to sustainable development in developing countries - relies on entities like the GCF to close the Sustainable Development Goal (SDG) funding gap. Not only does the GCF deploy significant amounts of capital to climate-related projects, it often deploys that capital catalytically with the express intent to attract private investment into those climate-related projects.
The GCF’s structure, which includes beneficiary country representation, is also worth applauding and should be replicated by other bilateral and multilateral agencies where possible. The GCF was intentionally structured to balance input from developed and developing countries, leading to an even number of representatives from both. This is not very common in the development finance world, where developed countries often dictate the development funding priorities for the developing world. The GCF has taken the opposite approach, and while inevitable challenges will and have arisen (such as in the latest board meeting), this approach will undoubtedly result in stronger projects that are aligned to local priorities
Finally, the GCF is an attempt at a global solution for a global problem. It’s incredibly ambitious and holds enormous potential, but of course that also means it will encounter significant challenges along the way. The last board meeting was one such challenge, but in the grand scheme of things, it’s just a setback, one that will force the GCF board to reevaluate its processes and ensure that the next meeting won’t befall the same obstacles.
We are confident that these challenges can and must be overcome and that the GCF will take these setbacks as opportunities to improve and become more effective. GCF is one of the few organizations funding climate action so regularly and at such large amounts. It is simply too important to the climate agenda and to blended finance to fail.
By Dean Segell, former Associate Director at Convergence