B.32/06: Review of the initial private sector facility modalities and the private sector strategy

The Board, having considered document GCF/B.32/06 titled “Review of the initial private sector facility modalities and the private sector strategy”:

  1. Takes note of the findings and recommendations in the Independent Evaluation of the GCF’s Approach to the Private Sector undertaken by the Independent Evaluation Unit, the Secretariat’s management response, and the Board’s consideration of these pursuant to decision B.30/11;
  2. Requests the Independent Evaluation Unit to present a management action report to the Board no later than one year following the adoption of this decision in line with the Evaluation Policy of GCF;
  3. Recognizes that meeting the parameters and guidelines for the allocation of resources during the GCF first replenishment programming period, as agreed under decision B.27/06, paragraph (i), requires a significant increase over 2022 and 2023 in Private Sector Facility programming overall, and in particular an increase in direct access and in adaptation programming through the Private Sector Facility;
  4. Adopts the private sector strategy as set out in annex V, which builds on the updated Strategic Plan for the GCF 2020–2023 and its strategic priority of catalysing private sector finance at scale;
  5. Requests the Secretariat to engage with national designated authorities and accredited entities to urgently promote the participation of private sector actors in developing countries, including small and medium-sized enterprises and local financial intermediaries, and to enable private sector involvement in least developed countries and small island developing States;
  6. Takes note of the proposed non-exhaustive list of priority areas for GCF private sector programming:
    1. Submission by direct access entities;
    2. Focus on adaptation;
    3. Engagement of local private sector actors, including micro, small and mediumsized enterprises;
    4. Support for climate technology incubators and accelerators in developing countries;
    5. Utilization of the diverse financial instruments of GCF, including exploring options to facilitate increased access to equity, guarantees and insurance products, and design and deployment of other innovative instruments; and
    6. Demonstration of significant potential to catalyse private sector finance at scale;
  7. Reconfirms GCF’s overall risk appetite statement that in order to realize significant impact and promote paradigm shift to meet the Fund’s strategic objectives, the Fund is willing to accept considerable uncertainties around investment risks in return for impact potential,1 which in the context of the private sector strategy means the Fund will promote enhanced support to the domestic private sector in developing countries, including through direct access entities, by providing early-stage financing to new, pre-commercially viable technologies or business models and climate initiatives, and deploy first-loss anchor investments as well as support financial innovations to catalyse investments in adaptation and mitigation projects;
  8. Requests the Secretariat to encourage and facilitate the use of the Readiness and Preparatory Support Programme and Project Preparation Facility to support countrydriven private sector engagement, through the national designated authorities, enhancing the role of the private sector in implementing nationally determined contributions, national adaptation plans and long-term climate strategies, and to accelerate the development of the private sector pipeline;
  9. Welcomes the private sector outreach plan, as contained in annex VI, noting that this is a living document that will be operationalized to promote the implementation of the private sector strategy in conjunction with delivery of the Secretariat’s annual work programmes;
  10. Takes note that the Secretariat, in implementing the private sector outreach plan, will engage with leading experts in and representatives of the private sector on a period and structured basis to advise the Private Sector Facility on global trends and opportunities for GCF in catalysing private sector financial flows for mitigation and adaptation in developing countries, and on enhancing GCF private sector engagement and programming; and
  11. Requests the Secretariat to report to the Board at its thirty-fourth meeting on the operationalization and implementation of the strategy, including a set of actions and accompanying timetable, and annually thereafter on progress in implementing the strategy and outreach plan.

1Risk appetite statement as adopted by the Board in annex VI to decision B.17/11.