The Fund utilizes a variety of financial instruments to realise these projects. These include grants, concessional debt financing, equity and guarantees. GCF private sector support includes assisting entities to tap financial markets.
Accredited Entities comprise the core of GCF’s funding proposal cycle. They are responsible for presenting funding applications to GCF, and then overseeing, supervising, managing and monitoring the overall GCF-approved projects and programmes.
It is not necessary for Accredited Entities to act as the direct implementer of funding proposals. Executing Entities can also do this on behalf of Accredited Entities by channelling funds and carrying out the funded activity. In these cases, Accredited Entities will continue to be important as they maintain oversight of Executive Entities’ GCF-related activities.
GCF project approval is built on the need to support developing country priorities. Developing countries nominate National Designated Authorities (NDAs) or focal points to act as the point of communication with GCF. Every project the GCF Board agrees to fund must be endorsed, expressed via a no objection letter, by the NDA or focal point. A full list of NDAs is available here.
GCF recognises developing countries may face capacity constraints in developing climate finance proposals. That is why it has established the Project Preparation Facility to provide financial support to help Accredited Entities prepare projects and programmes. The facility is specially targeted to support Direct Access Entities, and micro-to-small size category projects.
Generation of Funding ProposalsAccredited Entities develop funding proposals, in close consultation with NDAs or focal points, based on the differing climate finance needs of individual developing countries. Accredited Entities can also respond to Requests for Proposals issued by GCF to fill current gaps in climate financing. In issuing some Requests for Proposals, GCF may accept proposals from entities it has not yet accredited. However, non-accredited entities will have to team-up with Accredited Entities when formally submitting funding proposals to GCF. Entities that submit proposals through the Requests for Proposals can be prioritized when applying for accreditation.
Requests for ProposalsThe GCF Board has established several supporting programmes to issue Requests for Proposals.
1. Micro- Small-, and Medium-Sized Enterprises Pilot ProgrammeThe micro- , small-, and medium-sized enterprises pilot programme was established by the GCF Board in 2016 as part of the Private Sector Facility. The programme aims to support micro- , small-, and medium-sized Enterprises in addressing mitigation and adaptation challenges. Further information on the micro- , small-, and medium-sized enterprises pilot programme can be found on the GCF website here.
2. Enhancing Direct AccessThe GCF Board approved an initial allocation of USD 200 million for 10 pilots funding proposal adopting Enhance Direct Access implementation modalities.
Further details can be found on Enhancing Direct Access FAQ (Frequently Asked Questions) and on the GCF website here.
3. Mobilising Funding at Scale Pilot ProgrammeThe GCF Board has allocated up to USD 500 million for the Mobilising Funding at Scale Pilot Programme to identify innovative, high-impact projects and programmes that mobilize private sector investment in climate change activity.
Details about how to access this Pilot Programme will be issued by the Fund once the modalities for the Programme have been approved.
Simplified Approval ProcessConcept notes for some small-scale projects may also be submitted for consideration under the Simplified Approval Process (SAP). Under the SAP, the documentation and review processes for bringing projects or programmes from conception to implementation are reduced and simplified. Accredited Entities, National Designated Authorities (NDAs) or Focal Points and their partners may choose to submit concept notes under the SAP if the project or programme meet three main eligibility criteria:
- Ready for scaling up and having the potential for transformation, promoting a paradigm shift to low-emission and climate-resilient development;
- A request for financing to the GCF of up to USD 10 million of the total project budget; and
- The environmental and social risks and impacts are classified as minimal to none.