Synopsis & commentary:
This report presents the findings of the Independent Evaluation on the GCF’s approach to the private sector. It analyses the operationalisation of the GCF mandate regarding the private sector, lessons and opportunities for coherence and complementarity, the GCF business model, project portfolio, and measuring and reporting of results and impacts. The report closes with a series of findings, conclusions, and recommendations under each of these areas.
Overall findings are spread across seven criteria, and the most relevant are summarized below:
Country case studies
- MANDATE OF THE GCF: The following five core provisions are discernible in the GCF mandate on the private sector: 1) Channel private finance, including catalysing finance 2) Country-driven approach 3) Geographical and thematic balance between adaptation and mitigation 4) Efficiency and effectiveness to promote participation of private sector actors 5) Support to enable private sector involvement in small island developing States (SIDS) and least developed countries (LDCs) - LESSONS LEARNED FROM THE LANDSCAPE OF INSTITUTIONS: Evidence from climate funds, IFIs and development banks indicates that efforts to finance the private sector, directly and indirectly, require promoting and respecting country-driven processes that set the priorities for private sector engagement. The report concludes that the GCF has successfully channelled new financial resources to developing countries. It has also leveraged largescale co-funding from public and private sources. However, GCF support for policy and regulatory reforms, technical capacity-building, readiness, and the like is delivered primarily with limited targeting of or consultation with the private sector. Moreover, the GCF has had limited results with regard to investments in an enabling environment for private sector adaptation, channelling sufficient finance via DAEs, or exhibiting sufficient risk appetite to achieve its mandate to enable private sector involvement in adaptation in LDCs and SIDS.
The introduction of the RRMF is expected to address these findings through the introduction of under clearly defined objectives targeting private sector engagement. For example, Objective 2 includes ‘Outcome 2.4 Strategies for transforming and attracting private sector investment for low emissions and resilience developed and being used.’ Outputs associated with this outcome include: 2.4.1 New business models incubated and/or innovative financial mechanisms and schemes created to increase low -emission and climate resilient investment 2.4.2 Strategies, road-maps, studies and policy incentives completed to foster private financing for Country Programme implementation and/or low-emissions climate resilient development In addition, Objective 3 includes ‘Outcome 3.3 Private sector engagement in adaptation catalyzed.’ Outputs associated with this outcome include: 3.3.1 Strategies, policies, and incentives developed to foster private investment in adaptation solutions 3.3.2 Assessments and knowledge products to inform the private sector on adaptation options and GCF finance developed 3.3.3 Capacity building provided to the Private sector on adaptation options
This report is complemented by a number of country case studies, two of which demonstrate well how the RPSP can support private sector mobilisation. The case of Bangladesh shows how the RPSP can be used to reinforce and strengthen the capacities of national institutions and the private sector to better equip them for engagement with the GCF. For example, the RPSP-funded project on “Up scaling regulatory landscape of Green Banking for Shariah Based Banks and Financial Institutions in Bangladesh”, implemented by the Bangladesh Bank, set the stage for private sector engagement.
Similarly, the case of Burkina Faso shows how through three Readiness grants, significant progress could be made to ensure Burkina Faso now has the tools and partners needed to effectively engage with the GCF in a country driven manner: the funds built no-objection procedures, national and regional bodies were accredited, and workshops were held to strengthen the knowledge and understanding of the NDA on how the GCF operates and the key opportunities for catalytic action. For example, the first grant set up a no-objection procedure for the NDA, established a formal stakeholder consultation process, and supported the newly accredited entity to submit a funding proposal under the GCF’s PSF.