Dear Members of the Transitional Committee and Chairs of Country Groupings:
We are civil society organizations and social movements deeply concerned about the current direction of the Green Climate Fund (GCF). We worry that it may be turned into a ‘Greedy Corporate Fund’ serving the interests of the corporate and financial sectors, instead of financing activities to save the planet and protect the poor in developing countries. We are especially concerned with proposals for establishing a private sector facility in the Green Climate Fund (GCF) that could allow multinational corporations to directly access GCF financing for activities in developing countries, bypassing those countries’ governments.
We believe that the role of the private sector in the GCF must be decided, managed, regulated and incentivized at the national and sub-national levels in line with countries’ preferences and needs, not corporate bottom lines. We therefore strongly object to any resources going from the Green Climate Fund directly to the private sector, particularly through the establishment of a private sector facility.
An effective global climate fund must support people in developing countries, in both the public and private sectors, to fight against climate change. Therefore, we expect the GCF to contribute to sustainable, vibrant local economies in developing countries. The GCF’s purpose is not to subsidize multinational corporations or financial institutions. However, as currently written in the final report of the Transitional Committee for the Design of the Green Climate Fund to the Conference of Parties, the Fund could do just that: “The Fund will have a private sector facility that enables it to directly and indirectly finance private sector mitigation and adaptation activities at the national, regional and international levels.”
Few adaptation measures in developing countries will be attractive to the private sector, as they will not generate revenue. Some key mitigation programs, including efforts to encourage energy access for the poor, may also not be financially lucrative. Yet it is investment in these public goods on which the GCF must focus. A private sector facility could instead lead to the diversion of scarce climate finance resources away from investment in public goods toward private sector subsidies for profit-making endeavors.
Further, the Green Climate Fund should avoid being linked with carbon markets and other risky financial instruments.For example, carbon derivatives markets have been plagued with market and environmental integrity scandals, and have not offered strong prices and sustained revenues. Rather, carbon prices have been extremely volatile and, as of late, very low. A private sector facility linked to carbon markets will not provide a reliable stream of finance to developing countries for adaptation and mitigation. Further, according to the UN Climate Convention, finance is to be provided in the form of grants and concessional loans.
The GCF is critically needed to support developing countries in confronting the climate crisis. However, it must not serve to subsidize transnational corporations or financiers; the GCF must not have a private sector facility.
Thank you for your urgent consideration of these pressing matters.
Global Alliance for Incinerator Alternatives (GAIA)
Institute for Agriculture and Trade Policy
Jubilee South – Asia/Pacific Movement on Debt and Development
Sustainable Energy & Economy Network, Institute for Policy Studies
Third World Network
World Development Movement