Adaptation Fund accreditation to the Green Climate Fund

Legal assistance paper

All reasonable efforts have been made to ensure the accuracy of this information at the time the advice was produced (please refer to the date produced below). However, the materials have been prepared for informational purposes only and may have been superseded by more recent developments. They do not constitute formal legal advice or create a lawyer-client relationship. You should seek legal advice to take account of your own interests. To the extent permitted any liability is excluded. Those consulting the database may wish to contact LRI for clarifications and an updated analysis.

Date produced: 18/01/2018

Please consider the Adaptation Fund Board’s governance and regulatory alignment with the Green Climate Fund’s accreditation requirements


This advice maps the requirements for accreditation to the Green Climate Fund (GCF) and considers whether the Adaptation Fund’s (AF) governance and regulatory framework reveal evident initial gaps for accrediting the AF Board (AFB) to the GCF. The GCF’s accreditation requirements consist of several principles, standards and processes that the applicant entity must demonstrate to have in place and effectively operate. They are broadly divided into: i) environmental and social safeguards; ii) fiduciary standards; and iii) gender considerations. After matching such requirements to the existing policies and guidelines of the Adaptation Fund, no fundamental gaps have been identified.[1] Rather, it emerges that, under the ‘fit-for-purpose approach’ of the GCF’s accreditation process, the AFB could be identified and vetted as an international financial intermediary eligible to receive funding for micro/small-scale adaptation projects across all types of potential associated risks.

Beyond the formal requirements under the accreditation process, this advice identifies other governance aspects that parties and stakeholders should consider, and will most likely inform decision-making before and during the accreditation process. These are: i) duplication of processes and bureaucracy; ii) agency and responsibility chains; iii) the AF’s future role under the GCF’s investment criteria and strategy; and iv) the negotiating process under the CMA for determining how the AF shall ‘serve the Paris Agreement’ and its relationship to accreditation. The advice charts initial possibilities and avenues for addressing also these issues.



1.     The Adaptation Fund (AF or the Fund) was established in 2001 by the CMP as a special vehicle to finance concrete adaptation projects and programmes. The Fund was originally conceived to rely on the shares of proceeds from the sale of levied Certified Emission Reductions (CERs) from the Clean Development Mechanism under the Kyoto Protocol.[2]  Currently, the core governance structure of the Adaptation Fund comprises a Board (AFB), a Secretariat, and a Trustee (currently the World Bank). There are also three subsidiary bodies: an Accreditation Panel, an Ethics and Finance Committee and a Project and Programme Review Committee. The AFB is the regulatory and executive entity of the Fund and the only organ therein to have formal legal capacity under German Law.

2.     Access to AF’s resources is limited to accredited Implementing Entities, which can be of national, regional or international legal nature. According to the Operational Policies of the Fund,[3] Implementing Entities must submit a proposal for each project and receive formal endorsement from the national public agency of the state where such project will take place. Proposals go through a detailed vetting process of compliance with all AF relevant policies and strategies until funding is eventually approved by the AFB. Such mode of operation is akin to those of other UNFCCC-based Trust Funds operated either by the Global Environment Facility or the Green Climate Fund (GCF).[4]

3.     Despite its successes and positive evaluations, the AF is currently facing two major challenges: its strategic positioning in the complex institutional architecture of global climate adaptation finance; and its unstable levels of resource mobilisation. About the latter, since the fall of CERs’ prices in the carbon market in 2011-12,[5] the AF has been struggling in securing a sustainable, predictable and adequate funding for the medium-term. This has led the AFB to arrange for alternative means of resource mobilization —eminently via direct donations from states.[6] As a result, the AF is now mostly relying on casual donations from states and sub-national entities and, in doing that, is competing with other trust funds receiving financial resources for climate adaptation.[7] For what concerns the Fund’s repositioning in the institutional landscape of adaptation finance, in COP23 the CMP decided that the AF ‘shall serve the Paris Agreement’ (PA), pending a future decision by the CMA in December 2018 at its third meeting of the first session.[8] Also, with the support of the CMP in October 2017,[9] the AFB decided ‘to initiate a process for accreditation with the GCF’. [10]

