Abstract
Given the pivotal role of the Green Climate Fund (GCF) in climate finance and the importance of ensuring that it is accountable to its stakeholders, this analysis takes a look at the GCF’s recently created Independent Redress Mechanism (IRM) – a grievance redress mechanism that entertains complaints from people affected or potentially affected by a GCF project and from developing countries that have been denied funding by the GCF Board. The analysis provides an overview of the tools and methods that the IRM uses to hold the GCF to account and explores some of its procedural innovations. It argues that although the IRM lacks the power to issue binding decisions, it adequately makes up for this through the use of soft power.
The amount of international climate finance for developing countries to tackle climate change has increased in recent years, particularly in light of the Paris Agreement. Playing a crucial role in this mission to make greater resources available is the Green Climate Fund (GCF). The GCF is the world’s largest climate fund. Its commitments represent about 73 percent of total commitments made by multilateral climate finance funds.1 Its significance, therefore, is unquestionable.
As a result of its funding model, the GCF channels resources through what are known as “Accredited Entities”. These include entities that operate at the international, national, sub-national or regional level. Despite the requirement that they be fully vetted for their ability to manage certain financial, fiduciary, and environmental and social safeguards, there exists a risk that these entities will fail to fully comply with GCF policies and procedures. Should this happen, there is a high likelihood that those most affected by climate hazards will be adversely impacted. There is, therefore, a pressing need for the GCF to remain accountable to its stakeholders, which include project-affected people as well as the developing countries it has been set up to serve.
In this respect, litigation is a poor choice of vehicle for someone seeking to hold an intergovernmental organisation such as the GCF to account. It is prohibitively expensive, time-consuming, and inaccessible for many. In addition, the law of immunities generally prevents such organisations from being sued in court. This continues to be the case despite the much-talked-about decision of the US Supreme Court in Jam v. International Finance Corporation.2 Though undoubtedly significant, the decision of linking the immunity of an intergovernmental organisation to State immunity law takes the US out of line with international customary law, which remains very much centred around the principle of functional necessity.3
Fortunately, there are better alternatives. Internal accountability mechanisms provide stakeholders with a more efficient and cost-effective way of holding organisations such as the GCF to account. In this context, little attention has been turned so far to the GCF’s own quasi-legal internal accountability mechanism – the Independent Redress Mechanism (IRM). Our purpose in this paper is therefore twofold: first, to provide an overview of how the IRM seeks to hold the GCF accountable and second, to critically evaluate its efficacy. Here, we argue that although the IRM lacks traditional “hard” power, in the sense of not being able to issue binding decisions, it makes up for this through the use of “soft” power in the form of persuasion and pressure, which is made possible by its innovative procedures.
With these purposes in mind, the article begins by breaking down the term “accountability” to enable a better understanding of what it entails and demands. The next part provides a brief overview of the IRM’s functions and procedures. Finally, in the third part it evaluates its efficacy in light of the discussion undertaken in Part I.
Breaking Down the Concept of Accountability
The question of accountability in climate finance has been broached from several angles in the past.4 This is perhaps because of the polycentric nature that climate governance and finance has acquired in recent years. Most such discussion has been predicated on an understanding of the term “accountability” that has the following two commonalities.5
First, accountability connotes a relationship between the “holder” (party seeking to hold another to accountability standards) and the “power-wielder”, with the former holding the latter to certain standards of conduct. These standards may be process-based. For instance, one may look to the procedural requirements governing the conduct of an environmental impact assessment. Equally, the standards may be outcome-based, such as the States’ obligation not to allow objects that they launch into space to cause harm.6
Second, essential to this answerability are the means through which a holder can access information regarding the conduct of the power-wielder. The GCF, for example, apart from making an abundance of information available on its website, allows individuals to request information through its “Information Disclosure Policy”.
A third element that we consider essential to accountability is the ability of the holder to effectively hold the power-wielder to a set of standards. In other words, what is crucial is whether the holder is in fact able to influence the conduct of the power-wielder. It may do so through the use of either “hard” means such as sanctions or “soft” means such as pressure or persuasion.
The next section will briefly describe how the IRM seeks to hold the GCF to account.
