Equal representation on fund

Legal assistance paper

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Date produced: 05/02/2010

1. What does “equal representation by developed and developing countries” mean in the context of the Copenhagen Accord?

2. How can we counter interpretations that conclude that “equal representation” points away from the Adaptation Fund since the AF doesn’t have “equal representation” (in the sense of equal number of people/countries from both developed and developing countries) but gives majority to countries not included in Annex 1?

3. Can we exploit here that “equal representation by developed and developing countries” doesn’t mean much since there is no accepted definition of “developed” and “developing” – and that the AF board representation is about “majority for non-Annex 1”, i.e. doesnt talk at all about “developing” vs. “developed”?

1. The reference to “equal representation by developed and developing countries” in the query is a reference to the penultimate sentence of paragraph 8 of the Copenhagen Accord (Accord): “New multilateral funding for adaptation will be delivered through effective and efficient fund arrangements, with a governance structure providing for equal representation of developed and developing countries” (emphasis added).

An objective interpretation of “equal representation of developed and developing countries” would suggest that developed and developing countries would have an equal number of representatives within the governance structure through which new multilateral funding for adaptation would be delivered. (This governance structure would not necessarily have to be a existing institution. Indeed paragraph 8 goes on to say that “a significant portion of such [adaptation] funding should flow through the Copenhagen Green Climate Fund” (CGCF), established by paragraph 10 of the Accord. However, the current language does not preclude the GEF or the World Bank’s Climate Investment Funds being used to deliver the funding, provided there is “equal representation of developed and developing countries” within their respective governance structures.)

It should also be noted that the language used in the Accord in respect of the operating entity of the Convention’s financial mechanism (which the CGCF is intended to be) varies from that in the draft decision on finance. Paragraph 8 states:

The Climate [Fund][Facility] shall be governed by a [YY] Board of [yy] members [nominated by the Conference of the Parties,] with equitable and balanced representation of developed country Parties and developing country Parties;]” (emphasis added).

This same language is used in article 11(2) of the Convention: “The financial mechanism shall have an equitable and balanced representation of all Parties”.

Clearly, equal and equitable do not mean the same thing: the former would give the less-numerous developed countries more representation than “equitable representation”.

Finally, there is no guarantee that the level of representation would be more favourable for developing countries, even if the Accord stated there should “equitable and balanced representation”.

The Instrument for the Establishment of the Restructured Global Environment Facility (GEF) also states at article 16 that the Council (which is the decision-making body) “shall consist of 32 Members, representing constituency groupings formulated and distributed taking into account the need for balanced and equitable representation of all Participants and giving due weight to the funding efforts of all donors”. However, of the 32 members, 14 represent developed country constituencies (the donor constituencies), 16 represent developing country constituencies and 2 represent the countries of central and eastern Europe and the former Soviet Union (together, the 18 recipient constituencies).

While this is a slight improvement on if it were “equal” representation (which would be 16 donor and 16 recipient constituencies), it has been noted that donor industrialised council members enjoy a disproportionately higher number of seats on the GEF Council.

2. It is difficult to argue that the language in the Accord does not point away from the AFB model. Decision 1/CMP3sets up the AFB as the operating entity of the Adaptation Fund under the Kyoto Protocol. The composition of the AFB is specifically set out in paragraph 6 of that decision as follows:

(a)   Two representatives from each of the five United Nations regional groups;

(b)   One representative of the small island developing States;

(c)    One representative of the least developed country Parties;

(d)   Two other representatives from the Parties included in Annex I to the Convention (Annex I Parties);

(e)   Two other representatives from the Parties not included in Annex I to the Convention (non-Annex I Parties).

It would therefore be difficult to argue that the language in the Accord is intended to reflect the make-up of the AFB.

However, there is perhaps some hope the other language in the Accord can assist, if not with numerical representation, then with deciding where the money should go.

Firstly, the Accord (at paragraph 8) specifically recognises that “funding for adaptation will be prioritized for the most vulnerable developing countries, such as the least developed countries, small island developing states and Africa”. This then is the mandate for adaptation funding flowing from the Accord. Obviously, whether this is where the money will be spent remains to be seen, but there is at least this safeguard in the Accord.

Secondly, the final sentence of paragraph 8 states “a significant portion of such [adaptation] funding should flow through the CGCF”. The CGCF has, as yet, not been constituted and there is still opportunity to make representations to the parties that the governance structure of the CGCF should reflect the AFB, or at the very least have “balanced and equitable representation” of developed and developing countries, particularly as the financial mechanism itself is required by article 11(2) of the Convention to have an equitable and balanced representation of all Parties. If this is achieved, parties could lobby to make as much of the adaptation funding flow through the CGCF rather than any alternatives such as the GEF or the Climate Investment Funds (the latter of which has equal representation for donor and recipient countries).

3. While it is true that there is no accepted definition of “developed” and “developing” countries, it is unlikely, in my view, that there will be much disagreement between the parties on this point. In my view, “developed countries” will be viewed as those which are “Annex I Parties” and “developing countries” will be viewed as the “non-Annex I Parties).