Civil society representatives attending the board meeting of the Green Climate Fund (GCF) in Songdo, South Korea expressed strong disappointment Thursday with the board’s decision to accredit Deutsche Bank – one of the world’s largest financiers of coal – to receive and distribute GCF funds.
The Fund is the United Nations’ premier mechanism for funding climate change-related mitigation and adaptation in developing countries.
At the Copenhagen climate summit in 2009, donors agreed to mobilise 100 billion dollars a year by 2020, in an undefined mix of public and private funding, to help developing countries. The GCF is to be a cornerstone of this mobilisation, using the money to fund an even split between mitigation and adaptation projects.
But representatives of development, environment and social justice organisations say that while they support the Fund in principle, “it needs to change direction away from accrediting controversial big banks that are heavily invested in fossil fuels and thus actually exacerbating climate change.”
They say the Board chose to approve all 13 applicants presented for accreditation at the current GCF meeting in a single bloc, accrediting groups of entities in one go. Besides Deutsche Bank, they included the World Bank, whose record is also controversial for its “top-down, donor-driven nature.”
“This encouraged political horse-trading between Board members over which applicants get approved, leading to tit-for-tat approval of applicants despite very serious reservations,” the groups said in a statement Thursday.
They include ActionAid International, Third World Network, Women’s Environment and Development Organization (WEDO), Friends of the Earth, and a host of other development policy and grassroots organisations.
“[Deutsche Bank] has been criticized for its very poor record on human rights monitoring, was awarded the ‘Black Planet Award’ for environmentally destructive business policies, and recently received a record fine for market manipulation and obstructing regulators,” the statement says.
“The GCF claims zero tolerance towards money-laundering, but has accredited Deutsche Bank despite the fact that two national regulators have this year fined it for the poor state of its anti-money-laundering governance.”
Lidy Nacpil, coordinator of the Asian Peoples Movement on Debt and Development (APMDD), one of the representatives at the GCF board meeting, said, “Neither Deutsche Bank nor the World Bank can hold up to the highest fiduciary and financial accountability standards, as well as enforce social-economic and environmental safeguards.
“In addition, they continue to be among the biggest bankrollers of dirty energy, as well as false solutions such as palm oil and agrofuels. And despite their public commitment to the transition to renewables and clean energy, they show no signs of slowing down,” she added in a statement.
The 11 other entities accredited by the GCF board are Namibia’s Environmental Investment Fund, Rwanda’s Ministry of Natural Resources, India’s National Bank for Agriculture and Rural Development, Corporación Andina de Fomento (Development Bank of Latin America), Caribbean Community Climate Change Center, Africa Finance Corporation, Agence Française de Développement, Conservation International, European Bank for Reconstruction and Development, Inter-American Development Bank and United Nations Environment Programme.
They and the seven previously-accredited institutions are allowed to access GCF funds, and in turn disburse them to other groups who will be implementing projects and programs in developing countries.
“Unfortunately, with this decision [to accredit Deutsche Bank and the World Bank], the Green Climate Fund is proving to be more ‘business as usual’ rather than ‘transformational,’” Nacpil said.
Athena Ballesteros, director of the World Resources Institute’s Finance Center, who is attending the meetings, said the group welcomed the inclusion of many of these national entities.
“The future of effectiveness of climate financing rests on empowered national institutions which will be the main engine of countries’ implementation of climate action plans,” she said.
“Today’s decision demonstrates that developing country institutions, even relatively small ones, can meet international standards of best practice in financial and project management and environmental and social protections.”