Tag: Finance

This has been what might be called a year from climate hell with floods, droughts and scorching temperatures across the globe.  But those steering the debate on climate

financing are slow to get the point. As now envisioned, climate funding will bypass the most vulnerable.   

The vast majority of the grossly inadequate existing flow of climate finance is focused on mitigation.  For example, only 7.45% of major public funds reported at
climatefundsupdate.org are for adaptation.   

And there’s not much evidence to suggest that this basic pattern will change with fast-start finance.  Adaptation and the needs of the most vulnerable are still too often the forgotten step-children.  

Going forward, ECO isn’t suggesting that there’s too much financing for mitigation – au contraire!  But it is vital that adaptation gets its fair share of attention and funding.  A new global climate fund is just the place to make this happen. 

To ensure that the most vulnerable benefit from adequate, predictable and sustainable financial contributions, we propose that a fair pre-allocation of funding for adaptation is crucial.  

Specifically, the finance text should
ensure that at least 50% of overall funding counted against UNFCCC commitments should be dedicated to adaptation, and at least 50% of money channeled through the new fund should be allocated to adaptation. 

These proportions may need to be revised over time, but this is the balanced approach we should take now.

And if we don’t, surely it will be a recipe for disaster for those who are already the hardest-hit. 

One may well wonder, what could the climate change debate possibly learn from other fields?  ECO looked around a bit and discovered some interesting things about the Global Fund to Fight AIDS, Tuberculosis and Malaria.

The recent replenishment meeting of the Global Fund ended earlier this week in New York.  And despite the lingering recession in many parts of the world economy, the respective contributions resulted in pledges of $11.7 billion over the next three years, an increase of 20% compared to 2008-2010. That is good news and shows that the international community is still able to take action when urgent global challenges have to be addressed.

Of particular note for the climate debate is that the Global Fund is the pioneer in direct access. Donors seem to trust its approach, which so far has financed programmes in 140 countries. The United States is #1 among donors and has pledged $4 billion for the next period.

Furthermore, the Global Fund has some innovative institutional features which ECO thinks should be considered in the setup of the new climate fund. 

First, the Fund itself is an administratively autonomous international financing institution, with its own Secretariat based in Geneva. The only formal link to an existing institution is that the World Bank serves as Trustee.  The Global Fund was set up very quickly, with the Secretariat being established six months after the principal decision to establish the Fund, and the first grants were approved three months later.

On the national level, multi-stakeholder country coordinating mechanisms are the key players. These include the government and stakeholders such as NGOs, scientists and the private sector. This is an instructive example given the diverse responses that climate change will require on all levels of society in developing countries.

On the international level, the Fund is steered by a board composed of 20 voting members –  14 from governments/regional organisations and one each for the private sector, private foundations, developing country NGO, developed country NGO, and a representative from local communities. Representatives from international organisations are members of the Board without voting rights. It is a global partnership to
address a true global challenge.

Of course, the climate fund can’t just be a copy of the Global Fund. For one thing, the scale of climate resources must very soon be significantly higher than the $3 billion a year in the Global Fund budget. 

In order to fully prepare for the future, one must learn from the past. For instance, the US proposal, supported to some degree by other countries, that would set up the climate fund as a kind of reinvention of the GEF, does not do so.  Instead, the future climate architecture should take note of lessons like those offered by the Global Fund.