Can the Adaptation Fund Board decide to seek accreditation as a Green Climate Fund implementing entity on its own accord, or does it need a mandate from the CMP? Will an accreditation, once it has occurred, need some form of approval from the CMP?

Summary:

The decision to seek accreditation falls under the definition of a “strategic priority, policy or guidelines” in paragraph 5(a) of Decision 1/CMP.3 and therefore needs to be the subject of a proposal with recommendation for approval by the CMP.

Advice:

Although the Adaptation Fund Board has delegated to it numerous policy and decision-making abilities in order to deliver upon its mandate, paragraph 1(e) of Decision 5/CMP.2, which set out the initial specifications for the Fund, states as follows:

“The Adaptation Fund should operate under the authority and guidance of and be accountable to the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol which shall decide on its overall policies”. [emphasis added].

Decision 1 of CMP.3 provides greater detail as to the functioning of the Board, and its relationship with the CMP. Paragraph 4 provides as follows:

“Decides that the Adaptation Fund Board shall be established to supervise and manage the Adaptation Fund, under the authority and guidance of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, and shall be fully accountable to the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, which shall decide on its overall policies in line with relevant decisions”.  [emphasis added]

Furthermore, the following paragraph 5 of Decision 1/CMP.3 sets out the functions of the Board. The first two paragraphs relate to decision-making and are the most relevant; they provide that the Board has the ability:

“(a) To develop strategic priorities, policies and guidelines, and recommend their adoption to the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol;

(b) To develop and decide on specific operational policies and guidelines, including programming guidance and administrative and financial management guidelines, in accordance with decision 5/CMP.2, and to report to the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol.” [emphasis added].

All other provisions relating to the functions and powers of the Board and of the Fund must, in my view, be read in the context of the “headline” provisions above.

The questions, therefore, as to a) whether the Board has the ability, as a matter of law, to seek the accreditation of the GCF as an “implementing entity” without first seeking the mandate of the CMP; and b) if it can, whether, having obtained such accreditation, it then needs to obtain the approval of the CMP, are to be determined with reference to the provisions above.

Paragraph 5(a) of Decision 1/CMP.3 requires the Board to obtain the approval of the CMP for its proposed “strategic priorities, policies and guidelines”. By contrast, the Board has an inherent decision-making mandate itself in respect of “specific operational policies and guidelines”. The issue is therefore whether seeking accreditation as an “implementing entity” of the GCF is a “strategic priority or policy” or an “operational policy”.

It could be argued that it is an “operational policy” as it relates to how the Board raises the necessary funds to fulfil its mandate. However, with reference to the report “Strategic Discussion on Objectives and Further Steps of the Fund: Potential Linkages Between the Fund and Green Climate Fund”, the seeking of accreditation is far more than it may appear at first blush. What is being sought is, as described therein, an “institutional linkage” so that the Fund becomes one of the GCF’s delivery mechanisms of its adaptation remit. As both the Fund and the GCF are bodies created and overseen by decision-making bodies of the UNFCCC, the proposal is, in effect, for a more streamlined approach to the delivery of adaptation projects under the Convention.  Such a proposal is clearly “strategic” by its very nature, not least as the word “strategic” appears in the title of the discussion paper itself, but more importantly because it relates to the way that the Fund seeks its a significant part of its funding and aims to deliver its mandate via a new formal arrangement with a sister institution. The fact that the GCF is a sister institution under the UNFCCC adds to the strategic nature of the proposal, as it would affect the modus operandi of the GCF in an important way; the Fund is an intermediary, not a delivery vehicle of adaptation projects, and therefore not the type of organisation that the GCF has been set up to fund.

Although the language in paragraph 5 of Decision 1/CMP.3 does not give rise to a straightforward answer to the question posed, for the reasons above, I consider the proposal for accreditation to go beyond the type of “operational policy” that the AFB has the mandate to decide upon for itself.

A helpful way to consider the issue is by re-phrasing the question in the following way: would such a formal institutional linkage with wide-ranging implications for the delivery of adaptation projects under the Convention, and for the operation of both institutions, have been within what the CMP intended to mandate the Fund to decide upon itself, without CMP approval? Given the language in Decision 5/CMP.2 and Decision 1/CMP.3, my view is that the answer is in the negative.

I therefore consider that the Board needs to make a proposal, with a recommendation, to the CMP for its consideration and approval at its next meeting.