Strengthening Public Financial Institutions
Strengthen key policies and governance elements in strategically-important institutions in order to promote financing for sustainable activities and discourage financing for unsustainable ones.
Multilateral and national public financial institutions remain major providers of finance for sustainable, climate-compatible activities. These institutions’ investments and knowledge will be critical for meeting the climate and other sustainability challenges, as well as to meet the goals of the Paris Agreement. The institutions include the multilateral development banks (MDBs); specialized funds such as the Green Climate Fund (GCF), the Adaptation Fund, and the Climate Investment Funds; and national development banks under the umbrella of the International Development Finance Club (IDFC).
The Finance Center seeks to strengthen key policies and governance elements in a small set of strategically-important institutions in order to promote financing for sustainable activities and discourage financing for unsustainable ones. We rely on our deep knowledge of these institutions, the UNFCCC finance negotiations, and of the climate finance architecture; on our convening power; and on our in-house sectoral expertise to produce timely research products to inform key decisions. While our efforts apply to a broad range of financial institutions, our focus is primarily on:
- MDB policies, practices, and governance
- Policies, practices, and governance of specialized climate funds, especially the GCF
- UNFCCC finance negotiations
- IDFC analytical and strategic activities
Specialized climate funds provide vital public resources, usually on concessional terms, for climate change adaptation and mitigation. The resources in these funds are limited, so it is essential that they be directed towards activities with the greatest potential impact. The Finance Center works to help ensure that the climate funds are designed to effectively distribute their financial resources. While our work encompasses many of the climate funds, such as the Adaptation Fund (AF), the Climate Investment Funds (CIFs), and the Least Developed Countries Fund (LDCF), we focus much of our attention on the Green Climate Fund (GCF). As the largest dedicated climate fund, the GCF plays a particularly important role in the climate finance architecture.
The Finance Center works to ensure that the GCF channels funding effectively and efficiently to countries in need. This includes work on:
- The GCF’s overall governance structure;
- The GCF’s approach to supporting climate change resilience and adaptation; and
- The GCF’s systems for accrediting and channeling funding through entities from developing countries.