european capacity building initiativeecbi What to do with the Adaptation Fund? Its role in relationship with the GCF Sunday, 7 December, Swissôtel Lima Benito Müller Director ecbi, MD oxford climate policy european capacity building initiative initiative européenne de renforcement des capacités ecbi for sustained capacity building in support of international climate change negotiations pour un renforcement durable des capacités en appui aux négociations internationales sur les changements climatiques

european capacity building initiativeecbi STRATEGIC PROSPECTS FOR THE ADAPTATION FUND

european capacity building initiativeecbi Specialized fiduciary criteria Project management Project preparation and appraisal (from concept to full funding proposal) Project oversight and control Monitoring and evaluation Project-at-risk systems and related project risk management capabilities Grant award and/or funding allocation mechanisms Grant award procedures Transparent allocation of financial resources Public access to information on beneficiaries and results Good standing with regard to multilateral funding (e.g. through recognized public expenditure reviews) On-lending and/or blending Appropriate registration and/or licensing by a financial oversight body or regulator in the country and/or internationally, as applicable; Track record, institutional experience and existing arrangements and capacities for on-lending and blending with resources from other international or multilateral sources; Creditworthiness; Due diligence policies, processes and procedures; Financial resource management, including analysis of the lending portfolio of the intermediary; Public access to information on beneficiaries and results; Investment management, policies and systems, including in relation to portfolio management; Capacity to channel funds transparently and effectively, and to transfer the Fund’s funding advantages to final beneficiaries; Financial risk management, including asset liability management; Governance and organizational arrangements, including relationships between the treasury function and the operational side (front desk). GCF Modes of Engagement: Implementing Entities and Intermediaries “Implementing Entity” “Intermediary”

european capacity building initiativeecbi GCF Scales of Engagement: Executing Entities Large Executing Entity Medium/Large Project/Programme Micro/Small/Medium Executing Entity (MSME) Micro/Small Project/Programme

european capacity building initiativeecbi GCF Fast-track Accreditation Local Provincial National International Implementing Entity Intermediary Large Executing Entity Medium/Large Project/Programme Micro/Small/Medium Executing Entity (MSME) Micro/Small Project/Programme Bilateral (EU DEVCO)AF & GEF MIE/RIEs AF NIE

european capacity building initiativeecbi GCF Maximum Entropy Accreditation Local Provincial National International Implementing Entity Intermediary Large Executing Entity Medium/Large Project/Programme Micro/Small/Medium Executing Entity (MSME) Micro/Small Project/Programme

european capacity building initiativeecbi Adaptation Fund Local Provincial National International Implementing Entity Intermediary Large Executing Entity Medium/Large Project/Programme Micro/Small/Medium Executing Entity (MSME) Micro/Small Project/Programme NIE MIE/RIEs

european capacity building initiativeecbi GCF Enhanced Direct Access (Pilot Phase?) Local Provincial National International Implementing Entity Intermediary Large Executing Entity Medium/Large Project/Programme Micro/Small/Medium Executing Entity (MSME) Micro/Small Project/Programme NFE Mitigation Adaptation Foreign public sector funding stream consolidation through national gateway (National Funding Entity) In-country devolved access to the provincial and local level for engaging local stakeholders (communities, MSMEs)

european capacity building initiativeecbi The Status Quo Scenario Local Provincial National International NIE The Fund continues its current interim arrangements with the Global Environment Facility (GEF) and the World Bank, and its lines of accountability and reporting under the authority and guidance by the CMP. The Fund and the GCF are functionally independent from one another. Coherence could be enhanced through common guidance

european capacity building initiativeecbi The Institutional Integration Scenario Local Provincial National International NIE Different degrees of integration between the Fund and the GCF could be envisaged. Possible options may include the Fund serving as: the “Adaptation Window” of the GCF; a specialized instrument or window of the GCF; or a dedicated mechanism based on innovative sources (building on the experience of the CER-monetization process), etc. The AF Board would have no role to play in such an “institutional integration” or rather replication All Micro and Small project proposals for international GCF funding would instead be administratively approved The AF would not be a “window” or “instrument” under this form of “integration”, it would simply cease to exist.

european capacity building initiativeecbi Why should the AF continue to exist? “It is fully operational and has a proven record, particularly in providing direct access. Indeed it is the first climate fund to engage in enhanced direct access, providing not only country ownership but country driven-ness. It is currently the only Fund with direct access projects/programmes under implementation; It is also operationally independent and able to perform its functions without extensive external support;” “Given its unique mandate to address concrete adaptation projects, the Fund can provide targeted and specialised support to project proponents, even for smaller projects in highly localized contexts;” “Its governance structure allows for greater (recipient) country ownership.” The AF is a multilateral funding instrument tailor-made for and dedicated exclusively to (‘small-scale’) concrete adaptation projects with specialised services that cannot (cost) effectively be provided by wholesale funders.

european capacity building initiativeecbi The Operational Linkage Scenario Local Provincial National International NIE AF as GCF Multilateral Adaptation Funding Entity (“Multilateral Funding Window”) Given the legal capacity of the Board, the GCF could conclude agreements with it, limited to certain operational aspects. This modality would allow the GCF to channel some of its operations (and resources) through the Fund (e.g. direct access, concrete adaptation projects). These agreements do not imply any change in the institutional arrangements for the Fund, and could be concluded by the Board regardless of them.

european capacity building initiativeecbi GCF Enhanced Multilateral Access Local Provincial National International NIE Multilateral Adaptation Funding Entity Multilateral Mitigation Funding Entities

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