The potential accreditation of the AFB by the GCF as an international Accredited Entity will not only address issues of linkages, coherence and complementarity between the Funds, but might also offer a more effective avenue for sustained and adequate financial resources.[11] In this context, the Secretariat and the Co-Chairs of the AFB have already started engagements and discussions with the respective counter-parts of the GCF.[12]


4.     In response to the query, this advice offers an initial mapping and assessment of the AFB’s governance and regulatory alignment with the requirements for accreditation according to the relevant policies of the GCF. Similar to the AF’s framework, only Accredited Entities to GCF can submit project or programme proposals and directly receive financial support from the GCF. To achieve accreditation, these entities must undergo a process aimed at checking their compliance to several governance and regulatory requirements. Thus, the approach of this advice is to offer a mapping of these requirements and assess whether evident initial gaps emerge from the AFB’s framework and track-record. Therefore, this advice is not intended as a detailed and comprehensive assessment of the AFB’s regulatory compliance with the accreditation standards of the GCF. Governance and regulatory initial gaps are identified by comparing similar thematic elements that both the AF and the GCF address in their framework. These elements are contained in different policy documents adopted by the respective Boards.

5.      Moreover, beyond the question of full alignment and compliance of the AFB with such requirements, its practical operation as an Accredited Entity to the GCF also raises the following considerations: i) duplication of processes and bureaucracy; ii) agency and responsibility chains; iii) the AF’s future role under the GCF’s investment criteria and strategy; iv) the negotiating process under the CMA for determining how the AF shall ‘serve the Paris Agreement’ and its relationship to accreditation. These aspects are also generally assessed below.

The process for accreditation to the GCF

6.     The process for accrediting to the GCF is divided into three stages: i) after an application is submitted, the GCF Secretariat makes an initial completeness check; ii) the application is then reviewed by the GCF Accreditation Panel and approved by the GCF Board; iii) finally, the applicant and the GCF enter into an Accreditation Master Agreement, determining their bilateral relationship.[13] Applicant entities are accredited according to a scaled ‘risk-based and fit-for purpose approach’, which determines the track-record, and capacity of the Accredited Entity in financing or managing different types of projects. Depending on the assessed level of capacity, the entity will be accredited as eligible to submit project proposals that enter within identified risk categories and levels of financial intermediation. Being the only entity holding legal capacity in the AF, it will be for the Adaptation Fund Board to formally apply for accreditation and enter into an Accreditation Master Agreement with the GCF.

7.     As to the AF’s track-record and capacity, an appropriate fit under the GCF could be that of an international financial intermediary eligible to receive funding for micro/small-scale adaptation projects across all types of potential associated risks.[15] This stems from the following: first, under the GCF’s framework, financial intermediaries are Accredited Entities that demonstrate ‘additional specialized capacities’ to intermediate or administer grants and loans, to blend GCF’s resources together with their own resources and, in general, to arrange and manage their financial relationship with entities that receive funding and execute projects on the ground. The AF appears to conform with this type of Accredited Entity.[16] Second, the track-record of funded projects by the AF shows that only in one case the funding threshold of USD 10 million has been passed.[17] Hence, to date the AF has been mostly financing micro-scale adaptation projects according to the GCF’s categorisation.[18] Finally, the AF Operational Policies utilize the same project risk categories and risk-mitigation framework of the GCF when assessing project proposals.[19]

Substantive requirements for accreditation to the GCF

8.     According to the GCF’s Accreditation Framework,[20] every applicant entity must show capacity to include and implement several principles and standards in its operations. These can broadly be divided into: i) environmental and social safeguards ii) fiduciary standards; and iii) gender considerations.

