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TWN Info Service on Climate Change (Mar14/06)
26 March 2014
Third World Network  

UNFCCC: Outcome of 6th meeting of Standing Committee on Finance

Bonn, 26 March (Marjorie William) – At the sixth meeting of the Standing Committee on Finance (SCF), held 4-5 March, 2014 in Bonn, Germany, members unanimously re-elected the current Co-chairs, Ms. Diann Black-Layne (Antigua and Barbuda, SIDS) and Mr. Stefan Schwager (Switzerland, Annex I) to serve a second one-year term. It was agreed that the co-chairs had done a great job in shepherding the Committee from its first to now its sixth meeting.

As per the rules of procedure, the Co-chairs will hold office until the first meeting of 2015. According to regional rotation of membership in the Asian region, the meeting also saw new members from the Asia-Pacific, Ms. Suzanty Sitorus (Indonesia, Non-Annex I), replacing Ms. Bernarditas Muller of the Philippines and Ms. Rajasree Ray (India, Asia-Pacific, not in attendance), replacing Mr. Syed Mujtaba Hussain (Pakistan).

The SCF faces a year of intense technical work, including addressing a number of technical and methodological issues with regard to the four critical and inter-related agenda items in its work programme for the period 2013-2015. These challenging agenda items include (1) the production and delivery of the first biennial assessment report and overview of climate finance; (2) measuring, reporting and verification (MRV) of support beyond the biennial assessment; (3) the Fifth Review of the financial mechanism; and (4) Draft guidance to the operating entities of the financial mechanism. In addition, the Committee must prepare and hold its second forum scheduled for June 2014 in Montego Bay, Jamaica, to develop and maintain the linkages with the UNFCCC Subsidiary Body for Implementation (SBI) and thematic bodies of the Convention, and discuss a related draft communication strategy.

The meeting included the participation of about twenty observers from civil society, international organizations and a wide range of climate finance institutions, both from within and outside the UN system. Observers actively participated in the work implemented by the Committee, both in plenary meetings and small break-out groups on specific agenda items.

The SCF formal meeting was followed on the third day by the 1st mini workshop on the preparation of the First Biennial Assessment and overview of financial flows (6 March 2014). The mini workshop, attended by key stakeholders consisted of short presentations on assessing and tracking climate finance in order to share their experiences and provide insights on what they consider to be climate finance.  It aimed at exploring and generating insights on two broad themes: (1) the issues and challenges arising in the context of assessing climate finance, and (2) data inconsistency issues arising in the context of the preparation of the overview section of the biennial assessment.

This report focuses on the discussions held during the two-day SCF meeting.

1. Biennial assessment and the overview of climate finance

The UNFCCC Conference of Parties’ (COP) 17th meeting decision 2/CP.17, containing the mandate and the functions of the SCF specified as one of its activities in paragraph 121(f) the preparation of biennial assessment (BA) and an overview of climate finance, to include information on the geographical and thematic balance of such flows, at COP 18. The SCF was further requested to consider ways of strengthening methodologies for reporting climate finance.  The first BA report will be presented at COP 20 (Lima, Peru, 2014). In Warsaw, at COP 19, Parties invited the SCF to consider ways to increase its work on the MRV of support beyond the BA to be conducted in 2014.

At its fifth meeting (August 2013), the SCF discussed the objective and scope of, and a tentative timeline within the framework of its 2013-2015 work programme for, the first BA and overview of climate finance flows. The overview of climate finance should cover the period 2007-2012, with specific attention to the fast-start finance period (2010-2012); it should also focus on tracking trends since 2007/2008, when an updated report on investment and financial flows to address climate change was issued.

The timeline and process set out for the BA in 2013 included agreement on the scope of modalities and time for the first BA, and the establishment of an open-ended working group on the first BA with two co-facilitators, Mr. Houssen Alfa (Seyni) Nafo (Mali, Africa) and Ms. Outi  Honkatukia (Finland, Annex I). The members of the SCF also worked between sessions on the structure of the report of the first BA and key data sources.

