GCF Direct Access Accreditation: A Simple Strategy

by Benito Müller

My last OCP blog highlighted the institutional complexity and chaos that is likely to result from the accreditation procedures recently adopted by the Green Climate Fund (GCF) for implementing entities or intermediaries. This blog proposes a relatively straightforward remedial strategy, at least for the access modality known as “direct access.”

According to paragraph 47 of the GCF Governing Instrument, regional, national and sub-national implementing entities or intermediaries are eligible to access GCF funds directly, provided they are nominated by recipient countries. This authority to nominate gives recipient countries the option to limit free-for-all (direct access) accreditations. Satisfying the Fund’s initial fiduciary standards and principles thus does not constitute an entitlement for (direct access) accreditation – the existing procedures already admit (strategic) reasons for denying accreditation, even if all the technical requirements are fulfilled.

The idea of “direct access” was developed with the Adaptation Fund (AF), the best practice benchmark for this access modality. Indeed, the GCF Governing Instrument requirement for recipient country nomination of direct access entities was itself based on the AF requirement for countries to nominate “National Implementing Entities”[1], one each per county.[2]

The GCF would be well advised to follow this practice by limiting the number of direct access entities to one, or at most two, per recipient country. This would not only keep the access regime administratively manageable for the GCF, but also facilitate in-country coherence of climate finance and alignment with country priorities and strategies.

There is one other very important issue that an accreditation strategy for the GCF would have to address in this context: the right of countries and the GCF Board to reject or withdraw accreditations for strategic reasons, particularly if there can only be one or two national entities at a time.

How could this be achieved without creating too much uncertainty for the accredited entities? The answer, I believe, can again be found in the Operational Rules and Guidelines of the AF, in particular Rule 37 which stipulates that: “accreditation will be valid for a period of 5 years with the possibility of renewal.” Such a time limit gives the Board (and the recipient country, if re-nomination is required) the discretion not to renew accreditations – not only for non-performing entities, but also for strategically unsuitable ones.

The GCF Board has already decided that the accreditations are to be reviewed every five years, to check whether the accredited entities and their activities “are in compliance with the terms of its accreditation, and if any event has occurred that may lead to a suspension, downgrading or withdrawal of accreditation.” It is thus possible to change the accreditation status of an entity under the current GCF accreditation rules, but only in reaction to a performance failure of the entity in question. If performance is adequate, then accreditation cannot be withdrawn. Strategic considerations, whether by the Board or the recipient country, do not feature in this process of potential reclassification.

Following the AF practice, I would therefore suggest a two-element accreditation strategy for direct access to the GCF (to be introduced as part of a focused review “of specific elements of the fit-for-purpose accreditation approach as needed” envisaged in the GCF Accreditation Guidelines):

  1. Introduce a time limit of five years on accreditations (for all entities), with the possibility of renewal, depending on re-nomination by the recipient country and GCF Board approval.
  2. Limit the number of entities that can access the GCF directly to one or two per recipient country.

I believe both elements of this strategy[3] are of equal importance, but the first one may be more urgent, given that the GCF is about to enter legal accreditation contracts. It may be difficult to introduce a time limit to such a contract after it has been signed, without risking serious litigation issues. It would therefore be advisable for the GCF to adopt at least the first element of this strategy before accreditations begin.

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[1] Note that the epithet “national” in this context reflects this national nomination and nothing else. In particular, if a recipient country chose to nominate an organization that only operates sub-nationally, say, a particular province, it would still be a National Implementing Entity as far as the AF is concerned.

[2] Operating Rules and Guidelines, para 35.a.

[3] Strictly speaking, only the second of these elements is an (element of an) accreditation strategy, the first one is simply an enabling condition for the GCF Board, and for that matter recipient countries, to have an accreditation strategy at all.

3 thoughts on “GCF Direct Access Accreditation: A Simple Strategy

  1. Bougonou K. Djerri-Alassani

    Thanks for the informations and explanation. What about the nomination of a sub-regional institution. I’m working in ECOWAS Commission with 15 members States.

    Reply
  2. Benito Muller Post author

    As far as I can see, countries can nominate any sub-national, national, or regional entities for accreditation as GCF implementing entities/intermediaries under the direct access modality, as long as they are competent (Governing Instrument, paragraph 47). This means, in particular, that regional organisations could be nationally nominated, and thus become what I referred to as National Implementing/Funding Entities.

    However, as “regional institutions” they could also apply for accreditation under the international access modality (GI, para. 48)

    Reply
  3. Benito Müller

    Why should accreditations be time-limited?
    (Reply to a email query)

    Broadly speaking, is is to give the Board the option for strategic accreditation choices, while at the same time providing some assurance to accredited entities that, provided they perform (= satisfy the relevant standards), they will retain their accreditation for at least say 5 years.

    In other words, it is meant to give entities, once they are accredited, the performance related right/entitlement to remain accredited for a certain time period, while allowing the Board not to renew accreditation even if the relevant standards are satisfied.

    Indeed, the issue at hand boils down to the question of whether satisfaction of the relevant criteria constitutes an entitlement to be accredited, or whether it is merely a necessary condition: Must accreditation be granted if the criteria are fulfilled, or should the Board have the right to withhold accreditation for supervening “strategic” reasons?

    Well the reason why I think there should be no (unconditional) entitlement is not a matter of principle (such as: “the Board should be omnipotent) but of pragmatics. There must be thousands if not millions of entities out there (i.e. at the international , regional, national and sub-national level) which satisfy the fiduciary standards of the Fund. If there were an unconditional entitlement, then the Fund is facing a serious operational hazard of simply not being able to manage its accredited entities, not only because of the potential number, but because of the complexity of the system due to type differences.

    In short, the Board must have the right to decide, say, that there should be a limit on the number of entities that can be accredited per recipient country under the direct access modality, which would not be the case if satisfaction of the relevant standards constitutes an accreditation entitlement. (Note, incidentally, that recipient countries already seem to have the right for strategic refusal through the designation requirement)

    Reply

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