Current Affairs 2022 : Green Climate Fund and its Highlights

By Ankita Rawat

The Green Climate Fund is the world’s biggest climate fund committed to helping developing nations take climate action. Read further to get a glimpse of the Green Climate Fund.

 

The Green Climate Fund helps developing countries reduce or limit their greenhouse gas emissions and adapt to climate change. GCF aims to promote a paradigm shift to climate-resilient and low-emission development, taking into consideration the needs of countries that are especially vulnerable to climate change impacts.

Green Climate Fund (GCF) was established by 194 countries, those countries were parties to UNFCCC (United Nations Framework Convention on Climate Change) in 2010, as part of the Convention’s financial mechanism. GCF aims to provide equal amounts of funding to adaptation and mitigation under the guidance of UNFCCC’s provisions and principles. The relationship between GCF and COP is stipulated in the arrangements between the two as described in decision 5/CP.19. The fund is monitored by the GCF Board, functions & accountable under the guidance of the COP to support policies, programmes, projects, and other activities

In 2015, during the Paris Agreement the GCF was given a major role in serving the agreement and providing support to keep global temperature rise will less than 2 degrees celsius. Replying to the climate challenge needs collective actions from all the nations including both the private and public sectors. Among these collective efforts, advanced economies have agreed to mutually mobilize some financial resources. Getting from various sources, these resources address the pressing adaptation and mitigation needs of developing nation parties using thematic funding windows.

Transformative Approach of Green Climate Fund

GCF acquires their aim by investing across four transitions- energy & industry, built environment, livelihoods, human security, well-being, forests and ecosystems, land use, and employing a four-pronged approach.

1. Transformational Planning and Programming- by promoting integrated planning, strategies, and policymaking to maximise the co-benefits between adaptation, mitigation, and sustainable development.

2. Catalysing climate innovation- by investing in business models, new technologies, and practices to set up a proof of concept.

3. De-risking investment to mobilize finance at scale- by using few public resources to improve the risk-reward profile of low emission climate-resilient investment, notably for adaptation, nature-based solutions, small island developing states, least developed countries, and crowd-in private finance.

4. Mainstreaming climate opportunities and risks into investment decision-making to align finance with sustainable development by promoting standards, practices, and methodologies that foster new values and norms.

Climate change offers businesses an extraordinary chance to capitalize on new investment and growth opportunities that can protect the planet as well.

Key Features of Green Climate Fund

Country Driven

The GCF’s core principle is to follow a country-driven approach, which means developing countries lead Green Climate Fund implementation and programming. Country ownership of GCF financing decisions enables developing countries to change NDC objectives into climate action. Green Climate Fund’s nation-driven approach is bolstered by capacity-building assistance through its readiness programme that is available to all the developing countries.

An open partnership organisation

For project design and implementation, GCF operates through networking over 200 accreditation entities and delivery partners that work directly with developing countries. GCF partners include national commercial and international banks, regional, multilateral, and national development finance institutions, equity funds institutions, United Nations agencies, and civil society organisations. The open partnership enables the Fund to foster the extraordinary coalitions between private investors, civil society organizations, and development agencies to support the harmonisation of standards and practices, and achieve transformative change.

Balanced Allocation

Green Climate Fund must invest 50% of its resources to adaptation in grant equivalent and 50% to mitigation. However, half of its adaptation resources must be invested in most climate-vulnerable countries (LDCs, African States, and SIDS). The Green Climate Fund programming strategy acknowledges that they must scale up the adaptation and mitigation efforts, also aim to leverage minimize and synergy potential trade-offs between mitigation and adaptation.

Risk-taking, patient capital

Green Climate Fund add value to their partners by allowing them to raise the vision of their climate action. By leveraging the risk management capacity of their partners and set of investments, results in management frameworks, risk, GCF could accept huge risks to assist the early-stage project development and policy, technological, institutional, and financial innovation to promote climate finance. The capacity to take risks is supported by a robust second level diligence system.

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About the Author

  Ankita Rawat is doing graduation in BA(JMC) from JIMS Vasant Kunj, New Delhi.