Green Climate Fund
The Green Climate Fund (GCF) is the world’s largest dedicated fund helping developing countries respond to climate change. It was set up by the United Nations Framework Convention on Climate Change in 2010 and has a crucial role in upholding the Paris Agreement, supporting the goal of keeping the average global temperature rise well below 2°C. GCF invests across four transition areas: the built environment; energy and industry; human security, livelihoods and wellbeing; and land-use, forests and ecosystems.
Through its country-driven approach, GCF helps countries design, finance and implement innovative climate initiatives that can be replicated, scaled up and sustained after project completion to achieve transformational change. GCF structures its financial support through a flexible combination of grant, concessional debt, guarantees or equity instruments to leverage blended finance and crowd-in private investment for climate action in developing countries. This flexibility enables the Fund to pilot new financial structures to support green market creation.
GCF operates through a network of over 200 Accredited Entities and delivery partners who work directly with developing countries for project design and implementation. Partners include international and national commercial banks, multilateral, regional and national development finance institutions, equity funds institutions, United Nations agencies, and civil society organizations.
There are eight mitigation and adaptation result areas in GCF. Of these, Forest and Land Use (FLU) and Ecosystems and Ecosystem Services (EES) are strongly complementary. The GCF will contribute to shift the paradigm in the forest and land use sector through:
- Forest Protection – Countries recognising the role of forests for mitigation and adaptation in their NDCs need to reflect this pathway in strategic planning instruments at national and local levels.
- Forest Restoration – Restoring forested landscapes relies on international and national catalysts for reforestation, and on traditional and indigenous communities buy-in and leadership.
- Sustainable Forest Management – Improved forests and forestry management can help to increase carbon sequestration and storage, and to grow resilience, while maintaining economic productivity.
GCF’s direct financing of forest projects demonstrates many other innovative ways for more effective land management and establishing livelihood alternatives for people living in and around forests, including many Indigenous Peoples.
In order to scale up GCF’s activities and de-risk the delivery of capital flows, GCF has set up the Private Sector Facility (PSF), a dedicated division designed to fund and mobilise private sector actors, including institutional investors, project sponsors and financial institutions.
Financing instrument: Loans, Grants, Guarantees, Equity, Results-based Payments
Accredited entities can submit funding proposals up to the size for which they have been accredited:
- Micro: up to USD 10 million
- Small: up to USD 50 million
- Medium: up to USD 250 million
- Large: USD 250 and above
The Simplified Approval Process (SAP) can be used to finance projects requiring a GCF contribution of up to USD 25 million.
Funding of up to USD 1.5 million is available for Accredited Entities, especially Direct Access Entities, requiring project preparation support.
Applicable geographical regions/country groups: Global
GCF works through a network of Accredited Entities for project design and implementation. They are responsible for presenting funding applications to GCF, and then overseeing, supervising, managing and monitoring the overall GCF-approved projects and programmes.
National Designated Authorities (NDAs) are government institutions that serve as the interface between each country and the Fund. They provide broad strategic oversight of the GCF’s activities in the country and communicate the country’s priorities for financing low-emission and climate-resilient development.
GCF’s investment and its related indicators guide GCF stakeholders in the development, assessment and approval of projects. They seek to promote consistency and transparency in funding proposals and promote efficiency in the assessment process:
- Impact potential
- Parading shift potential
- Sustainable development potential
- Needs of the recipient
- Country ownership
- Efficiency and effectiveness
The GCF project/programme activity cycle, as approved by the Board and described in the GCF Progrmaming Manual, consists of the following key stages:
- Country and accredited entity work programmes;
- Targeted generation of projects/programmes;
- Concept note submission;
- Funding proposal development;
- Funding proposal review: Secretariat and independent Technical Advisory Panel;
- Board consideration; and
- Legal arrangements and post-approval.
In addition, the following stages are related to the portfolio management and implementation of GCF approved projects:
- Monitoring for performance and compliance;
- Adaptive management; and
- Evaluation, learning and project closure.
For more information on accessing finance from the GCF, visit the GCF Programming Manual: https://www.greenclimate.fund/sites/default/files/document/gcf-programmi...
GCF recognizes developing countries may face capacity constraints in developing climate finance proposals. That is why it provides financial and technical assistance support for the preparation of project and programme funding proposals through the Project Preparation Facility (PPF).
Last updated: 7 September 2023