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TWN Info Service on Climate Change (Jul19/04)
15 July 2019
Third World Network

Intense discussions at GCF Board prior to adoption of decision on voting

15 July, Delhi (Indrajit Bose) — Intense wrangling and exchanges happened at the most recent meeting of the Green Climate Fund (GCF) Board prior to the adoption of a decision on decision-making in the absence of consensus, that included procedures on voting.

The decision was adopted early morning at 3 am on 9 July, a day later than the scheduled closure of the 23rd meeting which began on 6 July in Songdo, Korea, and was deemed “historic”, given that the Board had failed in the past to agree to a decision on voting.

In adopting the decision, the Board confirmed that the procedures for adopting decisions in the event that all efforts at reaching consensus have been exhausted shall only be used as a “last resort”.  

The decision adopted by the Board on the procedures for decision-making includes: (i) efforts to exhaust consensus; (ii) determination of whether all efforts at reaching consensus in respect of a particular draft decision have been exhausted; (iii) the scope of the policy, i.e. areas where the procedures would not apply; (v) the voting procedure (referred to as threshold during the discussions); and (vi) procedure for confidential balloting process.(See further below for highlights of decision adopted).

Discussions on the determination of when and how all efforts at reaching consensus are exhausted as well as the threshold level as regards the voting saw major disagreements among the Board members. Some developing country Board members wanted to ensure that the scope of the application of the procedures exclude certain key areas, including the eligibility of all developing countries to access all financial instruments offered by the GCF.  

One of the primary reasons for the disagreement among Board members was the stance of developed countries in making their contributions for replenishment conditional on the adoption of a decision on voting. Several developed country members also characterized the lack of the decision on the matter as a “governance crisis” in the GCF. This perspective and narrative was countered vehemently by developing country members.

(The GCF Board is comprised of 24 members, with 12 from developed and 12 from developing countries. The Governing Instrument [GI] provides for decisions of the Board to be taken by consensus. It also provides for the Board to develop procedures for adopting decisions in the event that all efforts at reaching consensus have been exhausted. For some time until the most recent Songdo meeting, the GCF Board has been deadlocked over the issue. During the 8th GCF Board meeting in 2014, when processes for the initial resource mobilization (IRM) were being put in place, developed country members wanted decisions to be made according to voting linked to their share of the contributions. This idea was expressly rejected by developing country members who said that the GCF is an equal Board and every member has an equal say on an issue. The IRM period was from 2015-2018). [See related TWN Update]

(When processes were being put in place for the first formal replenishment in 2018, developed countries again pushed for a decision on decision-making and a few other policies to be in place before the replenishment process could begin. The 20th Board meeting in this regard was especially contentious, and several disagreements in relation to conditionalities and other procedural difficulties that led to the Board not agreeing on a replenishment process). (See related TWN Update).

(Thereafter emerged a view from some developed countries and their media that the GCF was going through a “governance crisis” and unless the crisis was resolved, developed countries would find it difficult to justify contributing resources to the Fund).

The alleged “governance crisis” also surfaced at the Songdo meeting as well, with Board members referring to the issue in response to a proposal on the procedures crafted by Co-chairs Nagmeldin Goutbi Elhassan Mahmoud (Sudan) and Josceline Wheatley (UK) for the consideration of the Board.

The Co-chairs had been tasked with consulting with Board members on the issue and a series of consultations had taken place. Prior to the Board meeting, the Co-chairs presented a proposal to members detailing procedures on the determination of whether all efforts to reach consensus were exhausted, the scope of the application of the procedures, the threshold level as regards the voting and a balloting process.

In the proposal by the Co-chairs, determination of whether all efforts to reach consensus are reached or not rested with the Co-chairs. In relation to the threshold, the Co-chairs had proposed that if at least a two-thirds majority of Board members present and voting and two-thirds of Board members present and voting in each constituency voted in favour of a draft decision, the decision would be adopted. In reacting to the proposal by the Co-chairs there were several interventions.

Sue Szabo (Canada) said the need for the procedure became all clearer as was evident from “external evidence”. She said that if one did a search on the GCF on the internet, what they would see in the media is about “governance and crisis” in the Fund. She also added that the “governance challenge” had also “become a point of discussion for a number of our senior leaders…who ask us what are we doing to fix it.” She said further that a decision on “decision-making is a necessary but not sufficient step” and that more needed to be done to “address governance” issues.

