There are various definitions of what Climate Finance Readiness means – a general way to define the term is for a country to have the capacity to plan for, access, deliver, and monitor and report on climate finance, both international and domestic, in ways that are catalytic and fully integrated with national development priorities. (adapted from UNDP Readiness for Climate Finance )
Direct access refers to the option for developing countries to access multilateral public climate finance through either an accredited national or sub-regional entity. These entities take on implementing agency functions (financial oversight, monitoring and evaluation, overall supervision) and contract executing entities to program resources.
Multilateral access refers to when fund oversight, management, and implementation are undertaken at the international level within a multilateral or international institution. Execution may take place at the national level (through national execution modalities within multilateral institutions) or may be managed from within the multilateral institution. Under this arrangement there is use of multilateral rather than country systems, with expenditure being channeled largely outside the national budgetary system (adapted from Direct Access to Climate Finance: experience and lessons learned, discussion paper by ODI).
In enhanced access all functions – oversight and management, implementation, and execution – are delegated by the global fund in question to the national level. The key distinction between enhanced access and direct access is that funding decisions and management of funds take place at the national level (adapted from: Direct Access to Climate Finance: experiences and lessons learned, discussion paper by ODI).
The Adaptation Fund pioneered fully-operational direct access to climate financing, and has accredited 32 implementing entities to date, who after our rigorous review process, are eligible to propose adaptation initiative, and to implement approved initiatives. Accredited entities include 17 national implementing entities, and their experiences are helping inform the Fund’s Readiness Programme for Climate Finance, which it launched in May 2014.
CDKN’s vision is for an international climate finance system that is ‘fit for purpose’ – i.e. that will support the delivery of climate funds urgently needed by developing countries in the medium term, as well as meet commitments made in the UNFCCC context in the long term.
Individual countries must be able to access those funds effectively. They need the skills and institutional capacity to qualify for them, and must have systems in place for allocating the funds transparently among projects and programmes.
The very significant potential of the private sector to provide investment capital for low-carbon development and climate adaptation projects must be unlocked if the world is to reach these ambitious climate finance targets and the underlying emissions reductions goals.
In support of this vision, CDKN:
1. Seeks to influence the evolution of the international climate finance architecture so that it benefits developing countries
2. Disseminates best practices and catalyses innovative partnerships among private sector actors and government decision makers in support of climate compatible development
3. Strengthens developing countries’ institutions and processes for gaining access to climate finance, allocating climate monies fairly, and monitoring and reporting accurately on climate investments.
Find out more about CDKN’s climate finance readiness projects and programme at http://cdkn.org/themes/theme- climate-finance.
The Climate Finance Ready website provides practitioners and others with best practices, news articles, links to resources, opportunities for sharing experiences, and more. With the Climate Finance Ready website, the Fund and CDKN aim foster ongoing dialogue and collaboration in climate finance readiness.