Climate Investment Funds Monitor 12
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Article summary
- A paper arguing for a continued role for the Climate Investment Funds (CIF) in the international climate financing architecture, despite its ‘sunset clause’, will be discussed in the November meeting
- Measures have been proposed to increase the CIFs’ efficiency, including on national-level stakeholder consultations
- An update on the CIFs’ gender action plan noted some progress, but concerns remain with the Clean Technology Fund.
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The future of the CIFs
The November joint CTF – SCF meeting will discuss a late October paper, titled Climate Investment Funds: an assessment of its accomplishments, transformational impact, and additionality in the climate finance architecture. The paper was written by the CIF administrative unit in response to a request by the joint committee in the May meeting. It follows the recommendation of the 2014 independent evaluation of the CIFs to consider the CIFs’ ‘sunset clause’, requiring the CIFs to close once a new climate finance architecture is effective (see CIFs Monitor 10), and builds on the discussion in the November 2014 CTF-SCF joint committee meeting on models for the future operations of the CIFs (see CIFs Monitor 11).
Without referring to possible constraints imposed by the ‘sunset clause’, the paper outlines several arguments for the “continuation of the CIF in the climate finance architecture.” While it recognises that the climate finance landscape “has evolved since the CIF was created, notably with the operationalisation of the Green Climate Fund [GCF]”, it raises concerns over a possible time lag “which could result in a loss of momentum”. It calls the CIFs “the only climate finance instrument … with the infrastructure and experience needed to continue the momentum while other funds ramp up.” According to the paper one of the CIFs’ strengths is that it works “exclusively with MDBs as implementing agencies”, arguing that “it is clear that the MDBs will pay a pivotal role in reaching the $100 billion climate finance mobilisation target by 2020”. This includes their ability to “leverage significant resources from their own balance sheets”, as well as through other financial actors. The paper also concedes that the CIFs are important to the MDBs since they “need concessional climate finance to blend with their resources if they are to meet their new climate investment targets.” Another key feature of the CIFs mentioned in the paper includes the use of “reimbursable (non-grant) resources”, i.e. financing instruments, such as loans, guarantees and equity. This includes resources for climate change adaptation, with the paper noting that the PPCR is “the first fund to extend reimbursable resources for adaptation”, despite long-standing civil society calls for adaptation efforts to primarily be funded by grants.
The paper outlines “five key pathways” for how the CIFs can be “instrumental to achieving the $100 billion annual goal by empowering wider systematic transformation”: it’s work on “institutional changes”; by “linking investments to policy and regulatory reforms”; by “targeting barriers inhibiting the development of viable markets”; by providing “large-scale funding to specific technologies”; and by “influencing behaviour change among a range of stakeholders at both the fund and national levels.” The paper also emphasises the flexibility of the CIFs, which it argues “can be further explored going forward to fill in gaps or address priority areas through, for example, thematic programmes … or a pipeline development facility that could support the preparation of projects.” It concludes that “a thorough gap analysis of the climate finance landscape including an elaboration of potential options for modifying CIF programmes to effectively address priority areas could be prepared for the consideration of the joint meeting in mid-2016.”
In the light of the current resource constraints in the CIFs, including a hiatus at the CTF due to lack of funds, the paper makes an implicit call for further funds to be channelled through the CIFs. With the number of CIF pilot countries having grown by a third in the past year and a half, the paper argues that the CIFs’ growing pipeline of projects requires funding. It notes that recipient countries “have expressed strong concerns about the lack of available funding for investments and highlighted that unless new funds are mobilised quickly there is an imminent risk of potential disruption to implementation on the ground”.
Measures to improve efficiency
Different measures to improve the CIFs’ governance were discussed during the May joint CTF-SCF committee meeting, including on “the decision making process during and in-between meetings”. The CIF administrative unit was tasked with developing a “a web-based, secure collaboration platform for approving decisions”, as well as proposing “a standard process for assigning which decisions should be discussed during the trust fund committee and sub-committee meetings, and which decisions should be processed through the ‘decision-by-mail’ or ‘online decision’ process.” It was also asked to “to track and inform the trust fund committee and sub-committee members of adopted decisions and their implementation.” Moreover, following the invitation of three new countries (Honduras, Rwanda and Uganda) to join both the FIP and the PPCR in the May sub-committee meetings, a joint process for developing investment plans across different CIFs has been proposed in order to create synergies and reduce transaction costs. According to the respective funds’ October semi-annual reports, advantages of the proposal include stronger ties between national adaptation and mitigation programmes. However, the reports also noted a risk that investment plans become “too broad and unfocused or dilute the principles of the PPCR or the FIP.”
Graph 1: Total CIF funding approved per fund (millions)
Source: CTF, PPCR, FIP and SREP semi-annual reports, October 2015
Moreover, the May joint committee meeting endorsed a proposal to enhance the generation of knowledge from evaluation for learning in the CIFs, complementing the current annual monitoring and reporting on core indicators or common and co-benefits indicators. Its recommendations included for the CIF administrative unit to create a “special initiatives budget” through the SCF, “for work on evidence based learning”, as well as a “CIF-wide advisory group on knowledge from evaluation for learning”. It should be chaired by a member from the CIF administrative unit and also include “one member from an MDB, one member from a donor country, one member from the CIF observers, two members from recipient countries and two external experts in the fields of climate change, evaluation and learning who are not affiliated with the CIF or the MDB independent evaluation offices.” Furthermore, it requested the CIF administrative unit to hire a senior evaluation and learning specialist to lead the implementation of the proposed actions.
