Report of the twentieth meeting of the Board, 1 4 July 2018

Transcription

1 Report of the twentieth meeting of the Board, 1 4 July 2018 GCF/B.20/26 28 August 2018 Meeting of the Board 1 4 July 2018 Songdo, Incheon, Republic of Korea Agenda item 27

2 Page a Table of Contents Agenda item 1: Opening of the meeting 1 Agenda item 2: Adoption of the agenda and organization of work 7 Agenda item 3: Adoption of the report of the nineteenth meeting of the Board 19 Agenda item 4: Board decisions proposed and approved between the nineteenth and twentieth meetings of the Board 20 Agenda item 5: Report on the activities of the Secretariat 22 Agenda item 6: Report on the activities of the Co-Chairs 26 Agenda item 7: Reports from Board committees, panels and groups 33 Agenda item 8: Matters related to the selection of the permanent Trustee 34 Agenda item 9: Agenda item 10: Agenda item 11: Agenda item 12: Terms of reference for the review of the committees and panel established by the Board 36 Guidance from the Conference of the Parties to the United Nations Framework Convention on Climate Change 37 Status of the GCF portfolio: approved projects and the fulfilment of conditions 44 Status of the GCF pipeline, including the status of the Project Preparation Facility requests 44 Agenda item 13: Status of the initial resource mobilization process 46 Agenda item 14: GCF Trust Fund financial report 46 Agenda item 15: Matters related to replenishment 52 Agenda item 16: Updated gender policy and action plan 66 Agenda item 17: Country programming and readiness 66 Agenda item 18: Matters related to accreditation 66 Agenda item 19: Risk management framework: compliance risk policy 66 Agenda item 20: Matters related to the approval of funding proposals 67 Agenda item 21: Consideration of funding proposals 68 Agenda item 22: Recommendations of the Private Sector Advisory Group on opportunities to engage the private sector, including local actors, in adaptation action at the national, regional and international levels 68 Agenda item 23: Dates and venues of the following meetings of the Board 68

3 Page b Agenda item 24: Administrative matters 69 Agenda item 25: Reports from the independent units 70 Agenda item 26: Other matters 70 Agenda item 27: Report of the meeting 70 Agenda item 28: Close of the meeting 70 Annex I: Updated workplan of the Board for Annex II: Annex III: Terms of reference for the review of the effectiveness of committees, panels and group established by the Board 86 Seventh Report of the Green Climate Fund to the Conference of the Parties to the United Nations Framework Convention on Climate Change 89 Annex IV: Green Climate Fund Report on Audits of Financial Statements 145

4 Page 1 Agenda item 1: Opening of the meeting 1. The Co-Chair opened the meeting on Sunday, 1 July 2018 at 11:28 a.m. 2. The developed country Co-Chair, Mr. Lennart Båge, officially opened the twentieth meeting of the Board (B.20) on Sunday, 1 July 2018 at 11:30 a.m. The Co-Chair noted that the start of the meeting had been delayed as a result of constituency consultations and the Board now had much business to attend to. 3. The Co-Chair informed the Board that fellow developing country Co-Chair, Mr. Paul Oquist, was unable to attend. Mr. Oquist had sent a letter to the Board dated 26 June 2018, which had been circulated to the Board on 27 June 2018, explaining that the gravity of current conditions in Nicaragua, in which the future of his country was at stake, had prevented his attendance at B.20. The Co-Chair noted that paragraph 8 of the Rules of Procedure of the Board states that in the event that one Co-Chair or both Co-Chairs are unable to attend a Board meeting, the Board shall elect (an)other Board member(s) to assume the functions of Co- Chair(s) for the duration of the meeting. In these circumstances, and in accordance with paragraph 8 of the Rules of Procedure, the Board was now invited to elect a replacement Co- Chair. Noting no nominees, the Co-Chair stated that the Board was in an extraordinary situation where no nominee had been presented to the Board. They invited the General Counsel to take the floor. 4. The General Counsel stated that the Co-Chair had aptly described the situation. The Rules of Procedure required Boards meetings to be chaired by two Co-Chairs elected by Board members from within their membership. It was clear there was now only one Co-Chair. The General Counsel said that since the law abhorred a vacuum, if a legitimate way could be found to continue the meeting, then the law would support it. For the meeting to proceed there would have to be a decision as to whether to continue with one Co-Chair. If the Board took such a decision, it would include the caveat that there would be a higher standard to discharge the obligations of chairing the meeting imposed on the sole Co-Chair. 5. The Co-Chair opened the floor for comments. Seeing none, Mr. Båge said that he would wish to suspend the meeting to consult the developed country constituency. 6. A Board member informed the Board that the developing country constituency had been working to reach agreement on a replacement for developing country Co-Chair, Mr. Paul Oquist. Given that the length of time that Mr. Oquist would be absent was unclear, it had not been possible to reach agreement. Taking on the role of the sole Co-Chair would require an extra effort to be balanced and impartial. 7. Another Board member thanked the first Board member for the explanation regarding the circumstances within the developing country constituency. They expressed regret that the developing country constituency had been unable to put forward a candidate. Clearly the Board was facing exceptional circumstances since the rules of procedure stipulated that one Co-Chair would be from a developed country Party and one from a developing country Party. Given that the Board faced a large agenda and the need to demonstrate that GCF was delivering strong results as it faced the first formal replenishment, they appealed to the developing country constituency to enable a situation where the Board could proceed per the Rules of Procedure. 8. The Co-Chair suspended the agenda item. Part 2 9. The Co-Chair reopened the agenda item later the same day and stated that all Board members were concerned that meeting time had been lost. They expressed the hope that this time could be made up, given the importance of this meeting. They reminded the Board that paragraph 8 of the Rules of Procedure states, in the event that one Co-Chair or both Co-Chairs

5 Page 2 are unable to attend a Board meeting, the Board shall elect (an)other Board member(s) to assume the functions of Co-Chair(s) for the duration of the meeting. Draft decision 10. The Co-Chair informed the Board that in the light of the discussions before the suspension, they were prepared to discharge the duties of both Co-Chairs and, in line with paragraph 10 of the Rules of Procedure, be guided by the best interests of the Fund. Accordingly, they would, with immediate effect, stand down as the chair of the developed country constituency for the duration of the current meeting and make themselves available to both constituencies upon request. The Co-Chair informed the Board of the elements within the draft decision, which had been prepared during the suspension as follows: The Board: (a) (b) (c) Notes that the Co-Chair from developing country Parties is unable to attend the twentieth meeting of the Board; Acknowledges that the Board, is unable to elect another Board member from a developing country Party to assume the functions of the Co-Chair for the duration of the meeting; and Agrees, notwithstanding paragraph 8 and section 4.2 of the Rules of Procedure, and in light of the exceptional circumstances and without setting a precedent, that the Co-Chair from developed country Parties shall discharge the duties of both Co-Chairs for the duration of the twentieth meeting of the Board only and that, in doing so, he shall, in accordance with paragraph 10 of the Rules of Procedure, be guided by the best interests of the Fund. 11. The Co-Chair asked the Board if they wished to adopt the decision as presented and distributed as hard copy. 12. A Board member requested clarification on the statement from the Co-Chair that he was resigning from his role as chair of the developed country constituency. Their understanding was that the Co-Chairs did not represent individual constituencies but the Board as a whole. 13. The Co-Chair confirmed that he would act in the best interests of the Fund and the Board. The intention of the statement was to put on record that they were resigning from their separate role as chair of the developed country constituency for the duration of the meeting. Pre-meeting consultations by Co-Chairs 14. Another Board member stated support for the draft decision but expressed the wish to explain the context for the current extraordinary circumstances. Between the nineteenth meeting of the Board (B.19) and B.20 there had been inadequate consultation by the Co-Chairs. As a consequence, this created a major problem in terms of how to proceed between B.20 and the twenty-first meeting of the Board (B.21). For said Board member, there had no meaningful consultation by the Co-Chairs about the agenda for B.20, the arrangements for the meeting, or the informal replenishment consultations in Bonn, Germany on 6 May In terms of specific examples, they stated that they had sent serious comments to the Co-Chairs and had to wait 25 days for a response. During this period, the Secretariat had to issue documents in accordance with the 21-day rule for transmitting documents to the Board before meetings as provided in the Rules of Procedure, while said Board member had queries outstanding. 15. The Board member noted that the developing country constituency had been unable to agree on an interim Co-Chair nominee for the period between B.20 and B.21. This period of time was critical as many current Board members would complete their terms and new members

6 Page 3 would be selected who might not be as familiar with the important matters facing the Board during the critical transitional period for GCF. They noted that they had separately held a discussion with the developed country Co-Chair about the possible need to establish a subcommittee to deal with outstanding Board issues so that a clean slate could be handed to the new Board. 16. The Board member noted that the modus operandi of the Co-Chairs had dramatically changed from one of full engagement and consultation by the Co-Chairs and their teams with Board members in advance of formal meetings, to the opposite. This had also included an alternate Board member being asked to leave the room at the informal consultations on replenishment held in Bonn because the principal Board member was there. They wished to ensure a return to the status quo ante in the preparation of Board meetings. Furthermore, an alternate member of the Board was acting as an adviser to the Co-Chair and was the interface between the Co-Chair and the Secretariat, for example, on the preparation of documents. While not covered by the Rules of Procedure, the Board member noted this was irregular. 17. Furthermore, and with due respect to the Co-Chair present in the boardroom, the Co- Chairs had taken a unilateral decision on the appointment of Board-appointed officials without any consultation with the Board. This was in breach of the Rules of Procedure; only the Board had the authority to make such decisions. They confirmed their support for the draft decision, provided that the preparation for B.21 was managed differently by the Co-Chairs and that this be reflected in the decision. 18. The Co-Chair noted the concerns expressed by the Board member. They said that they would wish to respond but, in the interests of opening the meeting, would focus on the draft decision before the Board. GCF mandate 19. Another Board member said that developed countries were prepared to support Mr. Lennart Båge as the sole Co-Chair because of the extraordinary circumstances. It was most important for the Board to act, as always, in a professional manner. In particular, GCF needed to fulfil its mandate of ensuring that finance flowed to those countries which needed it most. The impacts of climate change were clear, for example, with the melting of Antarctic ice, which was taking place at record speed. A recent study (Nature Climate Change) had shown that there was only a 5 per cent chance to meet the targets of the Paris Agreement to limit global temperature increase below 2 C. They asked the Board to move forward in a spirit of cooperation in their interventions. 20. A further Board member sought clarification on the wording in paragraph (b) of the decision regarding the Board s inability to elect a Co-Chair. This should be amended to inability to nominate. Furthermore, they reminded the Board of previous precedents, including the eighth meeting of the Board, when Mr. Ayman Shasly temporarily replaced the then developing country Co-Chair, and at B.19, when Mr. Karsten Sach temporarily replaced the developed country Co-Chair. This had been agreed by the Board without a formal Board decision. Any such changes by the Board were reflected in the report of the meeting. 21. With that amendment, the Co-Chair asked if the Board could adopt the decision. 22. Another Board member requested that the proposed amendment to the text in paragraph (b) be made. They also echoed the view expressed by the Board member above, that no decision was required per past Board practice. 23. The Co-Chair invited the General Counsel to take the floor. 24. The General Counsel stated that there was no difficulty with the Board agreeing to such an arrangement without a formal Board decision as it would instead be read into the record of

7 Page 4 the meeting. The understanding from a legal perspective would be that the Board had adopted this procedure (i.e. empowering the sole Co-Chair to chair the meeting for the duration of meeting) by acclamation. With reference to paragraph (b) of the draft decision, the Board was strictly adhering to paragraph 8 of the Rules of Procedure, which deals with the election of a Board member to assume the functions of a Co-Chair. The General Counsel stated that the Rules of Procedure do not recognize nomination, they only recognize election. 25. The Board member who had expressed concern at the failure of the Co-Chairs to consult effectively prior to B.20 said that paragraph 8 of the Rules of Procedure stated that the Board elected Co-Chairs and so a decision should be taken. Further, they wished to see language added to the draft decision regarding steps to be taken in preparation for B.21. They informed the Co- Chair that during the meeting they would supply language to be incorporated in the draft decision so that it was binding on everyone. They would then be able to support the decision. 26. Another Board member supported the legal opinion given by the General Counsel that, as no nomination had been received, there could be no election. They supported the proposal regarding the draft decision as currently before the Board, given the rather more exceptional circumstances they now faced. They requested that the preceding Board member suggest appropriate guidance for the Co-Chairs so that preparation for B.21 would be successful. This would not be in the form of a decision as it was not part of the Rules of Procedure. The developed country Co-Chair had made himself available and should be supported. 27. The Board member who had requested that the verb elects be used in paragraph (b) of the draft decision in place of nominates reiterated their request. They said that it was important to do so otherwise anyone subsequently reviewing the record of the meeting might conclude that there had been a candidate but that the Board had been unable to agree on a nomination. Amendment to draft decision 28. A Board member proposed inserting acknowledges that the Board, having received no nomination, is unable to elect to the draft decision. 29. The Co-Chair said he would respond to the intervention by one of the Board members. He noted the serious issues raised and wished to take time to explain his actions prior to the Board meeting. However, it was now of pressing importance to see if there was consensus to adopt the draft decision with the amendment just provided, namely the language acknowledges that the Board, having received no nomination, is unable to elect that was just read out. 30. The Board member referred to in the preceding paragraph said that they were ready to accept the decision as presented but wished to be assured that the Board would take action regarding how preparation for B.21 should be conducted. They also wished this to be recorded in the report of the meeting. 31. Another Board member requested that the letter from the developing country Co-Chair, Mr. Paul Oquist, which had been distributed to the Board prior to the meeting, be annexed to the draft decision. 32. The Co-Chair invited the General Counsel to take the floor. 33. The General Counsel stated that the letter could be annexed to the decision if the Board so wished. 34. Another Board member requested that the letter not be annexed. Paragraph (b) of the draft decision stated that the Board had been unable to nominate a candidate. However, the letter from Mr. Oquist referred to Mr. Ali ioaiga Feturi Elisaia as a potential Co-Chair.

8 Page The Board member who had requested annexing the letter requested a short suspension of the meeting for constituency consultations. 36. The Co-Chair suspended the meeting. 37. The Co-Chair reopened the item later the same day. Part The Board member who prior to the suspension had requested that the letter be annexed informed the Board that the request had been made because of important information contained therein. Following the developing country constituency consultations, they recognized the sensitivities contained in the letter. They proposed that, instead of annexing the letter, a further revision be made to the draft decision. This proposed language aimed to address the interim period between B.20 and B.21 and the doubt concerning the current developing country Co-Chair. The Board member read the proposed language as follows: The Co-Chairs themselves shall consult and coordinate directly with Board members and alternate members on all documents and matters relating to preparations of B.21, including, inter alia, those related to replenishment negotiations and processes. 39. The Co-Chair expressed concern at the proposed language, which referred to the Co- Chairs. They noted that in preparing for the meeting they had not considered it was their responsibility to be in direct contact with the developing country constituency as they did not wish to be seen as interfering. As far as the developed country constituency was concerned, members had indicated that consultations had been greatly appreciated. 40. The Board member who had proposed the additional language said that this was a gesture to ensure that the Board worked as one Board with everyone receiving the same amount of information and being able to engage in conference calls and other consultations. Furthermore, there was a single mailing list for Board members and alternate Board members. The intention was to ensure that in the preparation for B.21, the Board acted as one Board. 41. The concern over language was echoed by another Board member as the text imposed requirements on everyone. It was important to avoid giving any impression that one constituency governed the other constituency. They appealed to the Board member who had proposed this language to consider withdrawing it. They noted that the Board member had been very successful in ensuring a balanced approach both between and during meetings when they had been the developing country Co-Chair. Another Board member from the developed country constituency echoed this view. They also stated that when the Board member who had proposed the language had been developing country Co-Chair they had never been contacted. While the point regarding preparation for future meetings was valid, inserting language to this effect in a decision was a separate matter. 42. A third Board member expressed support for this view. The Rules of Procedure stated that the Co-Chairs would act in the best interests of GCF, and they said that the related modality should be determined by each constituency. The matter facing the Board now was how to open B.20 rather than to consider the governance processes of the Board. Many stakeholders were waiting for the meeting to begin. A fourth Board member said that it was important not to debate inter-meeting modalities under this agenda item, and a fifth Board member asserted that it was inappropriate to be considering a strict constituency requirement at this juncture. For the record, they wished to note that they had had excellent cooperation with their constituency Co- Chair. 43. The Board member who had earlier explained that they were not able to prepare for the meeting in the usual way reminded the Board that they wished to see language in the report that guaranteed this would not happen in the future.

9 Page The Board member from the developing country constituency who proposed the additional clause apologized to the Board as they had not intended to entangle the developed country constituency in the issues of the developing country constituency. While clearly the developed country constituency had enjoyed good consultations and reached agreement on the provisional agenda, this was not the case for the developing country constituency. This would mean that when the Board moved to the next agenda item, the adoption of the agenda and organization of work, many serious matters would be raised. They proposed revising the language as follows: The Co-Chairs shall consult and coordinate directly with their respective constituencies, Board members and alternate members. They explained that this meant that those already achieving high standards in pre-meeting consultation would not need to do anything. 45. The Co-Chair asked the Board to distinguish between the importance of the issue of preparations and consultations, as the preceding Board member had raised, and this specific decision. The Board had been established with two constituencies and two Co-Chairs but with the objective of functioning as one Board. As Co-Chair they would be happy to discuss how this should be done, which could be taken up later in the agenda. They asked the Board to adopt the decision presented so that the meeting could be started. 46. Another Board member said it was important to insert the proposed language as it referred to the future. It was the clear intention that the current developing country Co-Chair intended to return, but there was clearly no guarantee. If the current developing country Co- Chair did not return, since a Co-Chair could not be elected using electronic means, the Board would be paralysed. 47. A Board member asked the Co-Chair if the decision was to elect the developed country Co-Chair as the sole chair for the current meeting only. Their understanding was that this decision was to enable the workplan for the current meeting to be initiated without setting any precedent for the future on how the business of the Board should be conducted. They understood the frustrations of the developing country constituency, which suggested a separate conversation about governance was needed. They asked that those Board members requesting an additional insertion to the decision text consider withdrawing this request. It was important that the meeting was not delayed over governance procedures as many had travelled far to attend the meeting and accredited entities (AEs) were waiting for funding approvals to be approved. 48. Another Board member said GCF had a critical mandate and enormous potential, but that it clearly faced challenges with regard to governance. At the same time, GCF faced challenges regarding replenishment and was required to deliver outcomes on climate. Once the meeting had commenced the Board would be able to wrestle with some of the operational and governance challenges. 49. The Board member who had proposed the revised text said that in its six years the Board had never faced such exceptional circumstances. It was indeed essential that the Board was able to conduct its business. The proposed language was aimed at ensuring that the current impasse would not be repeated. It would be very difficult to adopt the agenda without clarity on this going forward. 50. The Co-Chair asked the Board if they could adopt the decision. Hearing no objections, the decision was duly adopted. DECISION B.20/01 The Board:

10 Page 7 (a) (b) (c) (d) Notes that the Co-Chair from developing country Parties is unable to attend the twentieth meeting of the Board; Acknowledges that the Board, having received no nomination, is unable to elect another Board member from a developing country Party to assume the functions of the Co-Chair for the duration of the meeting; Agrees, notwithstanding paragraph 8 and section 4.2 of the Rules of Procedure of the Board, and in light of the exceptional circumstances and without setting a precedent, that the Co-Chair from developed country Parties shall discharge the duties of both Co-Chairs for the duration of the twentieth meeting of the Board only and that in doing so, he shall, in accordance with paragraph 10 of the Rules of Procedure of the Board, be guided by the best interests of the Fund; and Requests the Co-Chairs to consult with Board members and alternate members of the Board on the matters relating to the preparations for the twenty-first meeting of the Board. 51. Following the adoption of the decision, the Co-Chair thanked the Board for the confidence placed in them and stated that they would do everything in the interests of GCF and the Board. 52. They then formally welcomed all new members and alternate members of the Board as follows: 53. Mr. Munenari Nomura, who replaced Mr. Yusuke Sekiguchi as alternate Board member; Mr. Trigg Talley, who replaced Mr. Christopher Allison as alternate Board member; Ms. Sue Szabo, who replaced Ms. Judith Gelbman as Board member; Mr. Chris Tinning, who replaced Mr. Ewen McDonald as Board member; and Mr. Peter J. Kalas, who replaced Ms. Sally Truong as alternate Board member. 54. The Co-Chair also thanked the outgoing Board members for their valuable contributions to the Board. 55. They acknowledged those Board members and alternate Board members who were not able to join the meeting for diverse reasons. These included Board member Mr. Paul Oquist; Board member Mr. Tosi Mpanu Mpanu; Board member Mr. Mungath Madhavan Kutty; and alternate Board member Mr. Teimuraz Murgulia. 56. The Co-Chair also thanked the active observers and around 250 accredited observers, AEs, national designated authorities (NDAs) and party States in the overflow room as well as those following GCF discussions live, all of whom play important roles in delivering on the mandate of GCF. 57. Finally, they expressed thanks to the Secretariat, including the management and staff, for their support during the meeting preparations as well as for their dedication and commitment to carrying out the work of GCF. Agenda item 2: Adoption of the agenda and organization of work 58. The Co-Chair opened the agenda item and drew the attention of the Board to document GCF/B.20/01/Drf.02 titled Provisional agenda. They noted that an earlier version had been circulated to Board members on 17 April 2018 as document GCF/B.20/01/Drf.01, and the updated version incorporating comments received (i.e. Drf.02) had been issued on 21 June 2018.

11 Page In accordance with paragraph 20 of the Rules of Procedure, the Co-Chair invited the Board to adopt the draft agenda as contained in document GCF/B.20/01/Drf.02, noting that concerns raised by Board members over the consultation procedures on the draft agenda prior to the meeting had been taken into account under the previous agenda item. The Co-Chair then opened the floor for comments. 60. Several Board members made comments on the order in which agenda items should be covered. One Board member asked why the Board had not received a daily programme of work; two said that a daily programme of work should be established as a matter of priority; two others asserted that the items on the agenda should be considered in strict sequential order. One Board member called for the Board to adhere strictly to the daily start time of 9 a.m. and end time of 6 p.m. Another Board member said that some of the headings in the agenda did not match the titles of the corresponding documents and noted with consternation that certain outstanding action items from B.19 had been included on the B.20 agenda only as information items. A further Board member praised the Co-Chairs for having distributed the provisional agenda at least 21 days in advance of the meeting in accordance with the Rules of Procedure. 61. A Board member underlined that they had communicated a request to the Co-Chairs and Board members in advance of the meeting for additional items to be included in the agenda but that those items had not been included. Under the agenda item Board decisions proposed and approved between the nineteenth and twentieth meetings of the Board, they requested the inclusion of a sub-item regarding guidance on decisions taken between meetings, which had been on the agenda of two previous Board meetings (the twelfth meeting of the Board and B.15). Recalling that a policy document on the two-stage process for funding approvals had included a recommendation that funding proposals requesting up to USD 50 million should be approved by decisions taken between meetings of the Board, the Board member drew attention to paragraph 41 of the Rule of Procedure, which stated that decisions without a Board meeting may occur on an extraordinary basis, and expressed concern that such decisions had become the norm. In addition, the Board member called for an agenda item to be included regarding the confirmation of the appointment of the Heads of the independent units by the Co-Chairs because the matter had legal implications given that the actions of the Co-Chairs implied either that the Board had been negligent in performing its duties or that the Secretariat had been negligent in reminding the Board of its obligations. Noting that programmatic approaches accounted for 20 per cent of all funding approvals, the Board member further requested the inclusion of an agenda item addressing the development of guidelines on such approaches. 62. Two Board members highlighted the importance of matters relating to the selection of the Permanent Trustee, and one Board member called for its inclusion as a separate agenda item in addition to the existing item Reports from committees, panels and groups, which incorporated the report from the ad hoc Trustee Selection Committee. One Board member requested the inclusion of additional items addressing the Policy on Ethics and Conflicts of Interest for Active Observers of the Green Climate Fund, the Whistle-blowers and Witnesses Protection Policy, the Prohibited Practices Policy, and the Anti-Money Laundering and Countering the Financing of Terrorism Policy, all of which were important governance matters that had not been included on the agenda by the Co-Chairs owing to the late submission of the relevant documents after the 21-day cut-off date. 63. Another Board member wished to know if a discussion on financial planning regarding the remaining commitment authority of GCF would take place under any of the items on the agenda. 64. Some Board members called for certain items to be moved higher up the agenda. Noting that reporting to the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) was a top priority for GCF, two Board members said that the agenda item Guidance from the Conference of the Parties to the UNFCCC should be prioritized. One Board member called for the item Consideration of funding proposals to be

12 Page 9 opened early in the meeting per previous practice to allow time to incorporate suggestions from the Board before reopening the item later in the meeting. Another Board member called for the agenda item Updated gender policy and action plan to be removed because, while they recognized its importance, they found its content confusing and in need of further work. They requested that the item Country programming and readiness be moved higher up the agenda in place of the item on gender given that this was a matter of particular importance for the least developed countries (LDCs). 65. Several Board members suggested that items be postponed or removed from the agenda. While recognizing that a discussion on contributions from philanthropic foundations and other non-public and alternative sources was long overdue given that the Board had requested the preparation of a document for understanding and defining alternative sources of financial inputs to GCF at its fifth meeting (decision B.05/04, paragraph (f)), a Board member said that they did not wish it to be discussed as a sub-item under Matters related to replenishment. Several other Board members shared this wish; one requested that it be removed from the agenda. Another Board member underlined that the GCF replenishment process must be carried out in line with the decisions of the UNFCCC. 66. Another Board member called for the sub-item Policies, procedures and documents for the formal replenishment process to be removed as they had not been involved in the informal Board member consultations on replenishment that had taken place in Bonn and therefore did not recognize that meeting. They also questioned the timing and design of the Bonn consultations as well as the use of GCF resources to organize both the consultations and the informal retreat at the Holiday Inn Incheon Songdo that had been planned for the day before the current Board meeting but had not taken place. The Board member also stated with concern that they viewed the policies for the replenishment process and alternative sources of funding, along with the updated gender policy, as conditionalities that were being imposed on the replenishment process. They called for the item on the gender policy to be swapped with the later sub-item on guidance from the COP. 67. Stating that a strong suite of policies was important in guiding the work of the Secretariat, another Board member expressed support for the inclusion of the item on the updated gender policy, noting that while the GCF Gender Policy was already in place it needed to be honed and updated to achieve best practice. They proposed that it be considered after the item on replenishment to counteract any impression that those policies were conditionalities related to replenishment. 68. A number of Board members called for the item on the updated gender policy to be removed from the agenda. Another asked for it to be postponed given that the GCF Gender Policy and Action Plan were already in place. Another said that the item had the wrong title and should be called a review. 69. Another Board member called for the agenda item Communications strategy and the sub-item Revised administrative guidelines on human resources to be postponed. They noted that document GCF/B.20/24 titled Revised legal framework for human resources management (limited distribution) was very complex and that they therefore needed more time to understand and adopt a position on it. A Board member asked for the agenda sub-item titled Interrelated policy matters on incremental cost calculation methodology; options for further guidance on concessionality; and policy on co-financing to include a reference not only to the calculation of incremental cost but also to instances where the full cost of projects could be financed as this was a particularly important matter for smaller countries. 70. A Board member called into question the recommendation by the Secretariat to organize only two Board meetings in While noting the Secretariat s justification that many of its resources that year would be taken up by the replenishment process, the Board member highlighted that in accordance with paragraph 23(k) of the Governing Instrument for the GCF

13 Page 10 the role of the Secretariat was limited merely to supporting the Board in arranging the replenishment process. Given the Secretariat s staff of approximately 200, in addition to consultants, the Board member suggested that the Secretariat should have capacity to service three meetings of the Board as well as the consultations on replenishment. 71. A Board member asked why the matter of guidance on the use of assets by the Interim Trustee did not feature on the provisional agenda, especially given that it had been raised under the item Other matters by a fellow Board member at a series of previous Board meetings. They asked for clarification as to why that Board member had not proposed the topic under Other matters at the current meeting and wished to know if the matter would be covered elsewhere on the agenda so that they could be prepared to discuss it. A further Board member said that they would also like to see this item added to the agenda. 72. A Board member noted with concern that the no-objection period for the proposed decision Policy on restructuring had ended on 27 June, only four days before the current meeting. 73. Two Board members raised concerns that some of the points raised by the Board under the current agenda item went beyond its scope and instead reflected the relative importance of the various issues for individual Board members. 74. The Co-Chair took note of the comments and said that the daily start time of 9 a.m. and end time of 6 p.m. would be strictly adhered to. They invited a representative of the Secretariat to respond to the queries raised. 75. A representative of the Secretariat noted that since the venue for the informal retreat (i.e. Holiday Inn Incheon Songdo) was also the caterer for the current Board meeting, there had been no charge. They also clarified that the phrasing used in the title of the agenda item on interrelated policy matters reflected that of decision B.17/10, paragraph (c)(i) in which the Board had requested the Secretariat to develop and apply an incremental cost calculation methodology. 76. A further Board member recalled that a subsequent decision of the Board did include the phrase full costs (decision B.19/06, paragraph (d)(ii)) and requested that the term full costs be incorporated into the title of the agenda item on interrelated policy matters. 77. The Co-Chair said that the draft agenda would be revised in consideration of the above comments. 78. The agenda item was suspended. 79. The Co-Chair reopened the agenda item on the second day of the meeting and drew the attention of the Board to document GCF/B.20/01/Drf.03. Noting that several matters raised the previous day, including confirmation of the appointment of the Heads of the independent units and selection of the Permanent Trustee, would be covered under existing agenda items, they announced the following changes to the agenda based on the concerns raised so far: the item on guidance from the COP had been moved up from number 19 to number 9; the item on the updated gender policy had been moved down from 9 to 11; the item on philanthropic contributions had been moved down from number 10(b) to number 20; the title of the item on interrelated policy matters now included a reference to full cost calculation methodology; the items on the communications strategy and guidelines for human resources had been moved down from numbers 18 to 26 and 22(a) to 22(c), respectively; and a new sub-item titled Financial planning of the Fund had been included under Other matters. On that basis, the Co- Chair invited the Board to adopt the draft agenda as contained in document GCF/B.20/01/Drf Two Board members said that the agenda item titled Country programme and readiness, which stood at number 18 on the current version of the draft agenda, should be

14 Page 11 considered of higher priority given its crucial importance for developing countries; one Board member suggested that it should be moved earlier than the item titled Matters related to replenishment, which stood at number The Co-Chair took note of the comments and suggested that requests for agenda items to be considered as higher priority than others should be addressed through their placement in the daily programme of work rather than being renumbered in the published agenda. 82. A Board member expressed concern that a number of items they had requested be included on the agenda the previous day, including an item on the selection of the Permanent Trustee and another on the development of guidelines on programmatic approaches, had not been included in the current version. Additionally, noting the decision under the previous agenda item regarding preparations for B.21, they requested that the matter be included on the agenda, for example, as a sub-item under item 6, Report on the activities of the Co-Chairs. The Board member stated that with those amendments they would be prepared to adopt the draft agenda but not the organization of work, which should be set out in a separate informal document detailing the daily programme of work. That document, the Board member noted, as per usual practice, should set out the order in which the Board would tackle the various items on the agenda in line with its priorities. 83. The Co-Chair clarified that the selection of the Permanent Trustee would be covered under the agenda item titled Reports from Board committees, panels and groups and thus did not need to be included as a separate sub-item. 84. Noting that the selection of the Permanent Trustee had featured as an action item on the agendas of the five preceding Board meetings, a Board member said that it needed to be resolved through a Board decision as a matter of priority. They therefore requested its inclusion on the agenda as a stand-alone item titled Selection of the permanent Trustee. Another Board member requested that the item titled Updated gender policy and action plan, which currently stood at number 11 on the agenda, be renamed to include the term review and moved down the agenda to ensure that priority items such as Matters related to accreditation (currently item 12) were addressed first. The Board member also noted with concern that the item on philanthropic contributions, instead of being deleted as requested the previous day, had now been included as a stand-alone agenda item (item 20), which effectively gave it higher status than its position as sub-item 10(b) on the second draft of the agenda (document GCF/B.20/01/Drf.02); they reiterated their request for that item to be deleted from the agenda. The same Board member said that the new sub-item titled Financial planning of the Fund did not belong on the agenda as a stand-alone sub-item under Other matters but should instead be verbally announced under that item. 85. Another Board member stressed the importance of establishing a logical sequence for the Board s consideration of the items on the agenda, taking into account the various synergies between the different items. 86. A further Board member reiterated their concern expressed the previous day that the Co-Chairs advisory teams had not adequately consulted Board members on the agenda in the run-up to the current meeting and that one Board member had effectively been part of the present Co-Chair s team and closely involved in the preparation of documents, including the agenda. Underlining the need to follow best practice, the Board member said that such close cooperation between a Board member and a Co-Chair represented a potential conflict of interest. Before they could agree to adopt the agenda, they wished to know what actions the Co- Chair would take to prevent a similar situation from arising in the period between B.20 and B.21. Another Board member echoed the same concern and highlighted the need for the Co- Chairs to uphold the best possible standards of integrity when performing their duties. 87. Two other Board members expressed concern that certain Board members were impugning the credibility and integrity of a fellow Board member and called on the Board to be

15 Page 12 accommodating to the Co-Chair in light of their gracious acceptance to take on double their normal duties in order to facilitate the Board meeting in the current exceptional circumstances, where the second Co-Chair had been unable to attend the meeting. 88. Underscoring that Board meetings represented the only platform where Board members had the chance to formally express the views of their constituency on the important matters at hand, and stating that they had received insufficient response to their communications with the Co-Chairs in the period between B.19 and B.20, a Board member reiterated their concern over the Co-Chairs inadequate consultation with Board members in the run-up to the meeting and stressed the need for good governance in line with best practices. With those concerns noted, they would be prepared to proceed with the agenda as it stood. 89. Noting that lengthy discussions on the draft agenda had already consumed a large portion of the meeting time, various Board members stressed the need for swift adoption of the agenda to allow the Board to proceed to its consideration of the various agenda items; one recalled that the first draft had been published well in advance of the 21-day document publishing deadline, leaving ample time for consultation and feedback in advance of the meeting; another noted that amendments proposed the previous day had already been taken into account; a further member said that it was not appropriate for Board members to attempt to alter the agenda or its sequencing to reflect the preferences or priorities of their own constituencies and that instead the Board was responsible for simply ensuring that each item on the agenda was covered; another Board member acknowledged the value of discussing the agenda in a transparent manner but urged speedy completion of the discussion. A further Board member said that the purpose of issuing a daily programme of work was to ensure that highpriority items were covered, given the tendency of the Board not to complete its full agenda during its meetings; another stated that the Board was fully capable of completing the agenda as set out as long as its members collaborated in a judicious manner. 90. The Co-Chair took note of the comments and noted that the first draft of the agenda (document GCF/B.20/01/Drf.01) had been published on 17 April 2018, leaving Board members ample time to comment on it; the comments had been taken account in the second draft (document GCF/B.20/01/Drf.02). They invited the Board to adopt the draft agenda as swiftly as possible to allow the Board to proceed with its work. 91. A Board member said that the Co-Chair s proposal to adopt the agenda without further discussion carried a disparaging implication that Board members were delaying the adoption of the agenda without due cause. They underlined that their comments on the agenda, which had been submitted one month previously by four separate s, had not been responded to by the Co-Chairs. The Board member also stated that they objected to comments made by other Board members that had implied that some members views could be easily dismissed or that the Board members did not all stand on an equal footing; they also objected to the language used in some of those comments. Regarding their request for the inclusion of an agenda item on the programmatic approach, they noted that among the funding proposals submitted for the current meeting a large amount of funding was being requested for programmatic approaches, and they stated that unless the Board could establish further guidance on such approaches they would not be prepared to approve those proposals. 92. Another Board member echoed the above objection to the use of improper language and recalled that during a Board meeting, Board members must address their comments to the Co- Chair, not to one another. The same Board member clarified that in their previous comments they had not intended to question the integrity of any other Board member but simply to stress the need to uphold best governance practices; they reiterated that a sitting Board member should not be allowed to influence the agenda by working closely alongside either of the Co- Chairs and that Board members should communicate through the proper channels between meetings. They also reiterated their assertion from the previous day that the Board must decide at the current meeting how consultations in advance of B.21 would be conducted to avoid a

16 Page 13 similar situation arising in future; since the matter had not been reflected in decision B.20/01, it must be included on the agenda. 93. The Co-Chair took note of the comments and stated that the third draft of the agenda took account of the issues raised by Board members the previous day. Emphasizing the need for all Board members to work in a spirit of compromise, they invited the Board to adopt the agenda as contained in document GCF/B.20/01/Drf.03. The Co-Chair noted the concerns raised over the consultation process between the Co-Chairs and the Board in the run-up to the meeting and highlighted the exceptional circumstances of the current meeting; they therefore proposed that the matter be addressed in informal consultations with Board members on the margins of the current meeting. 94. A Board member stated that the Co-Chair, in their capacity as the only Co-Chair at the current meeting, should stand for the interests not only of the developed country constituency but of the Board as a whole. Another Board member acknowledged the need for compromise but expressed concern that certain matters discussed the previous day had been moved lower down the draft agenda without consensus, while other items that had been requested for deletion had remained on the draft agenda. 95. The Co-Chair noted that they did indeed stand for the interests of the Board as a whole. Underlining that the views of the Board had been taken into account in the current version of the draft agenda, and that certain compromises had been necessary in so doing, they invited the Board to adopt the agenda in its current form. 96. A Board member stated that they were not prepared to adopt the agenda as it stood. Another said that they would be prepared to adopt the agenda if the amendments they had proposed were accepted, namely: inclusion of an item on the selection of the Permanent Trustee and another item on programmatic approaches, for which the Board needed to issue guidance, at least in an interim form; inclusion of a new sub-item on the conduct of preparations for B.21; and deletion of the item on philanthropic contributions, which, while important, was not relevant at the present time. 97. Another Board member noted that matters relating to the selection of the Permanent Trustee would be covered as part of the report from the ad hoc Trustee Selection Committee under the item Reports from Board committees, panels and groups and would be included as an action item at B.21, not B A further Board member said that while the ad hoc Trustee Selection Committee had a mandate to recommend options for the selection of the Permanent Trustee, including in relation to the potential use of single-source procurement, it did not have a mandate to decide upon them; on that basis, the matter should be included on the agenda as a stand-alone action item. 99. A discussion ensued on the way in which the selection of the Permanent Trustee should be covered on the agenda: several Board members acknowledged the importance of the matter; however, while various members proposed that it should be covered either under the item Reports from committees, panels and groups or as a separate sub-item under that item, one Board member insisted on its inclusion as a stand-alone agenda item in view of its significance The Co-Chair took note of the comments and proposed that the matter of the Trustee be covered as a stand-alone item titled Matters related to the selection of the permanent Trustee, to immediately follow the item on reports from Board committees, panels and groups A Board member expressed appreciation for the inclusion of the aforementioned agenda item while reiterating that they would not be prepared to adopt the agenda without the inclusion of two further items: an agenda item on guidelines for programmatic approaches and a sub-item on arrangements for B.21 under the item on the report of the Co-Chairs. Another Board member said that they would not be prepared to adopt the agenda, even with the additions proposed by the previous Board member, unless they were satisfied that their

17 Page 14 comments had been adequately reflected. The same Board member called for a balanced approach to the present discussions and called on the Co-Chair to ensure they gave the floor to Board members in the order they had requested it Three Board members emphasized the need for unity, cooperation and compromise and drew the attention of the Board to the substantial amount of time already spent discussing the present agenda item; another Board member said that the formal Board session appeared not to be conducive to a resolution of the matter and suggested that the item be suspended to allow the matter to be resolved in informal consultations outside the meeting. A further Board member said that a majority of Board members accepted the agenda as it stood, and only a small minority of Board members continued to raise objections. Another said that the current draft agenda already incorporated the amendments requested, and noted that while they did not object to the addition of agenda items, they did object to the removal of items that had been recognized as important by numerous Board members Three Board members objected to comments made by other Board members undermining the integrity of the Co-Chairs and questioning their conduct, especially when some such comments had been made using language that was inappropriate for the present forum and when one of the Co-Chairs was not present to respond to comments or accusations. A Board member highlighted that the Co-Chair present at the current meeting had commendably stepped up to fulfil the role of both Co-Chairs in the face of a governance failure among the Board to enable the Board to conduct its business. Describing the Board as dysfunctional and toxic, the Board member expressed their deep concern over the future of GCF; they called on the other Board members to reflect thoroughly upon how they wished to act, both individually and as a Board Two Board members highlighted the need for the comments of all Board members to be taken into account and for proposed amendments to be accepted if there was no opposition; with that in mind, they reiterated an earlier request for the item Country programming and readiness (which currently stood as item 18) to be moved higher up the agenda, particularly in view of the importance of these items for the LDCs, which were an especially vulnerable constituency The Co-Chair took note of the comments and reiterated that they took account of all suggestions equally and wished to work constructively to find a way forward. They proposed a short break to allow for the requested amendments to be incorporated into the draft agenda The agenda item was suspended The Co-Chair reopened the agenda item on the same day of the meeting and noted the following changes to the draft agenda: sub-item (c) titled Preparations for the twenty-first meeting of the Board had been added under item 6 Report on the activities of the Co-Chairs ; a new agenda item titled Matters related to the selection of the permanent Trustee had been added as item 8; the four items Status of the GCF portfolio, Status of the GCF pipeline, Status of the initial resource mobilization process (including its sub-item Financial planning of the Fund ), and Matters related to replenishment had been moved up the agenda to numbers 11, 12, 13 and 14, respectively; the item titled Country programming and readiness had been moved up the agenda to number 17; a sub-item titled Policy guidelines for programmatic approach had been added under the item Matters related to the approval of funding proposals ; and three items on philanthropic contributions; the communications strategy; and the revised administrative guidelines on human resources had been deleted. The Co-Chair expressed the hope that the aforementioned changes accurately reflected the wishes of the Board as expressed during the discussion. They invited a representative of the Secretariat to clarify why a Board member s request to alter the wording of the item Updated gender policy and action plan to include the term review could not be met. A representative of the Secretariat said that the Board, in its decision B.09/11, had requested the Secretariat to conduct

