GCF Financing of INDCs and TEMs Projects

Legal assistance paper

All reasonable efforts have been made to ensure the accuracy of this information at the time the advice was produced. However, the materials have been prepared for informational purposes only and may have been superseded by more recent developments.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. To the extent permitted any liability is excluded. Those consulting the database may wish to contact LRI for clarifications and an updated analysis.

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Date produced: 20/07/2015

Query:  “Can the Conference of the Parties to the UNFCCC mandate the Green Climate Fund (GCF) to finance conditional intended nationally determined contributions (INDCs)  and technical expert meetings (TEMs) projects? Can you suggest some language for a COP decision in this regard?”

Summary:  No.  The Conference of the Parties (“COP”) designed the Green Climate Fund (“GCF”) to be governed by a board of directors (the “Board”) that is independent of COP.  COP chose not to retain the authority to require the Green Climate Fund to do anything, and so it cannot require it to finance conditional intended nationally determined contributions (“INDCs”) or technical expert meetings projects (“TEMs Projects”).  The Board is required to receive guidance from COP and to take appropriate action in response to such guidance.  COP can give guidance to the Board of GCF to finance INDCs and TEMs Projects. 

Advice: COP created GCF, and GCF is accountable to COP.  Our answer to your question is based primarily on the governing instrument for GCF, which was approved by COP and could be amended by COP.  When COP established GCF and approved of the governing instrument for GCF, the body chose to create a board of directors that would govern GCF.  While we have not identified any document that records the reasons that COP chose to delegate governing authority to the Board, based on examples of similar bodies, we expect that such decision to delegate was for practical reasons (it is not possible for COP to manage the affairs of all of the subsidiary bodies of UNFCCC).  While COP could choose to override the decision to delegate to the Board in any subsequent meeting of the Conference of the Parties, we think it is likely that any such proposal would fail.

According to the governing instrument for GCF, GCF is “governed and supervised by a Board” that has “full responsibility for funding decisions.” The members of the Board and their alternates are selected by their respective constituency or regional group within a constituency. Decisions of the Board are taken based on a consensus of the Board members.  Included in the Board’s Role and functions is the responsibility to “Approve funding in line with the Fund’s principles, criteria, modalities, policies and programmes.”

The governing instrument for GCF states that GCF shall “be accountable to and function under the guidance of COP”. It goes on to provide that the fund shall  “(a) receive guidance from COP, including matter related to policies, programme priorities and eligibility criteria, and matters related thereto; (b) take appropriate action in response to the guidance received; and submit annual reports to COP for its consideration and receive further guidance”.  The Board is not required to follow the guidance of COP.  But COP can give guidance to the Board of GCF to finance INDCs and TEMs Projects.  Please let us know if you would like suggestions concerning the form that such guidance could take; and if you do so, please provide additional background on the proposal so that we can be of better help.

Another approach that the questioner could take is to provide guidance to least developed countries (LDCs) to craft their INDCs and TEMs projects so as to meet the investment criteria of GCF (see GCF/B.07/11 Annex XIV: Initial investment framework) that the Board of GCF has approved.