THE FUTURE OF THE FUNDS

FOREWORD
A few short months ago the Paris Agreement
entered into force, laying the ground for a safer
and more prosperous future. Now the real work
begins—governments across the world must accelerate
the transition toward low-emissions and resilient
societies. This transition will require financing.
While much of this finance will need to come from
the private sector, public finance has a crucial role
to play in helping to set economies on the right
path. Public funds can fill critical gaps and incentivize
private investors to shift their capital toward
sustainable initiatives. It can, for example, pay for
increases in community resilience that won’t result
in a financial return, or help reduce the risk to others
of investing in innovative clean technologies.
In recognition of the importance of public finance,
the global community has established several “climate
funds.” These funds are designed to disburse
funding to developing countries to help meet the
cost of climate change mitigation and adaptation.
Capitalized primarily by developed countries, the
funds also serve as recognition of the greater historic
responsibility these countries have for current
atmospheric greenhouse gases. While several international
climate funds now exist, their combined
resources of $23 billion are a mere fraction of the
global need of trillions of dollars a year. The funds
must therefore distribute their precious resources
carefully to ensure maximum positive impact.
This report seeks to investigate whether the current
arrangement of multilateral climate funds effectively
achieves such a distribution. It focuses on the
seven major multilateral funds operational today:
the Adaptation Fund, Clean Technology Fund,
Global Environment Facility, Green Climate Fund,
Least Developed Countries Fund, Special Climate
Change Fund, and Strategic Climate Fund. The
findings are based on interviews with a spectrum
of people representing these funds, contributor
and recipient countries and other key stakeholders.
The authors also conducted careful analysis of the
funds’ policies and portfolios.
The report shows there is room to improve how
the climate funds currently operate. The landscape
of funds could benefit from, among other things,
a greater focus on supporting systemic shifts, an
increased willingness to take on risk, and improvements
in efficiency and coordination. In the longer
term, some funds might be consolidated or sunset
once they have met their mandates.
It is crucial that international climate finance be
used effectively. I hope this report will help ensure
this is the case.
Andrew Steer
President
World Resources Institute
The Future of the Funds
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