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Necessary accountability or unnecessarily complex: The application processes of climate finance

Updated: Apr 18

Multilateral Funds such as the Green Climate Fund (GCF) were created to mobilize and direct public and private financial resources to complete works related to climate adaptation and mitigation in developing countries. Other funds include the Global Environment Facility (GEF), Adaptation Fund (AF), and Climate Investment Funds (CIFs) of the World Bank and regional Multilateral Development Banks (MDBs). The application process for climate financing from these multilateral funds is very complex, making it challenging for developing states to access diverse climate finance sources.

For instance, funding applications for the GCF require comprehensive project proposals that include detailed information on project objectives, expected outcomes, budget, implementation plan, sustainability measures and climate change impact assessment. Preparing a high-quality proposal can be time-consuming and demanding. The GCF also has specific eligibility criteria that projects must meet to be considered for funding. This includes alignment with the country's climate priorities, contribution to greenhouse gas emissions reduction or adaptation and sustainable development co-benefits. Implementing entities seeking GCF funding must undergo an accreditation process, which thoroughly assesses the entity's financial, environmental, social, and fiduciary standards. This process can take time and resources.

After GCF funding proposals are submitted, they undergo rigorous review processes by technical experts and the GCF Board, ensuring that only the most impactful and feasible projects receive funding. This evaluation process can add complexity and time to the application procedure. The GCF emphasizes capacity-building and safeguarding principles to ensure that projects positively impact local communities and the environment. Applicants will need to demonstrate their ability to adhere to these principles. It also typically requires co-financing from other sources, which means applicants must secure additional funding from various partners or funding institutions. GCF funding applications usually require engagement and coordination with the country's National Designated Authority or Focal Point, which can involve navigating national bureaucratic processes.

Another example is accessing funding from the Adaptation Fund. Accessing funding from the Adaptation Fund is also lengthy and complex. The Adaptation Fund operates under a Direct Access modality, meaning accredited National Implementing Entities (NIEs) from eligible countries can directly access and manage the funds. Before applying for Adaptation Fund financing, an implementing entity from an eligible country must first go through an accreditation process. Once accredited, the implementing entity can submit a project or program proposal to the Adaptation Fund. The Adaptation Fund places a strong emphasis on country ownership and engagement with local stakeholders throughout the project development and implementation process. The Adaptation Fund encourages applicants to integrate gender considerations into project design and implementation. The Fund requires projects to adhere to rigorous environmental and social safeguards. Proposals submitted to the Adaptation Fund go through a review and approval process by the Adaptation Fund Board. The Adaptation Fund has a limited pool of funding available, so the approval of projects depends on the availability of funds. Approved projects are required to implement robust monitoring and reporting mechanisms to track project progress and measure results effectively.

But are these listed processes necessary for adequate accountability to donor countries, or are they more unnecessarily complex and oppose the objectives of the United Nations Framework Convention on Climate Change (UNFCCC) to provide funding for vulnerable countries and instead exert donor control on who gets access, how much and how often.

Complex application processes for climate financing significantly impact vulnerable countries in various ways. Vulnerable countries often have limited financial and technical resources to navigate complex application processes. The high administrative burden and lengthy procedures strain their capacity to access climate financing. They face difficulties putting together comprehensive proposals meeting the stringent requirements, which limits their ability to secure funding. The complex application processes can result in significant delays in accessing climate funds. These delays impede timely responses to climate-related challenges, such as building resilience against extreme weather events or implementing mitigation projects. Delays in financing can exacerbate vulnerabilities to climate impacts in vulnerable countries.

Elaborate application procedures frequently demand specialized technical expertise, which might not always be readily available in PSIDS. The need to engage consultants or external experts to meet application requirements could add to the financial burden and delay the process. In some cases, stringent requirements lead to the rejection of otherwise viable projects due to minor technicalities or administrative issues. This can be disheartening as applying countries would have invested considerable effort in developing these projects. The time and resources spent navigating complex application processes will divert attention and resources from other urgent priorities such as adaptation efforts, disaster response, or economic development initiatives. Complex application processes also deter countries from seeking climate financing altogether, especially if they perceive the process as too daunting or risky. This could hinder investments in critical climate projects and slow progress towards achieving climate goals.

There must be an effective balance between the processes created to apply to these multilateral funds and the ability of the vulnerable countries to whom they were designed to assist. While the complexity of the GCF application process can present challenges for applicant countries, it is worth noting that the GCF also provides capacity-building support and technical assistance to help countries and entities better access and navigate the funding process. This is commendable, but until all vulnerable countries can access the amount needed to satisfy the full extent of their climate finance needs, funds such as the GCF are not achieving all of their objectives. The GCF must continue to enhance their accessibility and streamline procedures to improve the ease of accessing climate financing for countries as it continues to evolve and refine its mechanisms.

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