18 Page 15 a review of the GCF Gender Policy and Action Plan and submit it to the Board. The review, as contained in document GCF/2017/Inf.03 and Add.01, had been duly presented at B.18 and subsequently updated in light of input received from the Board. Document GCF/B.20/07 contained the Updated Gender Policy and Action Plan, as indicated in its title Requesting that their comments be reflected in the record of the meeting, a Board member requested clarification on whether it was possible to add stand-alone items to the agenda that did not reflect the mandates contained in previous Board decisions and noted that according to their understanding, such items could only be raised under the agenda item Other matters The General Counsel said that the Board was empowered to discuss and resolve matters relating to the adoption of its agenda and the organization of its work; the Rules of Procedure contained no specific legal guidance on the matter A representative of the Secretariat said that, according to current practice, the workplan of the Board contained items that related to mandates adopted by the Board. The agendas for Board meetings were drawn from items on the workplan; therefore, the agenda items related to Board mandates A Board member said that items could be included on the agenda either as the result of a Board mandate emanating from a previous decision or by consensus among the Board members. If there was no consensus on the inclusion of an item on the agenda, it must be raised under the item Other matters Another Board member said that on that basis, the sub-item Preparations for the twenty-first meeting of the Board belonged under the item Other matters Two Board members said that their request for the inclusion of a separate sub-item on preparations for B.21 emanated from a request that had been made by various Board members during the discussion under the previous agenda item that instructions on the conduct of those preparations be included in the text of decision B.20/01 so as to prevent further miscommunication and mishandling of Board preparations by the Co-Chairs; since the matter had eventually not been covered in the decision text, the Co-Chair had confirmed that it would be covered during the meeting. On that basis, the matter belonged as a sub-item under the item Report on the activities of the Co-Chairs as set out in the current version of the agenda and not under Other matters, especially given the risk that the meeting time would run out before the item Other matters could be opened Underlining that an item or sub-item could not be included on the formal agenda without consensus, a Board member stated that they stood in opposition to the proposal to include Preparations for the twenty-first meeting of the Board as a sub-item Another Board member acknowledged the need for a discussion on the matter to be held at the current meeting and appealed to the Board to find a procedurally acceptable manner in which to address it. A further Board member proposed that the matter be discussed outside the formal meeting; another said that, whether formally or informally, all efforts should be made to improve the functioning of the Board and its processes to avoid such extensive controversies in future. The Co-Chair acknowledged the crucial need for a discussion on the matter and proposed that it be addressed under Other matters in keeping with Board procedure and current practice. They also proposed that Other matters be explicitly included on the daily programme of work early on in the meeting to guarantee that it was covered A Board member said that their request for the inclusion of a separate sub-item on preparations for B.21 emanated from a request that had been made by various Board members during the discussion under the previous item for instructions on the conduct of those preparations to be included in the text of decision B.20/01; since the matter had eventually not been covered in the decision text, the Co-Chair had stated that it would be covered during the

19 Page 16 meeting. Noting that the present lengthy and controversial discussion was the result of failures during the preparation for B.20, they did not accept the proposal by the Co-Chair to cover the topic under Other matters. Two Board members insisted that the matter be covered as a formal sub-item on the agenda to prevent a similar situation from arising in advance of and during B Another Board member endorsed the proposal by the Co-Chair to cover the issue of preparations for B.21 under Other matters and include it on the daily programme of work to guarantee that it was addressed. They stated for the record that if the matter were included as a formal item or sub-item on the agenda it would represent a deviation from established Board procedure and thus set a precedent, paving the way for other items not emanating from Board mandates to be requested for inclusion on Board meeting agendas, which could easily lead to further controversy. Another Board member endorsed the comments of the previous Board member and registered their opposition to the proposal to include the topic Preparations for the twenty-first meeting of the Board as a formal sub-item on the agenda A discussion ensued on how to reconcile the present divergence of views in a mutually acceptable manner while adhering to the Rules of Procedure and standard working practices of the Board. Various solutions were proposed such as including the matter as a sub-item on the agenda but with brackets to note the exceptional deviation from standard procedure; using a footnote to explain the same; or covering Other matters early on in the meeting but were rejected as procedurally incorrect The Co-Chair took note of the comments and recalled that the items on philanthropic contributions, guidelines on human resources and the communications strategy had been removed from the agenda. With regard to other proposed amendments, they appealed to the Board to engage in constructive consultations and adopt a flexible attitude so as to break the current deadlock and reach a mutually acceptable solution to enable the Board to adopt the agenda and proceed with its work The agenda item was suspended The Co-Chair reopened the agenda item on the same day of the meeting and noted that to overcome the impasse in the current discussion an amendment had been proposed to decision B.20/01, which had already been adopted by the Board under the previous agenda item. The amendment took the form of the following addition as paragraph (d): Requests the Co-Chairs to consult with members of the Board and alternate members of the Board on the matters relating to the preparations for the twenty-first meeting of the Board. They invited the Board to approve the amendment as cited. There being no objections, the Co-Chair took it that the Board wished to approve the proposed amendment to decision B.20/ It was so decided The Co-Chair also noted that two further changes had been made to the draft agenda as reflected in the fourth draft, which had been circulated to the Board as document GCF/B.20/01/Drf.04. The changes were as follows: deletion of the item titled Preparations for the twenty-first meeting of the Board given that this had been addressed in the amendment to decision B.20/01; and deletion of the item titled Financial planning of the Fund. They invited the Board to adopt the draft agenda as contained in document GCF/B.20/01/Drf There being no objections, the agenda was adopted Following the adoption of the agenda, a Board member stated for the record that the two most recently deleted items should be considered as a matter of priority during the period between B.20 and B.21, and on the agenda of B Four Board members (Mr. Omar El Arini, Mr. Zaheer Fakir, Mr. Cyril Rousseau and Mr. Chris Tinning) stated for the record that they would be recusing themselves from the

20 Page 17 consideration of certain funding proposals at the current meeting owing to declared conflicts of interest on their part The chair of the Ethics and Audit Committee (EAC) noted with appreciation the conflicts of interest declared by Board members and recalled that in accordance with the Policy on Ethics and Conflicts of Interest for the Board, Board members were still able to participate in the discussion on a funding proposal for which they recused themselves but could not participate in the approval of that funding proposal. Recusing themselves from the discussion entirely represented an extra measure of caution, which was also appreciated The agenda item was closed The Board adopted the agenda as set forth below: 1. Opening of the meeting 2. Adoption of the agenda and organization of work 3. Adoption of the report of the nineteenth meeting of the Board 4. Board decisions proposed and approved between the nineteenth and twentieth meetings of the Board (a) (b) Application of paragraph 42 of the Rules of Procedure of the Board: guidelines to determine in which cases decisions may be taken without a Board meeting Application of paragraph 43 of the Rules of Procedure of the Board 5. Report on the activities of the Secretariat (a) Implementation of the work programme of the Secretariat 6. Report on the activities of the Co-Chairs (a) Co-Chairs report (i) Confirmation of the appointment of the Heads of the Independent Units beyond the probationary period (b) Updated Board workplan for Reports from Board committees, panels and groups 8. Matters related to the selection of the permanent Trustee 9. Terms of reference for the review of the committees and panel established by the Board 10. Guidance from the Conference of the Parties to the United Nations Framework Convention on Climate Change (a) (b) (c) Report on the analysis of the challenges, barriers, gaps and recommendations to achieve an increase in the amount of direct access proposals in the pipeline Annual report on the operational framework on complementarity and coherence Seventh report of the GCF to the Conference of the Parties to the United Nations Framework Convention on Climate Change 11. Status of the GCF portfolio: approved projects and the fulfilment of conditions 12. Status of the GCF pipeline, including the status of the Project Preparation Facility requests 13. Status of the initial resource mobilization process 14. GCF Trust Fund financial report

21 Page Matters related to replenishment 16. Updated gender policy and action plan 17. Country programming and readiness (a) (b) Country and entity work programmes Progress and outlook report, including status of national adaptation plans 18. Matters related to accreditation (a) (b) (c) Consideration of accreditation proposals Accreditation framework review, including the project specific framework approach Status of the accreditation master agreements 19. Risk management framework: compliance risk policy 20. Matters related to the approval of funding proposals (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) Integrated approach to addressing policy gaps Interrelated policy matters on incremental cost and full cost calculation methodology; options for further guidance on concessionality; and policy on cofinancing Matters related to the independent Technical Advisory Panel Further options for decision-making relating to funding proposals Two-stage proposal approval process Review of the financial terms and conditions of the GCF financial instruments Investment criteria indicators Mapping of elements related to project or programme eligibility and selection criteria Policy guidelines for programmatic approach Steps to enhance the climate rationale of GCF-supported activities Identification of results areas where targeted GCF investment would have the most impact Results management framework: update on the further development of some indicators in the performance measurement frameworks 21. Consideration of funding proposals 22. Recommendations of the Private Sector Advisory Group on opportunities to engage the private sector, including local actors, in adaptation action at the national, regional and international levels 23. Dates and venues of the following meetings of the Board 24. Administrative matters (a) Approval of the audited financial statements for 2017 (b) Report on the execution of the administrative budgets for Reports from the independent units 26. Other matters

22 Page Report of the meeting 28. Close of the meeting Agenda item 3: Adoption of the report of the nineteenth meeting of the Board 130. The Co-Chair opened the agenda item and drew the attention of the Board to document B.19/44 titled Report of the nineteenth meeting of the Board, 26 February 1 March Recalling a commitment made by the Secretariat at a previous Board meeting to issue the meeting report within four weeks of the end of each Board meeting, a Board member objected to the late issuance of the B.19 report. The Board member noted that in the absence of the official meeting report they had been required to spend excessive amounts of time searching through the video recordings of B.19 when seeking specific information on the proceedings of the meeting. To prevent similar delays and difficulties in future, the Board member called on the Board to adopt a decision stating that the reports of the current and future Board meetings would be issued within two weeks of the close of each meeting A representative of the Secretariat said that the draft report of B.19 had been circulated to Board members for a two-week review period on 5 May (The representative initially stated in error that 5 May 2018 had been one week after the close of B.19, but they subsequently corrected this error and informed the Board that B.19 had ended on 1 March 2018.) Following the issuance of the draft report, comments had been received from Board members; one such comment had included a request for two legal opinions from the Secretariat. Given that those legal opinions were to be circulated with the B.19 report, the official publication of the report had been delayed due to the time needed for their preparation. If the Board wished a meeting report to be published two weeks after the end of the meeting, it would not be possible to continue the current practice of issuing the draft report to the Board for a two-week review period prior to the official publication of the report Clarifying their earlier request, a Board member stated that they wished the draft report to be circulated to Board members two weeks after the close of the meeting A representative of the Secretariat said that, in future, the Secretariat would make every effort to ensure that the draft reports of Board meetings were issued to Board members within four weeks of the close of the respective meeting Noting that they had already raised the same point at previous meetings, and that other organizations provided meeting reports immediately following the close of their meetings, the Board member requested that the Board adopt a decision guaranteeing that meeting reports would be issued to Board members two weeks after the close of the respective meetings and asked the Secretariat to explain how that objective could be achieved in practical terms The Co-Chair noted that compliance with that request may have resource implications and proposed that the matter be discussed in further detail later at the current meeting A Board member noted that the Board report was covered under agenda item 27 and suggested that some form of summary report under that item would suffice. They added that either two or four weeks would both be acceptable deadlines for the issuance of the draft report to Board members The Board member who requested that a decision be taken on this matter said that the administrative budget contained substantial budget allocations for consultants and consultancy services, and should thus be sufficient to cover any costs incurred in guaranteeing earlier issuance of the report. They also surmised that the total cost of producing the report should remain the same even if the report were produced in a shorter time frame than at present.

23 Page The Co-Chair took note of the comments and said that an earlier deadline for the issuance of the Board report should not be decided upon unless adherence could be guaranteed; they therefore proposed that the matter be addressed under agenda item 27, Report of the meeting, so that an informed decision could be taken. On that basis, they invited the Board to take note of the B.19 report There being no further comments or objections, the Board duly took note of document GCF/B.19/44 titled Report of the nineteenth meeting of the Board, 26 February 1 March Agenda item 4: Board decisions proposed and approved between the nineteenth and twentieth meetings of the Board 141. The Co-Chair opened the agenda item and drew the attention of the Board to document GCF/B.20/Inf.10 titled Decisions proposed and approved between the nineteenth and twentieth meetings of the Board, which recorded the nine decisions that had been proposed between B.19 and B.20 as at 7 June They noted that seven of the nine decisions contained in the document had been approved and that since 7 June 2018 two additional decisions had been proposed and approved, namely: Appointment of a member to the Investment Committee (document GCF/BM-2018/13); and Accreditation of observer organizations (document GCF/BM-2018/14). Objections had been received in relation to two proposed decisions, namely: Dates of the twenty-first meeting of the Board contained in document GCF/BM-2018/07/Rev.01; and Policy on restructuring contained in document GCF/BM- 2018/12. Noting that comments from the Board would be invited following the introduction of agenda sub-items 4(a) and 4(b), the Co-Chair invited the Board to take note of document GCF/B.20/Inf A Board member said that the policy on restructuring was too significant an issue to be dealt with via as a decision taken between meetings, and called for all such major issues to be deliberated solely during face-to-face Board meetings in future The Co-Chair took note of the comment and once again invited the Board to take note of the document There being no objections, the Board took note of document GCF/B.20/Inf.10. (a) (b) Application of paragraph 42 of the Rules of Procedure of the Board: guidelines to determine in which cases decisions may be taken without a Board meeting Application of paragraph 43 of the Rules of Procedure of the Board 145. The Co-Chair opened the agenda sub-item and invited the General Counsel to provide an introduction The General Counsel said that decisions taken between meetings were regulated by paragraphs 41 to 43 of the Rules of Procedure. They noted that the Board, by decision B.12/12, had requested the Co-Chairs to carry out consultations with a view to establishing guidelines to determine in which cases decisions taken between meetings may be requested in line with paragraph 42 of the Rules of Procedure, and to submit a decision to the Board on the matter no later than its fifteenth meeting (B.15). At B.15, the status of those consultations had been reported to the Board in document GCF/B.15/05. In decision B.15/02, the Board had extended consultations on the mandate given to the Co-Chairs in decision B.12/12, with no specific

24 Page 21 delivery deadline. The matter was now scheduled for inclusion on the agenda for B.21. Providing an overview of the current state of affairs, the General Counsel clarified that, according to the Rules of Procedure, decisions taken between meetings could be taken on an extraordinary basis when both Co-Chairs agreed that an item was too urgent to postpone to the following Board meeting. In the absence of guidelines for the interpretation of that rule, the Co- Chairs could determine which decisions could be taken between meetings on a case-by-case basis. The period prescribed for the consideration of a decision taken between meetings was 21 days; in exceptional circumstances, the Co-Chairs could propose a shorter period, but this could be no less than 7 days. Whenever an objection was raised to a decision proposed for adoption between meetings that could not be resolved during the prescribed period, the decision must be submitted to the Board for consideration at its following meeting; there was currently no scope for revision of the draft decision or consultation with any other body as part of the procedure for decisions taken between meetings. All upheld objections to a proposed decision taken between meetings must be reported to the Board. The aforementioned matters would all be addressed in the new guidelines A Board member said that the Co-Chairs had acted contrary to the Rules of Procedure when dealing with an objection raised to a draft decision proposed between B.20 and B.21. To prevent any similar situation from arising in future, and given that a number of items on the agenda of the current meeting could end up being subject to the procedure for approval between meetings, the Board member proposed that the Board adopt the guidelines as presented in document B.15/05, annex II, with the deletion of paragraph 8, and noted that they would not consent to any decision being submitted for consideration between meetings until they were confident that the Rules of Procedure would be faithfully adhered to by the Co-Chairs The Co-Chair took note of the comment and invited a representative of the Secretariat to take the floor A representative of the Secretariat said that the guidelines on decisions taken between meetings had been the subject of a Board mandate in decision B.12/12. An update had been provided at B.15 and in document GCF/B.15/05. At B.15, the mandate had been extended and the item was now due for consideration at B The Co-Chair asked the Board whether it would be acceptable to consider the guidelines at B.21 as planned The Board member who had stated that the Co-Chairs had acted contrary to the Rules of Procedure reiterated their concern at the ongoing absence of guidelines on decisions taken between meetings and underlined the urgent need to resolve the matter. They would accept the proposal for the guidelines to be considered at B.21 as long as no decisions were proposed for adoption between B.20 and B.21 while the matter of the guidelines was still pending Another Board member said that the issue arising from the Co-Chairs application of paragraphs 41 to 43 of the Rules of Procedure between B.19 and B.20 had resulted from an error on the part of the Co-Chairs rather than a deliberate act of noncompliance with the Rules of Procedure; with that in mind, a ban on approving decisions taken between meetings pending approval of the guidelines would not be a proportionate response The Co-Chair took note of the concern and said that B.21 was the earliest time at which the guidelines could be discussed. Underlining the difficulty in foreseeing which decisions may be required to be taken between meetings, they proposed that the only decisions proposed for adoption between B.20 and B.21 should be those that were absolutely necessary to allow proper functioning of GCF. The Co-Chair assured the Board that the Rules of Procedure would be strictly adhered to for any decisions proposed for adoption between B.20 and B.21.

25 Page There being no objections, the Co-Chair affirmed that the item relating to guidelines on decisions taken between meetings would be considered at B.21 and that the Rules of Procedure would be strictly adhered to for decisions proposed between meetings henceforth The agenda sub-items were suspended The Co-Chair re-opened the agenda sub-items on the final day of the meeting and invited a representative of the Secretariat to take the floor A representative of the Secretariat noted that an objection had been received to one of the draft decisions proposed for adoption between B.19 and B.20, namely Policy on restructuring. Since there had not been sufficient time to consider the draft decision at B.20, the matter would be deferred to B The agenda sub-items were closed No decisions were taken under these sub-items. Agenda item 5: Report on the activities of the Secretariat (a) Implementation of the work programme of the Secretariat 160. The Co-Chair opened the agenda item and drew the attention of the Board to document GCF/B.20/Inf.08 titled Report on the activities of the Secretariat and its limited distribution addendum Add.01 titled Report on the activities of the Secretariat: Status of accreditation master agreements and funded activity agreements. They invited the Executive Director, Mr. Howard Bamsey, to take the floor The Executive Director said that, during the reporting period, the Secretariat had placed emphasis on consolidating project implementation and improving the services that the Secretariat provided to countries, and highlighted that the growth of the GCF portfolio over the previous year demonstrated the ability of the Secretariat to work to high standards of quality and scale. At the date of the Board meeting, the Secretariat had increased project and programme disbursement to 30 projects worth USD 1.4 billion; moreover, having further increased since 30 April, disbursements were now level with the Secretariat s projections. In addition, the rate of readiness approvals and disbursements had increased, and country programming was gaining momentum and beginning to show results. As a result of increased interest in GCF in recent months, demand was rising for in-country support; this had placed extra pressure on the Secretariat, particularly given its lack of regional presence. Challenges had also been encountered in implementing proposals received in response to request for proposals (RFPs), partly because many organizations that had responded to the RFPs were not yet accredited. To overcome the current challenges, the Secretariat aimed to build communities of practice and embed in-depth expertise within the Secretariat. The Secretariat had also focused on promoting complementarity and coherence with other climate finance channels, in line with the request from the COP, and practical outcomes were beginning to emerge. According to feedback from ministers at the recent Global Environment Facility (GEF) Assembly, other countries saw such complementarity and coherence as highly important. The Secretariat was also planning ahead for upcoming changes, for example, by developing appropriate briefing material for the new cohort of Board members who would begin their terms in Before initiating its preparations for the replenishment process, the Secretariat awaited guidance from the Board. While the Secretariat was broadly on track with its work programme for 2019, it was also paying close attention to areas where further improvements could be made, for example, regarding capacity-building for direct access entities (DAEs) and countries; nonetheless, while this was valuable, it was also demanding in terms of resources. The overall pace of work was high, and while staff numbers were forecast to reach the Board-approved target of 250 by the

26 Page 23 end of the year, the Secretariat s workload was expanding at a similar rate. Based on ad hoc feedback from countries, the response countries received from the Secretariat had improved. Notably, an operations manual had been introduced, and barriers to implementation were being overcome. Nonetheless, the Secretariat continued to strive for continued progress towards providing a satisfactory response to all partners and countries The Co-Chair took note of the information provided and opened the floor for comments Board members expressed appreciation to the Secretariat for its concise and informative report, and for the progress made during the reporting period. Communication and reporting 164. A number of Board members commended the Secretariat on its efforts to improve consultations with the Board on policy documents in advance of Board meetings, including through its series of webinars. One Board member noted that not all members were able to participate in the webinars. The same Board member called for the early inclusion of civil society in document review processes; they suggested that policy documents of interest to the public could be uploaded to the GCF website well in advance of meetings. Several Board members commended the Secretariat on its publication of nearly all Board documents at least 21 days in advance of B.20, in keeping with the established deadline A Board member called for increased transparency in the Secretariat s reporting on the allocation of resources under the Readiness and Preparatory Support Programme, including statistics on disbursement per country and the corresponding justification. They also underlined the need to introduce a system of benchmarking to ensure countries applying for readiness funds knew what to expect when dealing with GCF. In addition, they enquired as to why document GCF/B.20/Inf.08/Add.01 had been issued on a limited distribution basis A Board member called for improved reporting on agreements between GCF and other institutions, including further information on partnerships, such as the one established recently with International Solar Alliance as well as on the practical outcomes of the structured dialogues. Highlighting a disparity between the targets and forecasts for disbursement stated on pages 3 and 4, respectively, of document GCF/B.20/Inf.08, a Board member requested clarification from the Secretariat. Another Board member noted that 31 per cent of the Secretariat staff travel budget for 2018 had already been spent and requested more comprehensive reporting on the outcomes of the missions carried out by Secretariat staff and the Executive Director. Two Board members requested additional details on targets and forecasts for the conclusion of accreditation master agreements (AMAs) and funded activity agreements (FAAs); one wished to know which specific projects still lacked the relevant AMAs and FAAs, the reasons why, and how the Secretariat planned to conclude the pending agreements henceforth A Board member highlighted the need to establish systematic reporting on the results of GCF projects on the ground; another highlighted the importance of also reporting on lessons learned from implementation, particularly to provide justification for the upcoming replenishment process. Structured dialogues 168. Various Board members expressed satisfaction at the success of the regional structured dialogues to date, describing the dialogues as useful forums that offered GCF an opportunity to interact with a broad range of stakeholders in person, ensure consistent communication within a region, and transmit essential information on new GCF initiatives and processes, thus promoting awareness and improving understanding. One Board member said that the regional dialogue in the Pacific had notably boosted the development of country programmes in the

27 Page 24 region. Another Board member strongly recommended that Board members participate in the dialogues. Two Board members requested more robust reporting on the tangible results achieved by the dialogues so as to justify their continuation; two emphasized the need for the dates of the dialogues to be communicated to Board members well in advance to allow them to allot time in their schedules and obtain the required travel visas; one noted with regret that the structured dialogue in Latin America had been prepared at short notice and held too soon after the previous Board meeting to allow Board members to attend. Two Board members underlined the difficulties experienced by some Board members in obtaining the necessary visas to attend the dialogues. Regional support 169. A Board member underscored the need for GCF to establish a regional presence in regions that faced capacity constraints. Another Board member acknowledged that a regional GCF presence was worth considering, while also highlighting that it would entail significant responsibility and therefore should be approached cautiously. A further Board member said that increased efforts were needed to work closely with DAEs to boost the quality of the funding proposals they submitted. Another Board member said that the Secretariat should attempt to establish regional networks prior to creating its own regional presence to coordinate those networks and requested that the Secretariat prepare a proposal for submission to the Board on how a modest regional presence could be established. Other issues 170. A Board member wished to know why the matter of privileges and immunities (P&Is) had not been addressed in the report and what efforts had been made by the Secretariat and the Executive Director to pursue the option of obtaining P&Is through a connection with the United Nations system. The same Board member enquired as to why the Secretariat was proposing to recruit around 21 seconded personnel from other organizations, and why the particular skills or expertise sought through those secondments could not be covered by the Secretariat s diverse range of qualified in-house staff. They also highlighted that the salaries of those seconded personnel would mostly be paid by other international organizations or national governments, many of which were from developing countries that could ill afford such an expense The Co-Chair took note of the comments, noting with satisfaction that the Board had expressed broad appreciation for the work of the Secretariat. Echoing that appreciation, the Co- Chair invited the Executive Director to respond The Executive Director took note of the suggestions on improving transparency and said that the Secretariat would take them into account in its ongoing efforts to achieve greater transparency within its mandate. With regard to the regional structured dialogues, while information on their outcomes was already provided on the GCF website, the Secretariat would endeavour to produce a more strategic and focused summary of those outcomes and include it in future reports to the Board. Notwithstanding the many benefits of the structured dialogues, they also required a large amount of financial and human resources; therefore, the Secretariat was exploring possibilities to align the timing of the dialogues with other international events to economize on travel costs and staff travel time. The Secretariat was also seeking new ways to meet the increased demand for direct GCF engagement with countries as a result of the dialogues. The Secretariat would endeavour to schedule and publicize the dialogues as far in advance as possible On the point raised on the disparity between disbursement projections in the document, the Executive Director said that the two different sets of numbers indicated a revision of the Secretariat s projections. The first set, on page 3, was the target in the workplan, and the figures on page 4 were the revised quarterly projection; while the projections had been reduced, they

28 Page 25 could also be revised up again at a later date. The Secretariat would be happy to comply with the request for more comprehensive reporting on readiness and adaptation planning, including through benchmarking, and would address the issue in more detail under the agenda item on readiness With regard to reporting on the outcomes of travel missions, the Executive Director would consult with the Board informally on the type of information Board members wished to receive On secondments, the list provided in the report represented a selection of potential areas where seconded personnel could be brought in from other organizations, not a list of positions that would definitely be filled; in any given year it was likely that only a couple of the potential secondments would be implemented. The Secretariat was particularly interested in secondments from think tanks and universities in developing countries, and would strive to achieve as much diversity in secondments as in its permanent staff The Executive Director also clarified that the addendum to the document had been issued on a limited distribution basis because it contained details of ongoing negotiations with AEs and other organizations, some of which was classified as sensitive information. The agreements with other organizations were simply a way of signalling interest in collaboration and had not been mentioned in the report because they had no legal implications. Lastly, on P&Is, the Secretariat had been making good progress towards establishing the relevant agreements with countries on a case-by-case basis; further details could be provided to the Board on request Board members requested additional clarification on a range of issues, including: details on the Secretariat s policy on seconding personnel from other organizations, and whether that policy might need Board approval; whether any progress had been made towards establishing a P&Is arrangement in connection with the United Nations system; the steps the Secretariat was taking to overcome the obstacles encountered by certain Board members in obtaining visas for travel in accordance with their official duties; details on the process for seconding personnel to GCF; whether partnerships announced with other institutions carried any legal or financial implications; the arrangements for the secondment of a GCF staff member to the Caribbean region and potential ways that a similar regional presence could be established in other regions; and the status of the signing and effectiveness of AMAs and FAAs The Executive Director said that three projects, worth USD 39 million, were pending AMA approval; 14 projects, worth USD 975 million, were pending AMA effectiveness; and 26 projects, worth USD 1.2 billion, were pending FAA signing. Recognizing the need for further progress towards concluding those agreements, Mr. Bamsey noted that in the 14 projects awaiting AMA effectiveness, several different AEs were involved. Given that the time limit for project implementation was triggered the moment the AMA became effective, some AEs were waiting until the relevant FAAs were almost concluded before allowing the AMAs to become effective. Much progress towards concluding the agreements had been made in recent weeks; the Secretariat was hopeful that implementation of the projects would soon be able to commence and would update the Board in more detail as soon as further information became available Regarding a regional presence, any such presence would be extremely modest and would not follow conventional models; it would perhaps take the form of one or two staff embedded in an organization, working in a lean and structured manner. While networks had been established in some regions, the biggest lack of regional presence was currently in francophone West Africa and Latin America; language barriers were also an issue in those regions. With regard to the staff member who would soon be fulfilling a regional function in the Caribbean, the Executive Director clarified that this was related to personal circumstances and was in line with the current mandate from the Board to expand support to the regions; the

29 Page 26 individual would be embedded in (not seconded to) UNFCCC in a country where P&Is for GCF staff and officials had been agreed. The Secretariat would report to the Board on the progress of that regional presence The option to carry out secondments was provided for in the Administrative Guidelines on Human Resources and was designed to engage assistance in areas where the Secretariat did not wish to establish permanent staff positions. To be of significant use, the secondments would need to be made for several weeks; for long-term secondments, potential arrangements would also be explored. The list of potential secondments was simply a range of suggested areas for secondments, not a definitive list of secondments that would be actively pursued; the Secretariat would welcome guidance from the Board on the matter and would report back regularly to assess the value of secondments carried out Potential links with the United Nations on P&Is had been raised by GCF representatives at the most recent session of the COP, in November 2017; in the absence of consensus among UNFCCC Parties, no decision had been taken to move forward with such arrangements The Co-Chair invited the Board to take note of the document. There being no objections, it was so decided The Board took note of document GCF/B.20/Inf.08 and its addendum Add.01 (limited distribution) titled Report on the activities of the Secretariat No decision was taken under this agenda item. Agenda item 6: Report on the activities of the Co-Chairs (a) Co-Chairs report 185. The Co-Chair opened the agenda sub-item and drew the attention of the Board to document GCF/B.20/Inf.16 titled Report on the activities of the Co-Chairs. They gave a summary of the report, highlighting the Co-Chairs vision for their term and the positive feedback they had received on the new approaches proposed. The Co-Chair acknowledged the views expressed on the work of the Co-Chairs by Board members under an earlier agenda item, expressed their willingness to respond to questions and advice from the Board, and opened the floor for comments A Board member noted with concern that the Co-Chairs report had been distributed two days after the 21-day cut-off date. Noting the considerable delays experienced in proceeding with the work of the Board at the current meeting, they called on the Co-Chairs to consult more thoroughly with Board members when preparing for meetings. The Board member said that preparing for Board meetings by arranging physical meetings, such as the recent informal Board member consultations on replenishment held in Bonn, was an excessive use of resources; furthermore, the Board member had been unable to attend those consultations because they had coincided with a session of the 2018 Talanoa Dialogue Platform. The Board member said that they strongly objected to their lack of involvement in the consultations in Bonn A Board member contested the legal opinion of the General Counsel as contained in the report, which stated that the appointment of the Heads of the independent units had been de facto confirmed. According to the report, this had been done in the absence of an assessment of the Heads respective performance, and in the absence of any notification to the Heads of the IUs that their performance has been unsatisfactory. The Board member said that the Board should have been consulted on the appointment, and that the Co-Chairs consultation with the General

30 Page 27 Counsel on the matter was inappropriate on the basis that it compromised the independence of those units Recalling that the NDA of Argentina had on 22 March 2018 withdrawn a request for the reconsideration of funding proposal FP057, a Board member noted with concern that the Co- Chairs had not notified the Board of this withdrawal as had been requested by the Head of the Independent Redress Mechanism The Co-Chair took note of the comments and drew the session to a close in accordance with the agreement to adjourn the daily session of the meeting at 6 p.m A Board member raised a point of order regarding the daily programme of work, requesting that the funding proposals be considered the following day to ensure the conclusion of that agenda item before the end of the meeting The agenda item was suspended The Co-Chair reopened the agenda item the following day and opened the floor for comments Several Board members echoed the concerns raised on the previous day and under previous agenda items regarding the informal Board member consultations on replenishment in Bonn. One Board member reiterated that the consultations had coincided with the Talanoa Dialogue and called on the Co-Chairs to ensure that the timing of any future events they organized took account of the dates of other important meetings and consultation processes. They also wished to receive additional information on the outcomes of the Bonn consultations. A Board member requested that the Co-Chairs consult with the Board before taking actions of significant cost to GCF, such as the arrangement of the consultations in Bonn; they asked for this request to be recorded in the report of the meeting Two Board members expressed strong disapproval at the fact that alternate members of the Board had not been invited to attend the consultations; one noted that both the Swedish Co- Chair and the Swedish Board member had been in attendance. A Board member said that failure to consult all members and alternate members of the Board in advance of Board meetings led to an increased risk that consensus would be blocked by Board members. Another Board member said that the dissatisfaction expressed by some members of the Board had arisen because the consultations in Bonn had been arranged on the basis of decision B.19/05, which had been adopted by the Board without the aid of a hard copy of the text. Furthermore, the Co-Chairs had, on the basis of the mandate contained in that decision but without consulting the Board, decided to organize three meetings on the replenishment process in The Board member requested the inclusion of the phrase in consultation with the Board and with the assistance of the Secretariat in all future Co-Chair mandates While recognizing the need for the Co-Chairs to attend meetings abroad, one Board member noted with consternation that insufficient justification had been given for the meetings in the United Kingdom of Great Britain and Northern Ireland and Ireland outlined in the Co- Chairs report, especially given the considerable costs incurred by the meetings. Another Board member echoed this concern and asked if the Secretariat believed that the meetings fell within the mandate of the Co-Chairs; they called for a communications policy that would provide clear guidelines on the way in which GCF was represented externally. Two Board members requested specific information on the outcomes of the meetings. A further Board member noted with concern that the stated objective of the meetings in the United Kingdom of Great Britain and Northern Ireland had been to strengthen the relationship between UNFCCC and British governmental and non-governmental actors; they did not believe this to be an objective of GCF A Board member stated for the record that previous Co-Chairs had also conducted meetings, in particular on the margins of UNFCCC meetings, and had organized consultations without seeking the Board s approval in advance; they expressed support for such action by the

31 Page 28 Co-Chairs. Another Board member expressed their full support for the activities undertaken by the Co-Chairs as detailed in the report A Board member stated for the record that they objected to the conversations held between the Swedish Board member as part of the Co-Chairs team of advisers in advance of the meeting, regarding the documents for presentation before the Board. They also called on the Co- Chairs to consult with the Board before making the decision to hold an advisory day during which advisers could discuss policy items and funding proposals with the Secretariat prior to the Board meeting Noting that the Co-Chairs appeared to be guiding the preparation of many of the documents submitted for the Board s consideration, a Board member requested that future Co- Chairs reports include mention of this involvement. They also said that if a decision were to be adopted on the Co-Chairs report, it should include a request that the Co-Chairs consult the constituencies represented by the Board when overseeing the preparation of Board documents, with the assistance of the Secretariat The Co-Chair noted the Board members comments and proposed that the concerns raised be discussed outside the formal meeting. They offered their assurance that they intended to work in a way that met with the satisfaction of the members of the Board The Co-Chair invited the Secretariat to respond to the comments Recalling paragraph 14 of the Rules of Procedure, pursuant to which the Co-Chairs may represent the Board at external meetings and report back to the Board on those meetings, a representative of the Secretariat said that Co-Chairs had often spoken on behalf of GCF at past meetings and events A Board member reiterated their request for a more thorough account of the outcomes of the Co-Chairs meetings in the United Kingdom of Great Britain and Northern Ireland and Ireland on the basis that those meetings had taken place at considerable cost to GCF The Co-Chair noted the concern of the Board member and invited the Board to take note of the report A Board member requested that the Board adopt a decision on the concerns raised with regard to the Co-Chairs report because they related to the governance of GCF The Co-Chairs took note of the request but proposed that consultations on such a decision take place on the margins of the meeting so that the Board could move on to consider further items on the agenda. They invited the Board to take note of the Co-Chairs report Seeing no objections, they took it that the Board wished to take note of the report The Board took note of document GCF/B.20/Inf.16 titled Report on the activities of the Co-Chairs The Co-Chair suspended the agenda sub-item The Co-Chair re-opened the sub-item on the final day of the meeting and opened the floor for comments Noting with concern that certain Board members had been individually consulting with the Co-Chairs and the Secretariat on documents for consideration by the Board in advance of Board meetings, a Board member requested clearer guidelines on consultations between the Co-Chairs, the Board and the Secretariat. Highlighting that the provisional agenda had been posted on the website in advance of the current meeting, and that comments had been made by Board members and incorporated into the agenda, the Board member indicated their surprise at remarks made under previous agenda items to the effect that consultations with the Board had not taken place. They expressed their approval of the actions taken by the Co-Chairs to

32 Page 29 create a more transparent process in preparing for the current meeting, and proposed that the developed country constituency s preparatory phone call be broadened in future to include the whole Board. The Board member also proposed that the Co-Chairs make documents available on an e-platform in advance of the meeting with a function for Board members to make comments and share their views A Board member said that requests from Board members should be channelled through the Board s committees, and that it was improper for individual Board members to issue the Secretariat with mandates. Another Board member proposed that the issue of consultations between Co-Chairs, Board members and the Secretariat be considered in a review of the Board s governance, which should take into account the fact that members of the Board from developing countries often faced greater challenges in preparing for meetings than those from developed countries The Co-Chair took note of the comments The agenda sub-item was closed The Board took note of document GCF/B.20/Inf.16 titled Report on the activities of the Co-Chairs No decision was taken under this agenda sub-item. (i) Confirmation of the appointment of the Heads of the independent units beyond the probationary period 216. The Co-Chair opened the agenda sub-item and draw the attention of the Board to document GCF/B.20/Inf.16 titled Report on the activities of the Co-Chairs. They invited the General Counsel to summarize the circumstances that had led to the decision of the Co-Chairs to confirm the appointment of the Heads of the independent units as detailed in the report The General Counsel reported that the Co-Chairs had sought legal advice regarding the status of the contracts of the Heads of the independent units given that their probationary period had expired without being extended, and that no performance criteria or evaluation procedure had been developed by previous Co-Chairs pursuant to decision B.13/16. The General Counsel had advised the Co-Chairs that the contracts should be confirmed and had proposed two options for proceeding with this action: the Co-Chairs could either (i) seek the prior approval of the Board through a decision taken between meetings or at B.20 or (ii) confirm the appointments on behalf of the Board and inform the Board of their actions. In the legal opinion they had given at the time, the General Counsel had advised the Co-Chairs that while the first option was more technically appropriate, it presented political risks ; they had therefore invited the Co-Chairs to consider the latter option despite it being less legally sound. The General Counsel then clarified that both options were legally sound but represented different approaches. In choosing their course of action, the Co-Chairs had had to consider the need to close out the ongoing legal uncertainty of the status of the Heads contracts as quickly as possible on the basis that the uncertainty posed a reputational risk to GCF. Moreover, any decision on the part of the Board would have been a mere formality because the Board had failed to discharge its obligation to develop performance and evaluation criteria for the Heads of the independent units The Co-Chair thanked the General Counsel for their clarification and opened the floor for comments A Board member requested information on the number and positions of Secretariat staff whose probationary period had expired without their positions having been confirmed as well as on the rules governing the contracts of staff whose probationary period had expired. They wondered why the Board had not been notified that the probationary period of the Heads of the

33 Page 30 independent units had been reaching its term. Underlining that the Board was responsible for the approval, extension and conclusion of the contracts of Board-appointed officials, the Board member questioned the legal opinion given by the General Counsel. They stated for the record that they objected to the action taken by the Co-Chairs, stating that it was not in accordance with paragraph 42 of the Rules of Procedure, which pertained to decisions taken between meetings. The Board member asserted that a decision taken between meetings could have been adopted by the Board within a short time frame to resolve the matter Acknowledging the relevance of the Board member s comments, the Co-Chair said that the Co-Chairs had acted in a legally acceptable manner and in accordance with the advice of the General Counsel to rectify a legally uncertain situation in an expeditious manner. They had felt strongly that the procedure regarding the end of the probationary period of the Heads of units should be respected and had taken rapid action to resolve a matter that had been left open by their predecessors A Board member expressed agreement with the decision to confirm the appointments, but they said that it would have been more procedurally appropriate to seek confirmation through a Board decision taken between meetings. They reiterated the statement they had made under the previous sub-item that the Co-Chairs had not acted in accordance with the Rules of Procedure when they had failed to notify the Board of Argentina s withdrawal of a request for reconsideration of a funding proposal The Board member who had expressed an objection to the action taken by the Co-Chairs clarified that they did not disagree with the decision to confirm the appointments but with the manner in which it had been made. They stated for the record that they had conducted a telephone conversation with the Secretariat during which they had proposed extending the probationary period of the Heads of the independent units to allow the Board sufficient time to carry out a performance review of the Heads. Acknowledging the Co-Chairs wish to act appropriately, the Board member said that the Co-Chairs should be aware of the Rules of Procedure. The Board member reiterated their objection to the approach taken and requested that this be reflected in the report of the meeting Noting the Board members comments, the Co-Chair underlined that they had been faced with an acute situation and had acted in accordance with legal advice. They called on the General Counsel to respond to the comments of the Board members The General Counsel informed the Board on behalf of the Head of Human Resources that there were currently no staff in the Secretariat whose probationary period had expired and who had not yet been confirmed. When such cases had been referred to the Office of the General Counsel in the past, they had advised that the appointments of the staff members in question should be confirmed on the basis that those staff members could not be held accountable for a failure by GCF to carry out an assessment of their performance A Board member proposed that the Board adopt a decision to endorse the action taken by the Co-Chairs The Co-Chair confirmed that this proposal had been noted and that the matter would be addressed later in the meeting The Co-Chair suspended the agenda sub-item The Co-Chair re-opened the agenda sub-item on the final day of the meeting. The Co- Chair invited the Secretariat to distribute hard copies of the draft decision and opened the floor for comments Noting that some Board members supported the action that had been taken by the Co- Chairs to confirm the appointments of the Heads of the independent units without prior

34 Page 31 consultation by the Board, a Board member asked for clarification on whether paragraph (b) of the draft decision precluded the Co-Chairs from taking the same course of action in future The Co-Chair invited the Secretariat to respond Underlining that the decision text was new and had been drafted in response to a proposal from a Board member, a representative of the Secretariat said that the content of paragraph (b) reaffirmed the relevant provisions of the terms of reference (TOR) of the Heads of the independent units The Board member who had requested clarification asked if the legal advice that had been given by the General Counsel would still be valid under the new decision The Co-Chair invited the General Counsel to respond The General Counsel said that by adopting paragraph (a) of the decision, the Board would ratify the action that the Co-Chairs had taken to confirm the existing contracts of the Heads of the independent units. In doing so, the Co-Chairs had acted outside the norm. Paragraph (b) of the decision therefore reaffirmed the status quo with regard to the appointment and termination of contracts of Board-appointed officials, and the situation thus remained unchanged The Co-Chair thanked the General Counsel for the clarification and invited the Board to adopt the decision There being no objections, the decision was adopted The Board adopted the following decision: DECISION B.20/02 (a) (b) The Board: Takes note that the appointments of the heads of the independent Evaluation Unit, the independent Integrity Unit and independent Redress Mechanism have been confirmed; and Reaffirms that all future decisions relating to the appointment, confirmation of appointment and termination of all Board-appointed officials shall be taken by the Board. (b) Updated Board workplan for The Co-Chair opened the agenda sub-item and reminded the Board that according to decision B.18/01, the Co-Chairs were requested to update the 2018 Board workplan following each Board meeting. The Co-Chair drew the attention of the Board to document GCF/B.20/16 titled Updated workplan of the Board for They stated that the draft decision in annex I formally deferred those items that, as per the relevant Board decisions, were due to be considered at B.20 or before but which were not on the B.20 agenda. They invited the Board to take note of the document and adopt the draft decision contained in annex I to the document A Board member asked if it was realistic, given the difficulties experienced at the meeting, to expect the workplan of the Board and all the decisions entailed to be executed during the current year, the final year in the four-year initial resource mobilization period. They requested the thoughts of other Board members and offered to give their own, maintaining that there were important issues and that, if the workplan was to be taken seriously, this would need be addressed. The Board member recommended a subcommittee of the Board be tasked with examining the outstanding issues from previous meetings between sessions and either propose a draft decision for consideration by the Board or deal with the matter in some other way without burdening the agenda of B.21.