The May joint CTF-SCF committee meeting also decided that a proposal for a new SCF private sector facility (see CIFs Monitor 11) will not be moved forward at this time, and that efforts should instead be directed to improving the existing set-asides. Furthermore, in order to boost “stakeholder integrity and accountability”, the May meeting asked the CIF administrative unit to develop consolidated documents on roles and responsibilities and a code of conduct for co-chairs, trust fund committee and sub-committee members and observers “to better address issues of integrity, accountability and conflict of interest”. The CIF administrative unit was also asked to develop a proposal for a stakeholder advisory network “to provide an avenue for knowledge and experience sharing between current and past observers (CSO communities, indigenous peoples and private sector) that supports and enhances observers’ contributions to directions, strategies, projects, and learning efforts of CIF.”
The long delayed paper on Proposed measures to strengthen national-level stakeholder engagement in the Climate Investment Funds, released in April (see CIFs Monitor 11), was also discussed during the May meeting. The joint committee agreed to the measures proposed, including to “foster the use of existing country systems for stakeholder engagement by considering in each country the existing regulations, policies, practices, and institutions for participation … and how these can be used, adapted, or strengthened for CIF purposes”; “plan and adhere to an effective process of stakeholder engagement”; “address capacity needs and foster stakeholder engagement by creating opportunities for substantive exchange between pilot countries” and “harmonise the principles for stakeholder engagement across CIF programmes … acknowledging the unique features of the four programmes”. The CIF administrative unit was asked to work with the pilot countries and observers to agree on a work programme and budget for financial year 2016 and 2017 to implement the measures.
Graph 2: Total number of projects and programmes approved per fund
Source: CTF, PPCR, FIP and SREP semi-annual reports, October 2015
The November meeting will include a discussion on the future of the CIF partnership forum, with two options. The first option is to keep the two-day large conference format with some modifications, including flexibility in terms of timing. The second option is to build on and consolidate existing pilot country meetings into “three sets of thematic meetings focusing on energy (CTF and SREP countries), resilience (PPCR countries), and forests (FIP countries)”. These meetings would be part of a process, rather than one-off events, with an option to explore the possibility of linking the meetings to high-level international events and include a ministerial session in the agenda. Both options include a focus on “lessons, solutions and results”.
Gender update
A progress report on the implementation of the CIFs’ gender action plan was provided for the May joint CTF-SCF committee meetings. The gender action plan, approved in June 2014 with implementation from July 2014, addresses five key elements: policy development; programme support; analytical work; monitoring and reporting; and knowledge and learning. The report outlined findings from two gender reviews undertaken in the first year of implementation: a policy review and a portfolio review. It also reported on other ongoing activities, including analytical work on gender and renewable energy, initiated in 2015 for completion in 2016. Short guidance sheets on gender and agribusiness and gender and forest governance will also be prepared, and a CIF gender website is being developed.
The CIFs policy review was set up to assess “existing policies and required CIF procedures for gender mainstreaming in investment plans and projects, by programme, and identify and fill gaps in these in order to assure ‘throughput’ on gender mainstreaming processes and outcomes in the CIF.” It found “varied levels of gender requirements present across CIF programmes”, and highlighted “the question of how gender issues can be better addressed in the CIF at a more upstream stage of IP [investment plan] and project processes.” It noted that “formal criteria in programme design documents, such as the SREP gender equity criteria, were found to help ensure that resulting IP and project documents mainstream gender considerations more fully and in a manner that responds to country and sector contexts.” The next phase of the review, taking place during the remainder of 2015, will focus on findings and recommendations. The report noted that the review runs in parallel to a process to develop “practical, working norms” around the ways the CIF administrative unit and the MDBs support gender, where currently the CIF administrative unit “provides gender technical support to investment plans and projects only in response to direct requests from MDBs.”
The CIFs portfolio review was undertaken “across all four CIF programmes at the investment plan and project levels in order to establish baselines for the CIF gender action plan results framework indicators.” The review found that 45 per cent of investment plans since inception until end of 2014 contained sector specific gender analysis, 36 per cent “had gender-disaggregated indicators in their results frameworks, and 40 per cent had designed for activities specifically targeting women”, however, it cautioned “that many gender-disaggregated indicators … came from the non-CIF category … because CIF programme results frameworks … are generally not very gender-disaggregated in their composition.” Another finding was that “while a good share of IPs … address gender issues … once individual projects are developed under the IPs, specific attention to gender drops somewhat … This should be of concern as projects are the means for actual implementation of IPs on the ground, in contrast to programme intentions alone.”
The report noted a large difference between the CTF and the other programmes. While some improvement was noted for projects approved from July 2014, the CTF’s performance continues to be the weakest, both at investment plan and project level. At the investment plan level, since inception of the fund, only six per cent of plans had gender specific analysis, 13 per cent have women-specific activities, and 13 per cent have gender-disaggregated indicators. At the project and programme level, 16 per cent have gender-disaggregated indicators, 18 per cent host women-specific activities, and 22 per cent feature sector-specific gender analysis. It further noted that the CTF does not require gender-disaggregated reporting through its core indicators, which results in most countries refraining from doing so.
