The Green Climate Fund, the biggest multilateral climate fund, is a good example of an institution whose built-in learning structures and accountability have allowed it to remain relevant. Archi Rastogi discusses what the fund can teach us about multilateral organisations. In an article on the Policy Options website.
What the Green Climate Fund can teach us about multilateral organizations
The United Nations marked its 75th anniversary in September, and with the milestone has come scrutiny – yet again – of the relevance of multilateral institutions (including the UN and other institutions). Experts have long criticized multilateral systems for their high budgets, excessive fragmentation across agencies and hegemony of a few members. Supporters of such organizations argue that it is the states that need to deliver on promised resources, there is no alternative, and if the UN didn’t exist it would have to be invented. A recent report by the Brookings Institute finds that multilateral systems remain imperfect but relevant to mobilize collective action and protect core values.
Lately, some governments and political actors have displayed a tendency to walk away from multilateral systems and have called for disengagement. The challenges created by a global pandemic, the increasing fragmentation of a global system once dominated by one or two superpowers and the profound human and economic losses in 2020 have all contributed to this tendency.
The Green Climate Fund (GCF) is the biggest multilateral climate fund. My colleagues and I at the Independent Evaluation Unit (IEU) of the GCF spend a lot of time thinking about the effectiveness and relevance of this institution – whether it does things right, and whether it does the right things. We have found that the GCF (like most other institutions) can make no claim to be perfect (yet) but an outright dismissal of it would be quite premature.
Multilateral organizations peaked in their relevance after the major wars of the last century. The most high-profile ones, like the League of Nations, were designed to broker and keep peace among nations and prevent another world war. As it became clear that there were other global challenges that needed collective responses, newer and more innovative institutions were created. For instance, climate change and pandemics require concerted responses, which can be facilitated by multilateral institutions. In response, treaties and institutions such as the UN Climate Convention and the World Health Organization have come about. Indeed, there are multilateral institutions that focus on diverse sectors like aviation, whaling or specific regional challenges.
Let us take the example of the Green Climate Fund and how it has responded to emerging needs.
Around 10 years ago, as the Parties to the UN Climate Convention were deliberating on the creation of this fund – accountable directly to the convention – a few things were very clear.
First, countries that were especially vulnerable to climate change (the small islands, for example) would have to have a seat at the table. Indeed, these were the countries that lobbied hard for climate action. Eventually the GCF was constituted with a 24-member board with equal representation from developing countries and indeed a seat for the small islands.
Second, the developing countries would drive the agenda on their own. The concept of country ownership had been conceived of already, where developing countries would establish their own priorities and determine how best to access the GCF.
Third, in the vision for the GCF, it was quite clear that developing countries would channel these financial resources on their own. In the design of the GCF, this was called “direct access.” In theory, an institution from a recipient country could directly access GCF resources. All it would have to do is get accredited to the GCF and get a nod from the country’s national designated authority. (In the accreditation process, the GCF assesses the entity’s capacity to undertake projects or programs against GCF’s standards in areas of fiduciary standards, environmental and social safeguards and gender policy.)
It was thought that developing countries would be able to drive their own agenda and develop their own capacities rather than having to rely on more traditional multilateral institutions such as the World Bank because these kinds of institutions are seen as tilting in favour of developed countries. Interestingly, this new multilateral institution was being asked to support developing countries so they could rely less on other multilateral institutions.
All of these are remarkable mandates. It was unprecedented for developing countries to so closely guide the use of development finance according to their own priorities. Other recognized best practices were also incorporated into the design of the institution. For instance, the very design of the GCF provided for the establishment of an Independent Evaluation Unit for accountability and learning (which is where I work).
The GCF’s remarkable overall mandate has worked to some extent. The intentions were sound, but the design and execution have not entirely translated just yet.
Let us take the example of accreditation, which we studied in some detail recently. By the middle of 2020, the GCF had accredited 97 entities and supported more than 120 projects. The entities ranged from a small-scale nonprofit in the Pacific to large institutions such as the World Bank and the United Nations Development Programme (UNDP). But our study found that the mandate for accreditation was too vast. The function is simple – entities apply, get vetted and if their standards align with the GCF, they get accredited to propose projects. But we found that in various discussions, different things were expected from accreditation.
In various documents, accreditation was implicitly expected to build capacities, create a large pool of partners, help entities shift their own portfolios to be climate positive, ensure that they would uphold the best standards, and together result in a paradigm shift. While all together these are noble (maybe even possible) mandates, they were all implied. There was no explicit way in which these mandates were built into the design of the institution. In other words, this was a wish list, with no clear plans. And, no surprise, accreditation was not effectively achieving any of these.
We also found that the process took too long. Far too long. It took almost two years from submission of an application to approval. And then came very lengthy legal negotiations with the GCF. This falls short for an institution that was founded to meet the urgent needs of countries. Overall, we highlighted that there was no clear strategy. The GCF had long tried to articulate what it means to be accredited and how accreditation would fit into the whole GCF system. But there was no consensus, and no strategy emerged to clarify what the accreditation function means within the GCF, or what specifically the function was meant to achieve.
But these are teething troubles. The GCF was designed to be a learning institution and it has indeed learned from its own experience. While a multilateral institution is generally slow to evolve and respond, it is also one where accountability is high.
In June 2020, the Independent Evaluation Unit recommended some of the following on accreditation:
First, we should be realistic about the mandate given to accreditation in terms of function and process. Accreditation can achieve only so much, and we should be pragmatic.
Second, there should be a strategy on accreditation. The GCF should clarify what it expects to achieve through accreditation, and what it means to be an accredited entity.
Third, the GCF should set standards for the accreditation process.
Fourth, the GCF should consider whether accreditation is indeed the way to go.
Overall, while we found many things not working with accreditation, the GCF has the capacity to learn from experience and adapt as evidence emerges. But the bigger point is that it has built in an accountability structure like the IEU to provide the board with evidence to support its decisions. Since the release of our report, many members of the GCF board have emphasized the need to improve the accreditation function. Indeed, many of these areas received consideration in the GCF’s updated strategic plan, adopted by the board in November 2020. The GCF is learning from its experience and it is innovating and evolving.
The example of our evaluation of accreditation shows that the GCF is by design a learning institution. Such institutions innovate, then learn from their own experience and then take steps to fix themselves to continue to fulfil their mandate. A wholesale rejection of multilateral institutions would be overkill. Indeed, such a rejection would take away from developing countries the very gains they have made so far in advocating for their interests in climate and other areas. But at the same time, multilateral institutions themselves need to demonstrate that they are agile and relevant.