The Executive Director, Centre for 21st Century Issues (C21st), Titilope Ngozi Akosa has advocated that developed countries should remain the primary source of funding for the Green Climate Fund (GCF).

Akosa stated this at the ongoing thirty-fourth meeting of the GCF (B.34) in Incheon, Republic of Korea.

In her intervention titled: “Agenda Item 19: Discussion on the Approach Paper for Contributions from Alternative Sources”, Akosa argued that exploring alternative sources of finance should NOT be used as a diversion from the core responsibility and obligation of developed countries to provide climate finance directly to the GCF.

She further advised that “if the GCF allows for contributions from alternative sources, it must be done carefully so as not to inadvertently have a negative impact on access to finance.”

READ FULL INTERVENTION:

“First, while we agree that there is a need for significantly more climate finance and understand and appreciate the GCF exploring the possibility for contributions coming from alternative sources, developed Countries should remain the PRIMARY source of funding for the GCF. Exploring alternative sources of finance should NOT be used as a diversion from the core responsibility and obligation of developed countries to provide climate finance directly to the GCF.

“Moreover, this finance should be provided in the form of grants so as not to increase the debt burden of recipient countries and allow for the maximum flexibility of use.

“In presenting the options for alternative sources, we are concerned about the underlying preference the paper appears to demonstrate for what it refers to as “indirect contributions” including co-investment platforms, parallel funds, and partnership agreements. It is very clear that the founding parents of the governing instrument did not think about leveraged or “catalyzed” finance as an alternative source of GCF financial input when they drafted its paragraph 30 on financial inputs.

“As has been a recent trend, this paper seems to demonstrate a bias toward these types of financial structures, including by underplaying their legal, financial, and administrative management costs, rather than exploring further direct contributions from philanthropic sources, high networth individuals, subnationals, or debt-for-climate swaps. We do however support the effort to further analyze the potential of the GCF to benefit from SDRs.

“While we could support increasing GCF funding beyond ambitious developed country contributions, expressing a general preference for direct alternative sources in comparison to complex financial structures, we do not believe all direct alternative sources are desirable. For example, we are skeptical about funding the GCF through a share of proceeds from the market mechanisms established under article 6 of the Paris Agreement or insurance schemes, among others.

“If the GCF allows for contributions from alternative sources, it must be done carefully so as not to inadvertently have a negative impact on access to finance. We are wary of structures that could obscure accountability and country ownership, bypass the Board, weaken adherence to GCF’s mandates, or potentially side-step the transparent, participatory approaches that we strive to promote through known processes.

“For example, there is a potential that high net worth individual or philanthropic contributors would demand to “earmark” their inputs, which could undermine country ownership or approved allocation parameters such as a 50:50 balance between mitigation and adaptation, or even expect, as has been granted in other international funds, a seat on or a position from which to influence the Board.

“An approach to alternative contributions should not be used as a backdoor to weaken the agreement of the IRM and GCF-1 – and its expected continuation for GCF-2 – NOT to allow earmarking and to avoid anything that would reconfigure the Board composition according to financial contributions.”