Mathew Haarsager (United States) said effective and appropriate governance was crucial for the Fund. He said further that any procedure for decision-making in the absence of consensus should be implementable, fair and consistent with the GI, including the principle that all Board members have equal governance rights and have the opportunity to participate in decisions. He also said that the determination of whether all efforts have been exhausted to reach consensus should be a Board decision rather be left to the Co-chairs. In respect of the voting, he called for a higher voting threshold level of 75 per cent of the Board members.

On the governance issue, Aboulmagd (Egypt) said that developing countries were not presented with enough evidence to substantiate the point that a lack of procedure on decision-making in the absence of consensus was a significant governance issue facing the GCF. He said developing country members were engaging in “good faith” given the mandate from the GI. On the Co-chairs’ proposal, he said that determining efforts to exhaust consensus must follow an objective check list and with step-by-step procedures. On the threshold issue, he said that a constituency collectively (referring to the developed and developing country constituencies respectively) should have a say. He also said that three members of a particular constituency members should be able to prevent a policy decision from moving forward. Aboulmagd also highlighted the importance of excluding issues such as the eligibility of developing countries to finance, the concessionality that should be provided and the access to all financial instruments from the scope of the application of the procedures. 

Reinaldo Salgado (Brazil) also said that not having the procedures was not the central governance matter of the GCF, but added that having one single Board member veto decisions was also not desirable. In relation to the scope of the procedures, Salgado said that there was precedence in other institutions and led by some of the same developed country Board members in not giving access to grants to a certain group of developing countries, adding that this was not viewed as an eligibility issue by developed countries. He said that the procedures should not apply to any decision that may affect the access or eligibility of all developing countries to all financial instruments and all concessionality modalities available in the GCF, adding that all the rights of developing countries under the GI, the UNFCCC and the Paris Agreement must be taken care of.

Ayman Shasly (Saudi Arabia) said that the Board should be under no pressure to resolve the decision-making issue, adding that when it comes to governance, contributors should look at the systems in place in the GCF rather than focusing only on one issue. Shasly also wanted the scope of the procedures to not apply to the eligibility of developing countries to access the Fund’s resources, the arrangements between the GCF and the UNFCCC Conference of the Parties (COP), amendments of the rules of procedure, or any policies to do with earmarking the contributions of the Fund

Wenxing Pan (China) said on the determination of whether efforts to reach consensus have been exhausted should rest with the Board and that on the threshold question, he would prefer it to be a lower rather than higher.

 

Cyril Rousseau (France) said that decision-making in the absence of consensus was the most important decision the Board needed at the meeting. He also said that he was in favour of a lower threshold but was willing to show flexibility on the matter. Regarding the issue of scope, he said that everything should be done to show that they would not go against the Paris Agreement or the GI in terms of eligibility of countries to access the Fund’s instruments.

Other developed country Board members, Frank Fass-Metz (Germany) and Hiroshi Matsuura (Japan) said they had heard the concerns and could work on the text to address those concerns.

Following the interventions, the Co-chairs presented another draft for the Board’s consideration, but divergences on the threshold issue remained.

The Co-chairs then tasked a group of 8 board members to come up with a resolution. The 8 members, Aboulmagd (Egypt), Shasly (Saudi Arabia), Ignacio Lorenzo (Uruguay), Irina Ghaplanyan (Armenia), Rousseau (France), Frank Fass-Metz (Germany), Kate Hughes (United Kindgom) and Haarsager (United States) worked through the night of 8 July and came up with a resolution around 3 am the following day on 9 July.  

Reflecting on the resolution reached, Co-chair Wheatley said that on the threshold, the proposed revised decision stated that if there was an objection to a determination by the Co-chairs that all efforts at reaching consensus were exhausted, then “it shall be put to a vote in accordance with the voting procedures and shall be deemed to be confirmed if at least four-fifths of the Board members present and voting vote in favour of such determination”. He said this would address those who had called for an “objective” manner of arriving at the determination.

On the scope of the procedures, Wheatley said that the decision excludes the following areas: “any policy decision on financial instruments and/or financial terms that excludes a certain developing country or countries from accessing any financial instruments and/or financial terms available through the GCF”; any decision to recommend an amendment to, or that conflicts with, the arrangements between the GCF and the COP; any decision to amend the rules of procedure; and any contribution policy that allows for geographic or sectoral restrictions”. He said the last point referred to “earmarking” but that they did not want to use the word in the decision.

