From 26th to 28th June, the Board of the Green Climate Fund (GCF) convened its 4th meeting, in Songdo, Korea, the future seat of the GCF, and started with an important decision - the nomination of the GCF Executive Director: Ms. Hela Cheikhrouhou.

The "Business Model Framework (BMF)" was at the core of the 4th GCF Board meeting, and the official meeting was preceded by an informal workshop of the Board on the BMF, to which also observers had access as well. During the official meeting, the Board discussed 6 questions relating to the BMF.

• The Board discussed "objectives, results and performance indicators", crucial in order to develop a practical framework that is able deliver on the ambition that is required from the GCF. The Board based its discussion on the background paper prepared by the Interim Secretariat, which outlined a number of potential initial result areas in the area of mitigation and adaptation, as well as crosscutting aspects such as sustainable cities or integrated forest management, as well as potential performance indicators. A number of Board members pointed to the need to agree on initial result areas to be able to show what the fund will focus on, while others expressed their concern that a decision already now would be premature, and would prejudice and limit future funding options. A compromise - to attach the list of result areas from the background paper to the decision and clearly continuing work on this, with the option to add other areas - faced continued resistance by some parties. The Board will take up the matter at the next meeting and will try to resolve it, and further intense discussion must be expected.
• "Country ownership" is another crucial and crosscutting element on the BMF agenda, since a country-driven approach is a core principle of the GCF. The discussions on the draft decision focused namely on the nomination, role and design of the so-called National Designated Authorities (NDAs). Following intense discussions, the decision taken outlines some key responsibilities of the NDAs and initiates a nomination process, in the context of an overall country-driven approach. At the next GCF meeting, the Board will also look at best practice examples of multi-stakeholder involvement. This is another important issue and Board members couldn’t agree on minimum requirements that the NDAs would have to meet in that regard.
• With regard to "access modalities", the Board intensively discussed options to use existing access procedures by other financial instruments to speed up the process, while at the same time underlining the need to develop its own procedures in order to fully take into account the specifics of the GCF. A major discussion issue was that of enhanced direct access. Eventually the Board decided to consider - at its next meeting in September –interim accreditation procedures used by other relevant funds, the elaboration of criteria for the accreditation of sub-national, national, regional and international intermediaries and implementing entities; and assess existing procedures in other funds - with a view to agreeing whether or not those intermediaries and implementing entities should be provided with interim accreditation. At its first meeting in 2014 it will also consider modalities that further enhance direct access, including through funding entities. Therefore, the next meeting might already see the interim accreditation of institutions to start disbursing some initial funds.
• With regard to "financial instruments" the GCF would use, it was finally decided to commence with the use of grants and concessional lending and to consider criteria for their use at the next GCF Board meeting. How and which other instruments will be used could not yet be agreed.
• The Board also made a substantial and controversial decision around the "Private Sector Facility (PSF)". One key controversial issue was that of the governance of the PSF, whether to allow it to be governed by a separate governance structure, as one option suggested in the background paper. However, separating the PSF from the GCF was resisted by most Board members. The decision made reaffirms that the PSF is clearly under the authority of the GCF Board and part of the GCF. The decision further outlines, inter alia, some barriers that the PSF should address and reaffirms the importance of addressing private sector actors in developing countries. In terms of governance, the Board decided to establish two committees. The Risk Management Committee will have the task to develop an appropriate risk management framework. The Investment Committee will review investment proposals and instruments and recommend their approval in accordance with social and environmental safeguards and the Fund’s objectives and the risk management framework. Finally it was decided to establish a PSF Advisory Group to provide recommendations to the Board on the operation of the PSF. It will include Board members, private sector representatives and representatives from civil society.
• With regard to the "structure and organisation" of the Fund, the Board considered various options of structuring, but also agreed on the need not to prejudice too much the structure of the Secretariat given the fact that the new executive director would come on board soon. For the next meetings it has a number of tasks to look at, including the design of an independent redress mechanism, permanent Board committees etc.
• It was an important step to take decisions at this GCF meeting in order to capture the progress that was possible at this stage. However, many controversial issues are still on the table. In this regard, the next meeting will be another very crucial one to allow the GCF to move forward, and be deemed operational and capable of receiving substantial funds. For the next meeting, which is scheduled for September (the exact dates are no longer confirmed) and which will be hosted by Paris, the Board has a long to-do-list. It has to follow up on the June decisions, but also address a number of outstanding issues dating back from March, including that of resource mobilisation. Furthermore it has not yet taken up all the issues that the COP wrote in its to-do-list.