The 6th SCF meeting discussed the zero draft of the climate overview paper and the outline of the technical paper of the BA. The meeting also reflected on the COP 19 request that the SCF, in preparing the first BA, considered on-going technical work on operational definitions of climate finance, including private finance mobilized by public interventions and to assess how adaptation and mitigation needs can most effectively be met by climate finance (Decision 4/CP.19, paragraph 11). It is in implementation of this request that the mini workshop referred to above was held.

Discussions on the process of preparing the biennial assessment

Ms. Honkatukia (co-facilitator) presented the annotated outline and the zero draft of the climate finance overview paper.  She highlighted that there was extensive outreach and consultations with external stakeholders including calls for inputs, virtual meetings, conference calls and meetings at the Warsaw COP.  The working group reached out, in an open and transparent manner, to identify the stakeholders involved in assessing and tracking climate finance. In response to comments from some developing country SCF members, the outreach will be extended also to other SCF members who are not in the small working group.

Mr. Nafo noted that he and his co-facilitator have tried to keep the work as technical as possible and to avoid political issues at this juncture.  He also stated that there were many technical issues in terms of gaps that need to be resolved for stakeholders to have a political understanding on what is climate finance. He said that the work has been exhaustive and comprehensive to resolve the bottlenecks.

  • Technical discussion on the scope and content of the first biennial report

The Bonn meeting discussed the issue of the context of all the assessments that have been undertaken at the requests of the COP. Ms. Bernarditas Muller (the Philippines, Asia-Pacific) pointed to the context for the assessments undertaken under the UNFCCC. She highlighted that Article 11.3 (d) provided for the determination of the funding necessary and available in order to achieve the objective of the Convention and that, hence, this should be the focus of the BA. She noted however that most of climate change financing so far has been channeled through voluntary sources, or Article 11.5 institutions, and therefore it remained unclear as to what this climate change financing really covered. In order therefore to assess flows effectively, there must be an understanding of what is climate finance. This is the reason for the Warsaw decision on the need to understand the operational definition of climate finance. She underscored that the matter was not one of control but of information and that in accordance with the decision, it is important likewise to find out from developing countries what they receive as climate finance.

(UNFCCC Article 11.5 provides that “The developed country Parties may also provide and developing country Parties avail themselves of, financial resources related to the implementation of the Convention through bilateral, regional and other multilateral channels.)

Ms. Muller stressed that the assessment is not an end in itself, but to determine how best to achieve the objective of Convention through financing and how the obligations of Annex II Parties to provide new and additional resources to developing countries are fulfilled.

Mr. Nafo cautioned that though extremely important, the SCF is not going to conduct a needs assessment per se, but rather will seek to determine and identify to what extent climate finance is addressing the needs. Developed country SCF members did not see any use for further needs assessments of developing countries, but only for the SCF to work on the assessment of flows of funds itself.

Ms. Edith Kateme-Kasajja (Uganda, LDC) argued that it is important that the SCF agree on the matter of the definition of climate finance.  She further agreed that while the SCF cannot undertake a needs assessment it is to identify needs to determine whether these needs are being met through climate change financing.

Ms. Suzanty Sitorus (Indonesia, Non-Annex I) also agreed that while the SCF will not conduct an exercise on needs, the question still remains on how these needs are being met.  She said that she coordinated the National Economic Environment and Development Study (NEEDS) climate change project assessment study for Indonesia where the focus was on mitigation due to the difficulty in conducting needs assessment on adaptation.  She further noted that the assessment should look at how financing needs can be disaggregated at country level ‘but that does not mean we are going to conduct needs assessment study.’ The BA is undertaken to measure the flow of money that is effective to meet the needs of developing countries. Ms. Sitorus urged that the SCF work to improve methodological issues on needs assessment.

Both Mr. Kyekyeku Yaw Oppong Boadi (Ghana, Non-Annex I) and Mr. Ali Daud Mohamed (Kenya, Africa) agreed that it is important for us to understand needs in order to effectively undertake assessment to determine if needs are being met. Mr. Oppong Boadi noted that with proper methodological issues, needs can be identified. He pointed out that adaptation costs have been undertaken by many developing countries, and cautioned against de-linking needs from the biennial assessment.

