Executive Director Hela Cheikhrouhou says safeguards will ensure only ‘low carbon and resilient’ projects receive funding
By Ed King
The head of the UN’s flagship climate fund has defended it from accusations that it could finance fossil fuel projects in developing countries.
Hela Cheikhrouhou told RTCC she was confident the choice of investment guidelines used by the World Bank’s private-sector lending arm, the International Finance Corporation (IFC), would allow it help economies shift to low carbon and resilient pathways.
The IFC safeguards stress that detailed social and environmental reviews must be integrated into every proposed investment, but they do allow for financing of oil, gas and mining projects.
“This is an interim solution that is the best in terms of high-quality and internationally recognised standards,” Cheikhrouhou said, adding the guidelines for the multi-billion dollar fund would be reviewed in the coming years.
“We are about investing in projects that will mitigate or help adapt to climate change, and by definition our aim is to focus on projects that will help halt and adjust this environmental issue.”
Civil society observers following Green Climate Fund talks say the IFC standards are insufficient, and could see significant sums of capital backing projects with poor environmental credentials.
ActionAid’s Brandon Wu told RTCC the GCF’s unclear language could “open the door for lots of things that the GCF has no business funding”, citing a recent example of a IFC-backed venture that was linked to human-rights abuses.
Concerns have also been raised over the decision to evaluate investments on their ‘consistency with 2 degrees goal’ which some say could lead to lower carbon fuels like gas receiving backing.
The publication of the GCF’s operating guidelines marks the end of a set of intense and frequently bitter negotiations between members of its 24-strong board, made up of delegates from developed and developing countries.
More work still needs to be done on implementing their decisions, ahead of the next gathering in October, but attention is now likely to focus on how the now-operational fund will get any money.
In 2009 rich countries promised to deliver $100 billion a year by 2020 to fund low carbon development in poorer countries, but progress towards that target has been slow.
Avoiding warming of beyond 2C will require investments of $5 trillion annually by 2020, according to a 2013 study by the World Economic Forum.
France has pledged €1 million to cover the GCF’s administrative costs, while diplomats from the UK and Germany say their countries have money allocated for its capitalisation.
Yesterday UN climate chief Christiana Figueres called for $10 billion to be delivered by the end of the year, a level Cheikhrouhou admits could be seen as a “benchmark”.
A Geneva meeting of potential donors has been scheduled for late June – but she stresses they do not have to wait until then to offer support.
“From my perspective the path is clear for those interested contributors to come forward and pledge to the fund,” she said, refusing to be drawn on where she thinks cash will come from.
What’s clear is that she does not see the GCF as a cure to decades of under-investment in developing economies, saying it is “only part of the solution” – the others being technology, capacity on the ground and political will.
This will take time the GCF may or may not have, such are the pressures and expectations that weigh on it, and the momentum an effective flow of finance could give UN negotiations on a global climate agreement.
“Five to six years from now what I would like to see is a fund working through a spectrum of international, regional and national institutions that are using our resources in a way that is supporting the most impactful projects or reforms in developing countries,” said Cheikhrouhou, adding: “and making public and private sector investors when they are making daily choices choose the greener path.”