Environmental and social safeguards

9.     The GCF’s Environmental and Social Safeguards comprise principles, standards and a management system that Accredited Entities are expected to reflect in their own framework of operations.[21] It is not required that Accredited Entities formally adopt the GCF’s safeguards, but that their own framework is at least as rigorous as the one of the GCF. The GCF’s Environmental and Social Safeguards principles have been recently listed in a proposed (i.e. not-yet-binding) policy.[22] While they enlist a set of aspirations and approaches, those in the table below are identified as part of the GCF’s screening process of Accredited Entities. Therefore, they are matched with the existing principles and approaches of the AF’s Environmental and Social Policy[23] and other policies and guidelines containing equivalent elements. This matching effort does not assess substantive equivalence, but simply the presence of similar principles and approaches within the AF’s framework.

Table 1: Comparing GCF and AF’s environmental and social safeguards principles and standards

GCF’s Environmental and Social Safeguards Principles & StandardsAF’s Environmental and Social Policy Principles
Integration of environmental and social sustainabilityEnvironmental and Social Policy Delivery Process
Equality and non-discriminationMarginalised and vulnerable groups
Risk mitigation hierarchyEnvironmental and Social Policy Delivery Process
Stakeholder engagement and disclosureConsultative process and Information Policy
Gender-sensitive approachGender and women empowerment
Compliance with applicable lawsCompliance with the law
Consistency with UNFCCC REDD+ safeguardsn/a
Labour and working conditionsCore labour rights
Indigenous peoplesMarginalised and vulnerable groups and core labour rights
Human rightsHuman rights
BiodiversityConservation of biological diversity
IFC Performance Standard 3Climate change mitigation
IFC Performance Standard 3Pollution and resource efficiency
IFC Performance Standard 4Public health
IFC Performance Standard 8Physical and cultural heritage

From the table it appears that the AF Environmental and Social regulatory framework broadly replicates the one of the GCF in all its principles and thematic components. Moreover, both require that their respective Accredited/Implementing Entities consider and implement these or other equivalent standards across the whole project cycle. Yet, at the outset, there is an evident difference between the two frameworks on the substance of certain standards: as the GCF has adopted ad interim the IFC Performance Standards[27], these display a higher level of detail as to the requirements and procedures that entities should follow to secure certain sustainable development outcomes. By contrast, the AF’s related guidance adopts an approach that integrates its principles and processes with parallel international standards from existing multilateral treaties and international organizations.[28] Also, it is noteworthy that these standards are not only requirements to the AFB itself, but also to the AF’s Implementing Entities. These aspects will likely be included in a detailed assessment for accreditation.

Fiduciary standards

10.  The GCF’s accreditation requirements distinguish between ‘basic’ and ‘special’ fiduciary standards. All applicant entities must demonstrate a track-record of compliance with basic standards comprising aspects of general management and administrative capacities; financial management and accounting; internal and external audit; and transparency and accountability.[29]

In addition, applicant entities must comply with special fiduciary standards, depending on their nature and role under the GCF’s operations. These are divided in three types: i) standards for entities directly involved in project management; ii) in grant award mechanisms; and iii) for intermediaries using financial instruments with GCF’s funding (‘lending and blending’).[30]

Without making a detailed assessment of compliance with all these requirements, it suffices to stress how the AFB has a consolidated history of successful management of its Trust Fund, including disbursement of resources to its Implementing Entities, as well as a consolidated monitoring and evaluation process for each project. In reflection of the ‘fit-for-purpose’ approach in the accreditation to the GCF, it appears that, apart from the basic standards, the AFB might be vetted under the special fiduciary standards of ‘grant award’ and ‘lending and/or blending’ for being identified as a special type of financial intermediary covering both financial roles as an accredited entity.

In this regard, it is noteworthy that, in the brief history of the GCF, it would be the first time that an entity managing a project-based trust fund would be accredited.[31] This raises some governance considerations to be addressed below, as well as the possibility that also special fiduciary standards of project management might apply in the accreditation process depending of the type of role envisioned by the AFB.

