Improving Access to the Green Climate Fund: How the Fund Can Better Support Developing Country Institutions

The Green Climate Fund is a globally important source of finance for projects in developing countries that address climate goals. Central to the GCF’s formation is an emphasis on providing funds directly to developing country institutions.

Through “direct access” it seeks to fund a diverse set of stakeholders including public, private, and non-governmental organizations from developing countries, using a variety of financial instruments including grants, loans, equity and guarantees.

Despite accrediting 62 developing country institutions, 42 of these entities have yet to receive project funding. The GCF has launched several initiatives to support Direct Access Entities with project development and approval including the Readiness Programme, the Project Preparation Facility, the Simplified Approval Process, and the Enhancing Direct Access Pilot, but these are not yet delivering sufficiently to meet the need.

There are a number of steps the GCF can take to expand the range of entities that receive project funding by improving support to Direct Access Entities.

The GCF has put in place policies and programs to help ensure that a diverse range of actors are able to access GCF funding. These include the Readiness Programme, the Project Preparation Facility, the Simplified Approval Process, and the Enhancing Direct Access Programme.

This paper looks at how these four policies and programs are succeeding to date and provides recommendations for how to improve their effectiveness. We found:

• The GCF’s Readiness Programme provides needed assistance to entities seeking accreditation and project funding. However, its focus on Nationally Designated Authorities, inability to cover key costs such as staff time, and still somewhat cumbersome approval process make it unable to fully meet the needs of Direct Access Entities.
• The GCF’s Project Preparation Facility provides vital funding to entities developing project documentation. However, the Facility does not fully cover the cost of developing concept notes and is not yet sufficiently reaching entities who have not had previous projects approved by the GCF.
• The GCF developed a simplified approval process for projects under $50 million ($10 million GCF maximum contribution) with low social and environmental risks. This process has yet to be simplified to a point where access is markedly faster or less burdensome than going through a full proposal process.
• The GCF’s Enhancing Direct Access window of finance has not lived up to expectations, with only 2 projects approved during the pilot’s first five years. However, the underlying idea of devolving additional decision-making to the Direct Access Entity and other stakeholders remains very popular.

Source: wri