Info Service on Climate Change (Mar16/03)
GCF adopts Strategic Plan and agrees to live webcast of meetings
Songdo, 14 March (Indrajit Bose) — The Board of the Green Climate Fund (GCF) held its 12th meeting in Songdo, South Korea, from 8-10 March, and adopted several crucial decisions which included the Fund’s first Strategic Plan, and a comprehensive information disclosure policy that provides for live webcasting of the Board’s proceedings. (The Board proceedings are currently not webcast live.)
The GCF Board also accredited 13 new entities to the Fund and there was considerable controversy over the accreditation of HSBC holdings plc and its subsidiaries, headquartered in the United Kingdom and Northern Ireland.
Civil society organisations (CSOs) raised concerns on the track record of HSBC and some other entities up for accreditation.
“HSBC in particular is deeply embroiled in massive financial scandal. We firmly believe that the Board should not accredit HSBC due to its poor record on climate pollution, environmental and social harm, and human rights. It would also be premature for the Board to make a judgment on the fiduciary and reputational risks involved in accrediting HSBC before the public release of a report by an independent monitor overseeing the clean-up of HSBC’s massive money laundering,” said Lidy Nacpil, the southern active observer on the Board and coordinator, Asian Peoples Movement on Debt and Development, on behalf of CSOs. “The Accreditation Panel (AP) must perform its due diligence and fully review the report’s findings. At the very least, the Board must defer a decision on accrediting HSBC until it has the full picture,” added Nacpil.
Responding to some of the concerns raised by CSOs, the GCF Board members decided to impose certain conditions and review HSBC’s accreditation in the near future. Board members from Egypt, Cuba, Belize, Saudi Arabia, Samoa, Tanzania, Democratic Republic of Congo, Bangladesh and Norway asked for due attention to be paid to the issues raised by CSOs in their intervention.
In the decision approving HSBC’s accreditation, the GCF Board noted that in the AP’s review of HSBC, they had identified a potential “information gap associated with the implementation of their Global Standards programme, which overviews the applicant’s progress in implementing stronger AML (anti-money laundering) and sanctions compliance mechanisms (Global Standards)”. In the decision, the Board also requested the AP to review prior to the 14th and 16th Board meetings, “the applicant's progress in implementing its Global Standard, including a review of material external information”. The Board further requested that the AP report to the GCF Board on “whether the results of these reviews would alter their recommendation to accredit the applicant”. HSBC was also accredited subject to the condition that the GCF Board has the ability to temporarily or permanently suspend the applicant's accreditation based on the recommendation of the AP following its reviews. The decision made it clea r that the process outlined for HSBC applied “only in this case, without prejudice to further decisions”.
Besides HSBC, the other entities accredited to the GCF were Agency for Agricultural Development of Morocco; Ministry of Finance and Economic Cooperation of the Federal Democratic Republic of Ethiopia; National Environment Management Authority of Kenya; Development Bank of Southern Africa; Cr้dit Agricole Corporate and Investment Bank (Cr้dit Agricole CIB) headquartered in France; African Development Bank (AfDB) headquartered in C๔te d’Ivoire; European Investment Bank (EIB) headquartered in Luxembourg; International Finance Corporation (IFC) headquartered in the United States of America; Unidad Para el Cambio Rural (Unit for Rural Change, UCAR) based in Argentina; International Union for Conservation of Nature (IUCN) headquartered in Switzerland; World Food Programme (WFP) headquartered in Italy; World Meteorological Organization (WMO) headquartered in Switzerland.
Nacpil also voiced the concerns of the CSOs on a few other entities such as Credit Agricole CIB and the IFC.
The Board also adopted its first Strategic Plan, which was termed as a “living document” “to guide the Board in addressing policy gaps and programming the Fund’s resources of the initial resource mobilization period between 2015 and 2018”. The Board also decided to “review the Fund’s Strategic Plan as part of each replenishment process”.
Another controversial issue during the meeting was the issue of the comprehensive information disclosure policy of the Fund. The bone of contention was whether the GCF Board meetings should be webcast live. The United States was opposed to live webcasting, but after further discussions, the Board decided that the GCF Board meetings will be live webcast, until the end of 2017, after which there will be a review of the webcasting taking into consideration “the costs involved, the views of those who have accessed it, and other information that would be useful to assess the service”.
Board also approved a grant of USD 1.5 million to the Ministry of
Natural Resources of Rwanda, for for the project preparation of their
programme titled “Rural Green Economy and Climate Resilient Development
The Board also spent considerable time in discussing the initial risk management framework of the Fund. It was highlighted that the GCF Secretariat did not have any risk management expertise and the Risk Management Committee (RMC) of the Fund underscored the need to hire staff with risk management expertise at the earliest. The Board also adopted a risk register and requested the RMC to review the probability, impact, and resulting priorities prior to the 13th meeting of the Board. The Board also decided that the interim risk and investment guidelines would expire prior to the 15th meeting of the Board, when the updated set of risk policies and guidelines are adopted.
The Board also adopted a number of procedural decisions. This include the adoption of its workplan for 2016 and its’ new co-chairs Zaheer Fakir (South Africa) and Ewen McDonald (Australia) will consult with Board members on specific matters that have remained outstanding from previous Board meetings and come up with draft decisions to be considered at subsequent Board meetings. These issues include matters such as the first formal replenishment process for the Fund, a simplified approvals process and decision-making in the absence of consensus. Board members have not been able to find consensus on these outstanding issues in previous meetings.
The Board also discussed (behind closed doors and not open to observers) issues relating to the performance review of the Executive Director (ED) and the process for the appointment of a new ED. Prior to the Board meeting in Songdo, the current ED, H้la Cheikhrouhou announced that she would step down in September 2016, at the end of her current term as head of the Fund. A committee for the selection of a new ED was formed with Board members from Egypt, Saudi Arabia, Cuba, US, Canada and Switzerland.
On the issue of the review of interim trustee of the Fund, (currently the World Bank), the Board requested the Secretariat to commission an independent third party to implement the review of the interim trustee, in consultation with and oversight of the Risk Management Committee.
The Board also took stock of the total amount of pledges signed into contributor agreements. The Secretariat informed the Board members that of the total pledge of US10.2 billion, USD 6.8 billion have been via contribution agreements. During the meeting, the US informed the Board that it had completed arrangements to transfer USD 500 million to the GCF as its first installment on its pledge of USD 3 billion.
Prior to the formal meeting from the 8-10 March, the Board convened a day-long meeting on 7 March in an informal setting and discussed issues such as the strategic plan, risk management framework, pipeline of projects to be considered for funding, the GCF website, the accreditation master agreement, and agreements related to readiness.
The next Board meeting will take place again in Songdo from 28-30 June. (Further articles to follow)