TWN Info Service on Climate Change (May11/01)
World Bank’s conflict of interest in Green
Geneva, 3 May (Meena Raman) – Developing countries on the Transitional Committee for the design of the Green Climate Fund (GFC) under the United Nations Framework Convention on Climate Change (UNFCCC) raised concerns that there could be a conflict of interest if World Bank personnel are seconded to the Technical Support Unit to help in the design of the GCF.
This issue of the conflict of interest was raised
during the second day of the meeting of the Transitional Committee on
Friday, 29 April in
They said that since the World Bank has been invited to serve as the interim trustee for the GCF under the December 2010 Cancun decision [of the Ad-hoc Working Group on Long-term Cooperative Action under the UNFCCC], staff connected to the World Bank could not be involved in providing consultancy services related to the design of the GCF which is about its governance.
Nicaragua said that it is not internationally acceptable for the World Bank to be involved both in a consultancy function (in designing the GCF) as well as in being a trustee of the GCF.
This would be a violation of international fiduciary
standards, as there is an apparent conflict of interest to be involved
in role of designing the GCF that relates to the governance structure
of the GCF when the World Bank is a trustee of the GCF. In such a situation,
any World Bank personnel should excuse themselves from such a role as
in the designing of the GCF, said
It referred to the ‘sunset clause’ of the Climate Investment Funds (CIF) of the World Bank as contained in paragraphs 57 and 58 of the Strategic Climate Fund (SCF) where the World Bank as the trustee of the SCF is involved in decisions about the continuity of the SCF. (The SCF is one of the two funds of the CIF, the other being the Clean Technology Fund).
(Paragraphs 57 and 58 of the Strategic Climate Fund of the World Bank’s “sunset-clause” are as follows:
“57. Recognizing that the establishment of the trust fund is not to prejudice the on-going UNFCCC deliberations regarding the future of the climate change regime, including its financial architecture, the SCF will take necessary steps to conclude its operations once a new financial architecture is effective. Specifically, the Trustee will not enter into any new agreement with donors for contributions to the trust fund once the agreement is effective. The Trust Fund Committee will decide the date on which it will cease making allocations from the outstanding balance of the Trust Fund.
58. Notwithstanding the above paragraph, if the outcome of the UNFCCC negotiations so indicates, the Trust Fund Committee, with the consent of the Trustee, may take necessary steps to continue the operations of the SCF, with modifications as appropriate.”)
In response to this, the
(Paragraph 58 above clearly shows that the consent of the World Bank as trustee of the SCF is necessary in determining the continuation of its operations.)
On the sunset-clause of the CIF, it said that Bank worked under the direction of governments and did not have an independent role. It was the governments that decided what the priorities are.
Pursuant to this, the Executive Secretary, Ms. Christiana Figueres, informed Parties that arrangements have been made for establishing the Technical Support Unit, which is to be operational immediately after the initial meeting of the Unit. The Unit consists of the secretary to the Transitional Committee and a substantive team drawn from the UNFCCC secretariat staff and staff seconded from relevant organizations to support the work of the Committee
In an information note by the UNFCCC secretariat, Parties were informed that a fund design specialist will be seconded from a multilateral development bank (MDB) and will inter alia, coordinate the preparation of design options papers, including assessment of governance options.
Another issue of controversy that arose during the meeting related to how decisions are to be made by the Transitional Committee and what the meaning of consensus was.
Developing countries led by the
They did not want a repeat of what happened in
Cancun where despite the express objection by
The DRC and
Developed countries such as the
A further matter that was controversial was in relation to a request by members of the Asian Group of the Transitional Committee to have a representative from the region to serve as Vice-Chair to the Committee, in addition to the three Co-Chairs that were agreed to through a compromise reached on the first day of the meeting on April 28 (see TWN Info. Service on Climate Change April 11/01 dated 30 April 2011 for a report of meeting held on 28 April).
The current 3 Co-Chairs are Mr. Enersto Cordero
The request by the Asian Group was supported by
the Democratic Republic of Congo for the African Group,
The developed countries, led by the
An interesting exchange also followed on the kind of experts needed for the Technical Support Unit with the Alliance of Small Island States (AOSIS) setting out principles for its staffing and operation, including a call for an additional expert familiar with the specific constraints faced by developing countries in accessing climate finance.
Barbados, speaking for AOSIS, said that among the principles that should operate for the staffing and operations of the Technical Support Unit should be included the guarantee of independence and impartiality of each member; it should be composed of experts and specialists who have demonstrated and recognized technical expertise in the relevant field of work; the selection of experts and specialists should be made through a transparent and fair process; no dominance or over-representation of one single institution in the Unit; avoidance of conflict of interest; and the need for geographical balance in the representation of regional development banks.
Several developing countries including
The Transitional Committee meeting also considered a revised discussion note prepared by the Co-Chairs which was entitled ‘Revised draft work-plan for the TC (Transitional Committee)” with a proposal for 4 work-streams on (1) scope, guiding principles and cross-cutting issues; (2) governance and institutional arrangements; (3) operational modalities; and (4) monitoring and evaluation.
There was also disagreement between developed and developing countries over whether the Transitional Committee should address the roles and functions of the Standing Committee (SC).
Under work-stream 2, the Co-Chairs’ note referred
to the relationship between the Green Climate Fund and other bodies
including the SC. The
The Mexican Co-Chair agreed with the
The Mexican Co-Chair also proposed that two facilitators
facilitate each work-stream, with one from an Annex 1 country and one
from a non-Annex 1 country. Work-stream 1 would be facilitated by
The UNFCCC Parties at the meeting also expressed support for workshops to learn the lessons from the (UNFCCC) Adaptation Fund as well as from other existing funds, including from beneficiaries of the funds.
The Parties also agreed that the second meeting of the TC would be held in early July in Japan, while further meeting venues were offered by Switzerland (Geneva), Singapore and South Africa. +