On the voting procedure, Wheatley said the draft decision now contained a “double lock” and the decision text says: “four-fifths majority of Board members present and voting vote in favour of the draft decision, the draft decision shall be considered adopted, unless four or more developed country Board members or four or more developing country Board members vote against it”.

Following the presentation of the draft decision Jeremiah Sokan (Liberia) referred to the threshold issue and added that the LDCs were in a very difficult position, because by the composition of the Board, while it would take any group less effort to block a decision, it would take the LDCs four times the effort (given that the LDCs have only one seat on the Board).

Following an exchange of views, the Board adopted the decision. According to some developing country members who spoke to TWN, the final decision adopted provided comfort to them, as their concerns had been addressed. Another member commented that the atmosphere during the closed-door consultations was apparently “amiable and gentlemanly”, with due consideration given to the views of all members.

Highlights of the decision adopted

Below is a summary of the decision adopted in respect of the specific elements.

On Efforts to reach consensus -

Under the steps to be followed to reach consensus, Board members and alternate members are to be consulted on draft decisions and related documents prior to the publication of documents. The Co-chairs or the Board could also request a small group of members to consult between meetings of the Board on a specific matter to develop or refine a relevant draft decision.

Other processes include consultations during a Board meeting; Board members stating their reservation with a particular decision without preventing consensus from being reached; Board members disassociating from a particular decision by stating their reservation therewith, without preventing consensus from being reached; Board members requiring that their position on the relevant matter be formally recorded in the report of the relevant meeting; and Board members electing not to join the consensus by being absent from the Board-room.

On the determination of whether all efforts at reaching consensus has been exhausted -

In this regard, the Co-chairs have to determine “in good faith” whether all efforts at reaching consensus have been exhausted after consultations with all Board members and alternate members. To make such a determination, the Co-chairs are to consider: whether consultations have been carried out between and during Board meetings; whether the subject matter of the draft decision has been considered at prior Board meetings without consensus being reached; and whether, and how many members of the Board have indicated that they cannot join consensus on an issue.

The procedures also lay down that “when making such determination, the Co-Chairs shall take into account whether a decision on the relevant matter is urgent or necessary to safeguard the interests or reputation of the GCF, or to ensure the continued operations of the GCF”.

The procedures also lay down that, “if a question arises as to whether all efforts at reaching consensus in respect of a particular draft decision have been exhausted, in accordance with these procedures, the Co-chairs will, acting jointly, make a determination. If there is an objection to such determination, the matter shall be put to a vote in accordance with the voting procedures and shall be deemed to be confirmed if at least four-fifths of Board members present and voting vote in favour of such determination.”

Scope of the application of the procedures –

The Board also decided that the procedures shall not apply to:

“(a) any policy decision on financial instruments and/or financial terms that excludes a certain developing country or countries from accessing any financial instruments and/or financial terms available through the GCF;

(b) any decision to amend these procedures;

(c) any decision to recommend an amendment to, or that conflicts with, the arrangements between the GCF and the COP;

(d) any decision proposed for approval between meetings …(on decisions between meetings) of the rules of procedure, unless otherwise permitted pursuant to those rules;

(e) any decision related to moving and/or selecting the headquarters of the GCF;

(f) any decision regarding the termination of the Fund;

(g) any decision to amend the rules of procedure; and

(h) any policy on contributions that allows for geographic or sectoral restrictions.

Voting Procedure

The voting procedure is open to Co-chairs and the members of the Board. The Board decided that, “if at least a four-fifths majority of Board members present and voting vote in favour of the draft decision, the draft decision shall be considered adopted, unless four or more developed country Board members or four or more developing country Board members vote against it.”

Procedure for confidential balloting

The Board decided that “balloting shall take place as soon as practicable following the determination that all efforts at reaching consensus have been exhausted…in a closed setting”.

All Board members are entitled to participate in the balloting process and a member would be entitled to one ballot in each round of balloting. Prior to the balloting exercise, the Co-chairs are to propose and seek agreement on how the rounds of balloting shall take place.

The procedures adopted also state that “balloting shall continue until at least two-thirds of all ballots cast in a single round of balloting support one of the options being considered by the Board”.

The Board also requested “the Co-chairs to continue to enhance the effectiveness of pre-Board meeting consultations in an open, inclusive, consultative and transparent matter” and present to the Board a proposal regarding the next steps in the event any Board member expresses the view that they are unable to join consensus regarding the outcome of the confidential balloting process.

(Edited by Meena Raman)

 


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