35 Page The Co-Chair pointed out that the workplan was continually updated on the basis of the progress or lack of progress made at Board meetings A Board member requested clarification on whether the previous Board member was expressing disagreement with the current workplan as presented or with the modality on decisions taken between meetings. They reminded the Board that decisions on the latter had already been made on the previous day There being no further comments or objections, the report was duly adopted Subsequent to the adoption of the report, a Board member requested that a paragraph be added to the decision regarding the establishment of a subcommittee to deal with outstanding issues from previous meetings as they related to the workplan The Co-Chair advised that this suggestion would require considerable discussion and asked the Board member if they would be prepared to proceed on the basis of the workplan and work modality agreed upon The Board member consented but asked that their proposal be included in the report of the meeting The Co-Chair closed the agenda sub-item, stating that the Board would return to the issues of the confirmation of the Heads of the independent units and the proposal to have a decision adopted under the Co-Chairs report. DECISION B.20/03 The Board, having considered document GCF/B.20/16 titled Updated workplan of the Board for 2018 : (a) Takes note of the updated workplan of the Board for 2018, as set out in annex I; (b) Decides to defer consideration of the following matters and requests the Secretariat, in consultation with the Co-Chairs and the relevant committees, panels and groups of the Board, to progress its work on these matters and present these for consideration by the Board at the earliest possible opportunity: (i) (ii) (iii) (iv) (v) (vi) The development of a full set of policies relating to prohibited practices, antimoney-laundering and countering the financing of terrorism, requested pursuant to decision B.14/01, paragraph (e); The development of the terms of reference for a request for proposal to support climate technology incubators and accelerators, requested pursuant to decision B.18/03, paragraph (c); Guidance on the approach and scope for providing support to adaptation activities, requested pursuant to decision B.17/10, paragraph (c)(ii); The definition of the nature, scope and extent of second-level due diligence, requested pursuant to decision B.17/09, paragraph (o); The development of risk-rating models, requested pursuant to decision B.17/11, paragraph (f); and The development of modalities, based on the recommendations from the Private Sector Advisory Group, to support activities to enable domestic and international private sector actors to engage in GCF activities in least developed countries and small island developing States, requested pursuant to decision B.19/18, paragraph (b).

36 Page 33 Agenda item 7: Reports from Board committees, panels and groups 247. The Co-Chair opened the agenda item and drew the attention of the Board to document GCF/B.20/Inf.09 titled Reports from committees, panels and group of the Board of the Green Climate Fund and its addendum Add.01. The documents contained reports from the following: (a) (b) (c) (d) (e) (f) (g) (h) (i) Ad hoc Trustee Selection Committee; Accreditation Committee; Accreditation Panel; Budget Committee; Ethics and Audit Committee (EAC); Investment Committee; Private Sector Advisory Group; Risk Management Committee; and Independent Technical Advisory Panel The Co-Chair invited the Board to take note of the information provided in the documents and said that, to save time, they would not systematically invite the Chairs of the committees, panels and group to give oral reports in addition to the written reports already provided; however, to provide context for the following agenda item, Matters related to the selection of the Permanent Trustee, the Co-Chair invited the chair of the ad hoc Trustee Selection Committee to give a brief presentation. Ad hoc Trustee Selection Committee 249. The Chair of the ad hoc Trustee Selection Committee reported that, at one of its previous meetings, the Committee had approved a notice advertising the need for a Permanent Trustee for publication in The Economist. The advertisement had then been published as approved, with an application deadline of 14 May Since no expressions of interest had been received by that date, the deadline had been extended to 18 June Once again, no expressions of interest had been received by the deadline. In line with the options that the Trustee Selection Committee had previously presented to the Board based on the Reviewed Administrative Guidelines on Corporate Procurement (document GCF/B.19/09), the Trustee Selection Committee had then instructed the Secretariat to directly invite the 11 multilateral financial institutions that had been identified as meeting the GCF criteria for the selection of the Permanent Trustee to express an interest in the role; the invitation process was currently under way. The Chair explained that if those invitations also met with no response, the next step would be to initiate a process of single-source procurement. However, the Trustee Selection Committee did not have a mandate from the Board to conduct such a process. They asked for the Board s guidance on how to proceed The Co-Chair took note of the oral report and invited the other Chairs to present oral reports only if they considered them to be of high priority. Ethics and Audit Committee 251. The Chair of the EAC presented a summary of the report contained in document GCF/B.20/Inf.09/Add.01, noting in particular the work carried out by the EAC on the 2017 Financial Statements of GCF, the draft Whistle-blower and Witness Protection Policy and the Policy on Prohibited Practices, a draft document on the Standards for the Implementation of the Anti-Money Laundering and Countering the Financing of Terrorism Policy, and a draft of the

37 Page 34 Procedures and Guidelines of the Independent Redress Mechanism. The Chair also updated the Board on the activities of the EAC on conflicts of interest and urged Board members, alternate Board members and advisers to submit declarations of outside roles and functions as soon as possible, as many were already significantly overdue The Co-Chair took note of the verbal report and encouraged all Board members, alternate Board members and advisers to complete the declaration of outside roles and functions forms, which were being circulated to Board members in the room The Board took note of document GCF/B.20/Inf.09 titled Reports from committees, panels and groups of the Board of the Green Climate Fund and its addendum Add No decision was taken under this agenda item. Agenda item 8: Matters related to the selection of the permanent Trustee 255. The Co-Chair introduced the agenda item and reminded Board members that under agenda item 7, Reports from Board committees, panels and groups, the Chair of the ad hoc Trustee Selection Committee had informed the Board on the status of this matter The Co-Chair opened the floor for comments A member of the ad hoc Trustee Selection Committee stated that several steps had been taken between B.19 and B.20 and that the ad hoc Trustee Selection Committee was nearing the end of options available before initiating direct procurement action. In their view, the optimal way forward was to conclude the current process and authorize the Secretariat to initiate direct procurement action. This would ensure no lapse of trustee services The Chair of the ad hoc Trustee Selection Committee, speaking in their own capacity as a Board member rather than in their formal role on the Trustee Selection Committee, noted that the dilemma was that single source procurement meant appointing a specific institution. The initial concept for the selection of the Permanent Trustee was that some or all of the relevant institutions that had been identified, based on the TOR and criteria that the Trustee Selection Committee had developed (decision B.19/03 and Expression of Interest: EOI 2018/S/001) would reply to the GCF advertisement for the Permanent Trustee. None of the institutions had responded to the advertisement. The Committee was now at a point where it would invite the 11 identified institutions to express their interest, but the dilemma faced by the Trustee Selection Committee, and therefore the Board, was what would happen in the event that none of the institutions responded. How would a single source be determined if no institution expressed interest? In particular, how would a single source be determined when the current institution, which is the Interim Trustee, had not responded with an expression of interest, and, technically, all 11 institutions could fulfil the functions of a trustee The Co-Chair asked the Trustee Selection Committee what further guidance was needed from the Board The Chair of the ad hoc Trustee Selection Committee stated that the Trustee Selection Committee had fulfilled its mandate (decision B.16/05) based on the rationale that there would, by now, have been an expression of interest. In the absence of any expression of interest, it was not clear what further useful role it could play The Board member who had intervened earlier as a member of the Trustee Selection Committee requested that the Secretariat outline the procedures to be followed under the Reviewed Administrative Guidelines on Corporate Procurement (document GCF/B.19/09) for a single source procurement action to take place. Another Board member asked if there was any

38 Page 35 precedent for a direct procurement procedure and, if so, what were the criteria to select a specific entity A representative of the Secretariat informed the Board of the process followed by the Secretariat under the procurement guidelines, beginning with a competitive tender stage that could then be extended if it was not successful. If, after the extension, no offers were received, as in this case, the next stage was a limited tender process. In this situation, the immediate next step was to send a letter to all 11 institutions signed by either the Executive Director or the Deputy Executive Director and requesting a response within two weeks. If, following this action, there was no response, the Institutional Procurement Committee of the Secretariat would need to determine whether there was any institution that could provide the service required by GCF. If there were more than one, the Secretariat would contact them. Criteria would include capability and willingness. Once this had been done, the ad hoc Trustee Selection Committee would be informed The representative confirmed that there were precedents. In some cases, the Secretariat would amend the TOR, which could sometimes have a positive effect. If sole sourcing was the only option, the Secretariat would refer to the Institutional Procurement Committee and, in this case, the Executive Director would be required to provide authorization The first Board member to speak on this item stated that their interpretation of the guidelines was that if the limited tender process failed to yield a willing provider, the Secretariat would, as per other institutions needing to procure services, initiate a thorough process to secure such services. In this case, according to their interpretation, no further action was required by the Board The representative of the Secretariat said that the Secretariat would seek guidance from the ad hoc Trustee Selection Committee under such circumstances Another Board member stated that it was the Board that appointed the Trustee, while the Secretariat implemented the process. Although there were many institutions beyond the 11 identified that would be capable of providing the trustee service, they noted that the Board had accepted a process that limited the field of potential suppliers. They asked the Secretariat what its policy would be if a company or service provider that had been invited to bid or show interest failed to show any interest. Would that entity be considered for single sourcing or would they be excluded on the grounds that they were not interested in doing business with GCF? 267. The representative of the Secretariat said that it was possible to interpret any lack of response not as a refusal to offer a service but rather as a decision not to participate in the process. In such a scenario the Secretariat could initiate a negotiation with an entity that it considered was both capable and willing to provide the service required; this could be one or more institutions. This would be by direct contact, followed by the establishment of a contract with the entity The Board member requested further clarification as to whether the Secretariat under these circumstances would contact any of the organizations that had not responded to the advertisement and other outreach processes. If an organization had already refused or ignored these processes, on what basis would a negotiation take place and what would happen to the TOR? 269. The representative said that such scenarios presented challenges because it would not be clear to the Secretariat as to why the entity had not expressed any interest in bidding for the tender. A first step would be to identify which element or elements of the TOR were problematic for the organization concerned The Co-Chair thanked Board members for their interventions, which had clarified several issues. They stated that the matter remained with the Trustee Selection Committee as

39 Page 36 the process was ongoing until a bid was either received by the Secretariat or not. Subsequently the Secretariat would proceed to single source procurement and it was important to clarify in this context what would be the role of the Board The representative of the Secretariat stated that they would wish to be guided by the ad hoc Trustee Selection Committee as to single sourcing The agenda item was closed with no decision taken. Agenda item 9: Terms of reference for the review of the committees and panel established by the Board 273. The Co-Chair opened the agenda item and drew the attention of the Board to document GCF/B.20/01 titled Terms of reference for the review of the committees and group established by the Board and the draft decision contained in annex I to the document. Recalling that this item had been opened at B.19 but not concluded, they noted that the draft decision incorporated inputs gathered from the consultation of Board members on the margins of that meeting. The Co-Chair opened the floor for comments A Board member said that while the Board s committees, panels and groups played an important role in guiding the processes and strategic direction of GCF, they were not functioning optimally. The Board member therefore expressed support for the introduction of the proposed TOR, which they viewed as timely given the upcoming replenishment process and anticipated changes to the composition of the Board. While stating that the Independent Evaluation Unit (IEU) would have been an appropriate body to conduct the review, the Board member agreed to the engagement of an independent consultant or firm, as stipulated in paragraph (b) of the draft decision Another Board member requested the addition of the phrase including their continued necessity to the end of paragraph 1 of the TOR. With this amendment, the paragraph would state: The overall objective of the review is to assess the effectiveness of and lessons learned by the committees, panels and group established by the Board in supporting the Board to operate efficiently, and make recommendations to the Board in this regard, including their continued necessity The Co-Chairs took note of the proposed amendment and invited the Board to adopt the draft decision as amended There being no objections, the decision was duly adopted The Board took note of document GCF/B.20/01 titled Terms of reference for the review of the committees and group established by the Board The Board adopted the following decision: DECISION B.20/04 The Board, having considered document GCF/B.20/01 titled Terms of reference for the review of the committees and group established by the Board : (a) (b) Adopts the terms of reference for the review of the effectiveness of the committees, panels and group established by the Board as set out in annex II to this document; Decides that the review shall be undertaken by an independent consultant or firm, with the aim of presenting the outcomes of such review and any recommendations to the Board for its consideration as soon as possible and no later than the twenty-first meeting of the Board;

40 Page 37 (c) (d) Requests the Secretariat to promptly procure the independent consultant or firm referred to in paragraph (b) above; and Authorizes the Co-Chairs to establish the maximum amount that can be used for the procurement of such independent consultant or firm, which shall then be accommodated within the 2018 administrative budget of the Secretariat. Agenda item 10: Guidance from the Conference of the Parties to the United Nations Framework Convention on Climate Change (a) Report on the analysis of the challenges, barriers, gaps and recommendations to achieve an increase in the amount of direct access proposals in the pipeline 280. The Co-Chairs opened the agenda sub-item and drew the attention of the Board to document GCF/B.20/04 titled Strategy to increase funding proposals from direct access entities and its addendum Add.01. They invited a representative of the Secretariat to take the floor A representative of the Secretariat provided an introduction to the document. They highlighted challenges, barriers and gaps facing DAEs that were identified from surveys, undertaken by the consulting firm as part of the accreditation framework review, of DAEs participating in the Empowering Direct Access workshop as well as of all AEs and entities in the accreditation pipeline. The representative identified DAEs that had benefited from readiness and project preparation grants and technical assistance as well as those that had benefited from on-site support from the Secretariat staff and consultants In identifying future actions, they noted that the Secretariat intended to strengthen support provided through activities such as structured training, guidelines or tool development. Finally, with reference to the draft decision contained in annex I to document GCF/B.20/04, the representative explained that the Secretariat was seeking the Board s support to request international AEs to partner with DAEs, to prioritize project preparation requests from DAEs, and to increase the share of funding proposals from these entities to be brought to the Board for its consideration While the document and draft decision met with the broad support of the Board, several members of the Board requested changes and offered to support the drafting process on the margins of the meeting before adopting the decision. A Board member said that the proposals for action in the draft decision text were not sufficiently aligned with the challenges presented in the document. Others called for clearer wording on the work to be undertaken by the Secretariat, for instance, in paragraph (c) of the draft decision endorsing the actions the Secretariat suggests it take to increase the pipeline of projects from direct entities Two Board members said that, while they fully supported efforts to enhance direct access to GCF, the direct access modality was not an end in itself. Highlighting the need to focus on climate change mitigation and adaptation, a Board member said that the aim should be to increase the number of proposals submitted by DAEs rather than the number of entities themselves Several Board members said that direct access was a key modality of GCF; one said that while it was indeed merely a means to an end, it was an important one; another underlined the explicit mention of direct access at several points in the Governing Instrument; and a further Board member said that direct access was the best way to ensure national ownership and the

41 Page 38 disbursement of funds to where they were most needed. Referring to the phrasing of paragraph (f) of the draft decision, a Board member said that the Board should not simply encourage the Secretariat to increase funding proposals from DAEs but request that they do so Several Board members expressed disagreement with the use of quotas regarding the proportion of approved Project Preparation Facility (PPF) requests from direct access AEs and the share of funding approvals submitted by DAEs, as stated in paragraphs (e) and (f) of the draft decision, respectively. A Board member said that this would disadvantage countries working with non-daes and would not address capacity constraints A number of Board members expressed support for the inclusion of the aforementioned quotas in the draft decision but said that they were not sufficiently ambitious; one emphasized that the Board had made decisions to prioritize DAEs but that only 14 per cent of funding proposals were currently accounted for by DAEs. A Board member said that the number of approved PPF requests from direct access AEs had already reached the target of 50 per cent proposed in the draft decision. Another Board member said that a clearer system of prioritization of funding proposals should be introduced to increase the number of funding proposals from DAEs that reached the Board rather than continuing with the current practice of considering proposals on a first-come, first-served basis. A further Board member said that the figures used in the draft decision were not quotas but targets A Board member said that GCF should focus not just on the number of entities with direct access to GCF but also on the volume of funding disbursed to them. Another Board member called for increased emphasis on the quality of proposals rather than on their quantity. While expressing their support for the proposal in paragraph (e) of the draft decision to prioritize the review of proposals to PPF by DAEs, a Board member asked the Secretariat to elaborate on the approach taken and the challenges encountered so far Several Board members expressed concern regarding the emphasis placed on partnerships between international and direct access entities. While welcoming such partnerships in principle, a Board member said that they could lead to projects being implemented by DAEs that did not have the requisite capacities. They called on the Secretariat to provide guidelines on multi-entity proposals in the context of the programmatic approach modality due for consideration by the Board at B.21. Another Board member endorsed the request for clearer rules of engagement with international AEs, underlining that those entities could not be compelled to work with DAEs and that the accreditation process should focus more on the capacity of entities to operate effectively and in accordance with fiduciary standards Two other Board members requested an update on the implementation of decision B.10/06, paragraph (i), which was reaffirmed in paragraph (a) of the draft decision and required international entities to indicate how they intended to support potential subnational, national and regional entities to meet the accreditation requirements of GCF; one Board member asked what could be done to ensure that international entities intensified their efforts to work and partner with DAEs as per paragraph (d) of the current draft decision, and said that a report on those efforts should be part of the reaccreditation process A Board member welcomed the Secretariat s proposal in document GCF/B.20/04 to dedicate an interdivisional team to supporting DAEs and called for the team to work across not only the Country Programming Division, the Division of Mitigation and Adaptation and the Private Sector Facility but also other GCF divisions. While welcoming the proposal, another Board member requested additional information on the staffing requirements and resources needed for the proposed interdivisional team Several Board members requested further information on the proposal to establish a pool of experts to mentor DAEs and develop an on-site support programme. A Board member wished to know more about the selection criteria for the countries receiving such support and

42 Page 39 the budget implications of the proposal; another said that the period of deployment of three to five years seemed long and asked if this was the most efficient way of providing support A Board member called for the full operationalization of the simplified approval process (SAP) to support the increase of direct access funding proposals in the pipeline. They also said that the Secretariat would need a stronger presence in the regions to implement the actions it proposed Referring to the analysis presented in the document of the surveys conducted with NDAs, focal points and direct access AEs, several Board members highlighted the key challenges faced by DAEs in accessing GCF. Two Board members noted with concern that GCF processes were seen as cumbersome by approximately 50 per cent of DAEs. A Board member noted that while DAEs may have considerable experience in delivering projects and programmes in their countries, they faced a significant challenge in responding to the complex requirements of GCF for funding proposals. Several Board members called for clearer guidelines specifically tailored to DAEs on the procedures and operations of GCF Noting the language barrier experienced by many DAEs, especially in French-speaking Africa and Latin America, a number of Board members requested the translation of documents on accessing GCF from English into the respective local languages. A Board member proposed the creation of a directory of translated documents containing texts already translated by NDAs and AEs themselves. Highlighting the limited capacities of DAEs, a Board member asked for a separate funding track to be established within GCF specifically to address the needs of DAEs; another Board member underlined that further capacity development was needed during the accreditation process so that DAEs would be better prepared to develop and deliver projects upon accreditation Several Board members said that the draft decision should be considered within the context of the Readiness and Preparatory Support Programme; one asked for clarification from the Secretariat on the links between the actions proposed and the work undertaken as part of that programme. While noting the need to broaden the support offered to DAEs, a number of Board members asserted that the actions proposed should be financed by the existing funding allocated to the Readiness and Preparatory Support Programme. A Board member called for a shift in focus from the proposals for action made in the document to a reorientation of the Readiness and Preparatory Support Programme An active observer for civil society organizations (CSOs) welcomed the Secretariat s proposals to increase the number of funding proposals from DAEs but said that the targets in paragraphs (e) and (f) were not ambitious enough: increased emphasis was needed on the share of funding allocated to DAEs, not just on the number of projects delivered by DAEs; and clearer guidance should be provided to DAEs on the support options available to them. The observer suggested the establishment of local expert teams in addition to the pool of experts proposed by the Secretariat to ensure the sustainability of support and learning. They also endorsed the request by Board members for documentation to be made available in languages other than English. Finally, the observer requested that the Secretariat analyse the accreditation conditions for DAEs with a view to increasing the range of projects for which DAEs would be eligible The Co-Chairs took note of the comments and invited a representative of the Secretariat to respond A representative of the Secretariat said that, thus far, entities had generally been considered for PPF support on a first-come, first-served basis. In the absence of further guidance from the Board, only a soft prioritization of entities was being used based on the PPF decision adopted at the thirteenth meeting of the Board (decision B.13/21), whereby those entities that were judged best able to present a proposal were given precedence. Regarding the resources needed to establish the proposed pool of experts and inter-divisional team for

43 Page 40 supporting DAEs, the representative said that the Secretariat intended to carry out these actions under existing mandates and to use the budgets available under PPF and the Readiness and Preparatory Support Programme as well as the Secretariat s administrative budget. The proposal to deploy experts to DAEs over an extended period was based on feedback from DAEs that short-term expertise was less helpful; longer assignments enabled experts to provide support and advice throughout project and programme cycles, from design to implementation The Co-Chair proposed that the agenda sub-item be suspended and that Mr. Jorge Ferrer, Mr. Karsten Sach, Mr. Karma Tshering and Mr. Josceline Wheatley form a group to revise the draft decision on the margins of the current meeting Two Board members suggested that the Secretariat begin by revising the language used in the decision before the group of Board members met to work on the decision The Co-Chair agreed to this approach The agenda sub-item was suspended The agenda sub-item was not reopened The Board took note of document GCF/B.20/04 and its addendum Add.01 titled Strategy to increase funding proposals from direct access entities No decision was taken under this agenda sub-item. (b) Annual report on the operational framework on complementarity and coherence 307. The Co-Chair opened the agenda sub-item and drew the attention of the Board to document GCF/B.20/05 titled Annual update on complementarity and coherence. They invited a representative of the Secretariat to take the floor A representative of the Secretariat gave a presentation outlining progress made in implementation at the activity and national programming level, as well as in relation to the dialogue among the funds. The representative of the Secretariat also provided input relating to fund-to-fund arrangements, making reference to the Adaptation Fund, GEF and the Climate Investment Funds (CIFs), emphasizing that arrangements were dependent on how countries wished to see the funds cooperate and must ultimately aim to make arrangements easier for all involved The Co-Chair took note of the information provided and opened the floor for comments Highlighting the crucial importance of promoting complementarity and coherence as required under the Governing Instrument, a Board member expressed concern that a number of unfunded investment plans by CIFs that had been developed on the basis that they would be funded by GCF had now been left in limbo: on the one hand, it had become apparent that those investment plans could secure GCF funding only if they were shaped into the format of GCF funding proposals; but on the other hand, the CIFs were not able and the multilateral development banks not willing to fund further development of the investment plans to meet GCF requirements, such as the inclusion of feasibility studies. Also of concern was the fact that climate allocations at GEF had recently been reduced, making unclear what kind of joint programming was possible. With those concerns in mind, the Board member called on the Secretariat to adopt a more realistic and professional approach to programming efforts with GEF The Co-Chair took note of the comment and suspended the agenda item The Co-Chair reopened the agenda item later the same day and opened the floor for comments.

44 Page A number of Board members welcomed the report. Noting that the analysis contained in the report had been carried out primarily from an operational perspective, a Board member said that future reports should also consider the reality of the whole climate finance landscape. Echoing the point raised by the previous Board member regarding the recent sharp reduction in GEF funding available for climate-focused areas, they highlighted that GCF was nowadays expected to play a more significant role than other funds in tackling climate change-related challenges; GCF should therefore look beyond complementarity and coherence and focus on the leading role that it was expected to play in supporting developing countries in addressing climate change challenges. In addition, the Board member asked whether the Secretariat had considered the size of other funds in its analysis of how to enhance complementarity and coherence, and suggested that it do so in future reports Echoing the point raised by another Board member regarding investment plans left in limbo, two Board members suggested that some of those investment plans could be fed into the GCF pipeline; they therefore requested the addition of a new paragraph to the draft decision stating: Requests the Secretariat to collaborate with the Climate Investment Funds Administrative Unit to advise national designated authorities on how programming opportunities identified by Climate Investment Funds beneficiary countries may be brought to GCF programming, as appropriate A Board member wished to know the extent to which GCF had made contact with organizations outside GCF and requested information on the results of GCF meetings with the CIFs An active observer for CSOs expressed appreciation of the efforts made by GCF to build consistency and complementarity among the various climate finance delivery channels, particularly in the area of capacity-building; in that area, the observer advocated an outwardlooking approach that went beyond mere information-sharing. They added that, in streamlining its procedures and aligning with other funds, GCF should never compromise the quality of its programmes and activities but uphold the highest standards and benchmarks among the different climate funds, including with regard to safeguards on gender, indigenous peoples, and environmental and social policy The Co-Chair took note of the comments and invited a representative of the Secretariat to respond A representative of the Secretariat said that promoting complementarity and coherence was a very broad effort, involving not only the Secretariat but the entire GCF, including the independent units; it was therefore difficult to include all the relevant details in the report and presentation. The suggestions made by Board members on how to expand the analysis would be taken into account in future reports, and the proposed amendment to the draft decision would be incorporated. Regarding the CIFs investment plans, the Secretariat was aware of the challenges mentioned by a Board member, and had tried to address it in the draft decision by providing clear information to NDAs and AEs on how elements of the CIFs investment plans could feed into GCF programming. While the investment plans were ultimately country-driven, the Secretariat could provide further assistance to ensure that they came to fruition, in addition to efforts already undertaken. With regard to synergies, the Secretariat had received a great deal of interest from countries interesting in joint programming between GCF and GEF; the representative underlined that the term joint programming should not be interpreted as cofinancing of GEF country allocations with GCF resources but instead seen as potential for synergies between the different processes that countries would undertake as part of their GEF programming, even outside the field of climate finance. Noting that the areas of work in the operational framework adopted at the seventeenth meeting of the Board (decision B.17/04) were informed by activities of the CIFs, the Adaptation Fund and GEF as the starting point for complementarity and coherence with GCF, the representative underlined that the Secretariat was endeavouring to broaden that framework; for example, it had begun to cooperate with the

45 Page 42 Nationally Appropriate Mitigation Action Facility, with whom an information exchange had begun, and planned to engage with other bodies in the near future. The Board of the Adaptation Fund had signalled its intention to continue collaborating with GCF on two separate tracks, one on complementarity and coherence and the other on exploring accreditation of the Adaptation Fund to GCF; the wording of the draft decision would allow the Secretariat to explore those avenues further and report back to the Board A Board member requested that the amended draft decision be distributed to the Board in hard copy before being submitted for adoption. Another Board member called on the Secretariat to ensure that the wording in the decision was unambiguous, to avoid leaving scope for unrealistic expectations about GCF financing The Co-Chair took note of the comments and suspended the agenda sub-item The Co-Chair reopened the item later the same day and noted that an amended draft decision had been circulated to the Board in hard copy. They invited the Board to adopt the draft decision as amended There being no objections, the decision was duly adopted The Board took note of document GCF/B.20/05 titled Annual update on complementarity and coherence The Board adopted the following decision: DECISION B.20/05 The Board, having considered document GCF/B.20/05 titled Annual update on complementarity and coherence : (a) (b) (c) (d) (e) (f) (g) Welcomes progress on the implementation of the Operational Framework on complementarity and coherence; Requests the Secretariat to include, as appropriate, the update on activities as contained in document GCF/B.20/05 in the seventh report of GCF to the Conference of the Parties to the United Nations Framework Convention on Climate Change, in line with decision B.17/04, paragraph (d); Invites national designated authorities to collaborate with accredited entities to bring to the country programming process any applicable work and lessons achieved with other climate funds, in line with their country priorities and in accordance with the business model of GCF; Requests the Secretariat to provide information to national designated authorities and accredited entities, as appropriate, related to promoting coherence at the national programming level, including with regard to paragraph (c); Also requests the Secretariat to (i) develop a proposal for consideration by the Board in 2019 with an updated set of outcomes for the operational framework on complementarity and coherence for ; and (ii) include proposals for consideration by the Board on areas where further fund-to-fund arrangements are possible to improve efficiency, effectiveness and simplicity, and to enhance the alignment of portfolios with other climate funds; Requests the Co-Chairs, with the support of the Secretariat, to engage with the Chair and Vice-Chair of the Adaptation Fund Board to better understand options for collaboration with the Adaptation Fund, and to report back to the Board at its twenty-first meeting; and Requests the Secretariat to collaborate with the Climate Investment Funds Administrative Unit to advise national designated authorities on how programming opportunities

46 Page 43 identified by Climate Investment Funds beneficiary countries may be brought to GCF programming, as appropriate, including through the work referred to in paragraph (d) above. (c) Seventh report of the GCF to the Conference of the Parties to the United Nations Framework Convention on Climate Change 325. The Co-Chair opened the agenda item and drew the attention of the Board to document GCF/B.20/15 titled Seventh Report of the Green Climate Fund to the Conference of the Parties to the United Nations Framework Convention on Climate Change and the draft decision contained in annex I to the document. The Co-Chair invited Board members to adopt the draft decision and opened the floor for comments Noting that information on the DAEs pipeline and support given to direct access AEs was incomplete in the report to the COP, a Board member asked that this be included in the report as requested in decision B.18/02. A representative of the Secretariat said that this and further information would be included when the report was updated prior to submission to the COP A Board member requested the deletion of paragraph (b) of the draft decision, which stated that an addendum to the report should be included upon request by the Board, on the basis that the addendum should instead be included automatically, without the explicit request of the Board A representative of the Secretariat said that the past practice of including the addendum often did not provide a substantive update on GCF operations, on the basis that developing the addendum involved merely updating figures contained in the report to the COP that were readily available elsewhere, such as the GCF website. The intention had been to adopt the new practice of developing and submitting an addendum to the report to the COP only with the explicit request of the Board from 2019 onwards; however, the representative said that paragraph (b) could be deleted The Co-Chair took note of the comments and invited the Board to adopt the draft decision with the deletion of paragraph (b) There being no objections, the decision was adopted The Board took note of document GCF/B.20/15 titled Seventh Report of the Green Climate Fund to the Conference of the Parties to the United Nations Framework Convention on Climate Change The Board adopted the following decision: DECISION B.20/06 The Board, having considered document GCF/B.20/15 titled Seventh Report of the Green Climate Fund to the Conference of the Parties to the United Nations Framework Convention on Climate Change : (a) Requests the Co Chairs, assisted by the Secretariat, to finalize the Seventh Report of the Green Climate Fund to the Conference of the Parties to the United Nations Framework Convention on Climate Change, presented in annex III to this document, taking into consideration the comments made and decisions taken at the twentieth meeting of the Board, and submit the revised report to the United Nations Framework Convention on Climate Change secretariat no later than 12 weeks prior to the twenty-fourth session of the Conference of the Parties, in accordance with decision 7/CP.20, paragraph 23.

47 Page 44 Agenda item 11: Status of the GCF portfolio: approved projects and the fulfilment of conditions 333. The Co-Chair opened the agenda item and drew the attention of the Board to document GCF/B.20/Inf.06 titled Status of the GCF portfolio: approved projects and fulfilment of conditions and invited a representative of the Secretariat to take the floor A representative of the Secretariat gave a brief presentation outlining the status of the GCF portfolio, comprising a report on the current 76 approved projects and their implementation, and the status of fulfilment of conditions for the reporting period from 1 January to 30 April The Co-Chair invited the Board to take note of the document and opened the floor for comments An active observer for CSOs said that mitigation projects continued to be overrepresented in the GCF portfolio despite the GCF mandate to ensure a balance between mitigation and adaptation projects. Moreover, while the pipeline did show some movement in favour of DAEs, on the whole the distribution of funding among AEs continued to be skewed towards large international entities, with 66 per cent of GCF funding approvals to date concentrated in five AEs, namely the European Bank for Reconstruction and Development, the United Nations Development Programme, the Inter-American Development Bank, the European Investment Bank and the World Bank. Underlining their concern over transparency gaps relating to the fulfilment of project conditions, the observer noted with appreciation that the document included annexes disclosing the details provided by an AE to the Secretariat on its fulfilment of project-specific conditions. Such information disclosure should become standard, as part of the project documentation published on the GCF website. Noting with interest that the Secretariat expected to receive over 60 annual performance reports by the end of the year, the observer underlined the need for transparency and called on the Secretariat to follow the best practice of the Adaptation Fund by publishing each annual performance report as soon as it was finalized rather than waiting until the annual report on annual performance reports was presented to the Board There being no further comments, the Board took note of document GCF/B.20/Inf.06 titled Status of the GCF portfolio: approved projects and fulfilment of conditions. Agenda item 12: Status of the GCF pipeline, including the status of the Project Preparation Facility requests 338. The Co-Chair opened the agenda item and drew the attention of the Board to document GCF/B.20/Inf.07/Rev.01 titled Status of the GCF pipeline, including the status of Project Preparation Facility requests and its addenda Add.01 (limited distribution) and Add.02 (limited distribution). They invited a representative of the Secretariat to introduce the agenda item A representative of the Secretariat gave a presentation outlining the status of the pipeline of funding proposals, concept notes and PPF requests as at 28 June Figures were provided for the total volume of finance requested, its distribution by region, sector, instrument and type of entity, the amount of co-financing and the expected mitigation and adaptation impacts. The presentation also included a brief update on the SAP and mobilizing funds at scale RFP. Furthermore, it included the status of the pipeline for B.21 and the twenty-second meeting of the Board (B.22) The Co-Chair opened the floor for comments.

48 Page A Board member said that the GCF co-financing ratio of 1:3 appeared low compared with those of other comparable institutions and wished to know the Secretariat s views on the matter Another Board member said that GCF should issue quantitative data on the real amount of co-financing raised through its projects and the corresponding real amount of carbon dioxide (CO 2 ) reduction; such quantifiable indicators would be useful in assessing the real impact of projects such as GEEREF NeXt (FP038), for which implementation was unfortunately taking longer than planned An active observer for CSOs welcomed the efforts of the Secretariat to increase the amount of GCF funding allocated through DAEs but noted that the number of funding proposals and concept notes submitted by DAEs in the pipeline as well as the amount of funding allocated to them had increased by only a small amount in the reporting period. Underlining the continued imbalance between mitigation and adaptation in the pipeline as well as between larger and smaller AEs, they questioned whether the Secretariat was maintaining sufficient momentum to correct the imbalances. They expressed concern at the status of the enhanced direct access (EDA) modality, in particular the six EDA concept notes in the pipeline that had been inactive for the past year. Stressing the importance of enhancing direct access in accordance with the GCF mandate, they requested clarification on what the Secretariat was doing to improve the current state of affairs The Co-Chair took note of the comments and invited a representative of the Secretariat to respond A representative of the Secretariat said that there was no specific requirement for the co-financing ratio and that a unique advantage of GCF was its ability to take into account other critical factors when assessing funding proposals, such as their potential for high climate impact, transformational results and paradigm shift. This unique characteristic allowed GCF to fund transformational and groundbreaking projects, some of which no other financiers were willing to co-support. Furthermore, according to the objectives of GCF, 50 per cent of its portfolio should be dedicated to LDCs, small island developing States (SIDS) and African countries; however, in those constituencies, significant amounts of co-financing were not always available. The representative added that the figures at hand did not take into account the amount of funding leveraged by GCF projects and noted that a document on the definition of cofinancing was due for discussion later at the current meeting A Board member asked whether GCF took a proactive approach to engaging other cofinanciers A representative of the Secretariat said that significant efforts had been made by GCF, including through its Executive Director, to engage other financiers; nonetheless, while GCF attempted to secure as much co-financing as possible, the core investment criteria remained the transformational potential and climate impact of the projects and programmes that were proposed. With regard to FP038, the representative took note of the concern raised by a Board member over its slow implementation, and affirmed that the Secretariat was currently working closely with the AE to establish the legal and financial framework for the GEEREF NeXt fund of funds; they clarified that it was typical in such situations for such a process to take a significant amount of time. Once those frameworks were in place, the Secretariat would update the Board on the fundraising level achieved. In line with its commitment to do so, the Secretariat would update the Board, two years after the first close, on the status of funding mobilization in relation to the USD 500 million funding target set for the fund of funds for that date Another representative of the Secretariat said that USD 200 million had been allocated to the EDA process, for a minimum of 10 projects. Thus far, two projects had been approved, accounting for a total of USD 30 million. The EDA pipeline contained 12 concept notes and funding proposals, requesting a total of USD 226 million, but most of them had been submitted

49 Page 46 over a year previously and some were over two years old and could thus be considered inactive. The main challenge lay in the fact that many of the entities that were most willing to turn their concept notes into funding proposals were still awaiting accreditation, and many of those that were already accredited were less interested in doing so; the aim of the Secretariat was to strike a balance A Board member re-emphasized the need for quantitative data to be made available on the total amount of emissions reduced by the actions of GCF to date, for example, to allow those data to be compared and contrasted with original projections The Co-Chair took note of the comments and acknowledged the importance of quantifying the impact of GCF projects and programmes while also noting that the issues raised went beyond the scope of the current agenda item. They invited the Board to take note of the information provided in the document The Board took note of document GCF/B.20/Inf.07/Rev.01 and its addenda Add.01 (limited distribution) and Add.02 (limited distribution) titled Status of the GCF pipeline, including the status of Project Preparation Facility requests. Agenda item 13: Agenda item 14: Status of the initial resource mobilization process GCF Trust Fund financial report 352. The Co-Chair opened the two agenda items together and drew the attention of the Board to document GCF/B.20/Inf.05 titled Status of the initial resource mobilization process, noting that the document related to both agenda items. They invited a representative of the Secretariat to report on agenda item 13 and a representative of the Interim Trustee to report on agenda item A representative of the Secretariat gave a presentation summarizing the status of the initial resource mobilization process and the current remaining commitment authority. They noted that the commitment authority was determined by the total cash received, plus unencashed promissory notes, minus the cumulative value of the funding decisions approved by the Board. Approved funding decisions included funding proposals, the Readiness and Preparatory Support Programme, AE fees and administrative budgets. As at 31 March 2018, the total cash received amounted to USD billion, promissory notes accounted for USD 2.23 billion and cumulative funding decisions amounted to USD billion, resulting in a commitment authority of USD billion. During the period from April to June 2018, an additional amount of USD 0.7 billion had been received; thus, the commitment authority available to the Board for decision-making purposes at B.20 was USD 2 billion. During the remaining period of the commitment authority, an additional amount of USD 0.79 billion was projected to be received. Thus, the total forecasted remaining commitment authority was USD 2.8 billion With that in mind, the representative noted the following potential uses for the remaining USD 2.8 billion: (a) (b) (c) (d) USD 0.1 billion for the administrative budget of the Board, the Secretariat, independent units and Trustee; USD 0.3 billion for the Readiness and Preparatory Support Programme; USD 0.1 billion for the foreign exchange contingency in compliance with the risk management framework; and USD 1.0 billion for funding proposals to be presented at B.20.

