Green Climate Fund Private Sector Finance in Focus

The Green Climate Fund (GCF), established by and accountable to the United Nations Framework Convention on Climate Change (UNFCCC), is the world’s largest multilateral climate fund. A core part of its remit is to encourage private sector investment in mitigation and adaptation measures that address climate change in developing countries. The GCF has arguably probably the strongest private sector focus of the multilateral climate funds and this is seen by many countries, including several developed country contributors, as a core feature that differentiates it from other public actors in the global climate finance architecture.

GCF private financing should be “consistent with a country-driven approach,” with a particular focus on “local actors, including small- and medium-sized enterprises and local financial intermediaries” as detailed in the GCF’s Governing Instrument. On paper, the GCF can accept considerable investment risks in order to achieve impact and innovation, while maintaining rigorous fiscal standards, environmental and social safeguards. However, various evaluations by the GCF's Independent Evaluation Unit have identified shortcomings in policies and practices that have so far prevented the GCF from achieving this goal.

This series of short briefings provides timely analysis by civil society observers to the GCF on the Fund’s private sector engagement several years into its full operationalization with the effectiveness and future of the GCF’s existing private sector engagement strategy under review. Individual briefings scrutinize key trends, the GCF’s engagement with micro-, small- and medium-sized enterprises, the accreditation of private sector partners, as well as programmatic private sector funding approaches such as equity investments.