European Capacity Building Initiative

The Standing Committee on Finance meets the Adaptation Fund Board Chair and Vice-Chair

In December 2014 in Lima, Peru, the COP requested the Standing Committee on Finance in Decision 6/CP.20, paragraph 22 to consider issues related to possible future institutional linkages and relations between the Adaptation Fund (AF) and other institutions under the Convention.

In April 2015, the AF Board requested the its Chair and Vice-Chair ‘to initiate consultations with the Standing Committee on Finance (SCF) and start a dialogue with the Green Climate Fund (GCF) Board, on potential linkages between the two funds and request the issue of complementarity between the two funds to be considered by the GCF Board at the earliest.’

To facilitate this dialogue, the ecbi organised a Seminar on the eve of the 10th SCF meeting at La Redoute in Bad Godesberg to discuss agenda item 8 on these linkages and relations. The meeting, co-hosted by Seyni Nafo, Outi Honkatukia (Co-chairs, SCF), Hans Olav Ibrekk (Chair, AF Board), and Benito Müller (Director, ecbi), was attended by 10 SCF members, including both Co-Chairs, the Chair and the Vice-chair of the AFB, and 4 members of the respective Secretariats.

The dinner started with a brief welcome by Ms Honaktukia, who thanked the ecbi for organizing the event which she viewed as an excellent opportunity to interact informally between friends of the Adaptation Fund (AF). She then gave the floor to the ecbi Director to deliver a scene setting presentation on ‘The Adaptation Fund in the new climate finance regime: Its role in relationship with the GCF’ (available on the ecbi website). The presentation argued that a division of labour between the GCF and the AF could be a win-win situation for both funds. The AF could become the GCF’s ‘multilateral retail outlet’ for small concrete adaptation projects, while itself focussing on medium and large programmes, preferably carried out through its Enhanced Direct Access modality. Such a division of responsibilities would maximise the benefits that could be drawn from complementarities between the two funds and as such would probably have to be agreed in an MOU between the Boards of the two funds. Given the current funding predicament of the AF, such an MOU would probably have to be buttressed with GCF funds, which would mean that the AF would need to become an accredited multilateral GCF intermediary.

Following this introductory presentation, the AF Board Chair made a few comments on the current situation of the AF, emphasizing the merits of the AF (experience in funding concrete adaptation projects, pioneering both direct access and managing funding based on innovative finance) as well as the problems facing it (particularly the dearth of resources due to the collapse of the CDM market). Mark Storey, one of the co-facilitators of the SCF working group on agenda item 8 then briefly outlined the outcome of the working group deliberations at the preceding SCF meeting.

These introductory remarks were followed by a lively and very constructive discussion under the Chatham House Rule, with questions ranging from whether a GCF accreditation of the AF would require CMP consent (answer: no) to whether outsourcing anything to the AF would not inevitably mean more transaction costs due to the introduction of a ‘middle man’. In his closing remarks for the event, the ecbi Director took up this question which he argued was based on a misunderstanding of ‘out sourcing’: clearly outsourcing involves the introduction of a ‘middle man’, and clearly this can mean additional costs, but this is by no means always the case. If it were, then it would be difficult to explain why so many private sector enterprises opt for outsourcing as a cost saving alternative to in-house management.

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