Mr. Ali Daud Mohamed re-emphasized the points made earlier by Ms. Muller. He said that the assessment should be placed in its context:  It is to improve and increase the flow of climate finance and that these should be the basis of the Committee’s work. While agreeing that it is not feasible to carry out needs assessment of all developing countries, he pointed to the output and recommendations of various studies and processes including National Adaptation Programmes of Action (NAPAs) and Nationally Appropriate Mitigation Actions (NAMAs). He raised the question as to what extent those needs have been met and said that this should guide the future needs of support. Mr. Ali Daud Mohammed said that MRV of support is also important to developing countries as the many documentations and submissions on what has been pledged, disbursed and received need to be carefully assessed.

The Annex I members of the Committee, while agreeing that needs assessment was an important issue generally, stated that this was not the work of the SCF and the BA. They also agreed that the important thing was to get the best information out of the BA and to look at how these flows address adaptation and mitigation challenges of different countries most effectively. They cautioned that the work must be focused and well-circumscribed and that the trends will become more apparent after the second or third BA.

  • Next steps on the way to the first biennial assessment

The UNFCCC Secretariat informed the meeting that three consultants have been contracted to support the work of the SCF on the BA: Mr. Dennis Tirpak, Mr. Eric Haites and Ms. Smita Nakoda. They were selected on the basis of detailed terms of reference. The co-facilitators pointed out that the report has to be delivered by October 2014. It was therefore important that the SCF give the Secretariat and the consultants a clear idea of the criteria for writing the assessment.

The discussion on the overview and assessment will be held at the next meeting. In the interim, SCF members had a two-week period to submit written comments on the draft outline of the technical paper presented and discussed at the meeting.

Committee members cautioned against having a completed draft with little time for them to respond and suggested a phased iterative feedback process that will take everybody’s views on board.

2. MRV of support beyond the biennial assessment and overview of climate finance flow

A second and important pillar of the SCF’s work is the mandate from COP 19 (2013), which invited the SCF ‘to consider ways to increase its work on MRV of support beyond the biennial assessment and overview of climate finance in accordance with its work plan for 2014-2015 and its mandates.’

As noted above, the Committee consistent with its original mandate for MRV of support (COP 16), had in 2013, initiated both external and internal outreach to interested stakeholders and members of the Committee to submit their views and information on MRV of support as well as the BA and overview of climate finance flow. These inputs and a background paper for the fifth SCF meeting (2013) formed the basis for the resumed discussion on MRV support at this current meeting where members deliberated on the possible areas of work the Committee could engage in beyond its work on the BA.

Ms. Jessica Brown (United States of America, Annex I) noted that financial issues are at the heart of the matter hence it is important to link MRV to the outcome of the 2015 agreement and given the time constraints, it is essential that MRV is considered by the SCF.  She noted, and there was general agreement, that the SCF and its working group on the BA should be mindful of related ongoing work in the Subsidiary Body on Science and Technological Advice (SBSTA), including a focus on methodological issues. The SCF should not seek to duplicate this work. 

In general, the members of the SCF agreed that MRV seemed to flow naturally from the work on the BA as this activity is in implementation of the mandate of the SCF on the MRV of finance. The work should therefore be undertaken in a sequential manner by the working group on the BA after the completion of its work plan for 2014. The working group on the BA should transition in 2015 into a working group on MRV.

Mr. Nafo, co-facilitator of the working group on the BA, stated that in general the conduct of the BA is based on the timing of national communications available in 2014 and it was the expectation that the group would have inputs that would feed into the work for 2015. While noting that the BA is the key deliverable this year, both co-facilitators were comfortable with the sequencing for the work including MRV of support. Mr. Nafo then raised the question on the objectives of MRV of support, its scope and modalities, and relevant actors.

