Climate Finance Fundamentals 11: The Green Climate Fund
The Green Climate Fund (GCF) became fully operational in 2015 as a dedicated fund to help developing countries shift to low-emission and climate-resilient development pathways. While the GCF is an operating entity of the Financial Mechanism of the United Nations Framework Convention on Climate Change (UNFCCC) and serves the Paris Agreement (UNFCCC, 2015), it remains a legally independent institution hosted by South Korea. The GCF has its own Secretariat with the World Bank as its Trustee. The 24 GCF Board members, with equal representation of developed and developing countries and support from the Secretariat, have been working to operationalise the Fund and implement its vision since their first meeting in August 2012.
In 2020 the GCF’s long-overdue work to address gaps in essential policies and frameworks came largely to a halt due to the Covid-19 pandemic. The GCF Board could not agree on some of the more controversial policies via virtual meetings. However, the Secretariat moved ahead with efforts to speed up the development and approval of proposals and disbursement of approved funding. It also issued guidelines and improved operational procedures intended to drive up the overall quality of GCF projects and programmes, both approved and in the pipeline.
As of November 2020, the GCF had accredited 103 implementing entities as partners to deliver projects (with eight added since 2019), and had approved USD 7.2 billion for 159 projects. The 27th virtual meeting of the GCF Board in mid-November 2020 approved 16 of these project proposals worth USD 1.01 billion in GCF resources. Despite the disruptions caused by Covid-19, the GCF programmed more than USD 2.2 billion for 37 projects and programmes as well as readiness and preparatory support, with commitment authority under its first replenishment period (GCF-1, 2020–2023).
With close to three quarters of the USD 9.9 billion in pledges by 31 contributors confirmed as of November 2020, the GCF is thus on track to reach its annual programming goals set for GCF-1. An updated strategic plan, which was approved after much haggling in the final hours of the Board’s 27th meeting, will guide the Fund’s overall contribution to reaching the goals of the Paris Agreement.
The Fund’s role in a post-2020 climate regime as the major finance channel under the UNFCCC, and as the largest multilateral climate fund, was confirmed by successful replenishment in 2019. However, its accessibility, efforts to leverage additional resources, as well as the speed, quality and scale of GCF funding disbursement and implementation require further improvement. This Climate Finance Fundamental (CFF) provides a snapshot of the operationalisation and functions of the GCF at the end of the first year under GCF-1. Past editions of this CFF further detail the design and initial operationalisation phases of the Fund.