50 Page If the Board approved the amounts set out above, a total of USD 1.3 billion would remain for allocation from B.21 onwards A representative of the Interim Trustee reported on the financial status of the GCF Trust Fund based on data from the GCF Trust Fund report contained in annex II to document GCF/B.20/Inf.05, noting that real-time information on contributions signed, amounts paid and transfers to AEs was also available at <fiftrustee.worldbank.org> and via a link on the GCF website. During the reporting period, the Interim Trustee had signed contribution agreements and arrangements with contributors and GCF, and had received USD 6.02 billion in the form of grant, capital and loan contributions in accordance with the Standard Provisions for such agreements adopted by the Board. The Interim Trustee had made over 100 cash transfers to date, amounting to USD million; the pace of those transfers for projects and programmes has continued to increase in the period from March to June They noted that USD 61 million in investment income had been earned to date on the liquid trust fund balances, recalling that the investment horizon was currently limited to a maximum of one year in the light of the expiry of the mandate of the Interim Trustee no later than April The Co-Chair took note of the information provided and opened the floor for comments Noting that the investments contained in the GCF Trust Fund financial report for 2018 had been made in investment products with a one-year horizon, a Board member wished to know the investment rate differential between the current rate of return and the hypothetical rate of return in a similar environment but with a longer maturity Another Board member said that according to their understanding, of a total USD 10.2 billion originally pledged, only USD 7.2 billion was likely to materialize, given that approximately USD 1 billion had been lost through exchange rate fluctuations and approximately USD 2 billion worth of pledges were unlikely to be fulfilled. On that basis, they noted with concern that, given the current status of the commitment authority, only USD 2.8 billion now remained for allocation to funding proposals until further funds could be secured through the replenishment process; moreover, even if the replenishment process were completed within six months of the present time, the process of obtaining signed agreements and subsequently encashing the funds would take even more time. The Board member requested clarification on whether, based on the current scenario and trajectory as described, the commitment authority would be depleted by the end of 2018, leaving no available funds for approval of further funding proposals until replenishment was completed Another Board member wished to know whether the signed agreements totalling USD 10.2 billion, as mentioned in paragraph 1 of document GCF/B.20/Inf.05 offered any guarantee that the pledged funds would eventually be paid. They also requested further details to explain the statement in paragraph 10(f) that the GCF does not have a contingency reserve for overall asset liability management. However, contribution uncertainty risk and liquidity risk are addressed in the Risk Management Framework, as well as on the definition of grant equivalence in the context of paragraph 11 of the document, and on the meaning of paragraph 14: The application of paragraph 1(d) of the Policies for Contributions also depends on the interpretation of the reference to total contributions, confirmed by fully executed contribution agreements / arrangements, for which there are a number of possible cases Two Board members welcomed the information provided in the document, which gave a helpful overview of the state of the remaining commitment authority; one requested a legal opinion on the definition of fully executed in contrast to signed contribution agreements A Board member underlined the need to take into account the trigger for the first formal replenishment process as referenced in the document. They also said that, based on the information and figures provided, action was clearly needed to manage the pipeline of funding proposals in the coming months and years, and that to take decisions on how that should be

51 Page 48 done the Board would need to take into account the results of a number of reviews and assessments that had not yet been completed Emphasizing the need for the Board to take a decision on the short-term question of how to manage the depleting commitment authority, a Board member called for the introduction of a system of prioritization for the funding proposals in the pipeline to replace the current policy of first in, first out. Noting the need to also take account of wider, longer-term concerns such as how to maximize the use of the remaining resources of GCF, they endorsed a suggestion by another Board member to release some of the GCF capital that was locked up in projects for which disbursement was slow The Co-Chair took note of the comments and invited the Executive Director, another representative of the Secretariat and a representative of the Interim Trustee to take the floor, in turn, to respond to comments from Board members The Executive Director said that in view of the large number of funding proposals in the pipeline that were likely to successfully reach the stage of submission to the Board, demand for funding was likely to soon outstrip supply. The rate at which the remaining commitment authority would be allocated was entirely up to the Board to decide: if the Board continued to approve funding proposals at the current pace, the commitment authority would probably soon be depleted; other options included allocating certain amounts of funding per Board meeting, prioritizing funding proposals strictly in line with the priorities set out in the initial resource mobilization process, or setting aside specific amounts of funding for proposals submitted in response to RFPs to ensure that the high expectations surrounding the RFPs were met. While none of the options were ideal given that all would lead to frustration among some countries and AEs the Secretariat recommended that, to minimize disappointment while maintaining the approach used by GCF to date, specific amounts of funding should be set aside for allocation to proposals received in response to RFPs, those submitted by DAEs and those submitted through SAP A representative of the Secretariat said that contribution agreements or arrangements amounting to USD 10.2 billion had been signed by GCF, the Interim Trustee and contributors. With regard to the clarification requested on paragraph 10(f) of the document, the Secretariat had attempted to match the currency of receipt of contributions with the currency of the commitment. Based on current commitments, there was a mismatch of USD 96 million worth of funding committed in United States dollars against the contributions received in United States dollars. Under the risk management framework, GCF was therefore required to set aside USD 96 million to cover that currency mismatch; however, that figure could change depending on currency exchange rates. On grant equivalence, they said the total amount of USD 10.3 billion initially pledged had been calculated based on the exchange rates as at the original pledging session in November Changes in exchange rates since that time had meant that the amount originally pledged was worth only USD 9.1 billion as at April With regard to the cumulative funding approvals mentioned in paragraph 13 of the document, the cumulative total of USD 4.4 billion had been calculated by adding together all approvals issued by the Board, through its official decisions, for: funding proposals, the Readiness and Preparatory Support Programme, PPF, national adaptation plans (NAPs), AE fees and the GCF administrative budget A representative of the Interim Trustee said that a hypothetical longer-term strategy similar to that used by the Interim Trustee for GEF might have yielded up to USD 10 million in additional income in On the definition of the terms signed and fully executed contribution agreements, the Interim Trustee considered the two terms to be equivalent and to refer to valid agreements that had been signed by GCF, the Interim Trustee and contributors, and contained a fixed schedule for payments; the terms did not mean that the contributions had been fully paid. As part of its own reporting on the status of the GCF Trust Fund, the Interim Trustee revalued contribution amounts at each reporting date; for example, the trustee report of 31 March 2018 reflected the value of all the signed and fully executed contributions as at the

52 Page 49 reporting date and also reflected the actual cash received, which had been converted to United States dollars at the actual rates on the day the payments had been received The Co-Chairs took note of the responses and opened the floor for further comments A Board member stressed the urgent need for the Board to work collaboratively to draft a decision instructing the Secretariat to actively manage the remaining resources of GCF pending the first replenishment. They added that, in deciding how those resources should be managed, a balance needed to be struck between fulfilling the commitments made by the Board to date, including with regard to the RFPs, and establishing an indicative commitment ceiling Another Board member said that, as far as they understood, the real value of total GCF resources did not amount to USD 10.3 billion because USD 1 billion had been lost through foreign exchange fluctuations and USD 2 billion worth of initial pledges would not be paid, despite the relevant contribution agreement having already been signed. They asked for clarification on whether their understanding was correct and whether the USD 1 billion lost through foreign exchange rates was a real or virtual loss. They also reiterated their request for an explanation of the definition of grant equivalence in the context of the document A representative of the Secretariat said that the commitment authority was recognized by the Secretariat to be made up of the cash received and promissory notes deposited, which currently totalled USD 7.1 billion; that figure represented the amount of funding available to the Board with which to make funding decisions. The loss in value of the total amount pledged was the result of the difference in exchange rates between the date of the initial pledging conference and the date that the cash was received; in the case of cash yet to be received, the figure was calculated based on the exchange rate as at the end of April A representative of the Interim Trustee said that, pursuant to the policies for contributions to GCF (decision B.08/16), incoming contributions were reported on a grantequivalent basis to reflect the fact that contributions coming into GCF could take three different formats: grants, capital or loans A Board member said that based on the explanations given, the figure of USD 10.3 billion was a misleading value to attribute to GCF resources when in reality the figure was lower. The commitment authority was a more relevant figure to use as a reference, as it represented the funds available for the Board to allocate to GCF projects. With regard to the USD 1 billion lost through changes in the foreign exchange market, they again requested clarification on whether that represented a real or virtual loss, underscoring that such a loss was highly significant as it represented 10 per cent of the value of GCF initial resources. They also requested further clarification on grant equivalence, noting that they had initially understood grant equivalence to be unrelated to contributions A representative of the Secretariat said that the figure of USD 10.3 billion was an estimate of the size of the fund at the time the pledges were made in November 2014, using the then-applicable foreign exchange rates to calculate the conversion for amounts in currencies other than United States dollars. Since November 2014, there had been large variations in exchange rates, particularly in the case of euros and pounds sterling against United States dollars; hence the difference in the present value of GCF resources compared with the 2014 value A Board member said that the revised calculation, including the foreign exchange loss, should be communicated clearly in GCF documents so as not to give a misleading impression of the total resources of GCF The Co-Chair took note of the comments and agreed that GCF documentation should reflect changes in the value of GCF resources as a result of foreign exchange rate fluctuations so as to avoid confusion. They also expressed agreement with the proposal that the Board should establish a method for managing the remaining commitment authority and prioritizing funding

53 Page 50 proposals, and asked the Executive Director what the Secretariat required in the form of guidance and Board decisions to establish such a method The Executive Director said that the Secretariat required clear guidance from the Board on how much of the remaining commitment authority could be used to fund different types of projects so as to allow the Secretariat to communicate clearly with partners and AEs regarding the method and priorities to be followed in the allocation of the remaining funds. If the Board wished to deliver on the expectations set around the RFPs, it may wish to allocate a specific percentage of amount of the remaining commitment authority to funding proposals submitted in response to the RFPs. Similarly, the Board may also wish to consider allocating certain amounts or percentages to proposals submitted under SAP and by DAEs The Co-Chair took note of the information provided and proposed that the Board consider the matter once again at a later point in the meeting A Board member said that establishing a prioritization system for funding proposals would effectively mean changing the rules of the game part way through the process, by imposing stricter criteria to funding proposals submitted to the Board towards the end of the present funding cycle than to those submitted nearer the beginning. The proposal to establish such a system was therefore unacceptable. Instead, the Board should act consistently and fairly by only differentiating between funding proposals based on which were ready first, as long as they corresponded with the objectives of GCF Another Board member said that while it was preferable not to change the rules of the game midway, it was also important to gradually move towards a model that would ensure fair distribution of GCF resources, given that the first come, first served model risked allowing the bulk of the available resources to be consumed by the AEs with most capacity before entities with less capacity had had a chance to catch up. They therefore recommended that the Board attempt to reach a compromise solution on the matter A further Board member emphasized the need for sound financial planning. They recalled their suggestion four years previously for the Board to develop a strategic plan, including a business plan, which would feature country programmes and AE work programmes, in order to give GCF an informed overview of future funding requirements and thus plan its expenditure accordingly. However, the only element from the Initial Strategic Plan for GCF (document GCF/B.12/32, annex I) that had been implemented was the structured dialogues; no serious commitment had yet been demonstrated regarding country programmes or AE work programmes. The Board member expressed concern that some of the funding committed to approved projects would remain dormant for substantial periods of time before being disbursed for later elements of project implementation, particularly those that were dependent on the fulfilment of conditions; they requested clarification from the Secretariat on how much of the committed funding remained effectively dormant and called for innovative approaches to release idle funds and make best use of the available resources during the difficult period leading up to replenishment The Co-Chair said that a method for managing the commitment authority clearly needed to be established, but the issue of how to do so was highly complex and would require further preparation by the Secretariat and deliberations by the Board. Pending further discussion on how to proceed, the Co-Chair invited the Board to take note of the information provided in document GCF/B.20/Inf There being no objections, the Board duly took note of the document Agenda item 14 was closed Agenda item 13 was suspended.

54 Page The Co-Chair re-opened agenda item 13 on the final day of the meeting and noted that consultations were ongoing on the text of a draft decision that would be submitted for consideration and adoption by the Board at the current meeting. The draft decision would incorporate elements relating to the information provided and discussions held under agenda items 11, 12, 13 and 14. They invited a Board member to report on the status of the consultations A Board member stated that while the consultations were under way, the draft decision was not yet ready for submission to the Board The Co-Chair took note of the comment and suspended agenda item The Co-Chair reopened agenda item 13 later the same day and expressed gratitude to the Board members who had been involved in the consultations for their concerted efforts to reach consensus on the content of the draft decision. The Co-Chair invited a Board member to introduce the draft decision, which had been circulated to the Board Noting that the draft decision related to the status of the GCF portfolio (agenda item 11), the status of the GCF pipeline (agenda item 12) and the status of the initial resource mobilization process (agenda item 13), a Board member gave an overview of the draft decision and also noted that the place-holders used for the financial figures would be replaced by the exact figures in the final edited version The Co-Chair invited the Board to adopt the draft decision as presented A Board member proposed that the Board adopt only paragraph (f) of the draft decision, which requested the Secretariat to prepare an analysis of options for the financial planning of the GCF commitment authority and present this to the Board for consideration and adoption at its twenty-first meeting. They wished to know if other Board members had strong views on maintaining any other paragraphs of the draft decision. Another Board member noted that the Secretariat had already conducted a substantial amount of analysis on the topic and expressed concern that the draft decision failed to provide adequate guidance to the Secretariat on how to make further progress; they feared that this would result in simply delaying rather than resolving the pressing matter of deciding how to manage the remaining resources of GCF A further Board member requested clarification on why the words and institutional capacity, which seemed incongruous, appeared in paragraph (g) of the draft decision. Another Board member clarified that those words had been included in error and proposed their deletion The Co-Chair took note of the proposed amendment and asked whether there was consensus among Board members, firstly, on the adoption of paragraph (f), and, secondly, on the draft decision as a whole A Board member said that they were only prepared to approve paragraph (f) because, not having been included in the process of drafting the draft decision, they did not fully understand the basis for the other paragraphs. Following clarification of the meaning of and basis for the remaining paragraphs by two other Board members, the Board member stated that they were prepared to adopt the draft decision as a whole but wished to raise some of the matters at hand under the following agenda item Another Board member stated that while they would not block consensus on the draft decision, they wished it to be recorded that they were not comfortable with the Board approving projects worth substantial financial resources without clear guidelines and criteria on how the Board planned to evaluate and prioritize the remaining funds. They also stated for the record that the draft decision had not been negotiated in a public forum; while recognizing that the decision had been drafted in a different manner for the sake of expediency on the present occasion, the Board member registered their concern over the use of such a process and

55 Page 52 stated that it would have been preferable for the text to have been drafted in a public forum where all stakeholders, including observers, could have offered input and gained a better understanding of the various issues at play The Co-Chair took note of the comments and invited the Board to adopt the draft decision as amended There being no objections, the Board adopted the following decision: DECISION B.20/07 The Board, having considered document GCF/B.20/Inf.06 titled Status of the GCF portfolio: approved projects and fulfilment of conditions, document GCF/B.20/Inf.07/Rev.01 titled Status of the GCF pipeline, including the status of Project Preparation Facility requests and document GCF/B.20/Inf.05 titled Status of the initial resource mobilization process : (a) (b) (c) (d) (e) (f) (g) Takes note that the GCF cumulative funding approvals as at the twentieth meeting of the Board amount to USD 4.4 billion, and the remaining commitment authority for the initial resource mobilization is currently projected at USD 2.8 billion; Recognizes the high demand in the GCF pipeline from developing countries, and that an approach to managing the GCF commitment authority and resources is required to guide developing countries and accredited entities in engaging with GCF; Takes note of the information provided, which relates to the effects on the commitment authority related to currency fluctuations to the amount of USD 0.9 billion 1 and the as-yet unfulfilled contribution agreements/arrangements to the amount of USD 0.1 billion; 2 Takes note of the level of the current state of the disbursement of resources to the amount of 274 million for approved projects and urges the Secretariat to continue to make progress to speed up the rate at which projects reach the implementation stage; Requests the Secretariat to consider the Board s comments on the need for financial management of the commitment authority in preparing for the twenty-first meeting of the Board, with a view to ensuring resources for the operation of the GCF for the remainder of the initial resource mobilization period in line with paragraph (f) below; Also requests the Secretariat to prepare an analysis of options for the financial planning of the GCF commitment authority for the initial resource mobilization with a view to managing the GCF pipeline to balance commitments and diversity among accredited entities and across the initial results areas of the GCF based on confirmed contributions in accordance with decision B.06/06 on resource allocation, and present this to the Board for consideration and adoption at its twenty-first meeting; and Confirms that the financial planning exercise should also contain a forward-looking analysis on pipeline management to guide the GCF replenishment process. Agenda item 15: Matters related to replenishment 399. The Co-Chair opened the agenda sub-item and drew the attention of the Board to document GCF/B.20/06/Rev.01 titled Arrangements for the first formal replenishment of the Green Climate Fund The Co-Chair invited the Executive Director to introduce the document. 1 As at 8 May As at 8 May 2018.

56 Page The Executive Director noted that earlier in the meeting the Board had reviewed the commitment authority and status of GCF resources. Considering this, it was clear that now was an appropriate time to commence replenishment because GCF had matured, had an increasing portfolio at scale and with implementation proceeding. The Executive Director noted that the Board might wish to think of the replenishment process in three stages: (i) what decisions it wished to take to establish the process, namely the prerequisite preparatory work that needed to be undertaken; (ii) what inputs would be necessary during replenishment, and (iii) the mode of replenishment it wished to undertake, along with decisions resulting from replenishment. In the view of the Secretariat it was important to approach the question of what type of preparatory arrangements would be required as some would need six months or more, including a review of the performance of GCF; the latter was a normal activity for any fund or institution seeking replenishment The Executive Director said that an early decision on the timetable for replenishment would help the Secretariat to think through the implications for its work programme in 2019 so it could support replenishment effectively. The decision included a request to IEU to initiate a review of the performance of GCF during the initial resource mobilization period, and for the Strategic Plan to be updated, anticipating the next phase of GCF activity. Furthermore, a timeline should be established to allow the necessary policies and procedures for replenishment to be concluded with a view to commencing replenishment after B.21. One of the decisions the Board might wish to take would be the mode of replenishment, including how similar or different it should be from the mode adopted for the initial resource mobilization process in terms of governance, participation, inputs and timeline. For example, would the process be facilitated and championed politically, and always bearing in mind that there would be a transition period for the Board with a number of new members in In addition, what documents and decisions would be required during replenishment on matters such as programming and contribution policies. A decision at this meeting would start everyone on a steady path to a successful replenishment The Co-Chair thanked the Executive Director and opened the floor for comments on the draft decision. Part 1 Opening discussion 404. During the initial round of discussions Board members underlined the challenges of climate change and the role of GCF in helping to address these challenges; the role of GCF as an operating entity of the Financial Mechanism of the Convention and its relationship to the COP; the mandate from the Paris Agreement; the diversity of views as to how Board members saw the replenishment process itself and whether this should be a Board-driven or contributordriven process; the role of any review of the performance of GCF; what policies might or might not be required, and whether these would be preconditions for replenishment or progressed in parallel as a matter of GCF governance; the nature of the political processes that would need to be followed by potential contributor countries; how the transition between the initial resource mobilization period ( ) and replenishment might be managed; and several other matters. Replenishment consultations 405. A Board member expressed concern at the way proposals for the replenishment process were developed intersessionally and the concepts and ideas around the process of replenishment. This included the informal consultations held in Bonn, which appeared to have generated ideas to feed into the current meeting around which there was no consensus. A

57 Page 54 further two consultation meetings were proposed. In the opinion of the Board member this was not a good way forward. Another Board member echoed these views and noted that they had been unable to get convincing replies to their s about the Bonn meeting and were unable to attend. Secretariat document 406. Some Board members specifically commended the document prepared by the Secretariat, which they said covered the basics that were needed for replenishment. One noted that the section dealing with how other funds had approached their replenishments was very informative. Similarly, they noted that the identification of lessons learned from the initial resource mobilization process was useful. Furthermore, the document was phrased very positively and provided the Board with several options Another Board member stated that prior to B.19 there had been a document prepared by the Secretariat. During this period when there had been good consultation by the Co-Chairs with the constituencies, their constituency had presented many comments. There had been so many comments that the Secretariat had been unable to address them all and, therefore, the document was not presented at B.19. They opined that the document now presented was worse than the earlier one they had seen. They advised that the Secretariat should not attempt to present a draft decision where an issue was divisive. GCF mandate 408. A number of Board members highlighted that the context for the first replenishment of GCF was UNFCCC and its COP, which provided guidance to GCF under Article 11 of the Convention as an operating entity of the Financial Mechanism of the Convention and the Paris Agreement. The first formal replenishment of GCF was an important process for GCF to serve the Paris Agreement. It would also help to maintain the momentum of ongoing multilateral climate negotiations aimed at concluding the guidelines to implement the Paris Agreement at the twenty-fourth session of the COP as progress to achieve the pre-2020 commitment of USD 100 billion. The process for replenishment was governed by the policy for contributions, which set out the trigger for replenishment, which one Board member stated would be met soon if it had not already been met. The same Board member, noting that GCF resources were already below the demand shown in the pipelines, expressed a desire to start the replenishment process by consensus at the present meeting and to complete it as soon as possible Another Board member stated that the replenishment process should also be guided by paragraph 3 of the Governing Instrument. This stated, inter alia, that The Fund will play a key role in channelling new, additional, adequate and predictable financial resources to developing countries and will catalyse climate finance, both public and private, and at the international and national levels. Furthermore, every effort should be made to contribute to keeping global temperature increases to below 1.5 C. In addition, in considering this and other agenda items, the Board should bear in the mind the need to achieve a paradigm shift and to be transformational in all its activities. In considering policy gaps, the Governing Instrument should be used to determine priorities. The input of the Board to replenishment should be focused on strategic programming priorities and the approval of a work programme and budget for replenishment and the ambition based on increased projects, concept notes and DAEs. They stated that the Secretariat could help to provide the relevant statistics Another Board member stated that developing countries were looking forward to a decision that should have been taken at the preceding Board meeting. Replenishment ambition

58 Page Several Board members noted that it was important that GCF should be more ambitious in this first replenishment than the initial resource mobilization process. One Board member said that GCF should adopt an approach that reflected the progressively more ambitious climate targets of the Paris Agreement. Having been informed earlier during the meeting, in the presentation on the commitment authority, that the initial USD 10.3 billion was no longer available, they said that they expected the replenishment process to yield more than the initial resource mobilization process A Board member said that the broader framework for the first GCF replenishment was the requirement under the Convention and the Paris Agreement to try to restore some equilibrium to global climate and limit temperature increases to below 1.5 C. The practical realities of climate change included conflict between tribes because of drought. In Egypt, farmers were suffering owing to increased levels of salination from rising sea levels. The Paris Agreement set objectives to be achieved yet the Board was debating whether an evaluation should take place and who should do it. In terms of replenishment, they asked what would be the purpose? Should it be for GCF to continue with business as usual, under which the Board approved funding proposals with many conditions, and because of so many conditions, only disbursed limited amounts of money (USD 364 million)? At the same time, little of the initial Strategic Plan of GCF had been implemented. As GCF moved to the next stage of its operations, it should have clear objectives. The consideration of replenishment should address broader questions. For example, GCF could say to the world its ambition over the next four-year period was to reduce a certain number of tonnes of greenhouse gas emissions. Governments would take GCF more seriously if it set such targets than by saying it had approved a particular policy. They further asked the Board to consider what would be the implications of generating different levels of funding contributions. If, for example, the replenishment process generated USD 20 billion, how would such resources be used most effectively? Would the Board, the Secretariat, AEs and beneficiary countries have the absorptive capacity to handle this level of ambition? This was the kind of question that an evaluation should answer. They highlighted that, whatever decisions were taken now by the Board, would set precedents for future replenishments. GCF was party to an agreement which must be honoured A further Board member said that the level of ambition also needed to be considered by the Board in the context of the Paris Agreement, the needs and realities of the countries, nationally determined contributions and NAPs. There should be a focus on programming and targets for the next phase of the work of GCF Several Board members noted the importance of this topic for GCF and expressed support to initiate the process for replenishment. One Board member noted that GCF was in a very different place from when it was launched as a leap of faith. The institution was now more mature and great progress had been made. There were some policy gaps, but they expressed confidence that these could be resolved. Another Board member said that the first replenishment should be seen in the broader context of setting up a solid and regularized replenishment process for future replenishments. How GCF conducted its first replenishment would also impact its reputation. A third Board member noted the importance of learning from replenishments of other institutions One Board member stated that they had come to B.20 with a strong mandate from their government for a strong and ambitious replenishment. However, the extraordinary situation that had transpired at the meeting was a result of a governance crisis created by a minority of Board members. They felt they could not defend a strong and ambitious replenishment to their government without resolving issues of governance. It was now the third day of the meeting and no decisions of substance had been made Another Board member stated that, ahead of this, their first Board meeting, they were aware of gaps in governance. They had now witnessed these during the first two days of the meeting. Important points had been made by developing countries and it was essential to

59 Page 56 ensure there was a fit for purpose GCF that could maximize its resources. For said Board member, there was a clear link between governance and how successful the first replenishment would be in generating substantial funds. A further Board member said that an absolute priority was to strengthen the governance of GCF along with an effective decision-making process that would avoid the loss of hours and sometimes days on procedural matters Another Board member said that they were proud to be talking about replenishment. For their constituency the successful replenishment of GCF was crucial. There would be a structured dialogue in their region in three weeks and they would not wish to have to disappoint those attending because the Board was unable to take a decision to start the process. It was essential that that Board members connect what was happening in the boardroom with what was happening on the ground. They called on all members of the Board to refrain from being too wedded to their positions, stating it was important that, as a fisherman, in the pursuit of catching fish, you don t damage your net A further Board member stated that it was encouraging to hear that one of the other Board members had come with a mandate for a strong and ambitious replenishment. In the light of concerns that had been expressed during the meeting, it was very important to build trust. They opined that to build trust, independent reviews were needed. Such reviews could also help to build trust in GCF projects and programmes. Furthermore, this would enable the Board to measure progress in reducing greenhouse gas emissions. In addition, as suggested by others, it was important to consider broader strategic questions such has what kind of interventions GCF should be making. Review 419. Several Board members underlined the importance of a review of the performance of GCF during the initial resource mobilization period and the need for a decision on this at the current meeting. A number noted that such reviews were a normal part of replenishment in other international institutions. Furthermore, they said that these reviews were an indispensable component in being able to make a strong case to sovereign parliaments. One Board member said that GCF would need to show what it had delivered against its initial commitments A second Board member identified these commitments, namely a balance of mitigation and adaption, regional balance in thematic areas, leverage of private finance, co-finance, safeguards, transformational change, intended mitigation and adaptation targets and the way GCF was governed. They had presented these commitments to their parliament and it was against these that their parliament had approved their government s contribution pledge to GCF. There were important policy gaps and IEU should conduct its evaluation of the current portfolio against these ambitions. On top of the policies referenced in the document, there were other matters such as the discussion which had taken place under the previous agenda item regarding management of resources, setting priorities and behaving like a fully developed fund Others noted that it would be essential to show that GCF was effectively governed, to enable their parliament to entrust it with further resources. Another Board member highlighted that GCF was in competition for resources. They noted that there were several organizations that could channel resources to developing countries. In this regard, one of the key priorities was to identify what had been achieved by GCF. This would also be a learning opportunity for GCF, which was crucial in guiding its future strategic direction. This review would inform the comparative advantage of GCF in mitigation and adaptation and more particularly would identify what critical gaps existed that GCF could fill. This required solid evidence Regarding the type of review, this should both look backwards at results and look forward. Without such a review, individual contributor countries would be asked to do their own reviews. GCF was now in the fortunate position of having an independent evaluation unit.

60 Page Several Board members expressed support for the proposal that IEU undertake the review Another Board member asked the Board to consider carefully what exactly would be reviewed when 90 per cent of the portfolio had not been implemented. As a member of the Boards of other institutions of which their government was a contributor, the reviews undertaken by these institutions tended to be backward-looking. GCF needed to be ambitious and forward-looking. It needed to identify strategic targets for the next four years, such as what contribution GCF could make to changing energy sectors, transforming the transport sector or reducing greenhouse gas emissions. This would then drive what was needed in terms of instruments, the type of Secretariat and so on. This is where evaluation would play a key part. But this broader level of ambition was not coming through in the draft decision. Furthermore, where was the TOR for strategic programming? It was unclear where this body of work would be done. Instead the Board was focusing excessively at the micro level. Finally, what guidance was GCF getting from the operating entity of the Convention? Terms of non-contributor participation 425. A Board member stated that it was important that the Board acted in a united manner and non-contributor countries should be involved in the contributor meetings. This was echoed by another Board member who said that the replenishment process should be an inclusive, transparent, Board-driven process and this should be reflected in the document. A third Board member said it was important that there was no confusion between this Board decision-making process to prepare for the replenishment and the replenishment process itself, which was contributor-driven; there should be no interference between the two. The Board would ultimately be presented with the outcome of this process and would have the opportunity to consider and approve the replenishment package. Policies 426. Some Board members said that they did not see the need to fill policy gaps as setting additional requirements or conditions on the first replenishment of GCF. Rather, this was about ensuring that contributor countries could present a strong case to their parliaments and hence their taxpayers. These were indispensable in demonstrating that GCF was a responsible and predictable institution in the wider financial market. One Board member recalled an image that had been used in earlier Board meetings in terms of flying a plane while still building it. Now was the time to ensure the plane was safe to fly by closing existing policy gaps One Board member noted that most of the important policy gaps were listed in annex IV to the document. Another said that they were not convinced that the list was comprehensive. A third member also wished to see the policy on integrity added, which they hoped EAC would complete by B.21. A fourth acknowledged the need to address the policy gaps but asked why the focus was on policy gaps and not on ambition Another Board member stated that the requirement for policies to be filled was reminiscent of the initial resource mobilization, where there had been insistence from some Board members that a number of policies (decision B.05/17) be completed before the commencement of the initial resource mobilization. There had been further negotiations over earmarking of funds from potential contributor countries. This was eventually resolved as GCF was working towards higher-level objectives under the Convention. At the eleventh meeting of the Board, held in Zambia, the first portfolio had been presented, during which some Board members had raised the matter of policy gaps. The Board had taken a decision to move forward on the portfolio as the high-level segment of the twenty-first session of the COP in Paris was approaching. The Board had subsequently approved funding proposals and then reached a point where such approvals were suspended so that outstanding policies could be resolved.

61 Page 58 Some of these policies were never resolved. On the matter of the Board s decision-making procedures, again there were divergent views on voting. Over many meetings the Board had found ways to achieve consensus, including over the appointment of the Executive Director. Now the Board faced a situation where the USD 10.3 billion pledged would not materialize. As a member of the GEF Board they had experienced four replenishments and they advised against emulating the processes for replenishment adopted by GEF. GEF had seen a continued reduction in funds at replenishments. The CIFs were also short of funds and the Adaptation Fund was struggling Another Board member opined that the process proposed in the draft decision was overloaded with policies unrelated to replenishment. For example, in annex IV, with reference to the gender policy and the GCF environmental and social safeguards standards, they asked how these were critical to enable a case to be made to contributor country parliaments. This was similarly the case with reference to co-financing and cost methodologies. Was the intention to declare GCF a failure as it had not met its objectives? Furthermore, the document referred to decision-making procedures. In the Governing Instrument this was referenced, and while there were options, such as voting, arbitration or other mechanisms, this needed to be resolved separately. It was not acceptable to make this a condition of replenishment. Based on the earlier presentation on the commitment authority, the Board was now being told that it was running out of money to approve funding proposals yet at the same time a set of policy conditions were being imposed. Replenishment should focus on process, timelines and the 60 per cent threshold for replenishment along with the needs and requirements of developing countries and potential for GCF, including how much mitigation and adaptation could be achieved. They stated that they were not prepared to adopt the draft decision as presented Another Board member said that they could not support paragraph (j) given the list of policy issues in annex IV. As such, the draft decision could not be approved as currently presented. Mode 431. In terms of a model for the replenishment process, a Board member noted that there may be elements from the initial resource mobilization process that could be followed. There had been substantial negotiations at the time and agreement had been reached, so a model now existed. There was one major difference, namely that GCF was four years down the line and there were gaps. It was the Board s obligation to fill these gaps either before or during the replenishment. Another Board member asked if GCF wished the follow the process adopted by other institutions where one body endorsed the outcome of a replenishment process while another welcomed it. In this case the replenishment process could be endorsed by the Board and then welcomed by the COP. Another Board member noted that the initial resource mobilization had been exceptional and was not necessarily the model to follow. Transition 432. The Board member who recalled that the Board had a model that it could follow also said that this linked to the commitment authority and how to deal with the transition period. There were different views regarding timelines and this was also linked to what the Board considered important regarding policy matters. Regarding the trigger for replenishment, noting that there were different views among Board members, the member said that they favoured case 3 presented in document GCF/B.20/Inf.05. It was possible that the trigger would be met at B.21. In their view the draft decision was a good basis. Champions

62 Page A Board member noted that it was essential that capable external facilitators were used to present a strong case to potential contributors Having heard most of the Board members who had requested to take the floor, the Co- Chair stated that, as requested earlier by a Board member, the Board would need to move to an executive session on another matter. They would open for the floor for any remaining interventions the following day With reference to the discussion on replenishment, the Co-Chair noted a number of themes that had emerged. Firstly, that everyone was aware and committed to working to tackle the grave challenge facing humanity from climate change. Secondly, GCF was an important component in providing finance for programmes and projects and various other interventions for both mitigation and adaptation. Thirdly, it was clear that there were widely diverging views on how members of the Board viewed replenishment. The challenge for the Board was to come together to launch the replenishment process. They repeated their suggestion that they were willing, as the sole Co-Chair, to make themselves available to the developing country constituency The Co-Chair stated that the agenda item was suspended until the following day. Part The Co-Chair reopened the agenda item on the final day of the Board meeting A Board member who had not spoken the preceding day stated that vulnerable countries, including LDCs, were most at risk from climate change. A functioning GCF with sufficient funds was indispensable to them. The LDCs had taken time to understand GCF processes and many developing countries had funding proposals and concept notes to put forward. It would not be acceptable to them to have come so far only to find that GCF resources were depleted. Consequently, a rapid replenishment was imperative. This required the Board to work together An active observer for CSOs expressed support to move forward on an ambitious replenishment as demand clearly outstripped supply. It should be guided by an open and transparent process that took into account the growing needs of developing countries. They urged the Board to formally start the replenishment process no later than B.21 and be concluded as soon as possible to ensure there were no gaps so that GCF could do its work. In line with the precedent set by the initial resource mobilization process, including the pledging conference in Berlin, Germany in November 2014, they asked that the replenishment process provide for the participation of active observers for CSOs in related workshops and/or a pledging conference. They also clarified that a letter referenced by some Board members earlier in the meeting did not come from civil society but other observers The Co-Chair said that there were several comments on the draft decision and it would be necessary to return to this agenda item later in the day A Board member asked if a revised draft decision would include a review of GCF The Co-Chair affirmed that this would be case The Board member stated that they were unable to move to other agenda items until there was agreed text on the review. Other elements of the draft decision could be set to one side, but the review was essential The Co-Chair suspended the agenda item. Part 3

63 Page The Co-Chair reopened the agenda item and reminded Board members that a small group formed on the previous day comprising Mr. Josceline Wheatley, Mr. Karsten Sach, Mr. Omar El Arini and Mr. Zaheer Fakir had been working on the draft decision. Following this work, a revised draft decision text was being circulated. They invited a Board member representing the small group to take the floor The Board member said they would explain the intended meaning of each of the subparagraphs of the draft decision. It was also the intention that this was a report back from the group to the Board by way of consultation rather than advocacy by the group. The group was ready to respond to questions from the Board The Board member explained that: paragraph (a) was a preamble and statement of fact; paragraph (b) noted the importance of GCF conducting a successful replenishment; paragraph (c) was inserted because a number of members wished to make clear that the Board was responsible for setting the schedule, deciding modalities and other matters under which replenishment would operate; paragraph (d) reflected that there was preparatory work to be undertaken and that the process would be launched at B.21. The Board member said that there had been debate in the group as to whether the verb initiate or launch, coupled with the phrase first formal replenishment was the most appropriate; paragraph (e) referred to what would be described as a programming document in other similar institutions. It outlined what could be achieved for given levels of effort and taking into account the state of development of GCF; paragraph (f) was to determine whether GCF was fit to deliver on the ambition defined in (e); and paragraph (g)(i) addressed the impact and paragraph (g)(ii) addressed capacity. However, the bracketed text [Effectiveness and efficiency of] the institutional structure [arrangements and modalities] was seen as potentially in conflict with the Governing Instrument. It was presumed by some members to be relitigating the issues surrounding governance. Others felt no review of the fitness of GCF to execute the scenarios under paragraph (e) could possibly do other than look at the operational structure and modalities, and (g)(iii) was about relating the choices of instrument and volume to activities. The final part of the draft decision related to the execution of the review. There were differences of view regarding using IEU or asking the Secretariat to commission an independent third party. There was a question regarding timing, with consensus that the process should start sooner rather than later. Finally, paragraph (h) reflected the same budget allocation as in the first draft decision The Co-Chair thanked the members of the group and opened the floor for comments. Discussion 449. In the ensuing discussion, Board members intervened on both the substantive elements of the draft decision as well as working modalities for the Board, including the role of small group work during Board meetings, and the options for extending the duration of the meeting beyond the initial plan proposed by the Co-Chair. Under the agenda item, the Board also held further discussions on matters related to agenda item 2, Adoption of the agenda and organization of work, which related to agenda item A number of Board members expressed their thanks to the small group. One Board member, at this point and subsequently, expressed their objection to the process of small group working, stating that it was not in line with the guiding principles of GCF. They cited paragraph 3 of the Governing Instrument: The Fund will operate in a transparent and accountable manner guided by efficiency and effectiveness. They stated that they wished to see the matter resolved within the full Board. Another member of the small group said that in their view the group had done all that it could A member of the group raised a point of order to inform the Board that the group had come back into the plenary before it had finished its work. The member informed the Board that they were willing to continue working in the group unless the Co-Chair wished to cancel it. They

64 Page 61 also noted that they had been told that constituencies would have an opportunity to review the draft text before it was presented to the Board. Responding to the statement from the Board member that the small group had not finished its work, the representative of the small group who had introduced the draft decision text following the work of the group said that while the member was correct, it had been necessary to bring the draft back to consult the Board as time was pressing. They were happy to receive further guidance from the Co-Chair on how to proceed. Draft decision 452. On the substantive elements of the draft decision, several views were expressed regarding the various subparagraphs. Diverging views were expressed regarding the role of potential contributor countries and recipient countries, the role of the Board and the relationship of GCF to the Convention and the Paris Agreement. A number of Board members objected to language used in paragraph (c), which stated that the replenishment process will be driven by and implemented under the guidance of the Board. One Board member repeated a statement they had made on the previous day of the Board meeting that replenishment was a contributor-driven process, while the Board s role was to approve the outcome. This view was echoed by another Board member, who noted that replenishment across other institutions was donor-driven. They also noted that in paragraph (d) it would be the contributors who determined the timeline of replenishment and the targets Another Board member said they were happy to see that the draft decision referred to a forward-looking review of GCF in paragraph (g)(iii). This sent a positive signal that GCF was not fearful but willing to improve its efficiency and effectiveness. They also requested that this work should include a review of the governance of GCF. Regarding further details in the draft decision, they believed that IEU should undertake the review but given the timeline proposed (28 February 2019) were concerned that the proposed budget may be too low. With reference to paragraph (g)(ii), they felt the text was too prescriptive and would be better if it was broadened to reflect the need to review the efficiency and effectiveness of GCF in fulfilling its mandate. Finally, they stated that in paragraph (g)(iii) the current phrasing was confusing as it was not clear why a review was needed of the analysis of the existing GCF portfolio and seemed very similar to the dashboard already presented to the Board by the Secretariat Another Board member said they would support the review being undertaken by IEU or an independent third party commissioned by IEU. They also supported the proposed timing and need for a budget. However, another Board member expressed a preference for IEU as being both capable of the role and less expensive than commissioning a third party A further Board member stated that it would not be appropriate to use the bracketed verb launch under paragraph (d) to describe what would happen at B.21. They also objected to paragraph (c). This was addressing matters that would be dealt with under the discussion on preparatory arrangements referenced in paragraph (d) at B.21. Furthermore, it was premature to request scenarios; the only urgent matter for the current decision was to establish the process for the review of GCF. In response to an intervention by another Board member, they stated that what was needed was a broad description of the focus of the review instead of a detailed TOR. For said Board member, paragraph (g)(ii) was the crucial paragraph, as indicated by some other Board members Another Board member highlighted two points. The first concerned the precise language regarding the commencement of the first formal replenishment process. In the draft text the verbs initiate or launch were proposed as options. The Board member had no special preference for either and suggested that a way round this was to use language adopted in past decisions, namely, Once the Fund s cumulative funding approvals exceed 60 per cent of the total contributions, confirmed by fully executed contribution agreements/arrangements,

65 Page 62 received during the initial resource mobilization, the Fund will initiate a formal replenishment process (GCF/B.08/16, annex II, paragraph (d)) Regarding paragraph (g)(ii), the key reference point should be paragraph 3 of the Governing Instrument: The Fund will be scalable and flexible and will be a continuously learning institution guided by processes for monitoring and evaluation. The term embedding proposed in paragraph (g)(ii) implied a static organization. The words efficiency and effectiveness in the same paragraph of the Governing Instrument were preferable. Finally, they said that in paragraph (g)(ii) of the draft decision, the text in brackets, [arrangements/modalities], was insufficiently precise Another Board member expressed support for other Board members who had raised concerns regarding paragraphs (c), (d) and (e). Furthermore, they said they wished to see the review undertaken by IEU A further Board member expressed concern at the reference in paragraph (d) to essential preparatory arrangements. Did this include the policies listed in annex IV or just logistical arrangements for the replenishment? They noted that the decision seemed to be predominantly about the review and requested that a TOR be developed. A TOR had been developed prior to the evaluation of the Readiness and Preparatory Support Programme; now the whole of GCF was being evaluated, so this was essential. Another Board member said that the reference to preparatory arrangements in the paragraph was insufficiently detailed The Co-Chair asked the small group to advise on how it might be best to proceed. One member of the group said that they could not continue in the group as it had exhausted its work. They also requested a constituency meeting. The representative of the group confirmed that they would follow the Co-Chair s guidance On the request for a constituency meeting, a Board member asked that the Co-Chair extend the proposed duration of the meeting to compensate for the time that would be taken by this The Co-Chair said that it was clear that for the full Board to resolve this issue with an agreed decision text would be challenging and would involve a substantial amount of time Another member of the group said that they were willing to make a further effort if the Co-Chair so determined. A very clear backdrop to the urgency of commencing the work on replenishment was the earlier Board discussion regarding the commitment authority. For them, if there was one key point to resolve, it was the review; they had been involved in many other replenishments and none had been undertaken without a review. Contributor countries would have to present a case to their parliaments and these parliaments would ask for an evaluation of the effectiveness of GCF. Other parts of the draft decision that were currently causing difficulties could be deleted, but the review and further preparatory work by the Secretariat were two fundamental elements that needed to be decided upon by the Board. Regarding who should undertake the review they noted it would not send the right signal if the Board chose not to trust its own independent evaluation unit for this task Another Board member requested a short constituency meeting The Co-Chair expressed the hope that if a short constituency meeting was held, the Board meeting could be resumed and a decision adopted on this key item The Co-Chair suspended the agenda item. Part 4

66 Page The Co-Chair reopened the item later the same day and requested that the draft decision text, which had been revised during the suspension, be displayed on the boardroom screen in track changes A Board member opined that the key element was the review of GCF and that all other elements could be deleted. However, they wished to be guided by the Co-Chair A further Board member stated the item under discussion was replenishment, of which the review was an element. They reminded the Board that GCF was not an abstract concept. It was an operating entity of the Financial Mechanism of the Convention and was governed by a set of rules. When Board members referred to replenishment as a contributor-driven process it was important to bear in mind that it was a Board of equals. It was not the ethos of GCF to frame the relationship in any other way. Both constituencies worked for the success of GCF With reference to the draft decision text there were several elements that this Board member wished to highlight. Clearly the process of replenishment was undertaken by contributor countries, but the Board was the governing body of GCF. It was not the intention of the draft text to suggest that the contributor process itself would be driven by the Board. The proposed use of the verb launch, was not about the question of the trigger for replenishment, it was to capture the start of the replenishment process. The elements of replenishment, such as what was the process, what information was required, and what timelines were envisioned, among others, did not mean the replenishment meetings themselves. With reference to paragraph (e) and comments that had been made by some Board members regarding scenarios, the thinking behind this was to have an ambitious and visionary fund. What were the potential mitigation and adaptation scenarios for GCF and what would be the sources of information that would allow these scenarios to be crafted? It was suggested that these would include nationally determined contributions, NAPs and other sources that the Secretariat could analyse, enabling the potential ambition of GCF to be outlined. Finally, this would lead into questions about whether GCF had the necessary instruments, Secretariat capacity and other matters related to capacity. There was no opposition from developing countries to a review of GCF or its structure. However, the concerns hinged around tying replenishment to this review to the extent that one was contingent on the other. As to who would undertake this review, this was not a fundamental point of divergence; what was important was that an evaluation was undertaken of all structures, including the independent structures of GCF. They were happy to work with the Board to draft language that captured this. In summary, the draft decision proposed had been an attempt to find common ground so that the Board could move forward. As to the process by which this draft decision had been developed in a small group, experience had shown that attempts by the whole Board to revise decision text on screen had not been very successful. Meeting duration 471. The Co-Chair reminded the Board that they were close to the planned end of the Board meeting. They noted that some Board members had expressed a willingness to continue the meeting beyond 6 p.m. and, as Co-Chair, they were willing to continue to act as Co-Chair Another Board member thanked the preceding Board member for their intervention and noted that there were different aspects of the draft decision that were of importance to different constituencies. However, there seemed to be consensus that a decision was needed. In terms of overcoming some of the difficulties in the text in paragraph (d); the Board member said that the inclusion of the formal language regarding the trigger from document GCF/B.08/16 as proposed by an earlier Board member would be useful. The second alternative as proposed by the Board member above was to start the preparation of the process, which was also appropriate. This gave the Board two options The Board member noted that many concerns had been expressed regarding paragraphs (c) and (g)(ii). These concerns could be addressed by removing these paragraphs. In any event

67 Page 64 the Board would need to endorse preparations. Under paragraph (g)(ii) there was an excess of operational detail. The text in (g)(ii) could be replaced with To assess (ii) the performance of the Fund, including its funded activities and its effectiveness and efficiency, which was language from paragraph 59 of the Governing Instrument. There was an error in paragraph (g)(iii). The word of should be removed. It was not a review of an analysis but an analysis of the GCF portfolio. With reference to paragraph (e), a number of concerns had been expressed by the developed country constituency. For the Board member this was more about a programming document and seen within the wider climate finance landscape rather than a needs assessment under UNFCCC Another Board member echoed the remarks of the Board member in paragraph 474 above. For said Board member there were three important components to the decision. The first was that the opening paragraph sent an important signal to the outside world, reaffirmed the GCF mandate and confirmed that GCF would initiate a first formal replenishment process. At the current Board meeting the Board should have approved almost USD 1 billion in funding proposals. This would take the total approved to more than USD 5.4 billion, which exceeded the 60 per cent commitment authority. According to decision B.08/13, this would require the Board to initiate the replenishment process. This was most important during 2018 with reference to the Paris Agreement. The Board member stated that the second part was about the necessary preparatory work of the Secretariat. Finally, the Board member said that the third part regarding the review was very relevant. They considered that the draft decision addressed most of the concerns of Board members. GCF had been set up as an operating entity of the Financial Mechanism of the Convention and also the new mandate from the Paris Agreement. It was not a contributor-driven process Another Board member said they were willing to continue the meeting beyond the time for the close of the meeting on an exceptional basis. While negotiating text on a screen was far from ideal, the Board faced exceptional circumstances. They were also willing to continue working in a small group A further Board member opined that the decision was balanced and that a decision was now needed. It was most important to launch the replenishment process. It was not a contributor-driven process as the Board had a very important role to play. It was important, as had been suggested, to reflect nationally determined contributions, pipelines, country programmes and NAPs as part of the review. It was essential for the Board to find a compromise A Board member proposed that the small group undertake further work and also supported the intervention from an earlier Board member regarding using paragraph 59 of the Governing Instrument regarding evaluation of GCF One Board member said that it was encouraging to hear a willingness from several Board members to find a way forward. They observed that a good idea was a good idea, whoever made the proposal. It was important to have a level of comfort and confidence by reaching a decision now Another Board member, while expressing support for a decision, supported an earlier intervention to reduce some of the detail in the draft decision. Paragraph (d) was key, while (c) could be delete, as well as others where there were diverging views A further Board member requested that the small group reconvene Another Board member said that they were in favour of the decision being resolved within the boardroom. This was the normal practice in other efficient Boards. This was objected to by another Board member, who stated that they were not prepared to address the draft decision on screen. They were willing to have advisers work further on the matter.