As an observer, Ms. Bernarditas Muller (the Philippines) said that on the matter of MRV, the SCF was not working in vacuum but in the context of twenty years of climate financing. She noted that the synthesis reports of national communications, the decisions on guidelines for national communications with common reporting formats, the ongoing work of SBSTA and the secretariat’s NEEDS climate change project assessment (launched in 2008 and covered 11 developing countries from all regions), all contribute to MRV of support. Ms. Muller also drew attention to the Ecuadorian proposal (FCCC/AWGLAC/2012/CRP.1) submitted under the Ad Working Group on Long-term Cooperative Action under the Convention (AWGLCA) which spelled out very clearly the mechanisms and substance of MRV that should be taken on board in the SCF work.

SCF Co-chair Black-Layne commented that mitigation involves renewal energy, solar, wind and forests and that the SCF does not have to MRV everything at the same time. One approach could be to focus on sectors per year. Additionally, she called attention to the challenging issue of assessing the impact of financing for technical assistance and capacity building. The Co-chair said that the SCF must take stock of what is under the Convention and be in charge of the coordination and the identification of gaps, which it can seek to fill by itself or request work from SBSTA or SBI. The problem, she continued, is that it is important that MRV is understood in terms of its three elements: ‘M, R, V’ and that each piece complements the other. The big problem with information provided by Annex II Parties is the determination of what is effectively received by developing countries. She argued that it is not the work of national institutions to track climate finance inflows as well and to act as gate-keeper where all climate finance under the Convention is certified. Rather, an institution should be created and supported to do this work.

Mr. Ali Daud Mohamed (Kenya, Africa) said that one of the challenges to be addressed is on the recipient side as the donor side is largely better in reporting although at the same time, developed country Parties need to harmonize their reporting formats to allow comparability. The challenge on the recipient side is in part due to the fact that there are multiple channels of flows, from bilateral to multilateral, all outside of the Convention and therefore difficult to track. Hence, the SCF can propose mechanisms for recipients to track and report what they receive as climate finance. The national focal point for the UNFCCC could act also as a focal point of information on climate finance, for tracking purposes.

Mr. Oppong Boadi (Ghana, Non-Annex I) agreed with Mr. Mohamed and shared his experience on the ground,  which showed an information gap from the donors at country level. This, he said, is a fundamental issue to be addressed. Information on sources of funding, and what funding is going for which programme, and all the necessary documentation should be made available through the focal point or Designated National Authority.

One observer to the meeting, Mr. Benito Muller, cautioned that it is not the duty of recipients to track who has received funding. Rather, he argued, Annex II Parties should provide information in their national communication about what financing was made available and presumably should then do the tracking. They should also provide notification to governments; hence there is no need for certification. However, he noted, there is a clear need for a definition of climate finance.

Mr. Nafo agreed with Mr. Muller saying that a simple notification is good enough.  He added that when a country has pledged funding, notification of focal points should be simple. When negotiating different notification processes, the format for the guidelines, Nafo argued, should cover objective, scope and modalities and could constitute the bases for developing methodologies for aggregate levels. However, Mr. Nafo also noted that there is no process at these levels. Therefore, the SCF should work on this aggregate level in the context of three key objectives: (1) transparency, (2) ownership of activities identified by recipients as funded as climate finance, and (3) confidence-building. Ultimately, he said, developing countries will need to play a bigger role in these exercises. They are now getting used to reporting on mitigation but they will need to report on this in accordance with COP decisions.

Ms. Inka Gnittke (Germany, Annex I) noted that in Germany, climate finance is all ODA money that goes through bilateral arrangements with the recipient countries. Therefore someone on the recipient side is informed. Hence, it is a question of how much is considered to be climate finance. She said that how the inflow is counted is not transparent enough, but informed that the OECD is setting Rio markers (which are indicators of the degree of relevance of a given activity in addressing the objectives of a Rio Convention, i.e. on climate change, biological diversity and desertfication/land degradation) that should better enable this process.

