By Richard Calland, an Associate Professor in Public Law at the University of Cape Town, and Nancy Dubosse, an independent development economist, lead the new Climate Finance Hub initiative.

The financing of climate action has entered a watershed period. Either the momentum in favour of a substantial global fund to support both mitigation and adaptation efforts internationally– encouraged by the establishment of the Green Climate Fund (GCF) at COP17 – will be sustained, or it will wither on the vine, suffocated by a lack of political will, inadequate institutional capacity and the inclement economic environment in developed countries.

There is an urgent need to bring strategic and administrative coherence to the multiple sources of climate finance, and to align funding with development objectives and national and regional strategies. Even for climate finance from public budgets, there is a multiplicity of disbursement modalities.  The recent Climate Policy Institute’s climate finance mapping has revealed that of the $21 billion that comes from public budgets, about half goes to bilateral agencies and banks and the other half through multilateral agencies. Greater attention needs to be paid to improving the capacity of national and sub-national entities to absorb this financing and its effectiveness.

Eight urgent questions for effective climate finance governance

Accountable and transparent governance is crucial to the integrity, legitimacy, plausibility and sustainability of climate finance; considerations relating to country ownership, independent oversight and stakeholder engagement stand out. There are multiple questions of governance that need urgent attention:

• What is the most appropriate way to balance the need for nimble and efficient decision-making and dispersal of funding with the need to be fully accountable and inclusive? This was an issue that preoccupied the Transitional Committee charged with designing the institutional set up of the GCF last year, but was left largely unresolved and will have to be determined by the GCF’s Board as soon as it is established in the coming months.

• How best can civil society and private sector voices be included in the overall governance arrangements of the GCF? There are useful comparators now available, such as the Climate Investments Funds (CIFs), which have private sector and civil society participation.

• What will be the relationship between the GCF and other funds such as the Adaptation Fund, the CIFs, processes such as REDD/REDD++, and other multi-lateral bodies, such as the African Development Bank, and with private finance mechanisms such as voluntary carbon markets and offsets?

• What are the most effective governance and process management principles to enhance country ownership? And, how best to improve the capacity of developing countries to identify key priorities and develop climate change adaptation strategies, in the face of competing interests and priorities?

• Will recipient countries be sufficiently adept at organising and managing their national implementing entities to enable them to align GCF funding with development plans and strategies? In particular, how will local government structures be empowered to be agents of change?

• Which model for safeguarding environmental, cultural and social interests will be deployed? What redress mechanisms will be established? How will the need to advance gender equality be mainstreamed in the choice of GCF project funding?

• The Durban resolution establishing the GCF requires that its Board design an information disclosure policy.  Will the GCF and recipient countries adhere to international standards of information disclosure? This will be axiomatic for its legitimacy and for an inclusive approach to decision-making.

• What sort of multi-stakeholder processes can be built and sustained at international, regional, national and sub-national level to support the legitimacy and effectiveness of climate finance?

Innovative climate leaders as catalysts of change

Answering these questions requires innovative leadership, at all levels. Leadership is often mistakenly identified as a peak or the apex of a structure. A peak is a point of convergence; leaders are the catalysts for that convergence. Climate leadership can take place at the highest decision-making level or by a local community leader. Leaders can take ownership of the process of integrating climate change adaptation considerations into development planning, and champions can be disseminators and facilitators, relating global climate change issues to the national context.

Climate leaders can assure the success of programmes by fostering partnerships. For example, since communication is often lacking between climate change experts and development practitioners, there is a need to build partnerships with institutions that can act as intermediaries between science and policy-making, translating technical substance into practical actions that can be better understood at a grassroots level.

Therefore, funding mechanisms should support countries in developing the political and in­stitutional leadership, knowledge and technical capacity, financial and fiduciary management and accountability systems to take advantage of the multiple sources of climate finance available and so make flexible, robust decisions on climate change in line with low-emissions, climate-resilient development – perhaps (surely?) a strategic imperative for the GCF.

Aligning interests will be the name of the game

Last, climate change should be framed within a development agenda in which adherence to human rights and obligations to citizens must be fulfilled, including universal access to energy and the rights to housing, food security and education. These rights are claimed first at the level of government closest to the rights-holder: municipalities. Only at this level are social services fully accessible and adaptable.

In order to deliver such services, an integrated development planning process is required.  The climate leader in this in­stance is potentially the municipal manager who is meant to co-ordinate municipal planning with national and provincial departments, advocating on behalf of the local community. But thus far, climate finance to municipalities has been minimal. Local language use can aid in promoting awareness and behaviour changes  at local levels; private sector partnership with municipal governments and other local entities could help fill this gap.

These considerations are part of what one might call the ‘political economy of climate finance’, an appreciation of which requires an understanding of how the existing power centres of the world must adjust to a changing physical reality which will impact on everything from our diets to housing design to trans­portation. This ‘new reality’ of climate change represents a strong challenge to the state-centric model of international affairs, requiring both collaboration and consensus among a variety of stakeholders with diverse interests. Innovative leadership of innovative multi-stakeholder processes will be the name of the game.

View their full paper on Climate finance governance published at COP17 here.

Image courtesy of Ainhoa Goma- Oxfam.

We occasionally invite bloggers from around the world to provide their experiences and views. the views here are those of the authors, and not necessarily those of CDKN.