68 Page The preceding Board member once more referred the Board to paragraph 3 of the Governing Instrument regarding the need for transparency in the way in which Board meetings were conducted The Board member who objected to addressing the draft decision on the screen said that the practice had been to find common ground in a small group nominated by the Co-Chairs. As members of that group their role was to consult among themselves and with other Board members, alternate members and advisers A further Board member stated that they were unwilling to continue the meeting beyond 6 p.m. They proposed the creation of an ad hoc committee to discuss this matter intersessionally and to bring a draft text that would be broadly acceptable to the Board. They could, if created immediately, start work after the close of the meeting Another Board member objected to further group work as this contravened the principles of the Governing Instrument for GCF to operate in an efficient and effective manner. They expressed support for the creation of an ad hoc committee A Board member expressed a wish to have a procedure for decision-making in the absence of consensus The Co-Chair noted that the Board seemed unable to reach a consensus on the replenishment process or the procedures for effective Board working The Board member who had proposed a way forward in terms of the draft text suggested it might be helpful if they restated it. It was important not to ask the small group to reconvene The Co-Chair said he wished to suspend the meeting and meet briefly with Board members Mr. Karsten Sach, Mr. Chris Tinning, Mr. Zaheer Fakir and Mr. Geoffrey Okamoto. This was amended to Mr. Karsten Sach, Mr. Chris Tinning and Mr. Zaheer Fakir, with others to be added as needed The meeting was suspended. Part The Co-Chair reopened the meeting later on the same day and informed the Board how he proposed to proceed with the outstanding agenda items and organization of work related to agenda item 2, Adoption of the agenda and organization of work. During this process, agenda item 15 remained open but suspended With reference to agenda item 15, the Co-Chair stated that this had been discussed extensively. It was now split into two decisions, one on replenishment and one on the review. This reflected the discussions before the suspension While debating the Co-Chair s proposal on to how to achieve a result at the meeting, a Board member said that, having reviewed the new draft decision under agenda item 15, they could not support the decision presented The Co-Chair asked the Board member to repeat their intervention The Board member stated that they could not approve the text of the two draft decisions presented under this item Following a further discussion on the organization of work (agenda item 2), a Board member sought clarification as to whether agenda item 15 was still open. If so, they did not wish to proceed with any other agenda item until this was concluded The Co-Chair stated that the intention had been to close the item with the two draft decisions, but there had been no consensus.

69 Page After a further series of interventions on organization of work, the Co-Chair said that agenda item 15 could be reopened and the two decisions could be put to the Board A Board member raised a point of order. It was inappropriate for the Co-Chair to propose reopening the agenda item without first ascertaining whether the Board member s earlier objection to the text of the two decisions still stood. The Board member repeated that they had worked with colleagues to resolve this matter. They could not accept the current text and said that the two draft decisions had the same title, which was incorrect The Co-Chair confirmed that the two titles were incorrect and noted that the draft decisions had not been accepted No decision was taken under this agenda item. Agenda item 16: Updated gender policy and action plan 502. This agenda item was not opened. Agenda item 17: Country programming and readiness (a) Country and entity work programmes 503. This agenda sub-item was not opened. (b) Progress and outlook report, including status of national adaptation plans 504. This agenda sub-item was not opened. Agenda item 18: Matters related to accreditation (a) Consideration of accreditation proposals 505. This agenda sub-item was not opened. (b) Accreditation framework review, including the project specific framework approach 506. This agenda sub-item was not opened. (c) Status of the accreditation master agreements 507. This agenda sub-item was not opened. Agenda item 19: Risk management framework: compliance risk policy 508. This agenda item was not opened.

70 Page 67 Agenda item 20: Matters related to the approval of funding proposals (a) Integrated approach to addressing policy gaps 509. This agenda sub-item was not opened. (b) Interrelated policy matters on incremental cost and full cost calculation methodology; options for further guidance on concessionality; and policy on co-financing 510. This agenda sub-item was not opened. (c) Matters related to the independent Technical Advisory Panel 511. This agenda sub-item was not opened. (d) Further options for decision-making relating to funding proposals 512. This agenda sub-item was not opened. (e) Two-stage proposal approval process 513. This agenda sub-item was not opened. (f) Review of the financial terms and conditions of the GCF financial instruments 514. This agenda sub-item was not opened. (g) Investment criteria indicators 515. This agenda sub-item was not opened. (h) Mapping of elements related to project or programme eligibility and selection criteria 516. This agenda sub-item was not opened. (i) Policy guidelines for programmatic approach 517. This agenda sub-item was not opened. (j) Steps to enhance the climate rationale of GCF-supported activities

71 Page This agenda sub-item was not opened. (k) Identification of results areas where targeted GCF investment would have the most impact 519. This agenda sub-item was not opened. (l) Results management framework: update on the further development of some indicators in the performance measurement frameworks 520. This agenda sub-item was not opened. Agenda item 21: Consideration of funding proposals 521. This agenda item was not opened. Agenda item 22: Recommendations of the Private Sector Advisory Group on opportunities to engage the private sector, including local actors, in adaptation action at the national, regional and international levels 522. This agenda item was not opened. Agenda item 23: Dates and venues of the following meetings of the Board 523. The Co-Chair opened the agenda item and drew the Board s attention to document GCF/B.20/23 titled Dates and venues of the following meetings of the Board The Co-Chair informed the Board that the Secretariat had received a letter dated 27 June 2018 from the Government of the Republic of Rwanda expressing an interest in hosting B.22. This letter was in addition to the one received from the Government of the Independent State of Papua New Guinea that was annexed to document GCF/B.20/23 offering to host a Board meeting in 2019 or The Co-Chair proposed that the Board take note of the expression of interest from the Government of Rwanda and that it be recorded in the report of the meeting The Co-Chair said that with reference to dates for the future meetings, these were detailed in document GCF/B.20/23. The immediate requirement for the current meeting was to approve the indicative dates for B.21 from Wednesday, 17 October to Saturday, 20 October The Co-Chair asked the Board if they could adopt the decision as presented A Board member requested clarification as to whether the provisional dates for 2019 meetings had been checked to ensure no clash with Muslim festivals The Co-Chair invited the Secretary to the Board to take the floor The Secretary to the Board stated that the Secretariat had developed a calendar of international events. The dates had been checked against this and there were no clashes.

72 Page Another Board member said that the twenty-third meeting of the Board clashed with Ramadan and Eid al-fitr and that they would have to review this A further Board member reminded the Board that the issue of planning dates that did not clash with other events was a perpetual problem. They asked that the Board merely take a decision to confirm the provisional dates for B.21 and treat 2019 dates as indicative The Co-Chair proposed that given the lateness of the hour, a decision should be taken on the dates for B.21 per paragraph (a) of the document and the administrative matter detailed in paragraph (b). With reference to the dates for the three meetings during 2019, these should be taken as an indication of intent and decided by the Board at B The Board took note of document GCF/B.20/23 titled Dates and venues of the following meetings of the Board There being no objections, the following decision was adopted. DECISION B.20/08 The Board, having considered document GCF/B.20/23 titled Dates and venues of the following meetings of the Board : (a) Decides that the twenty-first meeting of the Board will take place from Wednesday, 17 October to Saturday, 20 October 2018; and (b) Decides that, without setting a precedent, the deadline for disclosure of environmental and social safeguards reports for category A projects and I-1 programmes to be considered by the Board at its twenty-first meeting of the Board will be kept as per the dates for twentyfirst meeting of the Board adopted in decision B.19/22, paragraph (b). Agenda item 24: Administrative matters (a) Approval of the audited financial statements for The Co-Chair opened the agenda sub-item and drew the attention of the Board to document GCF/B.20/02 titled Audited financial statements of the Green Climate Fund for the year ended 31 December The Co-Chair invited a representative of the Secretariat to introduce the document The representative of the Secretariat stated that a copy of the audited financial statements of GCF for the year ended 31 December 2017 had been sent to Board members. The financial statements had been audited by the external auditors of GCF, Grant Thornton, in accordance with international auditing standards. Grant Thornton had confirmed that they had been prepared in accordance with international financial reporting standards The financial statements had been reviewed and endorsed by the Budget Committee. They had also been reviewed and endorsed by EAC. EAC had recommended that the Board approve the financial statements The decision before the Board was to approve the audited financial statements of GCF for the year ended 31 December The Co-Chair asked if the Board could approve the draft decision There being no objections, the decision was duly adopted.

73 Page The Board took note of document GCF/B.20/02 titled Audited financial statements of the Green Climate Fund for the year ended 31 December The Board adopted the following decision: DECISION B.20/09 The Board, having considered document GCF/B.20/02 titled Audited financial statements of the Green Climate Fund for the year ended 31 December 2017 : Approves the audited financial statements of the Green Climate Fund for the year ended 31 December 2017 as contained in annex IV. (b) Report on the execution of the administrative budgets for This agenda sub-item was not opened. Agenda item 25: Reports from the independent units 545. This agenda item was not opened. Agenda item 26: Other matters 546. This agenda item was not opened. Agenda item 27: Report of the meeting 547. The Co-Chair reminded Board members that the decisions as adopted and their corresponding annexes would be distributed to Board members as soon as possible Document GCF/B.20/25/Drf.01 titled Decisions of the Board twentieth meeting of the Board, 1 4 July 2018 was duly distributed to Board members. Agenda item 28: Close of the meeting 549. The Co-Chair opened the agenda item and announced that they would read two important announcements following their own closing remarks Underlining the difficulties experienced during the current meeting, the Co-Chair said that the outcome was deeply troubling and disappointing, not only for those present but more importantly for the stakeholders of GCF and the people whose lives were being affected by the impact of climate change. They commended the staff of the Secretariat on their hard work and expressed the hope that the experience of the current meeting would help the Board to reflect upon potential solutions in future Noting that the current Board meeting would be his last as a member of the Board, Mr. Karsten Sach expressed appreciation to the other Board members for their enriching collaboration during his term on the Board. While conveying his disappointment at the outcome of the current Board meeting, he expressed optimism for the future achievements of GCF and thanked the Board members, the Co-Chairs, their respective teams of advisers and the staff of the Secretariat for their efforts to facilitate the work of B.20, highlighting that any failures of the meeting were the collective responsibility of the Board. Noting that he would continue to follow the progress of GCF closely in future, he wished the Board the best of success in its endeavours.

74 Page On behalf of the Board, the Co-Chair expressed warm appreciation for the tremendous contribution that Mr. Sach had made to GCF and to the work of the Board, especially through his creative approach and tireless efforts to facilitate consensus Subsequently, the Co-Chair read out the following message from Mr. Howard Bamsey, Executive Director of GCF: Dear Lennart, As you know, recently I have been considering the best timing for my departure from the Secretariat; pressing personal issues meant I would simply not be able to stay until the end of next year, which is when replenishment is likely to conclude. Clearly, it is much better that there is continuity in the Executive Director s role throughout such a complex and demanding process. I have concluded that it would be best for me to go in good time for the Board to have a replacement on duty before replenishment is launched. In that light, it makes sense for me to submit my resignation while you and other Board members are still in Songdo, so that you can consider initial steps towards a successor. I therefore resign from my position as Executive Director as of today. It has been an enormous privilege to work for the Fund, despite the many difficulties that it faces, now as much as ever. Best regards, Howard 554. The Co-Chair stated that, with deep regret, they had accepted the resignation of the Executive Director, which took place with immediate effect. They expressed their profound gratitude for the excellent work performed by Mr. Bamsey since his appointment in October 2016, noting that under his leadership GCF had built a portfolio of 76 programmes and projects totalling USD 3.7 billion in GCF resources. He had successfully guided the Secretariat through a period of rapid growth into a professional and highly competent staff of nearly 250 based in Songdo, Republic of Korea; and his dedication and commitment had been instrumental in accelerating the implementation of the GCF portfolio, with 30 projects worth USD 1.4 billion now under implementation. Mr. Bamsey s drive to tirelessly promote GCF around the world had been greatly appreciated by the Board, the Secretariat and GCF stakeholders the world over. In his personal capacity, Co-Chair Mr. Lennart Båge expressed deep gratitude to Mr. Bamsey for the support provided to him and his fellow Co-Chair, Mr. Paul Oquist, in 2018 and wished Mr. Bamsey the very best for the future. Lastly, the Co-Chair announced that Deputy Executive Director Mr. Javier Manzanares would serve as the Executive Director ad interim pending the appointment by the Board of a permanent replacement. Expressing thanks to all participants for their efforts at the current Board meeting, the Co-Chair closed the agenda item and convened an executive session of the Board An executive session of the Board was held The meeting was closed at 9.30 p.m. on 4 July 2018.

75 Page 72 Annex I: Updated workplan of the Board for 2018 Issue B.19 B.20 B.21 Strategies and plans Workplan of the Board Adoption of the workplan for 2019 Strategic Plan of the GCF (Decisions B.11/03; B.12/20; and B.17/05, para. (d)) Communications strategy (Decisions B.01-13/05, para. (c); B.04/14, para. (c); B.13/25, para. (f); and B.17/01, para. (b) (ii)) Guidance from the COP COP guidance and reports (Governing Instrument for the GCF, paras. 6 (a c); decisions B.17/04, paras. (b) and (d); and B.19/02) (UNFCCC decision 5/CP.19) Complementarity and coherence (Decisions B.13/12, para. (c); and B.17/04, para. (b)) (UNFCCC decisions 7/CP.21, para. 26; and 7/CP.20, para. 16) Mobilization of private sector finance to progress GCF forestry-related results areas 8 (Decisions B.12/07, para. (f); B.BM- 2017/02; and B.17/01, para. (b) (xxi)) Presentation of a comprehensive 2017 annual status report on the implementation of the Strategic Plan Incorporation of COP 23 guidance into the Board workplan Adoption of a communications strategy (Decisions B.13/25, para. (f); B.17/01, para. (b) (ii); and B.19/17, para. (b)) Approve the seventh GCF report to the COP COP report to include the report of the COP 23 annual meeting with the UNFCCC thematic bodies; and updates related to complementarity and coherence with other funds (Decisions B.13/11, para. (e); B.17/04, para. (d); and B.18/02, para. (c)) Annual report presenting the outputs from the operational framework on complementarity and coherence (to also be included in the seventh GCF report to the COP) (Decisions B.17/04, para. (b); and B.18/03, para. (e)) Addendum to the COP report; and Consideration of the Co-Chairs proposal on privileges and immunities of the GCF (UNFCCC decision 9/CP.23, para. 14, Decision B.19/02, para. (d)) Mobilization of private sector finance to progress GCF forestry-related results areas

76 Page 73 Issue B.19 B.20 B.21 Alternative policy approaches (Decisions B.12/07, para. (e); B.14/01, para. (e), and B.17/01) (UNFCCC decisions 10/CP.22, para. 4; and 7/CP.21, para. 25) Support for technology (Decision B.18/03, para. (c)) (UNFCCC decision 7/CP.21, para. 22) Committees, panels and groups Review of Committees and panel 1 (Annexes XVI XIX to decision B.05/13) Code of conduct for the Accreditation Panel 2 (Decision B.07/02, annex V, para. 14) Review of the TAP 3 (Decisions B.09/10, annex XII; B.10/09, para. (d); B.15/06, para. (c); B.17/01, para. (b) (i)); B.BM-2017/12; and B.BM- 2018/09) Presentation of TORs for the review of committees and panel Review of the structure and effectiveness of the TAP (Decisions B.10/09, para. (d); B.14/01, para. (h); B.15/06, para. (c); and B.17/01 (b) (i)) Consideration of TORs for the review of committees and panel 1 [ Continued from B.19] Consideration of the outcome of the performance review of TAP members (Decision B.BM-2017/12); Investment Committee recommendation regarding the extension of the terms of the three TAP members with contracts expiring in August 2018 (Decision B.BM-2018/09, para. (b)); Endorsement of new members nominated by the Investment Consideration of alternative policy approaches for the integral and sustainable management of forests Presentation of the TOR for a request for proposals to support climate technology incubators and accelerators (Decision B.18/03, para. (c)) Presentation of findings of the review of committees and panel Approval of a Code of conduct for the Accreditation Panel 1 Co-Chairs. 2 Accreditation Panel 3 Investment Committee.

77 Page 74 Issue B.19 B.20 B.21 Committee to be appointed to the TAP (Decisions B.BM-2018/09, para. (c); and B.19/08, para. (d)); Presentation of a proposal to accommodate the increase in funding proposals from the simplified approval process (Decision B.19/08, para. (c)); Analysis of options to accommodate the increased workload resulting from the higher number of funding proposals being processed, and an updated budget (Decision B.19/08, para. (d)); and Report on the implementation of decision B.19/08, including on: (i) Improvement of internal structures and processes; (Decision B.19/08, para. (f)); and (ii) Implementation of a periodic quality assurance process (Decision B.19/08, para. (h)) Permanent Trustee selection Competitive process for the selection of the Permanent Trustee 4 (Decisions B.08/22, para. (b); B.15/08, para. (a); B.16/05, annex II; and B.19/03) Update on: The TOR for the Permanent Trustee; Selection process and criteria, and time frame; and Approval of the announcement of the open, transparent and competitive Ad-hoc Trustee Selection Committee to report on the implementation of decision B.19/03 (Decision B.19/03, para. (i)); and Presentation of the recommended final nominee to the Board for its decision 4 Ad-hoc Committee on Trustee Selection.

78 Page 75 Issue B.19 B.20 B.21 process (Decision B.16/05, annex II) (Decision B.19/03, para. (e), annex III) Board policies and processes risk management framework Development of the risk management framework 5 Second set of components of the risk management framework (Decision B.17/11, para. (g)); and Further developed risk dashboard (Decision B.17/11, para. (d)) Adoption of the compliance risk policy (Decision B.17/11, para. (g)) Adoption of risk rating models (Decision B.17/11, para (f)); and Adoption of the legal risk policy (Decision B.17/11, para. (g)) Board policies and processes investment framework Initial proposal approval process (Decisions B.07/03; B.11/11; and B.17/09, paras. (g), (m), (n), (o) and (p)) Integrated approach to policy matters related to the approval of funding proposals Integrated approach to resolve interrelated policy issues (i) (ii) Enhancing the rationale of GCFsupported activities (Decision B.19/06, para. (d) (i)) Policy on restructuring and cancellation (Decisions B.07/03, para. (e); and B.17/09, para. (p)); [ Continued from B.19] Consideration of options for further decision-making on funding proposals (Decision B.17/09, para. (m)); and Consideration of options for the development of a two-stage proposal approval process (Decision B.17/09, para. (g)) Presentation of a proposal for an integrated approach to resolve interrelated policy issues (Decision B.19/06, para. (d)) Steps to enhance the climate rationale of GCF-supported activities (Decision B.19/06, para. (d) (i)) Update to the project and programme activity cycle as contained in decision B.17/09, annex IV (Decision B.17/09, para; (n)); and Defining the nature, scope and extent of second-level due diligence by the Secretariat (Decision B.17/09, para. (o)) 5 Risk Management Committee.

79 Page 76 Issue B.19 B.20 B.21 (iii) Annual review of the financial terms and conditions of the GCF financial instruments 3 (Decisions B.12/17, para. (c); B.15/05, para. (b); B.17/01, para. (b) (iii) and (xx); and B.19/06, para. (d) (ii)) (iv) Further guidance on concessionality, including the level of concessionality for the public sector (Decisions B.12/17, paras. (a) and (b); B.17/10, para. (c) (iv); B.BM-2017/02; and B.19/06, para. (d) (ii)) (v) Developing an incremental cost methodology (Decisions B.17/10, para. (c) (i); and B.19/06, para. (d) (ii)) (vi) Co-financing policy and co-financing arrangements with other financial institutions 1 (Decisions B.13/05; B.15/02; and B.17/10) (vii) Project and programme eligibility criteria Investment criteria indicators 3 Options for further guidance on concessionality Development and application of incremental cost calculation methodology and/or alternative methodologies Presentation of a document mapping elements included in previous Board decision and in the Governing Instrument that can contribute to strengthening project and programme eligibility criteria (Decision B.17/10, para. (b)) [Inputs to the B.19 paper invited. Updated paper to be considered at B.20] Presentation of a proposal on indicative minimum benchmarks Conclusion of the annual review of the financial terms and conditions of the GCF financial instruments, including the outcomes of the Co-Chairs consultations Options for further guidance on concessionality [ Continued from B.19] Development and application of incremental cost calculation methodology and/or alternative methodologies [ Continued from B.19] Consideration of the co-financing policy Document mapping elements included in previous Board decision and in the Governing Instrument that can contribute to strengthening project and programme eligibility criteria (Decision B.17/10, para. (b)) Consideration of a further developed proposal on investment criteria indicators

80 Page 77 Issue B.19 B.20 B.21 (Decisions B.09/05, paras. (c) and (d); B.13/02; and B.19/07, para. (b) Investment Committee) (Decision B.13/02 Investment Committee) (Decision B.19/07, para. (b)) Portfolio alignment and investment priority areas (Decisions B.09/02, para. (b); and B.17/08, para. (b)) Policy guidelines on a programmatic approach (Decisions B.13/09, para. (g); and B.14/07 para. (k)) Presentation of findings of the additional analysis of potential investment priority areas to identify specific results areas where targeted GCF investment would have the most impact (Decision B.17/08, para. (b)) [Inputs to the B.19 paper invited. Updated paper to be considered at B.20] Findings of the additional analysis of potential investment priority areas to identify specific results areas where targeted GCF investment would have the most impact (Decision B.17/08, para. (b)) Adoption of policy guidelines on a programmatic approach, taking into consideration the outcomes of the Co- Chairs consultations 1 Support to adaptation activities (Decision B.17/10, para. (c) (ii)) Policy on fees for accredited entities (Decisions B.11/10, para. (f); B.BM- 2017/02; and B.19/09) A mechanism to draw on appropriate scientific and technical advice (Decisions B.04/09, para. (d); and B.14/07, para. (o)) Revised policy on fees for accredited entities Board policies and processes results management framework Results management framework (Decisions B.08/07, para. (b); B.13/34; B.17/01 para. (b) (x); and B.19/06, para. (e) (iv)) Board policies and processes Institutional and Fund-wide policies Further development of some indicators in the performance measurement frameworks: status update Guidance and scope for providing support to adaptation activities (Decision B.17/10, para. (c) (ii)) Presentations of options for a mechanism to draw on appropriate scientific and technical advice Proposed approach to address gaps in the results management framework necessary to implement policies related to the approval of funding proposals (Decision B.19/06, para. (e) (iv))

81 Page 78 Issue B.19 B.20 B.21 Oversight of the independent units Status update (Decisions B.12/08; and B.15/02, para. (a)) Oversight of Board-appointed officials (Decisions B.12/08; and B.15/02, para. (a)) Board decision on oversight of independent units Information disclosure policy (Decisions B.12/35, paras. (b) and (g); annex XXIX, para. 28; B.17/01, para. (b) (xvii); and B.18/01, para. (g)) GCF Gender and Social Inclusion Policy (Decisions B.09/11; B.12/16; B.14/01, para. (g); and B.BM-2017/02) Indigenous Peoples Policy (Decisions B.15/01; B.17/01, para. (b) (ix); and B.19/11) Matters regarding conflicts of interest of persons engaged with the GCF (Document GCF/B.16/23 titled Decisions of the Board sixteenth meeting of the Board, 4 6 April 2017, para. 8) Decision-making in the absence of consensus 1 (Governing Instrument, Para. 14, Decisions B.08/14, para. (b); B.12/11; and B.15/02, para. (a)); Adoption of a Gender and Social Inclusion Policy Adoption of a GCF Indigenous Peoples Policy (Decision B.19/11) Approval of the modalities for the qualitative and quantitative review of the webcasting service (Decision B.12/35, para. (f), B.BM-2018/07, para. (a)) Adoption of an updated Gender Policy [ Continued from B.19] Review of the live webcasting service for formal meetings of the Board (Decision B.BM-2018/07, para. (b)); and Presentation of recommendations on the review of the relevant disclosure requirements once the environmental and social management system is developed (Decision B.12/35, para. (b)) Consideration of recommendations from the Ethics and Audit Committee on various matters regarding conflicts of interest of persons engaged with the GCF (Document GCF/B.16/23, para. 8) Decision-making in the absence of consensus (Decisions B.12/11; and B.15/02, para. (a));

82 Page 79 Issue B.19 B.20 B.21 Decision-making without a Board meeting 1 (Rules of Procedure, para. 42, Decisions B.12/12; B.15/02, para. (a); B.17/09, para. (m); and B.18/06, para. (c) (ii)); Observers Policies on ethics and conflicts of interest 6 (Decisions B.09/03, para. (b); and B.13/27, para. (b)) (Document GCF/B.16/23, para. 8) Participation of observers (Decisions B.01-13/03, annex XII, para. 17; B.05/23, para. (b); B.BM-2016/11; B.13/27, para. (b); and B.BM-2017/02) Decision-making without a Board meeting (Decisions B.12/12; B.15/02, para. (a); B.17/09, para. (m); and B.18/06, para. (c) (ii)); Policy on ethics for active observers (Decisions B.09/03, para. (b); and B.13/27, para. (b)) Presentation of the outcomes of the review of guidelines on observer participation (Decisions B.BM-2016/11; and B.BM- 2017/02) Approvals Funding proposals Consideration of funding proposals Consideration of funding proposals Consideration of funding proposals Accreditation matters Accreditation of entities 7 Status on matters related to accreditation Consideration of proposals to accredit entities Consideration of proposals to accredit entities 6 Ethics and Audit Committee.

83 Page 80 Issue B.19 B.20 B.21 Further development of the accreditation framework 1 (Fast-tracking decisions B.14/08, para. (d) (ii); B.17/01, para. (b) (xi); B.17/06, para. (e); and B.14/08, para. (f) (ii)); (Prioritization decisions B.14/08, para. (d) (ii); and B.17/01, para. (b) (xi)); (Use of third-party evidence decisions B.14/08, para. (e) (i); and B.17/01, para. (b) (xiii)); and (Adaptation Fund s Environmental and Social Policy decision B.14/08, para. (e) (iii)) Consideration of a proposal for the revision of the accreditation framework that includes other modalities for institutions to work with the GCF (Decision B.18/04, para. (b)) Consideration of the full report on the review of the accreditation framework, including the project-specific assessment approach (Decision B.19/13, paras. (b) and (e)) Initial fiduciary standards and integrity policies (Decisions B.07/02; B.12/31, para. (i); B.14/01, paras. (e) and (f); and B.14/08, para. (f)) Adoption of fiduciary compliance and integrity policies/policies relating to prohibited practices, anti-money laundering and countering the financing of terrorism 6 - Whistle-blower and Witness Protection Policy; and - Prohibited Practices Policy (Decisions B.12/31, para. (i); B.14/01, para. (e); and B.15/13); and Standards for the implementation of the Anti-Money Laundering and Countering the Financing of Terrorism Policy (Decision B.18/10, para. (b)) Integration of policies relating to prohibited practices, anti-money laundering and countering the financing of terrorism in the interim fiduciary standards (Decision B.14/01, para. (f))

84 Page 81 Baseline on the overall portfolio of accredited entities 2 Decision B.12/30, para. (d) Direct access entities Issue B.19 B.20 B.21 Environmental and social management system 7 (Decisions B.07/02, para. (n); and B.19/10) Monitoring and accountability framework (Decision B.11/10, para. (a), annex II) Implementation of the Readiness and Preparatory Support Programme (Decisions B.06/11, para. (f); B.13/09, para. (k); and B.16/01, para. (c)) Presentation of the environmental and social management system; and adoption of the Environmental and Social Policy Country programming and readiness Revised work programme for the Readiness Programme (Decision B.18/09, para. (e)); and TOR for the independent evaluation of the Readiness Programme (Decision B.18/09, para. (c)) Report on the analysis of the challenges, barriers, gaps and recommendations to achieve an increase in the amount of direct access proposals in the pipeline (Decision B.18/02, para. (d)) Progress report on the implementation of the Readiness work programme, including the status of NAPs; and Consolidated country and entity work programmes (GCF Strategic Plan ) [ Slipping from B.19] Baseline on the overall portfolio of accredited entities Decision B.12/30, para. (d) Consideration of a proposed approach to developing the GCF environmental and social safeguards standards (Decision B.19/10, para. (c)) Presentation of the first annual portfolio performance report (Decision B.11/10, para. (a), and annex II, para. 9) Progress report on the implementation of the Readiness work programme, including the status of NAPs; Findings of the independent evaluation of the Readiness Programme (Decisions B.18/09, para. (c); and B.19/16, annex XVII, section IV); and Consideration of a proposal for improving the Readiness Programme based on the outcome of the conclusions of the Secretariat s initial 7 Accreditation Committee.

85 Page 82 Issue B.19 B.20 B.21 Country ownership guidelines (Decision B.17/21) Country and entity work programmes (Decisions B.12/20; and B.17/05, para. (d)) Private sector outreach plan 8 (Decision B.13/05, para. (d); B.BM- 2017/02; and B.19/17) Private sector in LDCs and SIDS 8 (Decisions B.15/03, para. (d); and B.17/06, para. (d) (i)) (UNFCCC decision 10/CP.22, para. 11) Private sector in adaptation (Decisions B.15/03, para. (i)(ii);and B.17/06, para (d) (ii)) Private sector MSME pilot programme (Decisions B.09/09, para. (h); B.10/11, para. (b) (i); and B.13/22) Presentation of consolidated country and entity work programmes (Decision B.17/05, para. (c)) Private sector matters Presentation of PSAG recommendations on the development of a private sector outreach plan (Decisions B.13/05, para. (d); B.BM- 2017/02; and B.19/17) Presentation of PSAG recommendations on the development of modalities to support activities enabling private sector involvement in LDCs and SIDs Consolidated country and entity work programmes (Decision B.17/05, para. (c)) [ Slipping from B.19 ] Consideration of PSAG recommendations to engage the private sector, including local actors, in adaptation action at the national, regional and international levels review and of the independent evaluation of the Readiness Programme (Decision B.19/15, para. (f)) Presentation of the annual assessment of the application of the country ownership guidelines (Decision B.17/21, para. (c)) Consideration of modalities to support activities to enable domestic and international private sector actors to engage in GCF activities (Decision B.19/18, para. (b)) Presentation of TOR for request(s) for proposals for the remainder of the allocation for the MSME pilot 8 PSAG.

86 Page 83 Issue B.19 B.20 B.21 programme (Decision B.13/22, para. (f)) Resource mobilization First formal replenishment process of the GCF 1 (Decision B.12/09) Policies and procedures for contributions from philanthropic foundations and other non-public and alternative sources (Decisions B.08/13, annex XIX, paras. 5 7; B.11/05, para. (d); B.14/01, para. (i); and B.17/01, para. (b) (viii)) Independent accountability units Independent Integrity Unit Independent Evaluation Unit Independent Redress Mechanism Administrative matters Discussion on policies and procedures for the formal replenishment process Presentation of annual reports for 2017; Approval of comprehensive work programmes and budgets for the independent units for 2018 (Decision B.BM 2017/13); and Approval of the three-year rolling workplan of the Independent Evaluation Unit (Decision B.19/21, para. (a)) Presentation of policies and procedures for the formal replenishment process (Decision B.19/05, para. (b)) Policies and procedures for contributions from philanthropic foundations and other non-public and alternative sources Progress report on the independent evaluation of the Readiness Programme in the report of the Independent Evaluation Unit (Decision B.18/09, para. (c)) Pending outcomes of B.20; Including on the review of the Strategic Plan of the GCF (Decision B.19/05, para. (c)) Approval of the work programme and budget of the Unit for Approval of the work programme and budget of the Unit for 2019; and Approval of the independent evaluation policy Presentation of final report of the independent evaluation of the Readiness programme B.19/16, annex xvii, Section IV para. (b)(iii). IEU recommendations to improve the Results Management Framework (B.19/21, para. (c), annex XXI, para. 5(c)) Approval of the work programme and budget of the Unit for

87 Page 84 Administrative guidelines (Decision B.06/03, annex I) Issue B.19 B.20 B.21 Workplan and administrative budgets 9 A report on the execution of the administrative budgets for 2017; and Presentation of the draft unaudited financial statements for 2017 Revised administrative guidelines on human resources A report on the execution of the administrative budgets for 2018; and Approval of the audited financial statements for 2017 Presentation of reviewed administrative guidelines on procurement (Decisions B.12/39, para. (a); and B.17/01, para. (c)); and Administrative guidelines on information communication and technology A report on the execution of the administrative budgets for 2018; and Approval of the work programme and administrative budget for 2019 Matters to be addressed at each Board meeting Co-Chairs report, consultations and standing matters The Co-Chairs will report to each meeting on the status of consultations and will bring those matters to the attention of the Board as appropriate. The report on the activities of the Co-Chairs will include status updates on: The revised workplan following B.18 and B.19; Board decisions proposed and approved between meetings; Co-Chairs to present the performance criteria and measurement procedure of the Heads of the accountability units for adoption (Decisions B.10/05, para. (j); B.12/04; B.13/16, para. (c); and B.17/12, para. (b)); and Travel policy for the GCF (Decisions B.12/13, and B.15/02) Election of Co-Chairs Secretariat matters Report on the activities of the Secretariat, outlining the status of implementation of the Secretariat s work programme for 2018; Actions taken to include gender considerations in the activities of the GCF (Decision B.12/20, para. (d)); Status of staffing of the Secretariat (Decision B.18/11, para. (b)); 9 Budget Committee.

88 Page 85 Independent unit reports Other procedural agenda items Legal and formal arrangements with accredited entities; Status of the GCF portfolio and pipeline (Decisions B.11/11; and B.13/21, para. (d) (ix)); and status report on the PPF requests received (Decisions B.13/21, para. (d) (ix); B.13/21, para. (f); and B.17/01, para. (b) (xiv)); Status of the GCF portfolio: approved projects and fulfilment of conditions (Decision B.14/07, paras. (i) and (j)); Status of the initial resource mobilization process; and Consolidated Board document on all information reports (Decision B.18/12, para. (b)) Reports of the independent units (Independent Evaluation Unit decision B.19/21, para. (d)) Adoption of the agenda; Adoption of the report of the previous meeting; Reports from Board committees, panels and groups; Dates and venues of the following meetings of the Board (Decision B.17/24, para. (c)); and Report of the meeting Abbreviations: B = eighteenth to twenty-first meetings of the Board, COP = Conference of the Parties to the United Nations Framework Convention on Climate Change, LDCs = least developed countries, MSME = micro-, small- and medium-sized enterprise, NAP = national adaptation plan, PPF = Project Preparation Facility, PSAG = Private Sector Advisory Group, SIDS = small island developing States, TAP = independent Technical Advisory Panel, TOR = terms of reference, UNFCCC = United Nations Framework Convention on Climate Change

89 Page 86 Annex II: Terms of reference for the review of the effectiveness of committees, panels and group established by the Board I. Objective 1. The overall objective of the review is to assess the effectiveness of and lessons learned by the committees, panels and group established by the Board in supporting the Board to operate efficiently, and make recommendations to the Board in this regard, including their continued necessity. II. Scope 2. The scope of the review shall consist of: (a) (b) (c) An assessment of the effectiveness of the Board s current use of committees, panels and groups, taken as a whole, as further set out in section III; An assessment of the effectiveness of each committee, panel and group established by the Board, 3 as further set out in section IV; and Making recommendations to improve the effectiveness and efficiency of the work of the committees, panels and group to support the Board to operate more effectively and efficiently. III. Assessment of the Board s use of current committees, panels and groups 3. Taking into consideration lessons learned, this element of the review shall include: (a) (b) (c) (d) (e) An assessment of the Board s use of the committees, panels and groups as a whole, and the role they play in the Board s decision-making process, including the extent to which decisions recommended by the relevant committee, panel or group are adopted by the Board; An assessment of the level of cooperation, coordination and/or consultation among the committees, panels and group; An assessment of the distribution of responsibilities among, and comparative workload of, the committees, panels and group; An assessment of whether the current committees, panels and group address all matters that are delegated to them by the Board and/or whether there is any duplication of mandates among them; and A comparative analysis of the use of Board committees in other multilateral funds and international institutions. IV. Assessment of effectiveness of each committee, panel and group 4. This element of the review shall include an assessment of the performance, lessons learned, effectiveness, and efficiency of each committee, panel and group considering its terms 3 Except for the Accreditation Panel and the independent Technical Advisory Panel.

