Green Climate Fund restructures, aiming to become donors’ “partner of choice”

GCF Executive Director Mafalda Duarte speaks at the High-level Pledging Conference for the fund's second replenishment in October 2023. (Photo: Green Climate Fund / Ute Grabowsky)

Since the Green Climate Fund (GCF) approved its first eight projects just before the Paris Agreement was sealed in 2015, its investments to curb emissions and adapt to climate change in developing countries have grown to $15 billion across 270 projects.

Mafalda Duarte, the Portuguese climate finance specialist who heads the fund’s South Korea-based secretariat, says that after her first year in the job, she’s still discovering gems in the portfolio.

The GCF “is delivering many interesting things that are actually not known”, she told Climate Home – from its large equity investments that support entrepreneurs to a pioneering green credit guarantee company and a blended finance platform to lend to local governments.

“Because we haven’t placed enough focus on impact – and assessing the impact and assessing results – we are not able to have that information and communicate it,” she said in an exclusive interview setting out her plans to thrust the world’s biggest multilateral climate fund into the spotlight with the launch of a new organisational strategy.

Operations at the GCF’s head office in the city of Songdo are being overhauled to better track the benefits of its support for people on the frontlines of the climate crisis, to strengthen its investment partnerships, and to offer a more efficient service to the organisations that deploy its money on the ground.

The fund now has a network of around 250 partners – ranging from large UN agencies to environment ministries, banks and green NGOs – that are implementing climate programmes in some 130 countries, mainly in the Global South.

Cheaper and faster

Ever since the GCF – set up under the UN climate process – started operating about a decade ago, a key ask from these partners has been reducing the costs and the time it takes to do business with the fund, especially those based in the poorest countries with limited administrative capacity.

“That is always the primary topic of debate,” noted Duarte, who previously ran the multilateral Climate Investment Funds.

It’s an issue the GCF has made some progress in addressing. It now takes a median of four and a half months from getting a project approved by the board to the first pay-out of cash for the work to start – down from 14 months in 2022.

This July, the fund set a new record with a locally-led adaptation project for mountain farmers in Bhutan and another to strengthen watershed ecosystem management and food security in Malawi receiving money 15 days after being greenlit by the board.

Duarte told Climate Home the fund is now looking at whittling down the period from a project’s concept note to its approval from over two years to nine months by next year.

Speeding up the project process is one pillar of the executive director’s new vision which she launched last September during the UN Climate Ambition Summit in New York, just weeks after starting the job.

“50 by 30” vision

Dubbed “50 by 30”, the strategy aims to enable the GCF to efficiently manage $50 billion by 2030. Since 2014, the fund has secured total pledges of $33.1 billion – of which it has so far received $18.5 billion.

Other key goals of Duarte’s vision include boosting help for the most vulnerable countries like Somalia, increasing participation by the private sector, and shifting emphasis from one-off projects to programmes that secure wider change.

“I think there was a general understanding in the organisation that there was a need for change and for reform,” its executive director told Climate Home.

When Duarte took over, the GCF was merging from a rocky few years under previous management which led to whistleblowers exposing a range of problems – from a lack of integrity in vetting projects to a toxic workplace culture marred by sexism and racism. The fund responded by strengthening its internal procedures for handling grievances.

With those problems behind it, the GCF is now concentrating on getting more bang for its buck at the community level where climate finance needs are rising fast in line with the effects of extreme weather and rising seas.

To that end, the fund is reorganising its 300 staff into four regional teams – covering Africa, Asia-Pacific, Latin America and the Caribbean, and Eastern Europe, the Middle East and Central Asia – which will offer an integrated service to countries, from programme design to delivery.

From this month, 14 management-level hires are coming on board to lead Duarte’s twin drives to deliver greater real-world impact and win more co-investment from the private sector.

It’s an approach, she said, that’s needed to position the GCF as a “partner of choice” in a troubled world where international climate funds must compete for scarce resources from donor governments juggling multiple pressures.

“With the geopolitical context that we are facing globally, unless we see some shifts, it’s a challenging task to mobilise significant money,” said Duarte.

She has ideas for how to do that – whether it’s working more strategically with philanthropies like the Rockefeller Foundation or securing a share of new global climate levies being considered on activities such as fossil fuel production, aviation and financial trading.

“What I do want is GCF to be an institution that can deliver at scale, efficiently and with impact so that it becomes clear that it’s a key mechanism to deliver resources – whether they come from those [new] fiscal tools or they continue to come from state budgets,” Duarte said.

The GCF estimates that its projects to date will help 1 billion people become more resilient to climate change and avoid emissions equivalent to 3 billion tonnes of carbon dioxide.

Trump risk

For its second replenishment in 2023, the Green Climate Fund secured commitments of $12.8 billion from predominantly wealthy governments – its largest fundraising round to date – but that includes $3 billion from the United States, which has yet to deliver $1 billion of an earlier $3 billion pledge.

The White House struggles to persuade a Republican-led Congress to stump up money for the GCF at the best of times – but should Donald Trump be elected as its next inhabitant in November, all bets are off. During his first stint as president, the climate-sceptic Republican criticised the GCF harshly and delivered nothing.

Duarte admits the outcome of the US election could be a threat to the GCF’s bank balance – and stressed the importance of being prepared for any donors ducking their promises.

“It is a risk; it is a risk that we have seen before as well – and to be honest, it’s a risk that I don’t know if we will not see more of given political dynamics,” she added.

Donor priorities

That means Duarte’s new management team have a major task on their hands to persuade both existing contributors and new ones – which could include richer emerging economies, private foundations or venture capitalists – to pour billions more into its coffers this decade.

Its boss argues that wealthy governments should raise their ambition in backing the GCF – but believes the onus is on the climate community to show why putting money into efforts to cut planet-heating emissions and protect people from global warming in vulnerable parts of the world is a wise investment.

“There are significant macroeconomic and geopolitical constraints that countries are facing – but we also know that they mobilise funding for what they consider to be priorities,” Duarte said. “So I think the goal is for all of us to continue to make the case that [climate] needs to be more of a priority when countries think of allocating public resources.”

(Reporting by Megan Rowling; editing by Matteo Civillini)