Your Excellencies, distinguished guests, ladies, and gentlemen,
Please allow me to welcome you to this 2022 GCF Global Programming Conference. I would like also to offer a warm welcome to those joining us online and to express my deepest thanks to Mayor Yoo Jeong-bok for hosting this event in Incheon, Korea, the home of GCF.
This is the first in-person Global Programming Conference for three years. The world has changed significantly since our last GPC in 2019. Rising fuel and food prices, growing public debt, high inflation rates, increasing number of people living in extreme poverty, recovery from the pandemic and the changing structure of international politics all bring significant challenges to climate action.
While we must recognize these challenges, we must also recognize the window of opportunity to meet the goals of the Paris Agreement and avoid catastrophic climate change is rapidly closing. Since our last GPC, the IPCC sixth assessment cycle has delivered its working group reports confirming with very high confidence that ‘Global warming, reaching 1.5°C in the near-term, would cause unavoidable increases in multiple climate hazards and present multiple risks to ecosystems and humans’.
As we have heard from Prime Minister Brown and Deputy Prime Minister Bytyqi, there is no time for delay. We must act now to secure a livable future for people and the planet. There are enormous tasks ahead of us – we must reach net-zero emissions by 2050 to avoid unmanageable climate change and immediately scale up adaption efforts to manage unavoidable climate impacts. This will require integrated approaches that leverage climate action to promote inclusive and sustainable development.
The outcomes of this Global Programming Conference will inform our ongoing programming work and will educate the updated GCF 2024-2027 Strategic Plan and GCF-2 replenishment. GCF is now entering its second replenishment, which will culminate with a pledging conference in Autumn 2023. The GCF-2 replenishment is critical for global climate action and ambition. And this conference can play a key role in setting out the needs and expectations of developing countries for GCF’s next funding period – and for setting the tone for an ambitious replenishment to provide the resources required.
I hope to hear from many of you over the coming days about your hopes and expectations for the GCF-2 period, and how we can work more effectively with you to deliver your climate ambitions. For a successful GCF-2 replenishment that builds on GCF-1, we must have a credible programming track record combined with a compelling vision for the future. Achieving a successful replenishment will also require strong political support from our partner countries throughout 2022 and 2023.
GCF is fundamentally a partnership institution, working for, through and with partners to deliver climate results. Today, 148 countries have designated a National Designated Authority/Focal Point and GCF has established a network of 113 Accredited Entities and over 200 delivery partners. Thanks to the commitment and hard of this partnership, GCF has a solid track record. During the current GCF-1 period, which runs from 2019 until 2023, GCF has made tremendous progress in terms of organizational development, strategy, programming, portfolio implementation, and risk and result management.
In terms of programming, let’s go quickly through a few key numbers. GCF has committed $ 10.8 billion of its resources (USD 40.2 billion with co-financing) to 200 projects. We have a maturing portfolio with 81% of projects under implementation. We supported 141 developing countries in building readiness to implement climate finance through grants totaling USD 423.5 million.
The remaining Board meetings of GCF-1 should consolidate this dynamic. I am pleased to confirm that the GCF and its partners are to deliver a large pipeline of Funding Proposals for B34 with an important number of them covering DAEs, adaptation, and private sector. ITAP is currently reviewing 17 funding proposals with a GCF commitment of close to $1.6B. We intend to fully use our commitment authority for the 34th GCF Board meeting next October and schedule for submission to our 35th Board meeting next March any Funding Proposal that cannot be accommodated within our commitment authority for B.34.
Today, GCF is also reaching organizational maturity with a clear identity and confidence in the unique value we can bring. At the heart of our organizational development work is increasing the ability of developing countries to access climate finance. There are several dimensions to access, namely speed, simplicity, harmonization, volume, and direct access; and I would like to set out how GCF has been taking steps to enhance each of these five dimensions.
Speed is the first dimension.
If GCF is replenished every 4 years, funds pledged by financial contributors are usually transferred to the Fund in annual instalments. GCF is determined to avoid sitting on idle funds, and we aim to programme these resources as soon as transferred. At COP 26, we were able to confirm that GCF had committed all its available resources at that point in time to priority climate projects, and we anticipate being able to do the same at COP27. Today, GCF can programme its funds as soon as available thanks to significant strides made in increasing the speed of project appraisal, approval, implementation, and disbursement. For example, the time taken from first review of funding proposals to first disbursement has fallen considerably, from 26-28 months in 2018, down to 12-17 months for projects approved last year. Today, we are one of the fastest financial institutions for full scale projects (over $ 25 million).
Simplicity is also critical.