90 Page 87 of reference and other mandates delegated to it by the Board, and taking into account for this purpose: (a) (b) (c) (d) (e) (f) (g) (h) (i) The modality and frequency of its meetings, including arrangements for virtual meetings; The modes of operation of the proceedings of the relevant committee, panel or group; Its responsiveness to mandates delegated to it by the Board; The quality and usefulness of its recommendations to the Board; Its historic workload; The projected workload of the relevant committee or group considering the full operationalization of GCF, the ongoing implementation of the Strategic Plan for GCF and the Board s workplan for 2018, and any ongoing mandates delegated to it by the Board as well as the projected need for each committee, panel or group; The committee or group s composition, including in terms of gender balance, geographic representation and technical expertise, as well as the frequency of changes in membership; The quality and adequacy of the minutes or records of the meetings of each committee, panel or group; and The current and potential role of the committee, panel or group to add value to the institutional or operational activities of GCF. V. Deliverables 5. The outcome of the review shall take the form of a detailed report that sets out, inter alia: (a) (b) The results of the assessments described in sections III and IV of these terms of reference; and Based on the results of the assessments referred to in sections III and IV, recommendations on: (i) (ii) (iii) (iv) The usefulness of each committee, panel or group and, if the continuance of the committee, panel or group is recommended, any recommendations to increase its usefulness, efficiency, or effectiveness, including in relation to its practices, composition or activities for which it should or should not be responsible in the future, especially in regard to the activities undertaken by other committees, panels or groups. Additionally, recommendations may propose amendments to the terms of reference, or dissolution, of the relevant committee, panel or group; The establishment of any new committees to address gaps identified as part of the assessments and to enhance the Board s decision-making; Any appropriate modalities for consultation or collaboration, establishment of synergies, or exchange of information among relevant committees, panels and groups; and Any other relevant or pertinent matter based on the assessments conducted by the independent consultant or firm. VI. Methodology

91 Page The independent consultant or firm shall: (a) (b) Review the following documentation: (i) (ii) (iii) (iv) (v) The current terms of reference of each committee, panel and group; Any Board decisions mandating actions to a committee, panel or group; Reports of the committees, panels and group to the Board; Decisions adopted by the Board following a recommendation by a committee, panel or group; and Minutes or records of any meetings of a committee, panel or group; and Conduct interviews with or take written or oral input from the following persons: (i) (ii) (iii) (iv) (v) VII. Reporting Members of the committees, panels and group, including their advisers; Other members or alternate members of the Board; The Secretariat s liaison for each committee, panel or group; Staff members of the Secretariat or independent units who engage with the committees, panels or group on matters of substance; and Any other relevant source. 7. The final detailed report prepared by the independent consultant and referred to in paragraph 6 above will be presented to the Board for consideration.

92 Page 89 Annex III: Seventh Report of the Green Climate Fund to the Conference of the Parties to the United Nations Framework Convention on Climate Change Executive summary 1. The sections below summarize the milestones reached by GCF under the guidance of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) towards its objective to promote the paradigm shift towards low-emission and climate-resilient development pathways, in serving the UNFCCC and the Paris Agreement, in the period 1 November 2017 to 30 April The Board has approved USD 3.7 billion to support the implementation of 76 climate change adaptation and mitigation projects and programmes in 79 developing countries. These projects and programmes are expected to attract USD 8.8 billion in direct public and private sector co-financing. Of the USD 3.7 billion approved, USD 1.5 billion has come through the Private Sector Facility (PSF). Of the 76 projects and programmes approved, 60 per cent (46 projects) involve least developed countries (LDCs), small island developing States (SIDS) and African States. On a thematic basis, the portfolio is split 46 per cent for mitigation, 32 per cent for adaptation, and 22 per cent for cross-cutting. It is expected that these projects and programmes will abate 1.3 billion metric tonnes of carbon dioxide equivalent (CO 2 eq) of greenhouse gases in total and reach 217 million beneficiaries. Over 75 per cent of the amount allocated to adaptation is to projects and programmes to be implemented in LDCs, SIDS and African States and over 60 per cent of the total amount allocated to all approved projects and programmes is to be implemented in LDCs, SIDS and African States. The total value of the projects and programmes approved is USD 12.6 billion. 3. At its eighteenth meeting, the Board authorized, and the Secretariat subsequently launched, the Simplified Approval Process (SAP) Pilot Scheme with an allocation of up to USD 80 million in GCF financing. One SAP project has already been approved and more than threequarters of SAP submissions to date are from direct access entities and national designated authorities (NDAs), showing that the scheme is on track to reach its target of 50 per cent of SAP approvals for direct access entities. The Board approved a request for proposals (RFP) for REDD-plus results-based payments with an initial envelop of USD 500 million. The Secretariat is working with countries to bring forward high quality proposals through this initiative. At least three REDD-plus concept notes are anticipated during The Board approved an additional USD 60 million for the execution of the Readiness and Preparatory Support Programme (hereafter Readiness Programme ), bringing the total amount allocated to the programme to USD 190 million. As at 30 April 2018, a cumulative amount of USD 90.9 million had been committed or spent. USD 86.1 million had been approved for 185 readiness requests from 110 countries. Of the 110 countries, 73 were SIDS, African States and LDCs. Legal arrangements had been completed for 146 of the approved readiness proposals and USD 19.7 million had been disbursed for 109 readiness requests received from countries. 5. Fifty-nine entities had been accredited to GCF, consisting of a 54:46 balance in the number of direct access entities and international access entities. Among the 59 entities accredited, eight are private sector entities including both direct and international access entities. An additional 79 entities had completed and submitted their applications for accreditation and were in the first stage of the accreditation process (institutional assessment and completeness check) and 24 applications were under review by the independent

93 Page 90 Accreditation Panel (second stage of the accreditation process). With the aim of accrediting entities that fill the mandate on balance, diversity, coverage and advancing GCF objectives, the Board continued to prioritize entities applying for accreditation that are: national direct access entities; entities in the Asia Pacific and Eastern European regions; private sector entities, in particular those in developing countries; entities responding to requests for proposal (RFPs) issued by GCF; accredited entities seeking fulfilment of conditions for accreditation; and accredited entities requesting upgrades in their accreditation scope. 6. As at 30 April 2018, GCF has entered into bilateral agreements on privileges and immunities with 17 countries. 7. GCF continues to further strengthen its investment and operational frameworks. The Board approved both an indigenous peoples policy and an environment and social policy to ensure the positive impact of its operations. Gender aspects also factor significantly in the work of GCF, with 92 per cent of projects considered by the Board containing gender assessments and 83 per cent of projects incorporating gender action plans. An updated Gender Policy and Action Plan will be considered by the Board in July As part of the ongoing process to simplify and clarify project and programme eligibility and selection criteria, the Board is addressing policy matters arising from consideration of the initial batches of funding proposals through an integrated approach. The update to the GCF risk management framework is under way with Board adopting key risk policies and revising the approach to reporting on concentration in the risk dashboard. The Board adopted the anti-money laundering and countering the financing of terrorism policy, and further work on integrity policies, including policies relating to prohibited practices, will be considered in The Board has also taken decisions to clarify the path forward on both the selection of the Permanent Trustee and the first formal replenishment process. 8. In its capacity as depository of the selections of members of the GCF Board, the Secretariat sent a communication to the chairs and coordinators of the respective constituencies and regional groups 1 bringing to their attention the process for the selection of Board members for the third term of membership to start on 1 January 2019 and to end on 31 December The chairs and coordinators of constituencies and regional groups are invited to notify the GCF Secretariat the names and contact details of the selected members and alternate members before 30 September An update on the status of selections to the GCF Board will be provided at the twenty-first meeting of the Board, to take place in October 2018, and communicated to COP 24. For further information on this process, please see annex XI. 9. Table 1 below provides an overview of GCF progress against key results since the sixth report of GCF to the COP was delivered in August The communications were sent to the chairs of the African Group of Negotiators; the Asia-Pacific Group; the Group of Latin American and the Caribbean States; the Group of Least Developed Countries; and the Alliance of Small Island States on 29 May 2018, and coordinators of the Eastern European Group; and the Environmental Integrity Group, as well as the Chair of the Umbrella Group, and the Permanent Representative of Bulgaria to the EU on 31 May 2018.

94 Page 91 Table 1: Comparison of GCF progress against key result areas GCF Result Area 6 th Report 7 th Report Portfolio Number of approved projects Number of approved projects in SIDS/LDCs/African states Value of approved projects (GCF funding; USD billions) Total value of approved projects (GCF + co-financing; USD billions) Number of projects under disbursement Value of projects under disbursement (GCF funding, USD millions) Total GCF funding disbursed (USD millions) Breakdown of portfolio by mitigation/adaptation/cross-cutting (%) 41/27/32 46/32/22 Total number of beneficiaries (direct + indirect; millions) Total amount of CO2 equivalent abated (billions of metric tonnes) Readiness and NAP Support Number of approved readiness requests Number of approved NAP requests 3 12 Total value of approved Readiness and NAP requests (USD millions) Accreditation and legal arrangements Total number of accredited entities Number of direct access accredited entities Number of private sector accredited entities 8 9 Number of accreditation master agreements signed Number of funded activity agreements signed Number of countries entered into agreements on privileges and immunities Abbreviations: SIDS = small island developing States, LDCs = least developed countries, NAP = national adaptation plan.

95 Page 92 I. Introduction 1. Parties to the United Nations Framework Convention on Climate Change (UNFCCC) through decision 1/CP.16 established the Green Climate Fund (GCF) to be designated as an operating entity of the Financial Mechanism of the Convention under article 11 of the UNFCCC to support projects, programmes, policies and other activities in developing country Parties. 2. At its seventeenth session, the Conference of Parties (COP) to the UNFCCC through decision 3/CP.17 launched GCF and approved its Governing Instrument which stipulates that GCF is to play a key role in channelling new, additional, predictable and adequate financial resources to developing countries so as to promote the paradigm shift towards low-emission and climate-resilient development pathways to achieve the goals set by the international community to combat climate change, while accountable to and functioning under the guidance of the COP. 3. Through decision 5/CP.19, the COP agreed to the arrangements between the COP and GCF to ensure that GCF is accountable to and functions under the guidance of the COP. Accordingly, GCF receives guidance from the COP, including on matters related to policies, programme priorities and eligibility criteria, and matters related thereto; takes appropriate action in response to the guidance received; and submits annual reports to the COP for its consideration and to receive further guidance. 4. By decision 1/CP/21, the COP decided that GCF as an entity entrusted with the operation of the Financial Mechanism of the UNFCCC is also to serve the Paris Agreement, which was adopted at COP This document presents the seventh annual report of GCF to the COP. It provides an overview of actions taken in response to COP guidance and milestones reached towards its objective to promote the paradigm shift towards low-emission and climate-resilient development pathways, in serving the UNFCCC and the Paris Agreement. It covers the period of November 2017 to 30 April 2018, during which the Board held its nineteenth (B.19) and twentieth (B.20) meetings. 2 II. Accessing Green Climate Fund resources 2.1 Readiness and preparatory support 6. The Readiness Programme was put in place to enhance country ownership and to help countries access GCF resources. The programme therefore provides resources for strengthening the institutional capacities of national designated authorities (NDAs) or focal points and direct access entities to effectively engage with GCF. It also assists countries in undertaking adaptation planning and the development of strategic frameworks to build their programming with GCF. 7. In UNFCCC decision 10/CP.22, paragraph 7, the COP requested the Board to take into account decision 1/CP.21, paragraph 64, to enhance the coordination and delivery of resources to support country-driven strategies through simplified and efficient application and approval procedures, and through continued readiness support to developing country Parties. 8. By decision B.19/15, the Board approved an additional USD 60 million for the execution of the Readiness Programme, bringing the total amount allocated to the programme to USD The nineteenth and twentieth meetings of the Board were held on 26 February to 1 March 2018 and 1 to 4 July 2018, respectively, in Songdo, Republic of Korea.

96 Page 93 million. As at 30 April 2018, a cumulative amount of USD 90.9 million had been committed or spent. 9. As at 30 April 2018, GCF had engaged with 127 countries on 284 readiness requests. USD 86.1 million had been committed in the form of grants or technical assistance for 185 readiness requests from 110 countries and 109 of the requests were under implementation or had been completed. Of the 110 countries whose readiness requests were approved, 73 were SIDS, LDCs and African States. 10. USD 4.7 million had been expended on readiness events, including structured dialogues, regional workshops and NDA visits to the Secretariat, and on providing in-kind support to countries and direct access entities through the GCF accreditation process. 11. Legal arrangements had been completed for 146 of the approved readiness proposals, either in the form of bilateral grant agreements or under the GCF framework agreement with multilateral agencies, and USD 19.7 million had been disbursed to 109 readiness requests received from countries. 12. Figure 1 shows the status of the Readiness Programme as at 30 April Figure 1: USD 86.1 million in readiness resources committed to 185 readiness requests from 110 countries as at 30 April Table 11 in annex VII lists all the activities approved to receive readiness support as at 30 April Expected results from readiness support 14. Key expected outcomes of readiness support provided include: (a) The development of country programmes that form the basis for countries engagement with GCF, and development of project and programme pipelines. Recipient countries can engage with stakeholders in their countries, as well as accredited entities and the Secretariat in the structured dialogues to further develop their country programmes and pipelines of projects that implement national climate priorities identified in nationally determined contributions and other national strategies or plans;

97 Page 94 (b) (c) (d) (e) (f) (g) The strengthening of the capacity of NDAs to engage stakeholders in their countries to conduct dialogues and consultations, particularly on GCF country programmes; The provision of support to direct access entities in the accreditation process of GCF, from identification through to accreditation and, once accredited, the development of their capacities to build their pipelines of projects and programmes as articulated in their entity work programmes, and to effectively implement projects and programmes funded by GCF; The establishment of transparent and efficient no-objection procedures in countries; The engagement of the private sector and the mobilization of private sector finance in countries for climate action; The establishment or strengthening of national adaptation planning processes; and The strengthening of knowledge-sharing and learning through regional structured dialogues and other events, which are in addition to readiness grants and technical assistance provided to countries Support for national adaptation plans and/or other adaptation planning processes 15. The COP, in decision 1/CP.21, paragraph 46, requested the Board to expedite support for the LDCs and other developing countries for the formulation of national adaptation plans (NAPs), consistent with decisions 1/CP.16 and 5/CP.17, and for the subsequent implementation of policies, projects and programmes identified by them. In response to this guidance, through decision B.13/09, the Board decided to expedite support for developing countries for the formulation of NAPs consistent with decisions 1/CP.16, 5/CP.17 and 1/CP.21, paragraph 46, and for the subsequent implementation of projects, policies and programmes identified by them. The Board also invited NDAs and focal points to collaborate with readiness delivery partners and accredited entities to submit requests for support to formulate their NAPs and/or other adaptation planning processes. 16. The Board established a separate activity area under the Readiness Programme for the formulation of NAPs, and delegated authority to the Executive Director to approve up to USD 3 million to support the formulation of NAPs and other national planning processes, taking into consideration the UNFCCC NAP technical guidelines3 and the importance of coordination and complementarity with other NAP-related initiatives and support. 17. As of 30 April 2018, the Secretariat had approved 12 proposals (from Antigua and Barbuda, Argentina, Bangladesh, Bosnia and Herzegovina, Colombia, Democratic Republic of Congo, Kenya, Liberia, Nepal, Niger, Pakistan, and Uruguay), and had received NAP proposals from 37 additional countries, namely: Albania, Armenia, Benin, Bhutan, Cameroon, Costa Rica, Cote d Ivoire, Commonwealth of Dominica, Dominican Republic, Ecuador, Egypt, Ghana, Guatemala, Haiti, Honduras, Iraq, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mongolia, Montenegro, Myanmar, Nigeria, Papua New Guinea, Serbia, Seychelles, South Sudan, Sudan, Swaziland, United Republic of Tanzania, Uganda, Uruguay, Uzbekistan and Zimbabwe Support for direct access entities 18. In decision 7/CP.20, paragraph 13, the COP requested the Board, in its implementation, to pay adequate attention to the priorities and needs of developing country Parties, including 3 Least Developed Countries Expert Group Least Developed Countries: National Adaptation Plans: Technical Guidelines for the National Adaptation Plan Process.

98 Page 95 the LDCs, SIDS and African States, emphasizing the need to provide readiness support to those national and regional entities eligible for fast tracking upon request. 19. As at 30 April 2018, GCF had provided in-kind accreditation support to 185 entities nominated by the NDAs and focal points of 83 countries in African, Asia-Pacific, and Latin American and Caribbean States. Among them, technical assistance support had been approved for 29 direct access entities nominated by 33 countries for in-depth assessments of their institutional capacity, and fiduciary, environmental and social safeguards and gender standards against GCF accreditation requirements. To date, 19 of the entities nominated by 16 countries had received technical assistance enabling completion of their institutional gap assessments and preparation of action plans to address any gaps identified in order to meet GCF accreditation requirements. As of the same date, a total of USD 746, has been disbursed for the implementation of this support. 20. Following provision of the technical assistance, six entities had submitted their applications for accreditation (Stage I of the accreditation process); accreditation applications of two entities were under review (Stage II of the accreditation process); and two entities (Central American Bank for Economic Integration and Micronesia Conservation Trust) had been accredited. The institutional gap assessments reduce the time taken for reviews undertaken at Stage I and Stage II and help entities to accelerate through the accreditation process. 21. A user-friendly version of the online GCF accreditation self-assessment tool4 is available on the GCF website. The tool provides stakeholders interested in accreditation with insights into the fit-for-purpose accreditation requirements of GCF. Since its launch, more than 350 users, including NDAs, focal points and entities, have completed the assessment Evaluation of the Readiness Programme 22. By decision B.19/16, the Board approved the terms of reference for the independent evaluation of the Readiness Programme that will be undertaken by the Independent Evaluation Unit (IEU), with the aim of initiating and concluding the independent evaluation by July By decision B.19/15, the Board requested the Secretariat to submit to the Board a proposal for improving the Readiness Programme based on the outcome of the Secretariat s initial review 5 and of the independent evaluation of the Readiness Programme as soon as it is concluded. 2.2 Accreditation to GCF 24. Access to GCF resources for the implementation of adaptation and mitigation is through entities accredited to GCF. Accredited entities play a key role in working with developing countries to bring forward funding proposals and, once approved by GCF, to oversee the implementation of the projects and programmes in countries and monitor and report on the results achieved. The COP, by decision 7/CP.20, paragraph 13, encouraged the timely implementation of the GCF accreditation framework, and in decision 7/CP.21, paragraph 16, 4 The online GCF accreditation self-assessment tool is available at < 5 Findings of the initial review by the Secretariat of the Readiness Programme were submitted to the Board at its nineteenth meeting and are available at < _Readiness_and_Preparatory_Support_Programme Revised_Work_Programme_for_2018 Addendum_I Final_rep ort_from_dalberg_on_the_initial_review_of_the_readiness_programme.pdf/e3bdea93-7ff1-42b3-92decb2aaafdc05b>.

99 Page 96 urged the Board to streamline the accreditation modalities and to seek a balance of diversity in accredited entities. 25. GCF adopted the fit-for-purpose approach to accreditation, so that entities are accredited according to the project size category, financial activity and level of environmental and social risk of the projects and programmes that they intend to bring to GCF. 26. As at 30 April 2018, a total of 59 entities had been accredited to GCF, including 32 direct access entities (21 national, of which two are private sector entities, and 11 regional direct access entities, of which one is a private sector entity) and 27 international access entities (of which 6 are private sector entities). This represents an increase in the proportion of the number of direct access entities in the total portfolio of accredited entities from 50 per cent on 31 July 2017 (the cut-off point for reporting in the fifth report of GCF to the COP) to 54 per cent. The Governing Instrument establishes that countries will determine the mode of access, and both the direct access and international access modalities can be used simultaneously. 27. Of the 59 entities accredited, 42 had signed accreditation master agreements (AMAs) with GCF, thereby completing the accreditation process. 28. As at 30 April 2018, an additional 210 entities were seeking accreditation to GCF and were at various stages of the accreditation process. Of these, 107 entities had gained access to the GCF online accreditation system and are preparing their applications for submission; 79 entities had submitted their applications and are under Stage I of the accreditation process for institutional assessment and completeness checks; 24 were under Stage II (Step 1), the review by the independent Accreditation Panel which makes recommendations to the Board regarding the accreditation of entities. 29. Figure 2 shows the status of the accreditation pipeline as at 30 April 2018.

100 Page 97 Figure 2: Pipeline of entities in the various stages of the application process as at 30 April At its fourteenth meeting, the Board, with the aim of bringing forward accredited entities that fill the mandate on balance, diversity, coverage and advancing the objectives of GCF, established a prioritization of entities applying for accreditation, applicable from October 2016 to the end of the twentieth meeting of the Board (B.20) in July To this end, the Board prioritizes the following: (a) (b) (c) (d) (e) (f) National direct access entities; Entities in the Asia Pacific and Eastern European regions; Private sector entities, in particular those in developing countries, seeking a balance of diversity of entities in line with decisions B.09/07, paragraph (g), and B.10/06, paragraph (h); Entities responding to RFPs issued by GCF, for example including a pilot phase for enhancing direct access; a pilot programme to support micro, small, and medium-sized enterprises (MSMEs); and a pilot programme to mobilize resources at scale in order to address adaptation and mitigation; Accredited entities seeking fulfilment of conditions for accreditation; and Accredited entities requesting upgrades in their accreditation scope. 31. As at 30 April 2018, the Secretariat had received a total of seven applications from accredited entities to upgrade their accreditation types, of which two upgrades were approved by the Board. The remaining five entities include three direct access accredited entities and two international access accredited entities. The upgrade applications from one direct access accredited entity and one international access accredited entity are under Stage II (Step 1)

101 Page 98 review by the independent Accreditation Panel, and three remaining applications are currently under Stage I of the accreditation process. 32. The Board is scheduled to consider additional applications for accreditation at upcoming Board meetings. The Board is also to further consider matters related to the review of the accreditation framework. 33. Annex VI lists all the entities accredited to GCF as at 30 April Support for adaptation and mitigation actions 34. The Board, as at its nineteenth meeting (B.19), had approved USD 3.7 billion to support the implementation of 76 climate change adaptation and mitigation projects and programmes in 79 developing countries. The GCF portfolio contains 46 projects and programmes that involve LDCs, SIDS and African States. It is expected that the projects and programmes will abate a total of 1.3 billion Mt CO 2 eq and reach 217 million beneficiaries. The total value of the projects and programmes approved is USD 12.6 billion. 35. In nominal terms, of the USD 3.7 billion approved by the Board, 46 per cent is allocated through the mitigation window, 32 per cent through the adaptation window and 22 per cent cuts across the adaptation and mitigation windows. By disaggregating the cross-cutting projects and programmes, USD 2.3 billion (62 per cent) is allocated for mitigation projects and USD 1.4 billion (38 per cent) is allocated for adaptation projects Figure 3 below shows the GCF Portfolio by region, impact, and thematic windows. Figure 3: GCF Portfolio by region, impact, and thematic windows 37. The COP, in decision 7/CP.20, paragraph 13, requested the Board in its implementation, to pay adequate attention to the priorities and needs of developing country Parties, including LDCs, SIDS and African States. Over 75 per cent of the amount allocated to adaptation projects and programmes will be implemented in LDCs, SIDS and African States. 38. The current portfolio of GCF comprises 60 public sector projects and programmes, totalling USD 2.2 billion. The private sector portfolio contains 16 projects and programmes with 6 In terms of grant equivalency, 61% of the portfolio is dedicated to adaptation, and 39% to mitigation. The grant equivalents were estimated for each project using a uniform 5% discount rate. The Grant Equivalent Calculator (GEC) tool developed by the Office of Risk Management and Compliance of the GCF to measure the grant-like element embedded in GCF financing has been used for the calculations. The breakdowns by mitigation and adaptation for cross-cutting projects are preliminary estimates for all approved projects through B.19 based on the best information available to the Secretariat. The methodology to segregate the mitigation and adaptation components and the discount rate approach continues to be improved, so there may be modifications to the data in the coming months.

102 Page 99 a total GCF contribution of USD 1.5 billion, utilizing a wide range of financial instruments as provided for in the Governing Instrument. Taken together, these projects and programmes are expected to attract USD 8.8 billion in direct public and private sector co-financing. 39. Figure 4 provides an overview of the financial instruments applied and the combined cofinancing in the current GCF portfolio. Figure 4: Instruments in the GCF portfolio and co-financing 40. More details on the projects and programmes approved to receive GCF funding as at 30 April 2018 are provided in annex VII. The Board will continue to consider additional funding proposals at upcoming Board meetings Alignment of the GCF portfolio with the initial results management framework 41. In the arrangements between the COP and GCF, the COP requested the Board to indicate actions undertaken to balance the allocation between adaptation and mitigation activities. In line with decision B.09/02, with project approvals over USD 2 billion, the Board at its seventeenth meeting considered actions to align the portfolio composition with the initial results management framework, which consists of an equal number (four each) of adaptation and mitigation result areas. In order to align the portfolio composition with the initial results management framework, the Board by decision B.17/08 requested the Secretariat: (a) (b) (c) To undertake targeted outreach to promote partnerships between accredited entities and those potential non-accredited entities that have the technical expertise to support targeted result areas; To prepare targeted RFPs for Board consideration as appropriate; and To work with accredited entities to ensure that the financial terms and conditions proposed in concept notes and funding proposals for concessional loan products meet the principles agreed by the Board, and to apply these in a fit-for-purpose manner. 42. The Board by decision B.17/08 also requested the Secretariat to undertake additional analysis, taking into consideration potential investment priority areas considered by the Board at its ninth meeting, to identify specific result areas where targeted GCF investment would have the most impact. 43. In line with decision B.06/06 and paragraph 3 of the Governing Instrument, the Board will continue to aim to maintain a balance between mitigation and adaptation over time as it considers further projects and programmes at its meetings.

103 Page Simplified approval process 44. Through decision 7/CP.21, paragraph 14, the COP requested the Board to adopt a simplified process for approval of proposals for certain activities, in particular for small-scale activities to reduce complexities and costs involved in project proposal development and to move efficiently from project conception to implementation. 45. The Board by decision B.18/06 approved the Simplified Approval Process (SAP) Pilot Scheme with an allocation of up to USD 80 million in GCF financing, and requested the Secretariat to operationalize the pilot as expeditiously as possible. The decision simplifies the approval process for certain funding proposals in two ways: (a) (b) The supporting documentation to be provided with the funding proposal is reduced; and The review and approval processes are streamlined. Projects or programmes eligible under the SAP pilot are those ready for scaling up and having potential for transformation, promoting a paradigm shift to low-emission and climate-resilient development; projects or programmes with a GCF contribution of up to USD 10 million; and projects or programmes whose environmental and social risks and impacts are classified as minimal to none. 46. The SAP pilot is to be reviewed two years from its operationalization, or when the aggregate approvals under the pilot reach USD 80 million, whichever is earlier, with a view to further improving the efficiency and effectiveness of the process, considering expanding the type of eligible activities and to increasing GCF funding. 47. Following the Board approval at the eighteenth meeting in October 2017, the SAP Pilot Scheme was launched at COP 23 in November By March 2018 at B.19, the first SAP project, submitted by the Environmental Investment Fund of Namibia, 7 was approved by the Board. 48. As at 30 April 2018, the SAP pipeline consisted of 13 public-sector proposals: two funding proposals and 11 concept notes. Seventy-seven per cent of the submissions were submitted by direct access entities and NDAs. 49. To increase and enhance the SAP pilot pipeline and portfolio, the Secretariat has been undertaking various communications and outreach activities, as well as direct engagement with NDAs and accredited entities. The SAP pilot concept note template and the simplified format for the funding proposal template are now available on the GCF website. 2.5 Policy matters related to the approval of funding proposals Review of the initial proposal approval process 50. Following decisions B.17/09 and B.17/10 to develop and update GCF policies and procedures, the ongoing work of GCF included revisiting policy gaps. By decision B.19/06, the Board took note of the linkages between matters related to policy gaps identified in decision B.11/11 with matters related to incremental costs and concessionality, as well as the GCF 7 Further information on SAP001: Improving rangeland and ecosystem management practices of smallholder farmers under conditions of climate change in Sesfontein, Fransfontein, and Warmquelle areas of the Republic of Namibia is available at <

104 Page 101 results management framework, initial investment framework, country programmes and entity work programmes, and risk management framework. 51. Noting that addressing these policy gaps requires an integrated approach that considers their interlinkages, the Board requested the Secretariat to develop such an integrated approach to resolve these interrelated issues for consideration by the Board, including: (a) (b) Steps to enhance the climate rationale of GCF-supported activities; and Policies on the review of the financial terms and conditions of GCF instruments and concessionality, incremental costs, full costs and co-financing. 52. Pursuant to decision B.19/06 paragraph (f), the Board instructed the Secretariat to include a capacity-building strategy in its development of such approaches to support NDAs/focal points and accredited entities, and in particular direct access entities, to incorporate these policies. 53. The Board is also to consider a proposal on investment criteria indicators and options for the independent Technical Advisory Panel to accommodate the increase in funding proposals from the simplified approval process and regular funding proposals process Strengthening and scaling up the pipeline 54. As at 30 April 2018, the GCF pipeline is comprised of 66 public- and private-sector funding proposals, which request a total GCF funding of USD 3.9 billion to support projects and programmes totalling USD 17.7 billion, when taking co-financing into account. Since the eighteenth meeting of the Board (B.18), the Secretariat has received 28 new funding proposals from accredited entities and NDAs, which are at the different review stages of completeness check and second level of due diligence depending on the quality of the proposals. 55. The GCF pipeline includes 179 public and private concept notes, which request a total GCF funding of USD 10.7 billion, totalling USD 36.6 billion when taking co-financing into account. Since B.18, the Secretariat has received 58 new concept notes, including 13 SAP projects, from accredited entities and NDAs. 56. Among efforts to further scale up the pipeline with high quality projects, the Secretariat is drafting the sectoral/results areas guidelines, aiming to provide a first draft version to the public by the end of Update to the GCF risk management framework 57. In decision 7/CP.21, paragraph 18, the COP requested the Board to prioritize the development of its initial risk management framework. 58. By decision B.17/11, the Board adopted the first set of components of the updated risk management framework, which included: (i) the revised risk register; (ii) risk appetite statement; (iii) risk dashboard; and (iv) risk guidelines for funding proposals. This decision replaced the interim versions of certain components such as the initial risk register, dashboard and risk guidelines for the public and private sectors which were adopted pursuant to past Board decisions. The updated risk management framework complements the financial risk management framework adopted pursuant to decision B.07/05. The risk dashboard and the underlying methodologies were to be further developed and considered by the Board. 59. By decision B.19/04, the Board adopted an update to the risk dashboard with the revised approach to reporting on concentration and requested the Secretariat to publish the updated risk dashboard every quarter. The first publication of the risk dashboard is planned for May By the same decision, the Board also adopted the second set of components of the

105 Page 102 risk management framework, which included three policies governing investment risk, nonfinancial risk and funding risk. 60. Work to develop the remaining components of the risk management framework, including risk rating/scoring models and risk policies managing compliance and legal risks is ongoing and will be presented to the Board at subsequent meetings for its consideration. 2.6 Disbursement of resources for the implementation of approved projects and programmes 61. The COP, in decision 10/CP.22, paragraph 10, requested the Board to enhance the delivery of resources by addressing those measures that are delaying the implementation of projects that have been approved by the Board, including the conclusion of pending accreditation master agreements and funded activity agreements. 62. An accreditation master agreement (AMA) is the central instrument in the relationship between GCF and an accredited entity. It sets out the basic terms and conditions as to how the accredited entity and GCF can work together for the use of GCF resources. Once entities are accredited to GCF, an AMA between GCF and the accredited entity is to be signed as the last step in the accreditation process. The Board, though decision B.12/31, paragraph (f), requested the Executive Director of the Secretariat, as a matter of urgency, to prioritize the execution of AMAs with those entities accredited by the Board. The Secretariat continues to make every effort to expedite the conclusion of legal agreements to pave the way for project implementation. 63. AMAs have been signed with 42 of the 59 entities accredited to GCF as of 30 April Out of the 76 projects and programmes approved, FAAs for 32 projects have been signed, corresponding to USD 1.43 billion of GCF funding. 64. As at 30 April 2018, the number of projects and programmes receiving disbursements has increased to 20 of the 76 approved projects. The 20 projects under disbursement are valued at over USD 651 million in GCF funding and are active in 20 countries. Disbursements totalling USD million have been made to date. Of that amount, USD 93.9 million (59 per cent) has been disbursed for three private sector projects, and USD 64.2 million (41 per cent) for 17 public sector projects. 65. To date, a total of 26 projects and programmes have effective Funded Activity Agreements (FAAs), allowing them to move to implementation. With this progress, disbursements are expected to continue accelerating in Status of resources and arrangements for the formal GCF replenishment process 66. Pledges to GCF in the initial resource mobilization period as at 30 April 2018 amount to USD 10.3 billion equivalent. The pledges are from 43 countries, three regions and one city, 34 of which are developed and nine are developing countries. Approximately USD 10.2 billion of the pledges had been converted into contribution agreements/arrangements, representing 99 per cent of the total pledged amount. GCF continues to work with the relevant contributors on conversion of the remaining pledged amounts into signed contributions or arrangements. Annex IV provides details of the status of pledges and contributions as at 30 April Figure 5: Amount pledged to the GCF in the initial resource mobilization period and signed contribution arrangements as at 30 April 2018

106 Page 103 Total amount announced: USD 10.3 billion* USD billion* USD million* 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Total amount announced and signed Total amount announced but not signed * Amounts indicated are in United States dollars equivalent (USD eq.) 67. The initial resource mobilization period for GCF continues, and new pledges are accepted on an ongoing basis Arrangements for the formal GCF replenishment process 68. The COP, by decision 9/CP.23, encouraged the Board to launch the first GCF replenishment process in accordance with previous decisions of the COP and the Board. At the subsequent meeting of the Board (B.19), the Board adopted decision B.19/05 to advance work under its 2018 work programme to conclude the essential preparatory arrangements for the first formal replenishment process and requested the Co-Chairs, with the support of the Secretariat, and in consultation with members of the Board, to oversee the preparation of necessary policies and procedures for the formal replenishment process. The Secretariat is scheduled to present a document on the matter to the Board for its consideration at B.20. Also, the Co-Chairs, with the support of the Secretariat, are planning for consultation meetings among Board members to discuss the formal replenishment process. III. Support for forest-related actions 69. In line with the mandates of GCF as established by the COP, GCF is to promote the paradigm shift towards low-emission and climate-resilient development pathways and support the implementation of the Paris Agreement. These are the two strategic objectives of the GCF Strategic Plan for Accordingly, this document outlines operationalization of REDDplus as one of the key actions that the Board will take in promoting pipeline development and fulfilling the GCF mandate. 70. In decision 10/CP.22, paragraph 4, the COP urged the Board to finalize in a timely manner its work related to the guidance of the COP on financing for forests as mandated by decision 7/CP.21, paragraphs Operationalizing results-based payments for REDD-plus 71. Building on the REDD-plus logic model and performance measurement framework for ex-post REDD-plus results-based payments adopted at its eighth meeting, the Board in decision B.12/07, paragraph (d) requested the preparation of a document allowing for the operationalization of results based payments for REDD-plus activities. Subsequently, the Board mandated through decision B.14/03 the development of a RFP for REDD-plus results-based

107 Page 104 payments, including guidance consistent with the Warsaw Framework for REDD-plus and other REDD-plus UNFCCC decisions. Decision B.14/03 also mandated the development of further guidance to support efforts by NDAs and focal points to engage with GCF in the early phases of REDD-plus. 72. By decision B.18/07, the Board approved the REDD-plus RFP and all necessary templates were subsequently published for immediate use. The pilot is now open for applications but has not yet received any, although frequent communication exchanges with several NDAs are being conducted since its approval. The Secretariat has developed further guidance documents that will be posted on the website prior to B.20. It is expected that approximately three Concept Notes will be received by the end of Private sector engagement on forest finance 73. In decision B.12/07, paragraph (f), the Board invited the Private Sector Advisory Group (PSAG) to make recommendations on the mobilization of private sector finance to progress GCF forestry-related areas. 74. The PSAG held a meeting from 28 February to 1 March 2018 in Songdo, South Korea to discuss this request from the Board. A background document was prepared by the Secretariat to initiate and facilitate the discussion. PSAG recommendations to the Board on private sector engagement on forest finance are scheduled to be presented to the Board at its twenty-first meeting in October Alternative policy approaches for the integral and sustainable management of forests 75. In decision B.12/07, paragraph (e), the Board requested the Secretariat to prepare a document regarding alternative policy approaches, such as joint mitigation and adaptation approaches for the integral and sustainable management of forests consistent with decisions 16/CP.21, paragraph 6, and 7/CP.21, paragraph 25. The Secretariat is analysing options to implement the alternative policy approaches and is scheduled to present a document on the matter for consideration at the twenty-first meeting of the Board in October Further guidance for national designated authorities and focal points on how to engage with GCF in the early phases of REDD-plus 76. By decision B.17/19, the Board encouraged NDAs and focal points to access readiness support directly, or to collaborate with readiness delivery partners and accredited entities to submit readiness requests for the early phases of REDD-plus, using the existing modalities for accessing readiness and preparatory support. The Board also encouraged NDAs and focal points to collaborate with accredited entities to submit concept notes, project preparation facility (PPF) requests and funding proposals that will facilitate support for the early phases of REDDplus. 77. In the same decision, the Board requested the Secretariat to prepare appropriate communication material to facilitate access to the information presented in the guidance document for early phases of REDD-plus, and to update the information provided in the light of future Board decisions when needed. The Secretariat has created the following communication materials to respond to the Board request:

108 Page 105 (a) (b) GCF in Brief: REDD-plus 8 pamphlet that presents key information on GCF support for REDD-plus in a compact format; and A webinar series scheduled to cover different time zones for providing further information on GCF funding modalities for REDD-plus implementation. 78. The Board and the Secretariat will continue to provide guidance for NDAs and focal points to facilitate engagement with GCF in the early phases of REDD-plus. IV. Support for technology 79. By decision B.14/02, the Board confirmed that current GCF modalities enable support for technology development and transfer, including for facilitating access to environmentally sound technologies and for collaborative research and development. 80. The Board, in decision B.18/03, paragraph (b), encouraged NDAs/focal points to submit readiness requests, concept notes, funding proposals and PPF proposals supporting technology collaborative research and development. The Board also requested the Secretariat to develop for consideration by the Board the terms of reference for a RFP to support climate technology incubators and accelerators (I&As). 81. By decision 9/CP.23, paragraph 18, the COP encouraged GCF to report information on projects approved by the Board that support the innovation and/or scaling up of climate technologies. The Board responded in decision B.19/02, paragraph (c), requesting the Secretariat to include in the annual report to the COP information on projects approved by the Board that support the innovation and/or scaling up of climate technologies. This section addresses these mandates and provides further details on GCF support for facilitating access to environmentally sound technologies, collaborative research and development for developing countries, and for innovation and/or scaling up of climate technologies. 4.1 Support for technology through the GCF Readiness Programme 82. In decision B.18/03, paragraph (d), the Board requested the Secretariat to continue collaborating with the Technology Mechanism in implementing support for technology. As at 30 April 2018, GCF has received nine readiness requests submitted by NDAs and focal points with the Climate Technology Centre and Network (CTCN) 9 of the Technology Mechanism as delivery partner. Beyond the capacity-building provided with all readiness projects, the support for technology provides a window for communication between the NDA and national designated entities (NDEs). 10 It also further enables access to finance for action on mitigation and adaptation priorities of requesting countries. 83. As at 30 April 2018, the nine CTCN submissions request over USD 2.5 million in GCF support, of which five have been approved, for a total commitment of USD 1.4 million. The Secretariat will continue to work with countries and the CTCN in this effort. 84. In order to assist NDAs, focal points, and NDEs to formulate proposals for technologyrelated readiness support, the Secretariat has undertaken a revision of the readiness guidebook to include technology outcomes, sub-outcomes, baselines and targets. The revised guidebook 8 GCF in Brief: REDD-plus available at < +REDD%2B/6ad a066-8a8e622edacd>. 9 The United Nations Environment Programme (UNEP) hosts the CTCN in collaboration with the United Nations Industrial Development Organization (UNIDO) and the support of a global consortium of partners. For the purposes of the GCF Readiness Programme, UNEP-CTCN is the delivery partner. 10 National designated authorities/ndes are the in-country focal points for the UNFCCC Technology Mechanism.

109 Page 106 provides clear guidance on how countries can use readiness resources to enhance the deployment of climate technologies by: (a) (b) (c) (d) Establishing effective coordination between NDAs and NDEs; Identifying and prioritizing appropriate climate technologies in accordance with national strategies and plans for climate adaptation and mitigation, including development of roadmaps for prioritized technologies; Conducting feasibility assessments of selected climate technologies for mitigation and adaption; and Strengthening the enabling environment for supporting technology deployment, including market preparation and roll-out strategy development. 4.2 Support for technology through projects and programmes Development of an approach to track technology-related GCF support 85. Paragraphs 35 and 38 of the Governing Instrument mandate that GCF will finance agreed full and agreed incremental costs for activities to enable and support enhanced technology development and transfer, including innovative approaches. Subsequent Board decisions, as referenced above and in addition to others, reaffirm this mandate. 86. The GCF investment framework elaborates activity sub-criteria and assessment factors for adaptation and mitigation funding proposals, adopted by decision B.09/ The investment framework contains activity sub-criteria and/or assessment factors relevant to low-emission or climate-resilient technologies. Accredited entities are expected to develop funding proposals with due consideration of the investment criteria and the relevant activity-specific sub-criteria and indicative assessment factors, including: (a) (b) (c) (d) (e) Potential for strengthened regulatory frameworks and policies to drive investment in low-emission technologies and activities, promote development of additional lowemission policies, and/or improve climate-responsive planning and development; Opportunities for targeting innovative solutions, new market segments, developing or adopting new technologies, business models, modal shifts and/or processes; Degree to which the programme or project reduces proposed risks of investment in technologies and strategies that promote climate resilience in developing countries; Contribution of the programme or project to country s priorities for low-emission and climate-resilient development and demonstration of alignment with technology needs assessments (TNAs); and Explanations of how best available technologies and/or best practices, including those of indigenous peoples and local communities, are considered and applied. 87. The Secretariat has recently undertaken a comparative analysis of mitigation and adaptation key performance indicators (KPIs), associated targets, and systems on measurement, reporting and verifications (MRVs) of GCF with those of other climate finance delivery channels, and harmonized as part of the complementarity and coherence approach KPIs and MRVs as a basis for the further development of an approach to tracking technology-related support. During the exercise, technology-related indicators have either been identified or revised to better reflect the impact achieved through mitigation and adaptation projects and programmes. 11 The six GCF investment criteria are: impact potential, paradigm shift potential, sustainable development potential, needs of the recipient, country ownership, and efficiency and effectiveness.