The IRM: Holding the GCF to Account
The GCF’s basic structure is comprised of its Board, the GCF Secretariat and the three designated “independent units” (i.e., the IRM, the Independent Integrity Unit (IIU) and the Independent Evaluation Unit (IEU)). The Board is charged with governance and oversight of the Fund’s management, whereas the Secretariat is responsible for executing the day-to-day operations of the GCF. The three independent units, on the other hand, have distinct functions that serve to oversee the activities of the Fund and are, crucially, independent from the Secretariat. In practice, this means that the heads of the independent units are appointed by the Board and that they have the liberty to choose their staffing and budgeting requirements.
The IRM operates within a much broader accountability framework. At the highest level, the GCF and its Board are accountable to the Conference of the Parties of the UN Framework Convention on Climate Change. Below this, the Convention’s Secretariat and the three independent units answer to the Board. At the same time, the three independent units also play distinct roles in allowing stakeholders to hold the GCF to account. The IIU, for instance, investigates allegations of fraud, corruption and other prohibited practices, whereas the IEU provides invaluable information by undertaking independent evaluations of the GCF’s activities. The IRM, which is our chief focus in this paper, on the other hand, provides developing countries and project-affected people with a direct avenue through which to hold the GCF to account.
The IRM does this in three ways. First, it addresses grievances or complaints by persons who have been or may be adversely impacted by a GCF-funded project or programme.7 Second, the IRM may, under certain circumstances, self-initiate compliance review proceedings against the GCF Secretariat.8 Third, it entertains requests from developing countries who believe that they have been wrongfully denied funding.9 These processes will now be explored in greater detail.
Grievances or Complaints by those Adversely Affected by a GCF-funded Project or Programme
Under the IRM’s complaints procedure, a grievance or a complaint can be filed by a person, group of persons, or community who have been or may be adversely affected by a GCF-funded project or programme due to a failure of the project to observe GCF operational policies and procedures.10 These may include, for example, the GCF’s environmental and social policy, indigenous people’s policy, or sexual exploitation and harassment policy.
Building on international best practice, and in seeking to improve accessibility, the IRM allows for complaints to be filed through a wide variety of channels. They can, for example, be submitted through an online complaints form, voice or video recording, or by calling a toll-free hotline once that is in operation.11 Significantly, and unlike other grievance redress mechanisms, such as the Inspection Panel of the World Bank (Inspection Panel), or the Compliance Review Panel of the Asian Development Bank, the IRM also allows for non-local representatives to file complaints on the complainant’s behalf without requiring proof of exceptional circumstances.12
If the complaint is eligible, the parties to the complaint can choose either to enter into a problem-solving phase or to initiate compliance review proceedings.13 The former is a participatory and flexible approach focused on assisting the parties in finding an effective and mutually acceptable solution to the concerns raised by the complainant.14 The process is generally overseen by a dispute resolution expert, such as a mediator. Compliance review, on the other hand, is a more formal process which involves the IRM investigating the complaint in depth to establish whether there has been non-compliance with GCF policies or procedures.15 Following the investigation, a compliance report containing recommendations is published and sent to the Board.16 The Board can then choose whether or not to accept the IRM’s findings and recommendations.17 It is also not required to give reasons for its decision.
Three features of this procedure are worth noting. First, the IRM does not require one to wait for the harm to accrue before granting the right to complain. On the contrary, the IRM entertains complaints from people that believe they may be harmed in the future.18 This can be regarded as the preventive function of accountability, i.e., where holding the power-wielder to a set of standards prevents harm. This can be contrasted with accountability’s remedial function, which seeks not only to hold the power-wielder to a set of standards, but also to provide redress for the harm caused by the failure to observe proper standards.
The second element worth noting is that apart from having to explain the circumstances of the complaint, the IRM places no burden of proof on the complainant.19 Instead, the IRM acts somewhat akin to an inquisitorial conciliator, i.e., one who gathers evidence and offers non-binding recommendations. This feature significantly improves the accessibility of the mechanism, which in turn, improves its effectiveness.
Third, to lend itself credibility, the IRM acts under a set of supporting operating procedures which very much resemble the rules of procedure and due process that one would expect to see in traditional judicial settings. The IRM has, for instance, rules on standards of proof, conflicts of interest, costs and confidentiality.
