Authority of the CMA to Direct the Green Climate Fund and the Standing Committee on Finance

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Date produced: 15/11/2017

1.What is the relationship between the GCF, the SCF and the CMA? 2. Does the CMA have the authority to give direct guidance to the GCF and the SCF in the same way the COP can, or must it provide such guidance through the COP? 3. How does the language in paragraphs 58 and 63 of decision 1/CP.21 (that the Green Climate Fund shall serve the Agreement and that the Standing Committee on Finance shall serve the Agreement in line with its functions and responsibilities) limit the CMA’s authority over the SCF and/or the CMA’s ability to give guidance to it?

Summary:

The relationship between the GCF and the SCF with the CMA is not yet fully determined.  The Decision 1/CP.21 text specifies that the GCF “shall serve the [Paris] Agreement” and the SCF “shall serve the [Paris] Agreement in line with its functions and responsibilities established under the Conference of the Parties.” Interpretations of what it means to “serve” the Agreement may come to inform the relationship between these entities.

The Decision 1/CP.21 text does not make explicitly clear whether the CMA has the authority to give direct guidance to the GCF and the SCF with respect to the Paris Agreement in the same way as the COP. The COP, or potentially the CMA, could clarify that the CMA can give direct guidance to the GCF and SCF, but the text can be interpreted either way at present.

The qualification in the COP decision text in paragraph 63 (“that the Standing Committee on Finance shall serve the Agreement in line with its functions and responsibilities established under the Conference of the Parties”) appears to limit the scope of CMA’s authority over the SCF to directing the SCF to perform its existing functions with respect to the financial mechanism of the Agreement. Further research into the drafters’ intent may inform whether there are other viable interpretations.

Advice:

1.The relationship between the GCF and the SCF with the CMA is not explicitly delineated. However, the Decision 1/CP.21 text does specify the relationship between the Paris Agreement and each of these entities:

  • Paragraph 58 of Decision 1/CP.21 provides that the GCF “shall serve the Agreement,” which means the GCF shall perform designated functions according to the terms of the Agreement.  This is consistent with the use of the term “serve” throughout the Agreement, as well as the Kyoto Protocol (Arts. 13-15) and other international instruments such as the Biosafety Protocol to the Convention on Biological Diversity (Art. 31).
  • Paragraph 63 of Decision 1/CP.21 provides that the SCF “shall serve the Agreement in line with its functions and responsibilities established under the Conference of the Parties.”  The mandate of the SCF under the COP is to assist the COP in exercising its functions with respect to the financial mechanism of the Convention in terms of the following:  improving coherence and coordination in the delivery of climate change financing; rationalization of the financial mechanism; mobilization of financial resources; and measurement, reporting and verification of support provided to developing country Parties.  See http://unfccc.int/bodies/standing_committee/body/6973.php.  Thus, the SCF shall assist the CMA in exercising analogous functions with respect to the financial mechanism of the Agreement.

Language concerning the role of these entities in “serving” the Paris Agreement may inform interpretations of the relationship between the CMA and these entities. Those advocating for the CMA’s authority to offer direct guidance to the GCF and SCF may argue that this is necessary for these entities to fulfil their obligation to “serve” the Paris Agreement.

One possible scenario is that the COP will continue to provide guidance to the GCF based on input from the Standing Committee on Finance and the Subsidiary Body for Implementation, with the latter being advised/informed by the CMA where relevant.

2. The Decision 1/CP.21 text does not make it explicitly clear whether the CMA has the authority to give direct guidance to the GCF and the SCF with respect to the Paris Agreement in the same way as the COP. The COP, or potentially the CMA, could clarify that the CMA can give direct guidance to the GCF and SCF, but the text can be interpreted either way at present. Different considerations may apply to the GCF and the SCF, given their different role under the Convention: the GCF is a designated operating entity of the financial mechanism whose role is to provide finance to developing country Parties, whereas the SCF has a supporting role, assisting the COP in exercising its functions in relation to the financial mechanism through specific functions and responsibilities, as mentioned in section 1 above.

As regards the GCF, some may argue that the CMA does not have direct authority to issue guidance to it and that guidance should be provided through the COP (note that this is not an obligation: the COP merely recommends that the CMA gives guidance – see para.61 below). This authority derives from paragraph 61, which explicitly describes transmission through the COP.

In paragraph 61 of Decision 1/CP.21, the COP “Recommends that the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement shall provide guidance to the entities entrusted with the operation of the Financial Mechanism of the Convention on the policies, programme priorities and eligibility criteria related to the Agreement for transmission by the Conference of the Parties.”

Others might argue that the CMA has the authority to issue guidance to the GCF directly and emphasize that paragraph 61 merely “recommends” transmitting guidance through the COP. They would likely argue the authority to extend guidance directly stems from the language in paragraphs 58 (included above), concerning the obligations of the GCF to serve the Paris Agreement. They might argue that the language in paragraph 62 further support this interpretation:

In paragraph 62 of Decision 1/CP.21, the COP decided that “the guidance to the entities entrusted with the operations of the Financial Mechanism of the Convention in relevant decisions of the Conference of the Parties shall apply mutatis mutandis to the Agreement.”  This could arguably mean the CMA can give guidance to the GCF, as an entity entrusted with the operations of the Financial Mechanism of the Agreement (see paragraph 58 of Decision 1/CP.21) in the same way the COP can give guidance to the entities entrusted with the operations of the Financial Mechanism of the UNFCCC.

As regards the SCF, some may be of the view that there is no provision that clearly/explicitly entitles the CMA to give guidance to the SCF (whether directly or through the COP). Others might argue that its authority to do so is derived from para.63 of Decision 1/CP.21.

3. The qualification in the COP decision text in paragraph 63 (“that the Standing Committee on Finance shall serve the Agreement in line with its functions and responsibilities established under the Conference of the Parties”) limits the CMA’s authority over the SCF to assisting the CMA in exercising its existing functions (under the Convention) with respect to the financial mechanism of the Agreement. Such functions, as we have seen, include improving coherence and coordination in the delivery of climate change financing; rationalization of the financial mechanism; mobilization of financial resources; and measurement, reporting and verification of support provided to developing country Parties.

The quoted qualification should constrain the CMA from expanding its authority over the SCF or increasing its authority to give guidance to SCF.  However, this would not appear to be a significant constraint in as much as the starting point for CMA’s authority is “in line with” its authority as established by the COP.  If the COP were to expand its own authority, such an expansion should give rise to an analogous change with respect to CMA’s authority.

There may be more specific draft material in the history of the formulation of GCF and SCF that could inform the meaning of the statement “in line with its functions and responsibilities established under the Conference of the Parties.” Further research would be needed to make this assessment.

The safer move would be for the COP to explicitly delegate guidance responsibilities to the CMA. In the absence of such a move, the CMA could make its own interpretation and if the GCF, SCF, and member states all generally did not oppose this interpretation then the practice would become an accepted approach.