110 Page 107 This will also inform the Technology Mechanism of the UNFCCC as the Board undertakes further work on climate technology innovation by considering adoption of technology-related indicators in the performance measurement frameworks (PMFs). 88. GCF will continue to update the COP on the progress of this tracking approach in future GCF annual reports Examples of support for technology in the GCF portfolio 89. Early results of the application of the tracking approach reveal the GCF portfolio contains many examples of support for technology as well as capacity-building and enabling environment support to stimulate the uptake of climate technology, beginning from the first package of proposals approved by the Board in The support cuts across the mitigation and adaptation windows of GCF, and includes capacity-building, technical assistance and other enabling activities. 90. Table 2 below provides a non-exhaustive, indicative presentation of the types of support for technology provided through GCF projects and programmes. Further information on these projects is available on the GCF website. 12 The 11 projects and programmes included in Table 2 provide support to countries in all regions, including LDCs, SIDS and Africa. Three projects and programmes finance private sector activities (FP025, FP028, and FP078), and five are implemented by direct access entities (FP028, FP035, FP045, FP060, and FP078). Table 2: Examples of support for technology in the GCF portfolio Project title Result areas Technology component Cross-cutting (mitigation and adaptation) FP025 - Scaling up private sector climate finance through local financial institutions (GCF-EBRD SEFF co-financing Programme in Armenia, Egypt, Georgia, Jordan, Republic of Moldova, Mongolia, Morocco, Serbia, Tajikistan, Tunisia) FP040 Scaling Up Hydropower Sector Climate Resilience in Tajikistan FP060 Water Sector Resilience Nexus for Sustainability in Barbados Adaptation Energy generation and access; health, food and water security; infrastructure and built environment Energy generation and access; health, food and water security; livelihoods of people and communities; infrastructure and built environment Energy generation and access; health, food and water security; Livelihoods of people and communities Transfer of high performance EE, RE, and CR climate technologies to developing countries, investments in supply chains and local manufacturing to ensure the availability of these technologies locally Scale up the adoption of climate resilience practices and technologies in the Tajik hydropower sector Promotion of renewable energy technologies usage to increase water security via the installation of photovoltaic solar and backup natural gas power for pumping stations Estimated impact target a 27.5M tco2; 72,840 beneficiaries 7.5M tco2; 11M beneficiaries 220.2K tco2; 473,998 beneficiaries 12 GCF Portfolio available at <

111 Page 108 Project title Result areas Technology component FP002 Scaling Up of Modernized Climate Information and Early Warning Systems in Malawi FP035 Climate Information Services for Resilient Development in Vanuatu FP045 Ground Water Recharge and Solar Micro Irrigation to Ensure Food Security and Enhance Resilience in Vulnerable Tribal Areas of Odisha (India) FP078 Acumen Resilient Agriculture Fund (ARAF) (Uganda, Ghana, Nigeria) Mitigation FP010 De-risking and Scaling-up Investment in Energy Efficient Building Retrofits in Armenia FP028 Business loan Programme for GHG Emissions reduction in Mongolia FP033 Accelerating the Transformational Shift to a Low-Carbon Economy in the Republic of Mauritius FP071 Scaling Up Energy Efficiency for Industrial Enterprises in Vietnam Livelihoods of people and communities Health, food and water security; livelihoods of people and communities; ecosystems and ecosystem services; infrastructure and built environment Health, food and water security; livelihoods of people and communities Health, food and water security; livelihoods of people and communities Buildings, cities, industries and appliances Energy generation and access; buildings, cities, industries and appliances Energy generation and access Buildings, cities, industries and appliances Investments in climate information and early warning systems Expansion of the use of Climate Information Services in five targeted sectors: tourism, agriculture, infrastructure, water management and fisheries. Enhancement of ground water recharge in the community ponds through structural adaptation measures, and the use of solar pumps for micro irrigation Investment in aggregator platforms, digital platforms, innovative financial services Identification of and derisking measures for market barriers to EE technology deployment, building off Armenia s TNA Promotion of both energy efficient and renewable energy technologies in the Mongolian MSME market, building off Mongolia s TNA Promotion of renewable energy technologies, remove underlying barriers to sustainable use of the PV technology, implement technology-oriented grid absorption capacity solutions Scaling up of usage of energy efficiency technologies in the country's industrial sector Estimated impact target a 2.1M beneficiaries 260.7K beneficiaries 16.0M beneficiaries 10M beneficiaries 1.4 M tco2 eq 1.2M tco2 eq 4.3M tco2 eq 120M tco2 eq Abbreviations: EE = energy efficiency, RE = renewable energy, CR = climate resilience, FP = funding proposal, GCF- EBRD SEFF = Green Climate Fund-European Bank for Reconstruction and Development-Small Enterprise Financing Facility, GHG = greenhouse gas, MSME = micro, small and medium-sized enterprises, PV = photovoltaic, RE = renewable energy, TNA = Technology Needs Assessment, M = million, K = thousand. a Measured by GCF core indicators: (1) Expected tonnes of carbon dioxide equivalent (t CO2 eq) to be reduced or avoided (mitigation only); (2) Expected total number of direct and indirect beneficiaries with increased resilience, disaggregated by gender (adaptation only).

112 Page The projects and programmes in Table 2 above are valued at USD 2.2 billion, of which GCF financing totals USD 699 million. Although not all the committed GCF financing or cofinancing can or should be counted as support for technology, this non-exhaustive list indicates GCF has committed a significant percentage of its resources to supporting climate technology in developing countries. 4.3 Support for technology collaborative research and development 92. In decision B.18/03, paragraph (a), the Board took note of options presented by the Secretariat on support for technology collaborative research, development and demonstration, in respect of two approaches: (i) climate technology innovation systems and (ii) targeted climate technology research, development and demonstration support. In the same decision, paragraph (c), the Board subsequently requested the Secretariat to develop the terms of reference for a RFP to support climate technology I&As. 93. The Secretariat has undertaken a cross-divisional process to define and develop the terms of reference for the RFP requested by the Board in B.18/03. In doing so, the Secretariat has been mindful of the COP and Board guidance to continue collaboration with the Technology Executive Committee (TEC) and the CTCN in implementing support for technology, seeking the expertise of the Technology Mechanism and associated stakeholders. 94. The Secretariat actively participated in the CTCN Expert Meeting on National Systems of Innovation, held February 2018 in Paris, which featured discussions on National Systems of Innovation and Incubators and Accelerators. At that meeting, the Secretariat was informed of the wide array of approaches to the topic, while gaining feedback on the GCF RFP mandated by B.18/03 from experts from UNIDO, US National Renewable Energy Laboratory, the Indian Institute of Technology, among others. 95. The Secretariat also co-organized, with the TEC and CTCN, a thematic dialogue 13 on boosting climate technology I&As in developing countries, alongside the sixteenth meeting of the TEC. The dialogue addressed three main aspects: the role of I&As as part of a country's innovation ecosystem; experiences with I&As on the ground; and accelerating investment in climate technology I&As. The event offered significant expert and stakeholder feedback for the development of the GCF RFP on I&As. Specifically, the third session provided a forum for input directly to the GCF RFP on I&As, as well as discussing the role of I&As in achieving the goals of the Paris Agreement. 96. The Board is expected to consider the terms of reference for the RFP on I&As during its twenty-first meeting. V. Capacity-building and support 97. In decision 7/CP.20, paragraph 8, the COP requested the Board to ensure adequate resources for capacity-building and technology development and transfer, consistent with paragraph 38 of the Governing Instrument. 98. Through decision 16/CP.22, paragraph 9, the COP invited United Nations agencies, multilateral organizations and relevant admitted observer organizations engaged in providing capacity-building support to developing countries to provide information to the secretariat to be uploaded on the capacity-building portal. 13 Further information on this event is available at <

113 Page Pursuant to the same decision, the UNFCCC secretariat issued an information note inviting submission of information on capacity-building activities undertaken between 1 January and 31 December The information note was shared with the Secretariat The note requested that the information submitted be in accordance with the 15 priority areas for capacity-building identified in the framework for capacity-building in developing countries (annex to UNFCCC decision 2/CP.7), namely: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) Institutional capacity-building, including the strengthening or establishment, as appropriate, of national climate change secretariats or national focal points; Enhancement and/or creation of an enabling environment; National communications; National climate change programmes; Greenhouse gas inventories, emission database management, and systems for collecting, managing and utilizing activity data and emission factors; Vulnerability and adaptation assessment; Capacity-building for implementation of adaptation measures; Assessment for implementation of mitigation options; Research and systematic observation, including meteorological, hydrological and climatological services; Development and transfer of technology; Improved decision-making, including assistance for participation in international negotiations; Clean development mechanism; Needs arising out of the implementation of article 4, paragraphs 8 and 9, of the Convention; Education, training and public awareness; and Information and networking, including the establishment of databases As requested, the Secretariat is working to provide information through the capacitybuilding portal under the applicable priority areas. 5.1 Capacity-building and support through the GCF Readiness Programme 102. The Readiness Programme is a strategic priority for GCF and was established to strengthen and build enabling environments to allow developing countries to access GCF resources. It provides support to NDAs and focal points to prepare their strategic frameworks, including country programmes, and to develop GCF programme pipelines on mitigation and adaptation in a coherent approach. By decision B.08/11, the Board decided to use readiness resources to develop country-specific strategic frameworks for engagement with GCF, building on existing strategies and plans (which includes nationally appropriate mitigation actions, national adaptation programmes of action, NAPs and intended nationally determined contributions), support for accreditation for direct access entities and by decision B.13/09 also decided to support the formulation of NAPs under the Readiness Programme.

114 Page Developing strategic frameworks for national engagement with GCF (including country programmes, in accordance with decision B.08/10 and decision B.07/03 (initial proposal approval process), building on existing strategies and plans, including low-emission development strategies, nationally appropriate mitigation actions (NAMAs), NAPS and national adaptation programmes of action In accordance with the UNFCCC classification referred to in paragraph 101 above, the areas where GCF has provided financial support to developing countries through the Readiness Programme are in the areas: (a) institutional capacity-building, including the strengthening or establishment, as appropriate, of national climate change secretariats or national focal points; (b) the enhancement and/or creation of an enabling environment; (d) national climate change programmes; (f) vulnerability and adaptation assessment; (g) capacity-building for the implementation of adaptation measures; (n) education, training and public awareness; and (o) information and networking, including the establishment of databases. 5.2 Capacity-building and support through projects and programmes 105. GCF has also provided extensive support for capacity-building under its adaptation and mitigation thematic windows, where such activities are identified by countries as critical steps towards enhancing the climate change adaptation and mitigation results to be achieved through the implementation of their GCF-supported projects and programmes. Typically, this has been provided as financial support for capacity-building and technical assistance components of projects and programmes approved to receive financing from GCF In accordance with the UNFCCC classification, the financial support that GCF is to provide for capacity-building and technical assistance components of GCF projects and programmes have fallen under the areas: (a) institutional capacity-building, including the strengthening or establishment, as appropriate, of national climate change secretariats or national focal points; (b) the enhancement and/or creation of an enabling environment; (g) capacity-building for the implementation of adaptation measures; (i) research and systematic observation, including meteorological, hydrological and climatological services; and (n) education, training and public awareness. VI. Facilitating an increase in the amount of direct access proposals in the Green Climate Fund pipeline 107. The COP, in decision 10/CP.22, paragraph 6, requested the Board to facilitate an increase in the amount of direct access proposals in the pipeline and to report to the COP on progress made in this regard. This section hereby responds to this request, focusing on the progress achieved by GCF from 31 July 2017 (the cut-off point for reporting in the sixth report of GCF to the COP) to 30 April The Governing Instrument identifies direct access as a modality through which recipient countries receive funding. The GCF Strategic Plan for identifies ensuring the responsiveness of GCF to developing countries needs and priorities by enhancing country programming and direct access as a core operational modality. By decisions B.13/20, B.13/21, B.14/07, the Board has requested the Secretariat to facilitate and enhance access to the resources of GCF by direct access entities through a number of channels, including the simplified approval process and the Readiness Programme Following guidance from the COP in decision 10/CP.22, paragraph 6, the Board by decision B.15/03, paragraph (b) requested the Secretariat to prepare a document for consideration that outlines the actions to be taken by the Board to facilitate an increase in

115 Page 112 proposals from direct access entities in the GCF pipeline. This matter will be under consideration by the Board at B The Board further requested the Secretariat to include information related to approaches taken to facilitate an increase in direct access proposals in decision B.18/02, paragraph (c) in the annual report to the COP. That information is included in annex XIII. 6.1 Current engagement with accredited direct access entities 111. The Secretariat has been working with all accredited entities to update or develop draft entity work programme briefs. Aiming to strengthen the proactive and strategic approach of GCF to programming and to deliver country-owned, high-impact proposals, the entity work programme briefs include information on overall engagement with GCF envisioned by the accredited entities, focus areas, potential pipeline with GCF, as well as readiness needs. The Secretariat reported to the Board on the development of 44 entity work programme briefs (including 22 from direct access entities) at B The Secretariat maintains a steady dialogue with all direct access accredited entities and continues to explore opportunities to provide further technical support to NDAs and direct access entities for developing high-quality funding proposals The Secretariat organized the Empowering Direct Access Workshop on May 2017 at its headquarters in Songdo, Incheon, Republic of Korea. The goal of the workshop was to facilitate engagement between the Secretariat and the accredited direct access entities, and build their knowledge base to improve project design. The workshop also aimed to enhance peer-to-peer knowledge exchange, strengthen the capacity of entities and countries and build partnerships to address climate change. The workshop welcomed 68 participants, of which 41 represented direct access accredited entities, 19 were NDAs and eight were development partners As a result of a range of capacity-building learning sessions that were organized, the workshop offered an opportunity for the direct access accredited entities to discuss 32 project ideas and concept notes with the Secretariat, and received immediate feedback through focused bilateral meetings. In addition, the workshop provided focused guidance on seven funding proposals put forward by direct access accredited entities, along with two enhancing direct access pilot proposals, to assist their preparation for the next or final stage of review The engagement with direct access accredited entities enabled them to identify their needs at the institutional level and/or the project level, which could then be addressed through the Readiness Programme and/or the PPF. A number of readiness proposals were also advanced during the workshop, with six coming from countries and one from a direct access accredited entity. Since this workshop in May 2017, 17 PPF requests have been received from direct access accredited entities who attended, four of which have been approved or endorsed This engagement has also led to earlier identification of potential upgrades in accreditation types for direct access accredited entities in terms of project size category, fiduciary functions, and environmental and social risk category, and potential gaps related to these The Secretariat will be hosting the next Empowering Direct Access Workshop from 29 May to 1 June 2018 at its headquarters in Songdo, Incheon, Republic of Korea. 6.2 Further efforts to increase the amount of direct access proposals in the GCF pipeline

116 Page Through a number of channels within the GCF modalities exist that serve to increase or facilitate an increase in the origination of funding proposals from direct access accredited entities. The Secretariat works with direct access accredited entities and provides dedicated and targeted support in translating the identified needs into readiness requests and PPF requests while ensuring alignment with the respective NDA or focal point Since 31 July 2017, five readiness proposals have been endorsed for direct access accredited entities (Agency for Agricultural Development of Morocco, Centre de Suivi Ecologique, Environmental Investment Fund of Namibia, South African National Biodiversity Institute and Unidad Para el Cambio Rural of Argentina). An additional 12 direct access accredited entities have indicated that they would need readiness support to build their institutional capacities and pipeline of projects. In addition to closing accreditation conditions and achieving upgrades in terms of fiduciary standards and environmental and social safeguards, these activities also aim to further develop the capacities of direct access accredited entities Furthermore, the Board, in decision B.13/21, decided on the operational modalities of the PPF. In line with that decision, the PPF will support project and programme preparation requests from all accredited entities, especially direct access entities, and especially for projects in the micro- to small-sized category, with a view to enhancing the balance and diversity of the project pipeline The first PPF proposal (from the Ministry of National Resources of Rwanda for USD 1.5 million) was approved at the twelfth meeting of the Board, and has now completed all activities. On 30 April 2017, the Ministry of National Resources of Rwanda submitted its funding proposal of the underlying project, the Rural Green Economy and Climate Resilient Development Project, to the Secretariat. That funding proposal was approved at B.19 on 1 March As at 30 April 2018, eight PPF applications in total were approved and six were submitted by direct access entities As of the reporting date, direct access entities had submitted 23 PPF requests with Letters of No-objection and the Secretariat is working with all direct access entities to help them to develop further PPF requests. Much of the support sought in the PPF requests is to conduct feasibility studies, environmental and social impact assessments, and stakeholder consultations Figure 10 in annex VII lists PPF proposals approved as at 30 April Expected results of funding proposals from direct access accredited entities 125. The Secretariat continues to work closely with direct access entities and NDAs/focal points in developing their pipelines of proposals to be submitted to GCF. The sector/results areas guidelines, currently in the draft stage, would enable the direct access entities and NDAs to improve the quality and number of their proposals in the GCF pipeline As at 30 April 2018, the GCF pipeline contains 18 funding proposals from direct access accredited entities, requesting USD 1.2 billion of GCF funding, in addition to 42 concept notes requesting USD 2 billion in GCF support. VII. Maximizing engagement with the private sector 127. As established by the Governing Instrument, the GCF has a Private Sector Facility (PSF) that seeks to promote the participation of private sector actors in developing countries, in

117 Page 114 particular local actors, including MSMEs and local financial intermediaries. The Governing Instrument establishes that the facility will also support activities to enable private sector involvement in SIDS and LDCs and that the operation of the PSF will be consistent with a country-driven approach. 7.1 Accreditation of private sector entities 128. By decision 7/CP.20, paragraph 9, the COP requested the Board to accelerate the operationalization of the PSF by aiming to ensure that private sector entities and public entities with relevant experience in working with the private sector were accredited in As at 30 April 2018, of the 59 entities accredited to GCF, nine are accredited as private sector entities. However, many other entities accredited to GCF, including national, regional and multilateral development banks, have brought forward private sector funding proposals to GCF. In addition, it is possible for accredited entities to partner with private sector or other entities to bring forward private sector proposals With the aim of bringing forward accredited entities that fill the mandate on balance, diversity, coverage and advancing GCF objectives, the Board by decision B.14/08 decided to prioritize certain applications for accreditation, among which are applications by private sector entities, and in particular those in developing countries. (See section 2.2 above on accreditation to GCF for other applications to be prioritized for accreditation from October 2016 to the end of B.20) Furthermore, through decision B.17/06, the Board requested the Secretariat to provide recommendations for modalities to fast-track the accreditation of private sector entities for consideration by the Board. At B.19 the Secretariat proposed, as a part of the initial review of the accreditation framework, a project-specific assessment approach to accreditation, which would include engagement with the private sector, as those entities that had responded to the RFP for the mobilizing funds at scale pilot programme. Other ways to engage with GCF will be presented to the Board for its consideration at B Actions to promote private sector participation in projects 132. Of the total USD 3.7 billion approved for all GCF projects, USD 1.5 billion (41 per cent) has come through the PSF in the form of 16 projects and programmes. The private sector projects also include USD 4.5 billion in co-financing. The Board has mandated actions to further promote the participation of private sector actors in developing countries and in the LDCs and SIDS in line with the Governing Instrument and guidance from the COP as follows Establishment of pilot programmes 133. In decision B.10/11, the Board established two pilots targeting the private sector, namely: (a) (b) A pilot programme to support MSMEs, allocated USD 200 million; and A pilot programme to mobilize resources at scale in addressing adaptation and mitigation, allocated USD 500 million. (a) Pilot programme to support micro, small, and medium- sized enterprises 134. Through decision B.13/22, the Board approved the MSME pilot RFP, deciding to limit GCF participation in the first tranche at USD 100 million. Since the launch of the pilot on 8 July

118 Page , the Board has so far approved two funding proposals among the shortlisted concept notes. The approved projects include: (i) USD 20 million for proposal (FP028) titled Business Loan Programme for GHG Emissions Reduction submitted by Mongolia-based XacBank to which GCF has disbursed its total commitment of USD 20 million, and; (ii) another USD 20 million for proposal (FP048) titled Climate-Smart Agriculture (CSA) Risk Sharing Facility for MSMEs submitted by the Inter-American Development Bank to be implemented in Guatemala and Mexico. Board approval of the proposal (FP029) titled SCF Capital Solutions submitted through the Development Bank of Southern Africa (DBSA) for USD 12.2 million lapsed in October 2017 as DBSA did not wish to extend the relevant deadline to execute the related funded activity agreement Further projects stemming from the MSME pilot are expected to be brought for consideration by the Board, as is Board approval of the launch of the RFP for the second tranche of the MSME pilot. (b) Pilot programme to mobilize resources at scale 136. In decision B.16/23, the Board approved the mobilizing funds at scale pilot programme in April 2017, allocating up to USD 500 million to innovative, high-impact projects and programmes that mobilize private sector investment in climate change activities. The RFP attracted 350 concept note submissions from over 70 countries with an estimated GCF requested financing of USD 18 billion. Following a rigorous review according to criteria set out in the RFP, a shortlist of the top 30 concepts was published in December 2017 on the GCF website. 14 The concept notes target investments in 50 developing countries, and are proposed by a range of organizations The Secretariat is engaging with all proponents of shortlisted concept notes to work with them on the next steps towards developing full funding proposals for consideration by the Board. Concept notes that were not shortlisted have the opportunity to work with an accredited entity to reapply through the regular funding window. Regarding the next steps of this process, GCF will continue to provide updates on its RFP website and at each Board meeting Enabling private sector involvement in least developed countries and small island developing States and in adaptation 138. The COP in decision 10/CP.22, paragraph 11 encouraged the Board to implement decision B.04/08 to develop modalities to support activities enabling private sector involvement in LDCs and SIDS, and to seek opportunities to engage with the private sector, including local actors, on adaptation action at the national, regional and international levels The Board, in decisions B.15/03 and B.17/06, requested the PSAG to provide recommendations on opportunities to engage the private sector, including local actors, in adaptation action at the national, regional, and international level. In PSAG meetings, initial data and content from GCF-commissioned research by the World Resources Institute was reviewed by PSAG members, which helped initiate the discussion. The document will be presented to the Board for its consideration at B Developing a private sector outreach plan 140. In decision B.12/20, the Board approved the initial Strategic Plan for GCF. That document included findings of the analysis of the barriers to crowding-in and maximizing the engagement of the private sector. The analysis called for the development of a private sector 14 <

119 Page 116 outreach plan. To support this objective, the Board requested the PSAG to provide recommendations on the development of such an outreach plan Document GCF/B.19/30 titled PSAG recommendations on the development of a private sector outreach plan 15 was presented to the Board at B.19. The recommendations include tailoring communication to the private sector, using existing networks and communication channels, continuing targeted requests for proposals, and ensuring expedited and predictable GCF timelines In decision B.19/17, the Board requested the Secretariat to incorporate PSAG recommendations into the strategic roadmap of the Secretariat for leveraging, mobilizing, and engaging domestic and international private sector actors, the communications strategy of GCF, and other relevant policies, processes and programmes, as appropriate. The Board also requested the Secretariat to consider including a private sector outreach focus as part of the regional GCF structured dialogues. VIII. Complementarity and coherence with other funds 8.1 Operational framework on complementarity and coherence 143. The Governing Instrument institutes that GCF shall operate in the context of appropriate arrangements between itself and other existing funds under the Convention, and between itself and other funds, entities, and channels of climate change financing outside the Fund (paragraph 33). The Governing Instrument, in paragraph 34, also establishes that: The Board will develop methods to enhance complementarity between the activities of the Fund and the activities of other relevant bilateral, regional and global funding mechanisms and institutions, to better mobilize the full range of financial and technical capacities and that the Fund will promote coherence in programming at the national level through appropriate mechanisms ; and will also initiate discussions on coherence in climate finance delivery with other relevant multilateral entities The COP has in decisions 7/CP.20, paragraph 16, 7/CP.21, paragraph 26, and 11/CP.23, paragraph 3, encouraged the Board to improve complementarity and coherence with other institutions as per paragraphs 33 and 34 of the Governing Instrument, including by engaging with relevant bodies of the Convention, such as the Standing Committee on Finance Accordingly, the Board in decision B.13/12 mandated the preparation of an operational framework on complementarity and coherence (hereafter the framework ) that is to act as the basis for cooperation between the Board and the Standing Committee on Finance. The framework is to be built around the key elements outlined in the Governing Instrument for GCF namely: (a) (b) (c) (d) Board-level discussions on fund-to-fund arrangements (pillar I); Enhanced complementarity at the activity level (pillar II); Promotion of coherence at the national programming level (pillar III); and Complementarity at the level of delivery of climate finance through an established dialogue (pillar IV). 15 Document GCF/B.19/30.

120 Page The framework was adopted by the Board through decision B.17/04, paragraph (a). Following an update on the progress against the framework at B.20, the Board is to consider options for the operationalization of these key elements. 8.2 Coherence and current engagement with other climate finance delivery channels (this section to be revised pending the update going to the Board in document GCF/B.20/05) 147. This section provides an update on the progress made and outputs from the framework, in line with decision B.17/04, paragraph (b). In order to drive the institution-wide work on the framework, the Secretariat has set targets to achieve with respect to pillars II and III. These targets include: (a) (b) (c) The number of countries engaged in promoting coherence amongst climate finance delivery channels at the national programming level; The number of concept notes and funding proposals submitted with consideration of complementarity with other climate finance delivery channels; and The number of country-driven readiness and other preparatory support requests with consideration of complementarity with other climate finance delivery channels as a means of benchmarking progress The Secretariat, building on agreements during the first Annual Dialogue of Climate Finance Delivery Channels held in Bonn in 2017, organized a technical working mission to Washington DC in February 2018 to work out operational details jointly and bilaterally with the Adaptation Fund (AF), the Global Environment Facility (GEF), and the Climate Investment Funds (CIFs). This mission helped define specific steps to advance the work under pillar II, and explore potential approaches to advance work related to pillar III. The working missions also provided the opportunity to advance the targets set out in the paragraph above Work to enhance complementarity at the activity level (pillar II) 149. The Secretariat has undertaken work to enhance complementarity at the activity level in the following areas: 150. Readiness and capacity-building activities: the Secretariat has cooperated with other funds to create a process to systematically exchange information with regard to their support and pipelines on specific activities, starting with adaptation and forests/landscapes. This information sharing arrangement consists of virtual meetings every three months and has already resulted in (a) identification of overlaps in the delivery of support; (b) inputs and feedback in the development of policies of the different funds; and (c) alignment of outreach activities and materials, including the revision of templates for GCF support Project preparation support and funding proposals: the Secretariat has engaged with the other funds, bilaterally and as part of the regular conference calls, on issues related to support for the preparation of projects and programmes. Additional engagement with the NAMA Facility will explore synergies in their portfolio with GCF mandates and then conduct outreach to NDAs interested in bringing the NAMAs to GCF. The Secretariat is taking steps to ensure complementarity and coherence amongst funded activities, including by identifying where parallel financing provided by the other funds can enhance the impact of similarlyaligned GCF investments Accreditation process and accredited entities: the Secretariat is looking to build on the fast-track accreditation process and previous knowledge sharing between funds. As a part of

121 Page 118 the review of the accreditation framework, consultations with other institutions, such as the GEF and AF to further learn from their accreditation processes, are being undertaken. In addition, the Secretariat and the other funds will identify opportunities to align activities with common entities. Trilateral cooperation between funds and common entities is an important element of this work Private sector engagement: the exchange of information between the funds so far has focused on how to best position the funds so that private sector actors can easily engage with one or multiple funds. The Secretariat has conducted extensive outreach and exchanged information with other funds regarding the private sector when further developing GCF policies and procedures. Future work in this area will include catalysing private sector investment in adaptation and better understanding risk appetite for the private sector actors Monitoring and evaluation approaches and methodologies: the Secretariat conducted a comparative analysis of KPIs and methodologies for mitigation and adaptation across major climate finance mechanisms. As a result, GCF and GEF agreed to establish a platform to exchange ideas and best practices in the areas of results management, performance indicators, and methodologies for measuring impact, effectiveness and operational efficiency of the organizations. In addition, lessons learnt from the experiences of other climate finance entities are regularly incorporated into the evaluation activities of the IEU through benchmarking exercises and peer reviews. The IEU is also collaborating with the CIF Evaluation and Learning Initiative and is a member of the CIFs Transformational Change Learning Partnership Promotion of coherence at the national programming level (pillar III) 155. The Secretariat has undertaken work to promote coherence at the national programming level in the following areas: 156. Country programmes and engagement: The funds have prioritized country programming, investment planning and pipeline development to maximize synergies between funds. The Secretariat is collaborating with the GEF on developing an initiative to invite countries interested in exploring options for collaborative programming with the two funds in a manner that ultimately maximizes the benefit and impact of those resources National climate change action plans: The Secretariat is cooperating with climate finance delivery channels to coordinate financing of national adaptation plans, technology needs assessments, nationally appropriate mitigation actions, and measurement, reporting and verification, in a country-driven manner. The Secretariat is also exchanging best practices and coordinating in the application of GCF country ownership guidelines in this regard Country-driven coordination: The Secretariat is working with the other funds to enhance channels for communication between different focal points (NDAs and other respective focal points under the different funds within the country), where applicable. The funds will further identify issues that may arise where enhanced coordination between NDAs, focal points and accredited entities can be beneficial to support countries low-emission and climateresilient development Complementarity at the level of delivery of climate finance through an established dialogue (pillar IV) 159. In the margins of COP 23, the governing body representatives of the funds met in the first annual dialogue of climate finance delivery channels moderated by the GCF Executive Director. This marked the first opportunity for a formal yet frank discussion of the core issues regarding fund-to-fund interaction. Participants included the chairs of the GEF, GCF, and AF, as

122 Page 119 well as the manager of the CIFs; they were accompanied by secretariat staff to ensure operational details could also be discussed The event was split into two sessions: the first session focused on issues of fund governance, including the specific policies and procedures in need of alignment. The second session scrutinized the national and activity levels, and participants had the opportunity to discuss enhancing country ownership and access to finance as well as identifying efforts to move from pilot to scale effectively and strategically Participants agreed that making concrete progress in 2018 on complementarity and coherence remains a priority, recognizing that each institution has different strengths, ranging from risk appetite, innovation, and predictability, among other considerations. Participants agreed on the usefulness of the exchange and welcomed the organization of the second annual dialogue to be held in the second half of 2018, for which a concept note is under development in consultation with the other funds. IX. Strengthening linkages with the Technology Mechanism 162. In decision 14/CP.22, paragraph 9, the COP invited the operating entities of the Financial Mechanism to provide information on their actions in strengthening the linkages between the Technology Mechanism and the Financial Mechanism in their annual reports to the COP. This section addresses these mandates By decision B.14/02, paragraph (d), the Board requested the Secretariat to provide recommendations on further steps to enhance cooperation and coherence for consideration by the Board, and in the context of the GCF operational framework on complementarity and coherence and the annual event with the thematic bodies of the UNFCCC. (See annex III on the Second Annual Meeting of Thematic Bodies) 164. In line with decision B.18/03, the Secretariat collaborated with the TEC and the CTCN in the organization of a thematic dialogue on technology I&As held in conjunction with the sixteenth meeting of the TEC in Bonn, Germany in March The event provided expert commentary and inputs for the Secretariat s ongoing development of an RFP on technology I&As mandated by the Board (B.18/03). The Secretariat continues to seek technical feedback and inputs of the TEC and CTCN in the development of the RFP Additionally, the Secretariat has collaborated with the CTCN in the organization of events to enhance coordination between NDAs and NDEs to the Technology Mechanism as part of the GCF structured dialogues with regions, as well as information materials going to the NDAs with information on collaboration between CTCN and GCF Finally, at COP 23, the Executive Directors of GCF and the United Nations Environment Programme (UNEP) exchanged letters to formalize the linkages between GCF and CTCN on technology-related matters, including the CTCN as a readiness delivery partner. X. Gender, social, and environmental considerations in the work of the Green Climate Fund 10.1 Gender considerations in the work of GCF 167. In decision 21/CP.22, para. 21, the COP requested the Financial Mechanism and its operating entities to include in their respective annual reports to the Conference of the Parties information on the integration of gender considerations in all aspects of their work. In response

123 Page 120 to this guidance, the Board through decision B.15/03 decided to include, where feasible, gender considerations in all the activities of GCF and requested the Secretariat to include such information in its annual report to the COP. Information on actions taken on gender is hereby provided The Board adopted the Gender Policy and Action Plan of the GCF in March 2015 by decision B.09/11 in seeking to enhance a gender-sensitive approach in GCF processes and operations as embedded in the Governing Instrument. An overview of actions taken to integrate gender considerations in the work of GCF guided by the gender policy and action plan and of other additional actions is outlined below Enhancing gender considerations in readiness activities 169. To strengthen gender-related actions in activities implemented under the Readiness Programme activities, dedicated resources are being provided to NDAs for specific activities, such as participatory planning and inclusive strategies, enhancing stakeholder engagement and ensuring participation of women-led organizations and indigenous peoples organizations, and conducting gender-sensitive stakeholder consultation and analyses. The update of the Readiness Programme Guidebook has been reviewed incorporating gender-related actions This targeted support is expected to enhance the gender responsiveness of country programmes as well as gender inclusiveness in other activities supported by the Readiness Programme Gender-informed indicators and gender considerations have been incorporated in the templates of country programmes and entity work programmes. In this context, the Secretariat is working to advance gender-responsive actions, and to monitor progress on gender actions in the country programmes and work programmes of accredited entities The NAP development processes followed by countries when developing NAP proposals for submission to GCF have been reviewed from a gender perspective. PPF proposals submitted to the Secretariat are also reviewed from a gender perspective Gender considerations in projects and programmes 173. The Secretariat has proactively reviewed concept notes and funding proposals from a gender perspective, and ensures that gender assessments are undertaken by accredited entities as part of project appraisals, in line with the GCF Gender Policy and Action Plan. Gender mainstreaming design features, such as project-level gender action plans, have also been introduced and are submitted together with funding proposals. The gender assessments and project-level gender action plans submitted by accredited entities are now disclosed as part of the funding proposal packages considered by the Board As per the strategies outlined in the GCF Gender Policy and Action Plan, gender assessments at the project/programme level have been undertaken by accredited entities. The majority of funding proposals considered by the Board therefore contain gender assessments (92 per cent). This has helped to identify specific gender elements that should be included in project and programme activities, and to determine how the project or programme can respond to the needs of women and men also from vulnerable communities in view of the specific climate change issue to be addressed. As a result, the majority of funding proposals considered by the Board contain project-level gender action plans (83 per cent) Gender mainstreaming features were also incorporated in funding proposals submitted under the SAP pilot scheme.

124 Page Review of the Gender Policy and Action Plan 176. The Secretariat received inputs in November 2017 on the review and update of the Gender Policy and Action Plan following a second call for public inputs. An updated Gender Policy and Action Plan was presented to the Board for consideration at B.19 in February The Secretariat continues to further develop the Policy for consideration by the Board at B.20 in July Environmental and social policy of the GCF 177. By decision B.07/02, paragraph (c), the Board adopted on an interim basis the Performance Standards of the International Finance Corporation with regard to environmental and social safeguards. Paragraph (d) of the same decision resolved to develop environmental and social safeguards for GCF within three years of becoming operational. The COP has issued guidance to GCF with regard to the development of environmental and social safeguards (decision 9/CP.20, annex, paragraph 21) The Board in decision B.19/10 adopted the Environmental and Social Policy of the GCF. The Environmental and Social Policy forms an integral component of the Environmental and Social Management System, a broad operational framework for achieving improvements in environmental and social outcomes while addressing any unintended adverse impacts of GCFfinanced activities. In the same decision, the Board requested the Secretariat to present the proposed approach to developing GCF environmental and social safeguards standards, taking into account input from stakeholders, for its consideration at its twenty-first meeting Indigenous Peoples Policy of the GCF 179. In decision 4/CP.20, the COP requested operating entities of the Financial Mechanism to consider the recommendation of the Adaptation Committee, which encouraged GCF, GEF, and AF to enhance consideration of local, indigenous and traditional knowledge and practices and their integration into relevant aspects of GCF operations In its decision B.19/11, the Board has adopted the GCF Indigenous Peoples Policy. The policy aims to assist GCF in incorporating considerations related to indigenous peoples into its decision-making while working towards the goals of climate change mitigation and adaptation. The policy allows GCF to examine, control, eliminate and reduce the adverse impacts of its activities on indigenous peoples in a consistent way and to improve outcomes over time. These elements of the policy will be integrated with other policies and frameworks, particularly the Environmental and Social Management System, and will be utilized across the organization of GCF. XI. Further development of the Green Climate Fund investment and operational frameworks 181. By UNFCCC decision 7/CP.20, paragraph 10, the COP requested the Board to complete its work related to policies and procedures. Work continues to further strengthen the GCF investment framework and operational framework, much of which is detailed in other sections throughout this report By decision B.18/10, the Board adopted the Anti-Money Laundering and Countering the Financing of Terrorism Policy for GCF as developed by the Independent Integrity Unit. The Board further requested the Head of the Independent Integrity Unit to develop standards for the

125 Page 122 implementation of the Anti-Money Laundering and Countering the Financing of Terrorism Policy for consideration by the Board at B.20, during which time a set of integrity policies including the Whistle-blower and Witness Protection Policy and Prohibited Practices Policy (updated from the Interim Policy on Prohibited Practices) will be considered. Additionally, the Board will consider for adoption the Integrity Due Diligence Policy for Private Sector Operations and the Guidelines on Financial Disclosure and Declaration of Conflict of Interest In decision 6/CP.18, paragraph 7(e), the COP requested the Board to select the GCF Trustee through an open, transparent and competitive bidding process in a timely manner to ensure that there is no discontinuity in trustee services In decision B.19/03, the Board affirmed that there should not be a discontinuity in the service of the Trustee and confirmed that the selection of the Permanent Trustee of GCF shall be undertaken through an open, transparent and competitive bidding. The Board also adopted the terms of reference of the Permanent Trustee, a selection process and a time frame for the selection process. The ad-hoc Trustee Selection Committee will report to the Board on the implementation of this decision at the twenty-first meeting. XII. Privileges and immunities with regard to the operational activities of the Green Climate Fund 185. In decision 9/CP.23, paragraphs 12, the COP expressed concern with the low level of bilateral agreements related to the privileges and immunities of GCF concluded between GCF and Parties. The COP further encouraged Parties to enter into such bilateral agreements with GCF and encouraged the Board to intensify its efforts to ensure that GCF enjoys such privileges and immunities as are necessary for the fulfilment of its purposes In light of this guidance, the Secretariat has continued to conclude as many bilateral agreements related to the privileges and immunities of GCF as possible. As at 30 April 2018, GCF has entered into bilateral agreements on privileges and immunities with 17 countries, namely: Antigua and Barbuda; Belize; Cook Islands; Georgia; Honduras, Kiribati, Micronesia (Federated States of); Montenegro; Namibia; Papua New Guinea; Saint Vincent and the Grenadines; Samoa; Solomon Islands; Tonga; Uruguay; Vanuatu; and Zambia In addition, the Co-Chairs of GCF intend to present a proposal to the Board on options for intensifying efforts to obtaining the necessary privileges and immunities at the twenty-first meeting of the Board in October. The outcomes of such deliberations will be made available to the COP. XIII. Actions taken by the Green Climate Fund pursuant to guidance received from the Conference of Parties 188. This section provides an overview of actions taken by GCF pursuant to individual guidance received from the COP. It is organized in three sub-sections as follows: (a) (b) (c) Actions taken by GCF in response to guidance received from COP 23 (presented in table 3; Actions taken by GCF in response to guidance received from the seventeenth to the twenty-second sessions of the COP that is still relevant for action and reporting (presented in table 4); and Report on the implementation of arrangements between the COP and GCF (presented in table 5).