Gender considerations

11.  The GCF’s accreditation policy incorporates standards for gender considerations in the institutional governance and operations of every applicant entity. These gender-related requirements stem from both the Environmental and Social Safeguards framework (see Table 1 above), as well as from a specific gender policy.[32] For what concerns regulatory alignment, the GCF’s gender policy requires that Accredited Entities include ‘policies, procedures and competencies in place to implement the Fund’s gender policy’.[33]

Without looking in detail at the substantive equivalence, since 2016 the AF has adopted a detailed gender policy and action plan.[34] The policy imposes approaches and principles of gender-related aspects for the AF and its Implementing Entities. At the outset, the policy appears very much compatible with the gender-related requirements of the GCF. The AF’s gender policy, as part of the Operational Policies to access the Fund, makes ambitious commitments and extensive reference to international standards for gender equality and equity. It also comes with a biennial (2017-19) action plan for gender mainstreaming within the Fund’s institutional structure as well as in its operations. Therefore, there appears to be no evident gaps in the AF’s framework for GCF’s accreditation in this context.

Governance considerations

12.  While there appears to be no major gaps for the AF’s framework and operations to formally work in alignment with the GCF’s accreditation requirements, there are four further issues that parties and stakeholders should consider, and will most likely inform decision making before and during the accreditation process.

The first relates to duplication of efforts and bureaucracy. As noted above, it would be the first time that the GCF would accredit an entity which operates a parallel project-based and climate-related trust fund. Given the similarities between the funds’ respective project approval cycles, an ‘accredited AFB’ would be expected to formally submit itself project/programme proposals to the GCF, and at the same time evaluate the same proposals from its Implementing Entities. While this is likely to double the process for final approval and financial disbursement —as the same proposal should first pass the AF’s project approval cycle before being submitted to the GCF— the GCF and the accredited AFB could set up special arrangements in their Accreditation Master Agreement. For instance, the Agreement could establish a fast-track approval process for project proposals already approved by the AFB.

The second issue concerns agency and responsibility chains. The current GCF accreditation framework requires that an Accredited Entity is to be held responsible for its role and commitments undertaken with the Fund. The AFB will have to carefully consider the possible forms of agency and responsibilities that will be crystallised in the Accreditation Master Agreement. These are strictly linked with the specific role for the AFB that the parties will agree upon.

The third aspect is about the AF’s future special role under the GCF’s investment criteria and strategy.[35] As the GCF will scale-up its activities and develop its investment criteria through time, the AF will have to demonstrate how its past activity and future strategy fit within the GCF’s framework. Following a recent ‘Draft Medium Term Strategy’ presented at a recent AFB meeting, it appears that the AF is increasingly demonstrating its innovative capacity in defining crucial features of adaptation finance especially for vulnerable communities.[36] Becoming a specialist financial vehicle under the GCF, that would target small-scale adaptation projects for specific communities, might be a coherent justification for accrediting the AF.

A final issue features in parallel to accreditation and concerns the negotiating process under the CMA for determining how the AF shall ‘serve the Paris Agreement’. As there might be a passing of ‘guidance and accountability authority’ from the CMP to the CMA, the latter will have different options on identifying a specific role for the AF under the Paris Agreement. For example, the CMA could formally recognise the AF’s efforts for accreditation under the GCF and retain accreditation as sufficient to determine the ‘serving relationship’ to the Paris Agreement. Alternatively, the CMA could formalize the AF’s status by appointing the AFB as another operational entity of the UNFCCC/PA Financial Mechanism; in this way asserting the co-existence of the AFB with the GCF and the GEF in the institutional architecture of the Paris Agreement, regardless of accreditation. Overall, then, the AF’s accreditation to the GCF might fully define or be part of the ways in which the CMA will define the AF’s modalities for serving the PA.


