TWN Info Service on Climate Change (Jul15/08)
16 July 2015
Third World Network

GCF: Board agrees on process to develop framework for monitoring/ accountability

New Delhi, 16 July (Indrajit Bose) — After accrediting 20 entities to the Green Climate Fund (GCF), the Board of the GCF adopted a decision at its recently concluded meeting in Songdo, South Korea, to further develop an initial monitoring and accountability framework for accredited entities.

(The Board, had at its previous meeting in March this year, accredited 7 entities, and a further 13 were accredited at the just concluded session. The accrediting of the entities at the 10th Board meeting was controversial, with concerns raised both by developing country Board members and CSOs alike on some of the entities who were viewed as posing a reputational risk to the GCF). (See TWN Climate Info: GCF accreditation poses reputation risk for the Fund, say civil society, of 14 July).

The Board decided that accreditation of an entity to the Fund would be valid for five years and any re-accreditation would be “based on the assessment conducted by the Secretariat and the Accreditation Panel (AP)”.

The decision states that the framework will focus on compliance with the Fund’s environment and social safeguards, fiduciary standards and gender policy. The Secretariat was tasked to further develop the monitoring and accountability framework and provide more details on provisions such as corrective actions for non-compliance, implementation of compliance checks, and local monitoring. The Board will consider this again at its 11th meeting, planned in Zambia in early November this year. 

The decision though came after considerable discussions among the Board members on a progress report by the Secretariat on the monitoring and accountability framework. Developed country Board members from the United States, Canada and Sweden pushed for a decision on the issue at the meeting.

Caroline Leclerc (Canada), in her intervention in support of a decision, also referred to the concerns expressed by Meenakshi Raman of Third World Network, active observer to the GCF, on problem entities being accredited to the Fund. Raman, for the civil society constituency, had criticized the accreditation of entities such as Deutsche Bank and World Bank (see: GCF accreditation poses reputation risk for the Fund, say civil society).

Leclerc said that during the accreditation decision, Board members had “had a very rich discussion on the issue which would have reassured Meena ( referring to Raman), if she had heard it. (Discussions on the entities had happened in an executive session, which was not open to observers.) “We have a very professional and strong AP in ensuring mitigation of risks,” said Leclerc, calling for a decision on the issue.

David Kaluba (Zambia) though expressed a number of concerns on the progress report presented to the Board. He sought clarification around several issues ranging from the role of the national designated authorities (NDAs) and laid down detailed monitoring guidelines (see highlights of exchanges below).

After further discussions, Co-chair Gabriel Quijandria (Peru) suggested that interested Board members to get together and draft a decision.

By the time the decision was presented to Board members, it was well past the closing time of the meeting. Board members further deliberated on the decision, which was finally adopted early morning of 10 July, when a number of developing country Board members had left the room.

Leonardo Martinez-Diaz (US) added it was only a “process decision” that asks the Secretariat to develop further elements for monitoring and review and to work with civil society.

The full decision adopted reads as follows:
“(a) Notes the need for ongoing monitoring of compliance against the Green Climate Fund’s (the Fund’s) fiduciary standards, environmental and social safeguards, and gender policy;
(b) Decides that the accreditation of an entity to the Fund is valid for a fixed term of five years or less, depending on the terms of accreditation;
(c) Decides that the Board will decide whether an entity is to be re-accredited, based on the assessment conducted by the Secretariat and Accreditation Panel;
(d) Decides that the monitoring and accountability framework will focus on compliance with the Fund’s environment and social safeguards, fiduciary standards, and gender policy, and will comprise at least four compliance checks of the accredited entities and activities financed by the Fund:
i. Self-reporting to the Secretariat by the accredited entity once annually and any time there is an important change in the capacity or any other material aspect of the accredited entity with regard to the Fund’s fiduciary standards, environmental and social safeguards, and gender policy;
ii. Ad-hoc checks by the Secretariat at the level of the accredited entity and/or at the level of the project/programme, when any significant concern arises of potential non-compliance;
iii. Annual review on a given proportion by number of projects, of the Fund’s portfolio of projects and programmes, where projects and programmes to be reviewed are selected inter alia with consideration of the risk category of the project/programme; and
iv. A light-touch review of the accredited entity half way through its five-year accreditation period;