126 Page Actions taken in response to guidance from the twenty-third session of the Conference of the Parties 189. The COP in UNFCCC decision 9/CP.23 requested GCF, as an operating entity of the Financial Mechanism, to include in its annual report to the Conference of the Parties information on the steps it has taken and the timeline for implementation of the guidance provided in the decision The progress in implementing guidance contained in UNFCCC decision 9/CP.23 and other COP 23 guidance is provided in table 3 below. Table 3: Update on progress in addressing guidance received from the twenty-third session of the Conference of the Parties COP guidance Progress in responding to the guidance Accreditation Notes that accreditation is pending for a significant number of entities Decision 9/CP.23, para. 4 Welcomes the Board s decision to trigger the review of the accreditation framework and its fit for purpose approach, and urges the Board to swiftly adopt and implement the revised framework with a view to simplifying and facilitating access to the Green Climate Fund, including for direct access entities and private sector actors Decision 9/CP.23, para. 5 The Board is scheduled to consider a proposal under the review of the accreditation framework in accordance with decision B.18/04. The Board will also consider additional accreditation applications at B.20. Access to resources Notes with concern the challenges in accessing financial resources for climate action in developing country Parties, especially in relation to funding for adaptation Decision 9/CP.23, para. 6 Under the guidance of the Board, the Secretariat conducted research, consultation and analysis related to guidance and scope for providing support for adaptation activities, including for engaging the private sector in adaptation action, scheduled for Board consideration at B.20. Requests the Board to ensure that all developing country Parties have access to all the financial instruments available through the Green Climate Fund, in line with the eligibility criteria referred to in the governing instrument and relevant decisions of the Conference of the Parties and to ensure application of the agreed policies of the Green Climate Fund Decision 9/CP.23, para. 7 The Board is guided by the provisions of the Governing Instrument for the Green Climate Fund, specifically: Paragraph 35: All developing country Parties to the Convention are eligible to receive resources from the Fund. The Fund will finance agreed full and agreed incremental costs for activities to enable and support enhanced action ; Paragraph 54: The Fund will provide financing in the form of grants and concessional lending, and through other modalities, instruments or facilities as may be approved by the Board. Financing will be tailored to

127 Page 124 COP guidance Progress in responding to the guidance cover the identifiable additional costs of the investment necessary to make the project viable. The Board will consider an integrated policy approach to further develop the investment framework, including further guidance on concessionality, indicative minimum benchmarks, and guidance and scope for providing support to adaptation activities in Proposal approval process Welcomes the launch of the Simplified Approval Process Pilot Scheme and urges its implementation in line with Green Climate Fund Board decision B.18/06 Decision 9/CP.23, para. 9 Linked with decision 7/CP.21, para. 4 See section 2.4 on Simplified approvals process Readiness and Preparatory Support Programme Encourages the Board to continue improving the process to review and approve readiness and preparatory support requests, including requests for support to prepare national adaptation plans and voluntary adaptation planning processes, including the timely disbursement for approved programmes Decision 9/CP.23, para. 10 See section 2.1 for the update on the Readiness and Preparatory Support Programme, including subsections on support for national adaptation plans and/or other adaptation planning processes and on the evaluation of the Readiness and Preparatory Support Programme. Access to information Invites the Board to consider ways to improve the availability of information on accessing funding from the Green Climate Fund, as appropriate Decision 9/CP.23, para. 11 The Board will consider a communications strategy for GCF at B.20. Privileges and immunities

128 Page 125 COP guidance Takes note of the biennial report on the status of privileges and immunities and expresses concern with the low level of bilateral arrangements concluded between the Green Climate Fund and Parties Decision 9/CP.23, para. 12 Progress in responding to the guidance As agreed under decision B.19/02, the Board requested the Co-Chairs to develop a proposal for consideration of the Board in response to the guidance from the Conference of the Parties. See section XII Privileges and immunities with regard to the operational activities of the Green Climate Fund. Encourages Parties to enter into agreements to grant the privileges and immunities needed for the effective and efficient operationalization of the Green Climate Fund in accordance with national legislation and circumstances and Board decision B.10/12, as appropriate Decision 9/CP.23, para. 13 Also encourages the Board to intensify its efforts to ensure that the Green Climate Fund will enjoy such privileges and immunities as are necessary for the fulfilment of its purposes Decision 9/CP.23, para. 14 Formal replenishment of GCF Encourages the Board to launch the first replenishment process of the Green Climate Fund in accordance with previous decisions of the Conference of the Parties and the Board Decision 9/CP.23, para. 17 By decision B.19/05, para (a), the Board decided to advance work under its 2018 work programme to conclude the essential preparatory arrangements for the first formal replenishment process of GCF, noting this is without prejudice to the timing of a decision to initiate replenishment in line with decision B.08/13. By decision B.19/05, para (b), the Board further requested the Co-Chairs, with the support of the Secretariat, and in consultation with members of the Board, to oversee the preparation of necessary policies and procedures for the formal replenishment process. Support for technology Encourages the Board to include in its annual report to the Conference of the Parties information on projects approved by the Board that support the innovation and/or scaling-up of climate technologies with a view to informing See section 2.7 Status of resources and arrangements for the formal replenishment process for the GCF for further information See section IV on Support for technology

129 Page 126 COP guidance the Technology Mechanism as it undertakes further work on climate technology innovation Decision 9/CP.23, para. 18 Linked with decision 14/CP.22, para. 3, 8, 9 Decision 11/CP.23 Sixth Review of the Financial Mechanism Requests the operating entities of the Financial Mechanism to continue to enhance complementarity and coherence Decision 11/CP.23, para. 3 Progress in responding to the guidance See section VIII on Complementarity and coherence with other funds The Board will consider an update on implementation of the operational framework, including a report on the progress made and outputs from the operational framework on complementarity and coherence at B.20. The report on progress is contained in this document, including as input for the Standing Committee on Finance, as mandated by decision B.17/ Overview of guidance from the Conference of the Parties from the seventeenth to the twenty-second sessions that is still relevant for action and reporting 191. The guidance provided to GCF at COP 17 through to COP 22 that is still relevant has been consolidated in table 4. Similar guidance from these six sessions has been grouped together. Table 4: Overview of actions taken pursuant to guidance received from COP 22, COP 21, COP 20, COP 19, COP 18 and COP 17 that is still relevant for reporting Guidance received from the Conference of the Parties Action by GCF National adaptation planning National adaptation plans See Section on Support for national adaptation planning Further requests the Green Climate Fund to expedite support for the least developed countries and other developing country Parties for the formulation of national adaptation plans, consistent with decisions 1/CP.16 and 5/CP.17, and for the subsequent implementation of policies, projects and programmes identified by them Decision 1/CP.21, paragraph 46 Linked with decision 4/CP.21, para. 6

130 Page 127 Guidance received from the Conference of the Parties Adaptation planning Invites the Board of the Green Climate Fund to take into account in its programmatic priorities the Cancun Adaptation Framework, in particular the principles referred to in decision 1/CP.16, paragraph 12, and the activities referred to in decision 1/CP.16, paragraph 14 Decision 7/CP.21, para. 21 Guidance on REDD-plus Urges the Board to finalize in a timely manner its work related to the guidance of the Conference of the Parties on financing for forests as mandated by decision 7/CP.21, paragraphs Decision 10/CP.22, para. 4 Action by GCF See section III on Support for forest-related actions Linked with Decision 1/CP.21, para. 54 Decision 7/CP.20, para. 18 Decision 9/CP.19, para. 8 Decision 7/CP.21, para. 23 Decision 7/CP.21, para. 24 Decision 7/CP.21, para. 25 Consideration of gender in the activities of GCF Requests the Financial Mechanism and its operating entities to include in their respective annual reports to the Conference of the Parties information on the integration of gender considerations in all aspects of their work Decision 21/CP.22, para. 21 a Readiness and preparatory support Disbursement of readiness resources Takes note of the progress achieved to date in the implementation of the readiness and preparatory support programme of the Green Climate Fund and stresses the importance of improving the approval process and timely disbursement of readiness resources to facilitate readiness programme implementation pursuant to Green Climate Fund Board decision B.11/04 Decision 7/CP.21, para. 17 Action taken to integrate gender consideration in various aspects of the work of GCF is provided in section 10.1 Gender considerations in the work of the Green Climate Fund In decision B.11/04, the Board requested the Secretariat s proposal to simplify the process to access funds for country programming and readiness and preparatory support. Consequently, the Board in decision B.13/27 welcomed the simplification of the readiness support template; encouraged the Secretariat to continue to expedite the approval and disbursement of readiness and preparatory support resources; and agreed to simplify the readiness grant agreement with a view to developing an arrangement for country programme

131 Page 128 Guidance received from the Conference of the Parties Linked with decision 7/CP.20, para. 12 Accreditation Urges the Board of the Green Climate Fund to streamline the accreditation modalities and to seek a balance of diversity in accredited entities Decision 7/CP.21, para. 16 Encourages the timely implementation of the accreditation framework and requests the Board of the Green Climate Fund, in its implementation, to pay adequate attention to the priorities and needs of developing country Parties, including the least developed countries, small island developing States and African States, emphasizing the need to provide readiness support to those national and regional entities eligible for fast tracking that request it Decision 7/CP.20, para. 13 Proposal approval process Initial proposal approval process Requests the Board of the Green Climate Fund to ensure that the revised funding proposal template and concept note template are designed to facilitate the application process Decision 7/CP.21, para. 13 Simplified approvals process for small-scale activities Also requests the Board of the Green Climate Fund to adopt a simplified process for approval of proposals for certain activities, in particular for smallscale activities, as soon as possible in 2016, to reduce complexities and costs involved in project proposal development Decision 7/CP.21, para. 14 Facilitating increase in proposals from direct access entities Action by GCF framework agreements in order to expedite the disbursement of readiness resources. Section 2.1 on Readiness and preparatory support provides an overview of progress achieved by GCF Readiness and Preparatory Support Programme, including progress in disbursement of readiness and preparatory support resources and the evaluation of the Readiness Programme. See section 2.2 on Accreditation to the GCF The latest status of the accreditation state of play including the accredited entities composition is available on the GCF website. 1 See section 2.1 on Readiness and preparatory support and section 2.2 on Accreditation to the GCF Beginning at the seventeenth meeting of the Board (B.17), and aiming to enhance accessibility and predictability in line with the GCF Strategic Plan and decision B.11/11, is the review of the initial proposal approval process. Furthermore, following the mandate of the Board mandate in decision B.11/11, paragraph (o), a simplified funding proposal template was published to the GCF website on [XX Month] See section 2.4 on Simplified approvals process 1 Available at <

132 Page 129 Guidance received from the Conference of the Parties Requests the Board to facilitate an increase in the amount of direct access proposals in the pipeline and to report to the Conference of the Parties on progress made in this regard Action by GCF See section VI on Facilitating an increase of direct access proposals in the pipeline Decision 10/CP.22, para. 6 Delivery of resources Also requests the Board to take into account decision 1/CP.21, paragraph 64, to Enhancing coordination in delivery of resources enhance the coordination and delivery of resources to support country-driven See section VIII on Complementarity and coherence with other funds strategies through simplified and efficient application and approval procedures, and through continued readiness support to developing country Parties, including the least developed countries and small island developing States, as Simplified and efficient application and approval procedures appropriate, and in accordance with Board decisions In decision B.13/32, the Board welcomed the simplification of the Readiness and Preparatory Support Programme template and agreed to simplify the readiness Decision 10/CP.22, para. 7 grant agreement with a view to developing an arrangement for country Linked with decision 1/CP.21, para. 64 programme framework agreements in order to expedite the disbursement of readiness resources. Requests the Board to enhance the delivery of resources by addressing those measures that are delaying the implementation of projects that have been approved by the Board, including the conclusion of pending accreditation master agreements and funded activity agreements Decision 10/CP.22, para. 10 In decision B.18/06, the Board approved the Simplified Approval Process Pilot Scheme (SAP) with an allocation of up to USD 80 million in GCF financing, and requested the Secretariat to operationalize the pilot. See section 2.4 on Simplified approval process for more information. Continued readiness support See section 2.1 on Readiness and preparatory support Resource mobilization and replenishment Initial resource mobilization Also urges Parties that made pledges under the initial resource mobilization process of the Green Climate Fund but have not yet confirmed them through fully executed contribution arrangements or agreements to do so as a matter of high priority Decision 10/CP.22, para. 5 Enhancing delivery of resources See section 2.6 on Disbursement of resources for the implementation of approved projects and programmes See section 2.7 on Status of resources and arrangements for the formal replenishment process for the GCF

133 Page 130 Guidance received from the Conference of the Parties Linked with decision 7/CP.21, para. 8 Financial inputs to GCF Reiterates the invitation for financial inputs from a variety of sources, public and private, including alternative sources, throughout the initial resource mobilization process Decision 7/CP.21, para. 9 Fund Replenishment Reiterates its request to the Board to agree on the arrangements for the first formal replenishment process of the Green Climate Fund Decision 10/CP.22, para. 13 Linked with decision 7/CP.21, para. 10 Risk management framework Risk Management Requests the Board of the Green Climate Fund to prioritize the development of its initial risk management framework Decision 7/CP.21, para. 18 GCF accountability units Urges the Board of the Green Climate Fund to operationalize the Independent Evaluation Unit, Independent Redress Mechanism and Independent Integrity Unit as a matter of urgency and to make public the procedures Parties and affected individuals should follow when seeking redress until the Independent Redress Mechanism is operationalized Action by GCF Pursuant to decisions B.05/04, B.11/05 and B.14/01 policies and procedures for contributions from philanthropic foundations and other non-public and alternative sources are in the pipeline for consideration by the Board. In decision B.12/09, the Board requested the Co-Chairs to undertake consultations with the Board on the first formal replenishment process of GCF, and present a report on the outcomes of these consultations to the Board. The Board also requested the Secretariat to support the Co Chairs to prepare documentation related to the design and development of the first formal replenishment process of GCF. In decision B.19/05, the Board decided to advance work under its 2018 work programme to conclude the essential preparatory arrangements for the first formal replenishment process of GCF, noting this is without prejudice to the timing of a decision to initiate replenishment in line with decision B.08/13. See section 2.7 on Status of resources and arrangements for the formal replenishment process for the GCF for more information. The Board adopted (B.17/11) the first set of components of the risk management framework. This decision replaced the interim versions of certain components such as the initial risk register, dashboard and risk guidelines for the public and private sectors which were adopted pursuant to past Board decisions (B.10/08; B.12/34; B.13/36). The Board adopted (B.19/04) three risk policies and the update to the risk dashboard with the revised approach to reporting on concentration and requested the Secretariat to publish the updated risk dashboard every quarter. See section on Update to the risk management framework of the Green Climate Fund The Board, through decisions B.BM-2016/09, B.13/17 and B.13/18 appointed the heads of the Independent Redress Mechanism (IRM), Independent Evaluation Unit (IEU) and Independent Integrity Unit (IIU). The heads of the accountability units, are in the process of setting up the GCF accountability units.

134 Page 131 Guidance received from the Conference of the Parties Decision 7/CP.21, para. 20 Engagement with UNFCCC thematic bodies Technical examination process Encourages the operating entities of the Financial Mechanism of the Convention to engage in the technical expert meetings and to inform participants of their contribution to facilitating progress in the implementation of policies, practices and actions identified during the technical examination process Decision 1/CP.21, para 110 Support for technology Action by GCF IRM The Board approved the work plan and budget of the IRM by decision B.19/19. IEU The Board (B.19/21) approved the three-year rolling work plan of the IEU and requested the Independent Evaluation Unit to amend it once the evaluation policy of GCF has been adopted. By the same decision, the Board approved the IEU budget. Decision B.19/16 approved the terms of reference for the independent evaluation of the Readiness Programme to be undertaken by IEU. IIU The Board approved the work plan and budget of the IIU by decision B.19/20. The IIU has developed a suite of fiduciary compliance and integrity policies and guidelines designed to prevent and remediate the occurrence of integrity violations in GCF operations. These include the Anti-Money Laundering and Combating the Financing of Terrorism Policy that was approved by decision B.18/10; Policy on Prohibited Practices; Whistle-blower and Witness Protection Policy; and the Integrity Due Diligence Policy for Private Sector Operations, all of which are set for consideration by the Board in Further work is taking place on the Administrative Guidelines on Financial Disclosure and Guidelines on Declaration of Conflict of Interests for various groups. To enhance transparency, all these policies, in addition to guidance on how to report integrity violations, are easily accessible on the IIU website. 2 During SB48, the Secretariat participated in the technical expert meetings (TEMs) on adaptation. The secretariat delivered a presentation during the TEMs on adaptation focusing on adaptation planning support to catalyse action and investment, especially at the local level. The Secretariat also made an intervention during the TEMs on mitigation. GCF will continue engaging in the TEMs and incorporate emerging lessons learned into its work, where appropriate. The GCF Strategic Plan identifies the ability to take on risks that other funds/institutions are not able or willing to take, including risks associated with 2 Available at <

135 Page 132 Guidance received from the Conference of the Parties Also invites the Board of the Green Climate Fund, in line with paragraph 38 of the governing instrument of the Green Climate Fund, to consider ways to provide support, pursuant to the modalities of the Green Climate Fund, for facilitating access to environmentally sound technologies in developing country Parties, and for undertaking collaborative research and development for enabling developing country Parties to enhance their mitigation and adaptation action Decision 7/CP.21, para. 22 Capacity-building and technology development and transfer Requests the Board of the Green Climate Fund [ ] to ensure adequate resources for capacity-building and technology development and transfer, consistent with paragraph 38 of the Governing Instrument (annex to decision 3/CP.17) Decision 7/CP.20, para. 8 Linked with decision 13/CP.21, para. 10 Linkages between the Technology Mechanism and GCF Encourages the Board of the Green Climate Fund to continue to invite the Chairs of the Technology Executive Committee and the Advisory Board of the Action by GCF deploying innovative climate technologies as key for GCF to achieve maximum impact. As per decision B.14/02, the Board acknowledged that current GCF modalities enable support for technology development and transfer, including for facilitating access to environmentally sound technologies and for collaborative research and development. The Board also encouraged national designated authorities and focal points to access readiness support directly, or to collaborate with readiness delivery partners and accredited entities to submit readiness requests, concept notes, funding proposals and Project Preparation Facility proposals that will facilitate access to environmentally sound technologies, consistent with a country-driven approach and will encourage the involvement of relevant stakeholders, including vulnerable groups and addressing gender aspects. By decision B.19/02, the Board requested the Secretariat to include in its annual report to the Conference of the Parties information on projects approved by the Board that support the innovation and/or scaling up of climate technologies. See section IV on Support for technology Capacity-building See section V on Capacity-building and support Technology development and transfer As per decision B.14/02, the Board acknowledged that current GCF modalities enable support for technology development and transfer. By decision B.18/03, the Board requested the Secretariat to develop for consideration by the Board at its twentieth meeting the terms of reference for a request for proposals to support climate technology incubators and accelerators. See section IV on Support for technology By decision B.15/03, the Board decided to invite the Chairs of the Technology Executive Committee (TEC) and the Advisory Board of the Climate Technology

136 Page 133 Guidance received from the Conference of the Parties Climate Technology Centre and Network to future meetings of the Board of Green Climate Fund on issues of common interest in order to strengthen the existing linkages between the Technology Mechanism and Financial Mechanism Decision 14/CP.22, para. 3 Encourages the Technology Executive Committee, the Climate Technology Centre and Network and the operating entities of the Financial Mechanism to enhance the involvement of relevant stakeholders as they undertake actions to strengthen the linkages between the Technology Mechanism and the Financial Mechanism Decision 14/CP.22, para. 8 a Invites the Technology Executive Committee, the Climate Technology Centre and Network and the operating entities of the Financial Mechanism to provide information on their actions in strengthening the linkages between the Technology Mechanism and the Financial Mechanism in their annual reports to the Conference of the Parties for guidance on further actions if needed Decision 14/CP.22, para. 9 a Action by GCF Centre and Network (CTCN) to present to the Board during its consideration of options for supporting collaborative research and development, in accordance with paragraph 38 of the Rules of Procedure of the Board. The agenda item options for supporting collaborative research and development was discussed at the eighteenth meeting of the Board, and the Chairs of the TEC and the Advisory Board of the CTCN were invited and presented to the Board on this agenda item. See section IX on Strengthening linkages with the Technology Mechanism Linkages with the Financial Mechanism of the UNFCCC Linkages with the Technology Mechanism Invites the Board of the Green Climate Fund to provide its recommendations, in accordance with decision 1/CP.18, paragraph 62, for consideration by the Conference of the Parties at its twenty-second session (November 2016) Decision 13/CP.21, para. 4 Relationship with Thematic bodies To initiate a process to collaborate with the Adaptation Committee and the Technology Executive Committee, as well as other relevant thematic bodies under the Convention, to define linkages between the Fund and these bodies, as appropriate Decision 6/CP.18, para. 7(f) Linked with decision 3/CP.17, para. 17 By its decision B.13/06, the Board agreed to strengthen the relationship with the thematic bodies of the Convention through holding an annual meeting between the Co-Chairs of the Board and the Chairs of the thematic bodies. The first annual meeting was held during the twenty-second session of the Conference of the Parties in Marrakech, Morocco, on 9 November The meeting was attended by the Co-Chairs of the Technology Executive Committee (TEC) and the Climate Technology Centre and Network (CTCN). During the meeting the Chair of the Advisory Board of the CTCN noted that he sees the areas of collaboration between the CTCN and GCF in the Readiness and Preparatory Support Programme, the Project Preparation Facility and direct access areas as well as in enabling technical experts, national designated authorities, national designated entities and collaboration between the thematic

137 Page 134 Guidance received from the Conference of the Parties Linkages with the Technology Mechanism Requests the Technology Executive Committee, the Climate Technology Centre and Network and the operating entities of the Financial Mechanism to continue to consult on and further elaborate, including through an in-session workshop at the forty-fourth sessions of the subsidiary bodies (May 2016), the linkages between the Technology Mechanism and the Financial Mechanism Decision 13/CP.21, para. 8 Action by GCF bodies. The Chair of the TEC noted that the attendance at the fourteenth meeting of the Board (B.14) in Songdo was very useful and that both organizations will benefit from such collaboration in the future. The full report of the annual meeting with the thematic bodies is contained in annex III. Furthermore, the Board in decision B.13/11 requested the Secretariat to strengthen its current approach to engaging with thematic bodies, including through: (i) exchanging information; (ii) participating in relevant meetings; and (iii) identifying components of programmes and work plans of thematic bodies and incorporated into the relevant parts of the work programme of the Secretariat (in Board decision). The Secretariat continued to participate in meetings and provided information and input into the activities of the TEC and the CTCN throughout the reporting period. Paragraph (f)(iii) of decision B.13/11 specifies Identifying components of the programmes and work-plans of the thematic bodies that are related to the GCF, and, where appropriate, updating the work programme of the Secretariat as means to improve coordination. The GCF structured dialogue for Asia held on April 2017 in Bali, Indonesia demonstrated such collaboration in action with the CTCN, having engaged with GCF so that CTCN s Regional Forum for Asia was held alongside the GCF structured dialogue. By scheduling the structured dialogue and the CTCN Regional Forum in parallel and complementary schedules, the GCF national designated authorities and the CTCN national designated entities benefitted from a mutual exchange of updates and knowledge sharing through cross-presentations and discussions. By decision B.14/02, paragraph (d), the Board also decided to request the Secretariat to provide recommendations on further steps to enhance cooperation and coherence for consideration by the Board by B.17 and in the context of the GCF operational framework on complementarity and coherence and the annual event with the thematic bodies of the UNFCCC. As such, aspects related to technology have been included in thematic cooperation with other Funds.

138 Page 135 Guidance received from the Conference of the Parties Response to the recommendations of the Adaptation Committee Requests Parties, operating entities of the Financial Mechanism and other relevant entities working on adaptation to consider the recommendations contained in chapter V of the report of the Adaptation Committee, as included in the annex Decision 4/CP.20, para, 4 Action by GCF Decision 13/CP.21, paragraph 4; decision 6/CP.18, paragraph 7(f), decision 3/CP.17, paragraph 17; and decision 13/CP.21, paragraph 8 have now been addressed. Linkage with the Technology Mechanism will continue to be a part of the GCF report to COP under Strengthening linkages with the Technology Mechanism. By its decision B.13/06, the Board agreed to strengthen the relationship with the thematic bodies of the Convention through holding an annual meeting between the Co-Chairs of the Board and the Chairs of the thematic bodies. The first annual meeting was held during the twenty-second session of the Conference of the Parties in Marrakech, Morocco, on 9 November The meeting was attended by the Co-Chair of the Adaptation Committee. She noted that the following activities are very closely related to GCF: the preparation of an information document on the experience of countries in accessing GCF finances through readiness support, in particular for national adaptation plans and adaptation planning processes; the organization of a workshop in the first half of 2017 on challenges in accessing funding, in particular for national adaptation plans and national planning processes. Furthermore, the Board has requested the Secretariat to strengthen its current approach to engaging with thematic bodies, including through: (i) exchanging information; (ii) participating in relevant meetings; and (iii) identifying components of programmes and work plans of thematic bodies and incorporated into the relevant parts of the work programme of the Secretariat. The Secretariat continued to participate in meetings and provided information and input into the activities of the Adaptation Committee throughout the reporting period. The Board adopted the Indigenous Peoples Policy by decision B.19/11. Complementarity and coherence with other funds Complementarity and coherence with other funds Encourages the Board of the Green Climate Fund to improve complementarity and coherence with other institutions, per paragraphs 33 and 34 of the See section VIII on Complementarity and coherence with other funds

139 Page 136 Guidance received from the Conference of the Parties governing instrument of the Green Climate Fund, including by engaging with relevant bodies of the Convention, such as the Standing Committee on Finance Decision 7/CP.21, para. 26 Linked with decision 7/CP.20, para. 16 Coherence and coordination Requests the Board of the Green Climate Fund, when deciding its policies and programme priorities, to consider the information and lessons learned through engagement with other relevant bodies under the Convention, and other relevant international institutions Decision 7/CP.20, para. 15 Incorporating lessons learned on country-driven processes Requests the Board of the Green Climate Fund: (a) To consider important lessons learned on country-driven processes from other existing funds Decision 4/CP.19, para. 16(a) Action by GCF GCF has been continuously conducting consultations and engagement with existing funds such as the Adaptation Fund, the Global Environment Facility and the Multilateral Fund to learn from their country-driven approach when developing and implementing all key operational areas of GCF, covering accreditation, readiness and project development. The Secretariat has been participating in various meetings, events and workshops held by existing funds to actively learn from the existing lessons. See section VIII on Complementarity and coherence with other funds In its decision B.08/10 the Board has endorsed the initial best practice options for country coordination and multi stakeholder engagement as part of its decision on country ownership. It has also decided that only those funding proposals that have a letter of No-objection will be considered by the Board. The Board through its decision B.10/10 re-affirmed that it will pursue the country driven approach. In addition, the Board approved through decision B.17/21 the guidelines for enhanced country ownership and country drivenness. The Board further requested the Secretariat to assess annually the experiences gathered from the application of these guidelines and to continue to improve the guidelines based on lessons learned and observations from current best practices. Engagement with the private sector Encourages the Board to implement its decision B.04/08 to develop modalities to support activities enabling private sector involvement in the least developed countries and small island developing States, and to seek opportunities to engage with the private sector, including local actors, on adaptation action at the national, regional and international levels Decision 10/CP.22, para. 11 See section VII on Maximizing engagement with the private sector The Board through decision B.15/03, paragraph (i), requested the Private Sector Advisory Group (PSAG) to provide recommendations to the Board at its seventeenth meeting on: (i) The development of modalities to support activities enabling private sector involvement in the least developed countries (LDCs) and small island developing States (SIDS); and

140 Page 137 Guidance received from the Conference of the Parties Requests the Board of the Green Climate Fund to accelerate the operationalization of the private sector facility by aiming to ensure that private sector entities and public entities with relevant experience in working with the private sector are accredited in 2015, expediting action to engage local private sector actors in developing country Parties, including small- and medium-sized enterprises in the least developed countries, small island developing States and African States, emphasizing a country-driven approach, expediting action to mobilize resources at scale, and developing a strategic approach to engaging with the private sector; Decision 7/CP.20, para. 9 Privileges and immunities for GCF Requests the Board of the Green Climate Fund to report biennially to the Conference of the Parties on the status of existing privileges and immunities Action by GCF (ii) Opportunities to engage the private sector, including local actors, in adaptation action at the national, regional and international levels. The Board decided to co-opt a Board representative from the LDCs and another from SIDS to assist the PSAG to develop its recommendations. In addition, pursuant to decision B.13/05, paragraphs (c) and (d), the Board is scheduled to consider an analysis of barriers to crowding-in and maximizing the engagement of the private sector, and PSAG recommendations on the same. The Board also mandated the development of a private sector outreach plan. The Secretariat carried out a survey of private sector actors and an analysis of barriers to crowding-in the private sector, which was presented to the PSAG, and these items are subsequently planned for presentation to the Board for its consideration, in driving towards the development of the private sector outreach plan. The Board, in decision B.17/06, requested the PSAG to provide recommendations on opportunities to engage the private sector, including local actors, in adaptation action at the national, regional, and international level. In PSAG meetings, initial data and content from a GCF-commissioned research by the World Resources Institute was reviewed by PSAG members, which helped initiate the discussion. The document will be presented to the Board for its consideration at its twentieth meeting. See section VII on Maximizing engagement with the private sector See section XII on Privileges and immunities with regard to the operational activities of the Green Climate Fund

141 Page 138 Guidance received from the Conference of the Parties with regard to its operational activities, starting at the twenty-first session of the Conference of the Parties Decision 7/CP.20, para. 22 Notes with concern the lack of signed bilateral agreements related to privileges and immunities in order for the Green Climate Fund to undertake its activities Decision 10/CP.22, para. 8 Linked with decision 7/CP.20, para. 21 and decision 7/CP.20, para. 21 Action by GCF Looks forward to the biennial report on the matter referred to in paragraph 8 above, in accordance with decision 7/CP.20, paragraph 20, and Board decision B.08/24 Decision 10/CP.22, para. 9 Results management framework Monitoring and evaluation In supporting the monitoring and evaluation of adaptation, the AC recommends that the COP invite Parties, operating entities of the Financial Mechanism and relevant entities working on adaptation to take into account the following recommendations: (b) Monitoring and evaluation frameworks need to be appropriate, relevant to needs and tailored to country circumstances. A common set of global indicators is not useful, owing to the context-specific nature of adaptation; (c) National-level assessments can play a different role in measuring adaptive capacity from subnational or project-based assessments. National-level assessments could, for example, measure the degree of coordination and integration of adaptation in national priorities; (d) A positive learning environment, which encourages formal and informal learning, including peer-to-peer learning, and which encourages learning from negative as well as positive experiences, is important; (e) Planning and allocation of resources, both technical and financial, are key for effective monitoring and evaluation systems Decision 4/CP.20, annex, para. 3 Results management framework Each project proposal includes indicators that are unique to each project but based on the core indicators of the results management framework and relevant indicators from the GCF performance measurement framework (decision B.05/03). Relevant performance indicators at the impact and outcome level are assessed in each funding proposal for future monitoring and evaluation. Productive communication with accredited entities is encouraged for better understanding their current monitoring and evaluation practices. National assessments are funded through the GCF readiness programme including inter alia country programmes and national adaptation plans, and institutional strengthening of national and direct access entities which affords coordination and integration of adaptation of national priorities. Monitoring and evaluation systems are also developed through readiness programmes and are included in funded activities. Workshops organized by GCF to empower direct access entities and national designated authorities and focal points help enhance South-South knowledge exchange and learning from peers as to how to effectively engage with GCF and access necessary funding. There are four core indicators of the results management framework (decision B.08/07), three for mitigation (emissions reductions) and one for adaptation

142 Page 139 In the context of the monitoring and evaluation of adaptation, the AC also recommends that the COP invite the Board of the GCF, with respect to its Results Management Framework, to consider: (f) Keeping indicators simple; (g) Designing indicators that are qualitative as well as quantitative; (h) Designing indicators in such a way as to capture the progress that countries are able to make in integrating adaptation into their development and sectoral planning, policies and actions; (i) Giving countries sufficient flexibility to define their indicators in line with their national and local planning, strategies and priorities Decision 4/CP.20, annex, para. 4 Selection of the Permanent Trustee [ ] To select the trustee of the Green Climate Fund through an open, transparent and competitive bidding process in a timely manner to ensure that there is no discontinuity in trustee services Decision 6/CP.18, para. 7(e) Linked with decision 3/CP.17, para. 16 Decision 9/CP.20 Fifth review of the Financial Mechanism (populations affected). The indicators are used to measure the impacts of projects and programmes. Progress reports contain both quantitative and qualitative progress of relevant indicators for each funding proposal. Additionally, constant improvement of the adaptation and mitigation performance management framework indicators is envisaged. Additionally, narrative reports including qualitative elements on the implementation progress of each project will provide additional information for assessing the performance of GCF-funded projects. Pursuant to the Board request contained in decision B.08/07(b), the Secretariat is in the process of developing indicators for the performance measurement framework, including indicators for NAPs. This work has taken into account the report of the Adaptation Committee to COP at its twenty-first session (COP 21). Several refinements to the proposed indicators were developed informed by the Adaptation Committee recommendations. The additional work that has been carried out to further refine the indicators are scheduled for consideration by the Board. In decision B.12/36, the Board mandated the commissioning of a third party to implement the review of the Interim Trustee of GCF as set out in the Governing Instrument. By decision B.16/05, the Board established the ad hoc Trustee Selection Committee and adopted the terms of reference of the ad hoc Committee; appointed four members of the Board to Committee; and requested the ad hoc Trustee Selection Committee, with the support of the Secretariat, to convene immediately to begin its work, and to recommend the final nominee to the Board for its decision no later than its eighteenth meeting. In decision B.19/03, the Board affirmed that there should not be a discontinuity in the service of the Trustee and confirmed that the selection of the Permanent Trustee of GCF shall be undertaken through an open, transparent and competitive bidding. The Board also adopted the terms of reference of the Permanent Trustee, a selection process and a time frame for the selection process. The ad hoc Trustee Selection Committee will report to the Board on the implementation of this decision at the twenty-first meeting.

143 Page 140 Stakeholder engagement in the development of policy documents The GCF could build on the experience of and lessons learned from the GEF in terms of stakeholder involvement. In this regard, the GCF may consider establishing a robust consultative process with its observers in order to ensure that adequate and timely consultation is undertaken with respect to the development of its policies, procedures, guidelines, and, later on, during the implementation of programmes and projects of the Fund Decision 9/CP.20, annex, para. 14 Gender GCF has continually conducted consultations with stakeholders through calls for inputs, workshops, webinars and conference calls. During this reporting period, stakeholder consultations were carried out as follows: i) In decision B.15/12, the Board authorizes the Head of the Independent Redress Mechanism Unit (IRM) to undertake consultations on the revised terms of reference (TORs) for the IRM. On 21 December 2016, GCF called for submission of inputs on the revised TORs for the IRM. Consultations were also carried out with a wide range of stakeholders though a series of webinars. The Board is scheduled to consider the revised TORs of the IRM; ii) GCF launched consultations with members of the Board and global REDDplus stakeholders in February 2017 and organized an expert workshop in Bali, Indonesia in April Both the submissions from the consultations and the outcomes of the expert workshop will serve as the basis for the development of an RFP for results-based payments that is scheduled for consideration by the Board; iii) GCF, on 24 May 2017, invited public inputs for the development of its Whistle-blower and Witness Protection Policy; iv) GCF, on 20 April 2017, launched a call for public inputs to the review and update of the GCF Gender Policy and Action Plan posted on the GCF website; and v) On 15 December 2016, GCF launched a call for inputs for the development of its environment and social management system to be developed pursuant to decision B.07/02. Public calls for inputs with respect to the development of GCF policies, procedures and guidelines launched to date are available on the GCF website. 3 Following decision B.12/14, the process to conduct a comprehensive review of the participation of observers in activities of the Board/GCF is ongoing, and is in the pipeline for consideration by the Board. See section 10.1 on Gender considerations in the work of the GCF 3 Available at < meetings/documents?p_p_id=122_instance_8e72dtqcp5qa&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=_118_instance_jugwsitwv8c5 column- 2&p_p_col_count=1&p_r_p_ _resetCur=true&p_r_p_ _categoryId=23991#nav-category>.

144 Page 141 In developing its own approach to gender mainstreaming, the GCF could build on the experience of the GEF. It is recommended that gender equality be integrated in the structure and organization of the GCF itself, and that gendersensitive criteria be taken into account in funding approvals of the Fund Decision 9/CP.20, annex, para. 18 Environment and social safeguards As the GCF is developing its own environment and social safeguards, it should consider consistency with the safeguards of the GEF Decision 9/CP.20, annex, para. 21 Fiduciary standards As it monitors the use of its initial fiduciary standards and reviews those standards within the next three years, the GCF should consider maintaining consistency with the standards of the GEF Decision 9/CP.20, annex, para 25 Coherence and coordination The GEF and the GCF may consider collaborating in the use of funding pathways that may include the LDCF and the SCCF Decision 9/CP.20, annex, para. 51 Indicators The GEF and the GCF may consider collaborating to harmonize impact indicators and set new norms around reporting practice, especially in the context of adaptation finance. Furthermore, the operationalization of the GCF results-based management framework presents an opportunity to make progress in this regard Decision 9/CP.20, annex, para. 76 See section 10.2 on Environmental and Social Policy of the Green Climate Fund Pursuant to decision B.07/02, GCF adopted its initial fiduciary standards, which include basic fiduciary standards and three specialized fiduciary standards for project management, grant award and/or funding allocation mechanisms, and on-lending and/or blending. In decision B.08/03 and related decisions, the GCF accreditation process allows for entities that have undergone an accreditation process at the GEF (as well as the Adaptation Fund and the European Commission's Directorate-General for International Cooperation and Development) and are in full compliance with their requirements to be fasttracked in the GCF accreditation process. This recommendation will be taken into consideration when the initial fiduciary standards are reviewed. Pursuant to decision B.13/12, work to develop an overarching operational framework on complementarity and coherence with other funds is ongoing. See section VII on Complementarity and coherence with other funds which also reports on coherence and current engagement with other climate finance delivery channels while work to develop the overarching complementarity and coherence framework is ongoing. Pursuant to the Board request contained in decision B.08/07(b), the Secretariat has further developed the GCF performance measurement frameworks (PMFs), which set the indicators that GCF and its accredited entities are to use to measure the climate results envisaged in the initial results-based management framework. The draft PMFs were developed in consultation with 35 institutions, including the GEF. The proposed PMFs are in the pipeline for consideration by the Board.

145 Page Report on the implementation of arrangements between the Conference of the Parties and GCF 192. Through UNFCCC decision 5/CP.19, the COP adopted the arrangements between the COP and GCF, in with article 11 of the Convention, to ensure that GCF as an operating entity of the Financial Mechanism of the UNFCCC, is accountable to and functions under the guidance of the COP The arrangements specify elements to be included in the annual report of GCF to the COP starting from COP 20. Table 5 responds to these requirements, or maps out where in the report the information requested is provided. Table 5: Arrangements between the Conference of the Parties and GCF: Overview of reports on actions taken by GCF Guidance received from the Conference of the Parties Actions taken by GCF Arrangements with the COP Requests the Board of the Green Climate Fund to report on the implementation of the arrangements referred to in paragraph 4 above in its annual reports to the Conference of the Parties, starting at the twentieth session of the Conference of the Parties (December 2014) Decision 5/CP.19, para. 5 Recommendations of the Independent Redress Mechanism Unit The GCF will include in its annual reports to the COP the recommendations of its independent redress mechanism, and any action taken by the Board of the GCF in response to those recommendations Decision 5/CP.19, annex, para. 9 Linked with decision 7/CP.20, para. 24 This report addresses this request. The Board through its decision B.BM-2016/09 appointed the Head of Independent Redress Mechanism (IRM). Work to revise the terms of reference for IRM to be approved by the Board is ongoing. The Board is also to consider the detailed guidelines and procedures for the independent redress mechanism, which are to be prepared in consultations with the similar or equivalent mechanisms of accredited entities and other stakeholders. GCF reports to the COP The GCF is to submit annual reports to the COP for its consideration. Such annual reports shall include information on the implementation of policies, programme priorities and eligibility criteria provided by the COP, including information on the extent to which the COP guidance has been adhered to by the Board of the GCF Decision 5/CP.19, annex, para. 11 Linked with decision 6/CP.18, para. 5 Information on activities approved to receive GCF funding By decision B.19/19, the Board approved the work plan and budget of the IRM. Recommendations of the IRM will be included in subsequent annual reports of GCF to the COP. This report addresses this request.

146 Page 143 Guidance received from the Conference of the Parties Actions taken by GCF The GCF will include in its reports a synthesis of the different activities under implementation and a listing of the activities approved, as well as a financial report Decision 5/CP.19, annex, para. 12 The GCF will also include in its reports information on all activities financed by the GCF Decision 5/CP.19, annex, para. 13 Resource allocation The GCF will indicate in its reports actions it has undertaken to balance the allocation of resources between adaptation and mitigation activities under the Fund Decision 5/CP.19, annex, para. 14 Linked with: Decision 4/CP.19, para. 9(a) Decision 6/CP.18, para. 7(b) Decision 3/CP.17, para. 8 Mechanisms to draw on expert and technical advice from UNFCCC thematic bodies The GCF will also include information on the development and implementation of mechanisms to draw on appropriate expert and technical advice, including from the relevant thematic bodies established under the Convention, as appropriate Decision 5/CP.19, annex, para. 15 Linked with decision 7/CP.21, para. 27 Annex VII lists the activities approved to receive GCF funding as at 30 April 2018 under: The Readiness and Preparatory Support Programme (table 11); The Project Preparation Facility (table 12); Projects and programmes under the adaptation and mitigation thematic windows of GCF (table 13). Annex X contains the financial report and audited financial statements for Of the USD 3.7 billion approved for the implementation of 76 projects, USD 1.07 billion is allocated to adaptation projects; USD 1.61 billion to mitigation; and USD 1.04 billion to crosscutting projects and programmes. In decision B.09/02, the Board requested the Secretariat to monitor the portfolio, report to the Board, and recommend needed actions, in order to align the portfolio composition with the initial results management framework as contained in decision B.07/04 when the portfolio reaches USD 2 billion, but no later than two years after the first funding decision. See section on Alignment of the GCF portfolio with the initial results management framework See section IX on Support for technology strengthening linkages with the Technology Mechanism, and responses to: UNFCCC decision 1/CP.21, para. 110 UNFCCC decision 7/CP.21, para. 22 UNFCCC decision 7/CP.20, para. 8 UNFCCC decision 13/CP.21, para. 4 UNFCCC decision 6/CP.18, para. 7(f) UNFCCC decision 13/CP.21, para. 8 UNFCCC decision 4/CP.20, para. 4 Resource mobilization The GCF is to provide information on resource mobilization and the available financial resources, including any replenishment processes, in its annual reports to the COP Decision 5/CP.19, annex, para. 17(b) See section 2.7 on Status of resources and arrangements for the formal replenishment process for the GCF and annex IV to see the pledge tracker.

147 Page 144 Guidance received from the Conference of the Parties Actions taken by GCF Linked with: Decision 7/CP.20, para. 5 Decision 4/CP.19, para. 9(a) Decision 6/CP.18, para. 7(c) Independent evaluation The reports of the GCF should include any reports of the independent evaluation unit, including for the purposes of the periodic reviews of the financial mechanism of the Convention Decision 5/CP.19, annex, para. 20 See status on available financial resources in annex IX which contains the Audited financial statements 2017/Statements of financial position and of comprehensive income. At the thirteenth meeting of the Board (B.13), the Board appointed the head of the Independent Evaluation Unit (IEU) and through decision B.16/07 approved an interim work plan and interim budget of the IEU, and authorized the Head of the IEU to undertake consultations to inform the outline of the independent evaluation policy and undertake processes to set up the IEU. By decision B.19/21, the Board approved the initial work plan and budget of the IEU. It also approved in decision B.19/16, the first evaluation to be undertaken by the IEU of the Readiness Preparatory and Support Programme. See section on Evaluation of the Readiness Programme for more details. Reports of the IEU, including for the purposes of the periodic reviews of the Financial Mechanism of the UNFCCC, will be included in subsequent annual GCF reports to the COP.

148 Annex IV Green Climate Fund Report on Audits of Financial Statements For the years ended December 31, 2017 and 2016 Prepared Under International Financial Reporting Standards