The year 2014 took the momentum on climate action to new heights. In September 400,000 citizens of the world, made their presence loud and clear at the people’s climate march in New York, culminating all the way to the Lima Climate Forum at the end of the year. All of this is building up to a milestone agreement on climate change to be signed in Paris in December this year.
Climate finance is a major component of that deal -- how the activities to tackle climate change will be paid for. For those keeping an eye on the climate finance landscape, the most exciting progress may come from the Green Climate Fund’s (GCF) latest decisions on its accreditation mechanism. It depicts a brand new future where the least developed countries (LDCs), such as Bangladesh will be brought into a golden age for capacity upgrading, stimulated and supported by climate finance.
The Green Climate Fund is to be the main vehicle for financing global efforts in mitigating climate change and adapting to its impacts in the post-2015 era. Naturally, procedures on how national, regional and international organisations will be accredited (qualified for sufficient fiduciary capacity and thereby being entrusted with donors’ funding) to receive GCF fund for climate actions is the central concern for developing countries.
At its 8th Board Meeting, GCF has elaborated how its innovative “fit-to-purpose” accreditation mechanism will operate and improve developing countries’ accessibility to the fund. The “fit-to-purpose” approach in its nature is a “tired accreditation process.” It classifies applicants based on the scope and nature of the project or program that they intend to carry out, and requires them only to demonstrate adequate capacities to deal with tasks and risks that are corresponding to the scale and complexity of their proposed projects.
GCF does not follow a “one-size fits all” accreditation process, rather a “fit for purpose” model. It is different from the Adaptation Fund (AF) and the Global Environment Facility (GEF), in that way. Under the “fit for purpose” model, LDCs are required to meet the standards and safeguards to address risks for the projects of any size they wish to implement. The standards and safeguards requirements are therefore, less onerous. The “fit-to-purpose” accreditation, therefore, makes the GCF fund accessible to a much wider scope of institutions and projects, regardless of their size and capacity constraints.
On top of this, GCF allows accredited organisations to upgrade the scale and nature of intended activities as their institutional capacities evolve over time. As its capacity expands over time, it will not be judged against its previous capacity, rather on its current, enhanced capacity. This flexible arrangement enables organisations in LDCs to start their national climate actions from a basic level, giving them the necessary time and space to go through the learning curve towards conducting large projects. It increases country ownership in a progressive manner and cuts off burdensome procedures that undermine the incentive for countries to apply for higher accreditation status.
However, challenges for LDCs emerge from the GCF’s Environmental and Social Safeguards (SEE). GCF requires organisations to address environmental and social risks at not only the project level, but also internally within their organisations. It indicates considerable institutional efforts to familiarise the SEE performance standards, develop and deploy environmental and social management systems. These tasks are new to most LDCs and they have to do their homework. From a strategic position; these challenges also provide an opportunity for countries to identify their gaps in addressing social and environmental risks, which can have many positive effects in the long run.
GCF is functionally ready to go now. Many aspects of its framework hold great potential to help LDCs strengthen their national systems to tackle climate risks and provide the financial resources to do so. Now LDCs must play their part to take advantage of the opportunity and make themselves ready to receive what GCF has to offer.
Bowen Wang is a Climate Change Policy Research Consultant and Visiting Researcher at ICCCAD.