Ms. Outi Honkatukia, co-facilitator, summed up the discussion on MRV that was undertaken in the small breakout group during the meeting and its conclusions. She noted that:

  • there was strong recognition that MRV is an important and iterative process with this year’s effort to be focused on BA and the MRV work to be undertaken for 2015;
  • there was an understanding that the SCF should not duplicate work undertaken in other areas of the Convention;
  • the existence of a gap in the financing pointed to the value added in making a synthesis of MRV work;
  • there are many issues with regard to MRV for the SCF to examine, including interest in looking at recipient side issues and best practices. There is a need to prioritize the work programme of the SCF;
  • developed countries should submit information on appropriate methodologies and systems used to measure and track climate finance by May 2014;  
  • the Secretariat is to prepare a compilation and synthesis report on the information reported by developed country Parties in the biennial reports and national communications, for consideration at COP 20 to support the work of SBSTA in developing methodologies by 2020; and
  • the need to consider other work on MRV occurring outside the UNFCCC such as that of the OECD on private finance and the multilateral development banks’ work on defining, measuring and assessing the flow of climate finance.

Ms. Honkatukia wrapped up this agenda item by noting that the forward momentum for the SCF is to finalize a work plan, including a call for submissions on elements for inputs into finalizing an initial draft at the end of the June meeting.

3. Fifth Review of the Financial Mechanism

The SCF members discussed possible approaches and a work plan for completing its mandate with regard to the fifth review of the financial mechanism of the Convention covering the period 2010 to 2014, in line with the decision taken at COP 19.

[The decision 8/CP.19 adopted the updated guidelines annexed to the decision covering three key areas for the fifth review: the objectives, sources of information and criteria. The objectives identified broad clusters on conformity with the COP guidance and accountability of the operating entities of the financial mechanism, and how to improve consistency and complementarity of the mechanism with other sources of investment and financial sources including its the role in the scaling up of the level of resources. With regard to sources of information, the review is to draw on national communications; the annual report of the Global Environment Facility (GEF) to the COP, including information on the Least Developing Countries Fund (LDCF) and the Special Climate Change Fund (SCCF) and the report from the GEF independent evaluation office; the annual report of the Green Climate Fund (GCF) to the COP; the report of the Adaptation Fund Board to the COP/MOP; and reports from relevant mechanisms under the Convention. With regard to criteria, the SCF is mandated to consider the effectiveness of the financial mechanism taking into account the transparency of decision making process of the operating entities; the level of stakeholder involvement; the extent to which the mechanism contributes to gender sensitive approaches; the adequacy, predictability, accessibility and timely disbursement of funds for activities in developing country Parties; the sustainability of funded programmes, project and operations in developing countries and the extent to which the financial mechanism is contributing to country ownership of programmes and project among other things.]

Discussions at the Bonn meeting focused on a background paper on the fifth review of the financial mechanism (SCF/2013/6/4), which aimed at providing an overview of a possible process and timeline that the SCF may wish to consider in fulfilling its mandate in this regard; and a concept note for a technical paper and the associated outline of the paper to be prepared by the Secretariat. The proposed technical paper will inform the updated guidelines for the fifth review of the financial mechanism. The guidelines will be the basis for assessing the effectiveness of the financial mechanism.

Committee members deliberated on the nature, extent and sources of information for four clusters of issues that underlie the criteria for the review: (1) governance; (2) responsiveness to the COP guidance relating to the programme priorities, policies and eligibility criteria; (3) mobilization and delivery of financial resources; and (4) consistency with the objective of the Convention. The first two issues will be discussed at the seventh Committee meeting. The second two clusters which are linked to the BA and overview of financial flows which will be available in the second half of 2014 will be discussed at the eighth Committee meeting.

Governance involves transparency of the decision making process of the operating entities of the financial mechanism, level of stakeholder involvement and gender sensitive approaches. Responsiveness to the COP guidance relate to programme priorities, policies and eligibility criteria; and responsiveness and efficiency of the GEF project cycle (the GCF is not yet operational); country ownership of programmes and projects; and the sustainability of funded programmes, projects and operation in developing countries. Mobilization and delivery of financial resources include the amount of resources provide to developing country Parties, the amount of financed leverage and modalities of co-financing, as well as the adequacy, predictability, accessibility and timely disbursement of funds.

Consistency with the objectives of the Convention includes the extent to which the resources provided are contributing to the achievement of the objective of the Convention, and the role of the financial mechanism in scaling up the level of resources and enabling environments.