[1] This advice should not be intended as a detailed and comprehensive assessment of the AFB’s regulatory compliance with the accreditation standards of the GCF, as this would require a more detailed and extensive study.
[2] See Decision 10/CP.7,
[3] As amended in October 2017,
[4] These are the Global Environment Facility Trust Fund (not restricted to UNFCCC funding), the Least-Developed Countries Trust Fund, the Special Climate Change Fund, and the Green Climate Fund Trust Fund. The Green Climate Fund and the Global Environment Facility are the operational entities of the UNFCCC and Paris Agreement’s Financial Mechanism.
[5] ‘UN-Led Carbon Market “Close to Collapse”’ (Financial Times, 2 October 2012)
[6] See AF, ‘Resource Mobilization Strategy’ (October 2016),
[7] Decision -/CMP.13, ‘Report of the Adaptation Fund Board’,
[8] Ibid., paras 12-3. It will be decided by CMP.15 whether the AF will serve exclusively the PA or also the KP.
[9] Decision 2/CMP.12, ‘Report of the Adaptation Fund Board’, para 11,
[10] As reported by (an official Decision of the AFB has not yet been published).
[11] Mueller B, ‘Time to Decide! The Adaptation Fund after Marrakech’ (January 2017),
[12] As reported in AF Secretariat, ‘Strategic Discussion on Objectives and Further Steps of the Fund’, AFB/B.30/6 (10 October 2017),
[13] GCF, ‘Initial guiding framework for the Fund’s accreditation Process’ (May 2014) GCF/B.07/12, Annex I.
[14] GCF, ‘Guidelines for the Operationalization of the Fit‐for‐purpose Accreditation Approach’ (October 2014) GCF/B.08/02, p.4,
[15] Ibid., at 16 and Annex III.
[16] The other type of Accredited Entity is defined as an ‘implementing entity’, which receives funding to directly manage projects. The AF, as a typical multilateral trust fund, does not manage projects directly.
[17] See
[18] GCF’s project sizes are the following: micro projects USD 0-10 million: small USD 10-50 million; medium USD 50-250 million; large > USD 250 million. See GCF, ‘Applying Scale in the Assessment of Funding Proposals’ (8 July 2015) GCF/B.10/04, para 7,
[19] See n(2), Environmental and Social Policy, Annex 3, para 8.
[20] See n(12).
[21] This understanding relies on a regulatory framework proposed, but not yet formally adopted- at the latest (18th) GCF Board meeting. The reference documents are GCF, ‘Environmental and Social Management System’,  GCF/2017/Inf.02 (September 2017),; and GCF, ‘Interim Environmental and Social Safeguards of the Fund’, GCF/B.07/11 (October 2014), GCF Rep. Annex III
[22] Ibid. This advice refers to this draft policy as closest reference to the future environmental and social management system of the GCF.
[23] See n(2), Annex 3.
[24] This is required at project proposal stage by the AF. See AF, ‘Instructions for Project or Programme Funding for Adaptation Fund’ (November 2013), part II (H),
[25] See AF Ethics and Finance Committee, ‘Open Information Policy’, (June 2013) AFB/EFC.12/5/Rev.1,
[26] The GCF adopts the International Financial Corporation’s Performance Standards as interim Environmental and Social Standards. See IFC, ‘ Performance Standards on Environmental and Social Sustainability’ (January 2012),
[27] And by extension, their detailed ‘Guidance notes’ and ‘Environmental, Health and Safety Guidelines’,; and
[28] AF, ‘Guidance document for Implementing Entities on compliance with the Adaptation Fund Environmental and Social Policy’,
[29] These are detailed in GCF, ‘Initial fiduciary principles and standards of the Fund, GCF/B.07/11 (October 2014) Annex II,
[30] Ibid.
[31] A similar entity to the AFB might be the International Fund for Agricultural Development, already accredited with the GCF. However, the Fund itself formulates project proposals to other entities, while at this stage, this would not be the case for the AFB.
[32] GCF; ‘Gender policy for the Green Climate Fund’ (April 2015) GCF/B.09/23, Annex XIII,
[33] Ibid., para 12.
[34] AFB, ‘Gender Policy and Action Plan of the Adaptation Fund’ (March 2016) Annex IV to OPGs,
[35] The GCF’s initial criteria for funding decisions are listed in GCF, ‘Investment Framework’, (May 2014) GCF/B.07/06, p.5,
[36] (October 2017), AFB/B.30/5/Rev.1,