International Finance Corporation has withdrawn its REDD Climate Bonds proposal to the Green Climate Fund

Last week REDD-Monitor posted an open letter to the Board of the Green Climate Fund written by the World Rainforest Movement. The open letter, which was signed by over 100 organisations, urged the board to say no to the International Finance Corporation’s funding proposal, “Climate Bonds for Forests: Scaling up Private Sector Financing for REDD+”. Today, the IFC withdrew the proposal.

The Green Climate Fund document GCF/B.24/02/Add.09/Rev.01 states (in full):

The funding proposal titled “Climate Bonds for Forests: Scaling up Private Sector Financing for REDD+” submitted by the International Finance Corporation (IFC) has been withdrawn from consideration at the twenty-fourth meeting of the Board by the accredited entity.

The Green Climate Fund has amended its document GCF/B.24/02/Rev.02, “Consideration of funding proposals” to state that FP 123 “has been withdrawn from B.24 by the accredited entity”.

Lack of country ownership

The Green Climate Fund submitted IFC’s funding proposal to its independent Technical Advisory Panel (iTAP). The funding proposal was “not progressed by the iTAP due to . . . the lack of country ownership in particular no-objection letters missing from most of the countries involved”.

The Green Climate Fund states that,

a financial programme was proposed targeting a multiple number of countries. During the course of the iTAP assessment, the iTAP identified issues that required additional work to be reflected in the funding proposal. The iTAP and AE [accredited entity] agreed to suspend the process until the work is completed and its result is incorporated in the funding proposal to be resubmitted for the iTAP continuous assessment.

Under Green Climate Fund rules, the IFC can revise the funding proposal together with the Green Climate Fund Secretariat and the revised funding proposal can be presented to a future meeting of the Board.

FONAREDD’s five main concerns

On 8 November 2019, the Technical Committee of the Fonds National REDD (FONAREDD) in the Democratic Republic of Congo held its 26th meeting. In a Communique released after the meeting, the Technical Committee notes that because of the “originality and complexity” of the IFC proposal raises a series of concerns that “require a detailed analysis of the programme proposal”.

FONAREDD’s Communique lists five “main concerns” relating to:

• The accounting of credits and their deduction from DRC’s achievements under its Nationally Determined Contribution.

• The limited amount of time allocated to review the complete documentation.

• The regulatory framework required for transactions is not in place and should be a condition of the programme starting.

• The process and criteria for the selection of intermediaries and local companies should be transparent, participatory and clarified.

• Risk management measures should be put in place for land grabbing, change of allocation, and marginalisation of local communities. The Cancun safeguards have to be respected.

FONAREDD’s Communique concludes with the Technical Committee’s recommendation that the IFC’s funding proposal should be reviewed in view of these concerns. The Green Climate Fund’s Board should require “the integration of sustainable conditions before the programme comes into force”.

So much for country ownership.