Committee Member Mr. Ali Daud Mohamed (Kenya, Africa) said that the fifth review is one of the most important deliverables of the SCF and pointed to its growing importance with the context of transformation in the climate finance architecture and the crisis around adaptation finance.  Mr. Daud, Ms. Edith Kateme-Kasajja (Uganda, LDC) and Ms. Bernarditas Muller noted that while the Adaptation Fund of the Kyoto Protocol is not directly an operating entity of the financial mechanism, the mechanism of the Convention is also the financial mechanism of the Protocol and the Fund should therefore be an integral part of the fifth review.

Ms. Kateme-Kasajja highlighted the Adaptation Fund’s importance to LDCs. In this regard, both Mr. Daud Mohamed and Ms. Muller argued that the SCF has to look at coherence of funds and the LDCF, SCCF, the Adaptation Fund, etc. must be evaluated for their contribution to the objective of the Convention.

Mr. Raymond Landveld (Suriname, GRULAC) pointed out that the current discussion is not a new discussion but a continuation of previous discussions, the results of which were fed into the background paper under discussion. He noted that as previously agreed, the review is not simply focused on programmes and impacts only, but should influence the funding going to adaptation and mitigation as well as to examine how funding is balanced between the two activities.

This point was also noted by Ms. Kateme-Kasajja who said that this review is not undertaken as an end in itself, but rather to determine if the financial mechanism is delivering the financial resources that are badly needed, especially by LDCs, to address the issue of climate change. She said that any review that falls short of this will be failing to do its job. She said that the Convention guides on how to address climate change and the fifth review must be in line with the Convention and should be effective. The review must also include the GCF as there is a need to find out how it plans to address climate change in the context of the Convention and to give guidance to it. Ms. Kateme-Kasajja also highlighted the important issues of access, adequacy, ownership and predictable for the review. She said that her constituency, the LDCs, see the fifth review as helping to guide Parties forward in making financing accessible, predictable and adequate. She noted that LDCs receive funding with conditionality that prevents them from implementing their climate change plans and actions.

Mr. Kyekyeku Yaw Oppong Boadi (Ghana, Non-Annex I) said that there is a need to improve transparency hence there should be tracking of climate finance from entities to countries in order to know what is happening on the ground level and how effective the various funds are under the financial mechanism. Ms. Suzanty Sitorus (Indonesia, Non-Annex I) said that the elements that should be emphasized in the elaboration of the criteria should include transparency: a review of the system of governance applied by the operating entities with an eye towards ensuring decision-making and responsibility that are equitable following the principle of the Convention. Another element should be accountability issues, including from recipient to donor and from donors to the recipient; and the issue of responsiveness – looking at how operating entities are responding to the needs and concerns of the communities funded by the projects and programs, their local preference etc. Finally, Ms. Sitorus noted the importance of adequacy, predictability and accessibility. She said that there is a need to emphasize how the financial mechanism has tried to promote direct access as an important modality to foster country ownership and the sustainable delivery of projects and programmes.

4. Guidance to the operating entities of the Financial Mechanism

In light of the mandate given to the SCF by COP 17 to assist it in exercising its function with respect to the financial mechanism, the SFC members deliberated on a background paper on the draft guidance to the operating entities of the mechanisms (SCF/2014/6/7) prepared by the Secretariat. The paper provided recommendations as to how the SCF could move forward in providing draft guidance to the OEs, with a view to improving the consistency and applications for such guidance.

The background paper noted that in 2013, for COP19, the SCF developed a template for the provision of guidance to the operating entities which was utilized as a good input into the discussion of the guidance to the GEF as well as the GCF. The paper proposed that the way forward for the SCF was to agree on an overall standardized procedure for the provision of draft guidance to the COP for its annual activity on these matters. In the deliberation on the provision of guidance to the operating entities, the SCF members agreed that there was a need for thinking through how to provide better guidance, possibly in the form of a framework table. It was, however, discussed that there may be a need for different tables that were suited to the GEF (the older entity) and the GCF.

Questions were raised by a few members as to frequency of and the nature of the guidance to be given. Annex I members in particular noted the repetitiveness and lack of coherence of COP guidance and how best guidance could be rationalized. This highlighted the need for a feedback process from operating entities to the COP.