We are continuing to take steps to simplify our procedures for securing climate finance. This year our Board has approved new measures to further streamline our Simplified Approval Process or SAP. This is a significant reform which will further simplify the documentation required for proposals and develop an expedited review process for SAP projects. The level of GCF funding for SAP projects/programmes will also increase from USD 10 million to up to USD 25 million. In parallel, we have also initiated a major re-engineering of our business processes to accelerate the approval and implementation of small-scale readiness grants (usually less than $ 1 million), by better tailoring proposal review and second level due diligence to project risks.
Another breakthrough in terms of simplification and streamlining of processes was the adoption by the GCF Board earlier this year of a new Project Specific Assessment Approach. This will allow organisations to bring climate project proposals directly to GCF for rapid consideration, rather than having to undertake accreditation as a prior and separate step. This initiative will be formally launched in 2023, coupled with a capacity development initiative that will target the development of locally led projects in partnership with GCF National Designated Authorities in LDCs, SIDS and African States.
GCF has also streamlined and codified all its project development, appraisal, and implementation procedures. GCF programming and appraisal manuals can be downloaded from our website, together with our project development and appraisal tools. These manuals and tools aim to empower our project development partners, standardize the appraisal process, and avoid delays associated with unnecessary back-and-forth during the project development cycle.
Harmonization is the third dimension of access I would like to highlight.
These GCF simplification measures are important, and I look forward to hearing your ideas about how we can further simplify our procedures. However, they cannot solve this problem alone. In seeking climate finance, developing countries must address multiple channels of finance of which GCF is only one. Developing countries, particularly SIDS and LDCs, might have to engage with several dozens of multilateral, bilateral, and non-governmental climate financiers, each with different requirements and application procedures. Harmonization is therefore key to achieving greater simplicity in access to climate finance. Here, GCF is ideally positioned, to take the lead. With over 200 delivery partners, our role is increasingly to act as a hub of climate finance and create coalitions for transformative change.
We aim to leverage this role of climate hub to unify processes with multilateral institutions, delivery partners and bilateral financing partners. I would highlight in particular our work on complementarity and coherence with other climate funds, for example our Long-term Vision approach with the Global Environment Facility, and our ongoing partnership initiatives with the Adaptation Fund and Climate Investment Funds.
Volume is the next critical dimension of access.
After B.34 and by the time of COP27 we should have over USD 45 billion in assets under management, including almost $ 12 billion of GCF resources in co-financing. However, it should be recognized that GCF, whilst the largest dedicated climate fund, only accounts for around 2-3% of global climate finance flows under the UNFCCC; 0.5% of total climate finance flows; and less than 0.1% of total climate finance investment requirements. It is therefore critical for us to use our resources in a catalytic manner to mobilise much larger sums of climate finance from both public and private sectors.
We have adopted a four-pronged approach to unlock climate innovation and investment and enable developing countries to access climate finance at scale. They are: (i) enhancing the capacity of countries to establish an enabling environment for climate action; (ii) enabling innovators in developing countries to ground truth new climate solutions; (iii) de-risking through blended finance early investments in new climate solutions; and (iv) greening the financial sector to accelerate the widespread adoption of proven climate solutions.
We also recognize that a project-by-project approach is unlikely to reach scale fast enough to advert catastrophic climate change. With its partners, GCF is working on several co-investment platforms to accelerate climate innovation and investment. Here again, we will aim to leverage our capacity to convene and share knowledge as a hub of the climate finance architecture to create coalitions for transformative change.
This includes a “Green and Sustainable Debt Platform” to increase developing countries’ access to domestic, regional, and international capital markets and several regional blue economy co-investment platforms, which will federate different sources of public and private finance for some of the most climate vulnerable countries in the world, without increasing their debt burden. We look forward to discussing some of the initiatives during our regional and thematic sessions in the coming three days.
Finally, and most importantly, support for enhancing direct access is key to access climate finance as it leverages local expertise and strengthen country ownership. I am pleased to report that we are on-track to achieve the objective of our Updated Strategic Plan 2020-2023 of increasing the portfolio share managed by direct access entities, which has risen from 13% during the IRM period (2015-2019) to 17% in cumulative terms to date thanks to a significant increase in direct access during the first three years of GCF-1. Our Board is currently considering an accreditation strategy, which would allow a greater prioritization of the accreditation of direct access entities.
Your Excellences, together we are already delivering, and we can do much more in future, with more resources. This conference will provide important feedback on our future priorities and can help us to set a vision for an ambitious GCF-2 replenishment. Once again, thank you for joining us and for your participation and insights in this global programming conference.