(e) Requests the Secretariat to further develop the monitoring and accountability framework for consideration by the Board at its 11th meeting, in particular providing more detail about:
(i) Corrective actions and remedies that can be implemented in cases of non-compliance;
(ii) Implementation of the compliance checks listed above in (b) and any additional compliance checks that may be identified;
(iii) An early warning system to support ad-hoc checks and the annual review of a portion of the Fund’s portfolio;
(iv) Local monitoring (including feedback from a range of stakeholders, including women);
(v) How to process potential reaccreditation of accredited entities at the end of their five-year accreditation period;
(vi) How the monitoring and accountability framework will relate to and work with the Fund’s accountability units;
(vii) Ensuring there are sufficient resources available to the Secretariat to implement the framework;
(viii) How the framework will use a risk-based approach, including by leveraging other monitoring processes, to use its resources efficiently;
(ix) Reporting on the findings of activities under the monitoring and accountability framework; and
(x) How the national designated authority or focal point can be included in the monitoring and accountability framework; and

(f) Requests the Secretariat, when further developing the monitoring and accountability framework, to do so in consultation with the Accreditation Committee and entities accredited by the Fund, and engaging a wide group of stakeholders, including women, including through a call for public input.”

Highlights of Interventions

Leonardo Martinez-Diaz (US) said that the document is to ensure that accredited entities are reaching the standards of the Fund. He said that it is important to give the matter a push at the 11th meeting and have a decision on the issue.

Jan Cedergren (Sweden) said that the accreditation term should be five years and to review any accreditation would have to be a Board decision. 

Caroline Leclerc (Canada) said some of the elements in the paper need strengthening. She suggested using the risk management framework and to re-examine mid-term review visits by the Secretariat. She also wanted to understand the reason for emphasis on fiduciary standards in the progress report. “We have to look at the balance between performance and results,” said Leclerc.

Ingrid-Gabriela Hoven (Germany) said the ‘Monitoring and Accountability Framework’ is linked to knowledge management within the Secretariat and added that there needs to be a robust, participatory process with respect to implementation of projects on the ground.

Omar Al Arini (Egypt) said the Board has to be mindful of the activities to be undertaken by the (accredited) entities. He sought clarification on how this (the monitoring and accountability framework) would fit with the work of the independent evaluation unit and how it would be reflected in the framework. He said it is important to reflect this in the accreditation master agreement and asked if monitoring indicators would be there in the project proposal itself. 

David Kaluba (Zambia) raised the following issues:

• The accredited entity  (AE) would be the one to enter into agreement with the Fund and has the responsibility of overseeing the project implementation.
• Renewal of the accreditation after five years should clarify the role of the NDA. The need for strengthening of the NDA’s no-objection role even in the renewal process in case an AE in its operations has moved away from its mandate and is not meeting the national priorities. The procedure should say, before expiry of the accreditation, the AE through the NDA’s no-objection, shall apply for renewal of accreditation.
• The NDA should have a mandate to report on the operations of the AE to support the renewal application or otherwise. National level monitoring and clear channels for communicating feedback should be highlighted.
• Revision of the guidelines must be communicated in sufficient time to allow the AEs to comply and be ready to have renewal based on revised guidelines. Therefore, the statement should be explicit in reference that there will be communication to entities and the entities will have a given timeframe to adjust their compliance.
• Monitoring process should not have multiple reporting systems such that they overburden a country’s reporting capability and duplicate work. For example, if an AE has its own monitoring and reporting system, a country should only report on the basis of the GCF system. The web-based system should be accompanied by reports to the NDA to answer to outlined national priorities and sustainable development criteria.
• On central monitoring, the emphasis should be on compliance.
• It should be clear who is monitoring and suggested using “national monitoring vs local monitoring”. AEs will be monitored by NDA/focal points through participatory approaches, in line with guidelines for NDA functions.
• Country ownership of national monitoring and evaluation needs to be emphasized and strengthen the role of the NDA. Involvement of local agents should clarify to whom they are accountable and their nature of support to the NDA.
• NDAs should be supported in building monitoring systems beyond fulfilling the role of monitoring and accountability framework.

Ali’ioaigi Feturi Elisaia (Samoa) called for a very strong accountability framework and asked for procedures for entities complying with the Fund’s policies.

Martinez-Diaz said since it is a complicated issue and it needs more thought and feedback from the Secretariat. He suggested a skeletal decision that lays out further work. Stefan Marco Schwager (Switzerland) supported Martinez-Diaz.

Andrea Ledward (UK) said there should be a mid-term review, to ensure the process is not bureaucratic and to limit costs of the Secretariat and the accredited entities.