Frequency of COP guidance
Co-chair Ms. Black-Layne said that the guidance is not enough and that the SCF should look at coherence with regard to how to make financial flows work better. She argued that there is need for a feedback mechanism and that the SCF could be the focal point for such a mechanism. With regard to the frequency of COP guidance, the Co-chair noted that unlike other Conventions, which may meet every two years, the UNFCCC COP met annually. This view was shared by many developing countries.

Developing country Parties were of the view that COP guidance continues to be needed on a yearly basis. It was noted that the annual COP meeting provided the only opportunity for the Parties to interact with Parties (or in the GEF Assembly every 4 years or in the GEF Council). While agreeing that the frequency of reporting is dictated by frequency of the COP meetings, it was noted that the timing of the guidance could be much better arranged. It was generally agreed that the annual reports of the operating entities and the evaluation of the GEF are important inputs into the process. 

In particular, Ms. Muller noted that Parties to the UNFCCC only have the opportunity of dialoguing with the operating entities at the annual COP meeting. Furthermore, she pointed out that every year, there are new decisions and new responsibilities for developing countries that must be addressed through the provision of financial support through the operating entities. The COP needs to provide guidance to the operating entities in these areas. 

Repetitiveness of COP guidance
Members of the SCF also noted that the issue of repetitiveness of COP guidance had to be examined in a context. Mr. Daud Mohamed noted that the question of repetitiveness raised by some members begged the issue of why this guidance is reiterated. He noted that there was a felt need by developing country Parties in the light of the lack of responsiveness of the GEF as an operating entity. The GEF is perceived as not responsive to the constant requests of the Parties and the COP’s guidance.

Ms. Muller supported this view and said that the so-called ‘repetitive guidance’ is in fact guidance not heard and signified recurrent problems. She also pointed out that since the inception of the GEF as an operating entity of the financial mechanism, every year developing countries report the same problems and variation of these problems, in particular as regards access to GEF funding. She agreed that there is a problem of how to measure accountability with the guidance of the COP. She also pointed out the lack of operationalization of the redress mechanism of the Annex of the GEF MOU and noted that the GCF accountability is laid out in the contents of the reporting as provided for in the Arrangements between the GCF and the COP.

Rationalizing/ systematizing a framework for providing guidance 
In the initial discussion on rationalizing a process and system for the provision of guidance to the operating entities, the SCF members highlighted the following items: (1) mobilization of finance; (2) governance; (3) responsiveness to COP guidance; (4) channels and delivery of resources to developing countries; (5) provision of financial resources consistent with the Convention obligations; (6) accountability issues (including from recipients to contributors and from contributors to recipients); (7) responsiveness (including assessing how operating entities are responding to the needs and concerns of the  communities funded by the projects and programmes, local preferences); and (8) the principles of adequacy, predictability and accessibility (including the need to emphasize how the financial mechanism made efforts to promote direct access as an important means to foster country ownership and the sustainability of delivery of projects and programmes).

Members of the SCF also noted the lessons learnt as laid out in the background document. These include the importance of understanding how guidance functions, how it is received, and the consequences of different guidance. Specific highlights encompass: the need to examine previous guidance and to rationalize it so that it is useful and relevant to the operation of the operating entities; and the importance of timely guidance. In this context, representatives from the GEF and the GCF also responded to the background paper as well as shared their own perspectives.

The GEF representative noted that that there has been numerous guidance given that has been compiled into a book. He said that every guidance to the GEF is explicitly responded to and that the GEF annual report addresses the responses to the guidance. He noted that an important lesson to be learnt from the past is the importance of timing of the report. He noted that the fifth meeting of the SCF enabled discussion and good feedback for the COP 19 report as well as the dialogue held with the SCF in 2013.

The GCF actively participated in the meeting of the SCF for the first time. The GCF representative noted that there was no experience in terms of lessons learnt; that at the operational mechanical level, the Fund has tried to identify the elements received as COP guidance.

The final decision on guidance to the operating entities will be determined in the next meeting. The SCF members remarked on the need to be mindful that the output must be delivered in 2014 in order for the COP to undertake its draft discussion on guidance to the entities.

5. Linkages with the SBI and other bodies of the Convention

The SCF members discussed the issue of the Committee’s representation to other bodies of the Convention including the Adaptation Committee, the Climate Technology Center and Network (CTCN), the Taskforce on National Adaptation Programmes, and the Loss and Damage (L&D) Mechanism. It was decided that there were two levels of outreach and involvement. The first were bodies that the SCF was mandated by COP decisions to participate in (CTCN and L&D Mechanism). The second are those bodies to which the SCF is attending as an observer.  The working approach thus far has been for the Co-chairs of the SCF to meet with the Co-chairs of the Adaptation Committee, the GCF and the Technology Executive Committee and give updates on the outcome of their meetings. The Secretariat was left to undertake other forms of outreach within the UNFCCC.

In an inter-sessional work process, the SCF nominated the requested two members to the interim Executive Committee for the Warsaw International Mechanism for Loss and Damage viz.  Mr. Paul Herbert Oquist Kelley (Nicaragua, GRULAC) and Ms. Willemijn Slingenberg-Verdegaal (Netherlands, Annex I).

Ms. Bernarditas Muller said that with regard to its participation in other bodies of the Convention, it was important for the SCF to understand that it was not a separate body of the Convention, but was a subsidiary body established by the COP in exercising its function with regard to the financial mechanism. She pointed out that what is lacking with all the other thematic bodies is the link to the financial mechanism. This is why the COP made this a function of the SCF.

6. Planning for the Second Forum of the Standing Committee on Finance

An important agenda item discussed was the finalization of the draft programme for the SCF’s Second Forum on Finance to be held in Montego Bay, Jamaica on 21-22 June 2014. The theme is ‘adaptation finance’. (COP 17 mandated the SCF to organize a forum for the communication and continued exchange of information among bodies and entities dealing with climate finance in order to promote linkages and coherence. COP 18 further encouraged the SCF to facilitate the participation of the private sector, financial institutions and academia in the forum.) 

The objective of this year’s SCF forum, which will be coordinated by Mr. Raymond Landveld (Suriname, GRULAC), is to assist in the mobilization and deployment of adaptation finance through the exchange of experience of various stakeholders.

The COP 19 decision on the report of the SCF mandated the Committee to also organize, as soon as possible, a forum on the issues related to forests, including the implementation of activities referred to in COP decision 1/CP.16 para. 70, inter alia: (a) ways and means to transfer payments for results-based actions (para 29 of 1/CP18); and (b) the provision of financial resources for alternative approaches.

The SCF members discussed the possibility of a combined forum on forest and adaptation finance. Finally, it was decided that though the two subjects are linked, they were each quite all-encompassing on their own terms and hence required separate in-depth treatment. It was decided that this second (2014) forum would address adaptation as previously planned and the third forum will take up the issue of REDD-plus (forest-related) finance. Mr. Landveld, who is also co-chair of the Ad Hoc Expert Group on the International Arrangement on Forests until 2015, said that this year’s forum will take into account that the forest-related aspects of adaptation finance will be integrated within the substantive content of the second forum.

The SCF, in discussing a concept note on the draft program of the forum, agreed that it should focus on practical examples and lessons to be learnt on how (both developed and developing) countries have integrated adaptation into national plans. The forum will also explore issues around the mobilization of public and private sector finance for adaptation as well as innovative and alternative approaches; and the financing of co-benefits between adaptation and mitigation. Members also discussed the involvement of other thematic bodies of the Convention such as the Adaptation Committee.

7. Communication strategy

The Committee discussed a background paper on the draft communication strategy to enhance concrete areas of collaboration and to facilitate the SCF’s overall outreach activities with key stakeholders and thematic bodies under the Convention. The paper which was structured along the lines of the work plan and related outreach activities of the SCF was not discussed in detail due to lack of time. It was highlighted that the Finance Portal on the UNFCCC website is already on line on the website and that the biennial assessment and finance data will have its own dedicated section of webpage.

8. Next Meeting of the SCF

The next meeting of the SCF will be held on 16-18 June 2014.

 


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