Self-initiated Proceedings
Although it is generally preferable for adversely impacted persons to bring their own complaints, the IRM can “self-initiate” proceedings under certain circumstances,20 subject to three conditions. First, the IRM must receive/present evidence from a credible source that a GCF-funded project or programme has adversely impacted a person, group of persons, or community, or may do so in the future. Such information may be sourced from the IRM’s own media scanning.21 Second, the information, if true, must pose a significant reputational risk to the GCF.22 Third, the head of the IRM must make a finding that the affected persons are unable to access the IRM.23 Inability in this respect does not mean impossibility. A person may be unable to access the IRM if they lack the skill or means to register a complaint with the IRM. If all the criteria are met, the IRM treats the matter as an eligible complaint and proceeds accordingly.24
It is indeed rare for an accountability mechanism to possess such powers. The IRM is alone among other noteworthy accountability mechanisms at the international level (including, for instance, the Inspection Panel, or the Compliance Advisor Ombudsman of the International Finance Corporation), in having the power to self-initiate proceedings.
Requests for Reconsideration of Projects or Programmes Denied Funding
During the negotiations that led to the creation of the GCF, developing countries insisted that the IRM should be able to review funding decisions. This insistence stemmed from the fear that developing countries would be denied funding based on irrelevant considerations which would ultimately dampen their efforts to tackle climate change.
Under this novel procedure, a request can be filed by a developing country that has been denied funding by the Board for reasons other than lack of available resources, and on the basis that the denial was not in compliance with GCF policies and procedures.25
If the request is eligible, the IRM engages with relevant stakeholders to pursue the possibility of finding a resolution.26 If such a resolution is not achieved, the IRM investigates the request and submits a recommendatory report to the Board.27
Evaluating the IRM
To date, the IRM has received one eligible complaint, one request for reconsideration (which was promptly withdrawn), and has self-initiated proceedings on one occasion.28 The meagre case-load is not wholly unexpected, however. The GCF is a relatively young institution. Although a significant number of projects have been approved, the majority of them have not yet received full disbursement.29 In addition, the IRM’s predominant focus for the past few years has been institution-building. It has only very recently shifted its attention to outreach. It will, therefore, be some time before its strength is truly tested. Despite the lack of empirical evidence, however, it is possible to make a number of observations about the IRM based on its procedures and analogies from similar accountability mechanisms. This can provide us with a rough indication of what to expect from the IRM.
In Part 1, we observed that an essential element of accountability is the ability of the holder charged with applying accountability standards to effectively hold the power-wielder to those standards. How well equipped is the IRM to do so?
Browsing through the IRM’s weaponry, one would be tempted to assume that it possesses rather modest firepower. For instance, it can only make non-binding recommendations to the Board. What makes the odds even more unfavourable for the IRM is the fact that the Board itself may under certain circumstances be the power-wielder being held to account (i.e., when it is asked to reconsider a funding decision it has made).
To counter this inherent disadvantage, the IRM relies on two forms of soft power: persuasion and pressure. As discussed above, the IRM’s procedures are moulded on legal principles of fairness and due process. For instance, it affords all stakeholders (including the GCF Secretariat) a reasonable opportunity to participate in its processes, it carefully weighs available evidence according to established rules on proof, and it offers detailed reasons for its findings.
The application of these principles lends credibility to the IRM’s findings, increasing its persuasive power and making it that much harder for the Board to make short shrift of the IRM’s reports.
The IRM also seeks to create pressure through publicity. For example, its reports are available on its website. Such publicity allows NGOs and other members of civil society to become aware of what is transpiring and affords them an opportunity to collectively organise and apply pressure on the GCF. In many cases, the looming possibility of such negative publicity is sufficient to prompt the GCF’s Secretariat into action.
Indeed, such is the case with the IRM’s current and sole self-initiated inquiry into GCF Funded Project FP 001: Building the Resilience of Wetlands in the Province of Datem del Marañón, Peru.30 The project aims to enhance the resilience capacity and livelihoods of the indigenous communities living in the carbon-rich wetland ecosystem in the region of Loreto, Peru. It also aims to reduce greenhouse gas emissions from deforestation. An important activity designed to achieve these ends is the creation of environmental conservation areas (Áreas de Conservación Ambiental, or ACAs).
Through its own media scanning, the IRM came across three articles that raised several concerns about the project. The articles questioned the impact of the ACAs on the on-going efforts of the indigenous people in the region to secure recognition of their customary lands. They also doubted the adequacy of the Free Prior Informed Consent process conducted, and highlighted issues relating to the risk categorisation of the project.
Subsequently, and although the IRM determined that there was sufficient evidence to initiate proceedings, it then decided that it would be quicker and more beneficial to directly engage with the Secretariat. The Secretariat, faced with the prospect of the negative publicity that would emerge from a full investigation, promptly agreed to time-bound undertakings designed to remedy the identified concerns.31 Although one can debate the impact that the threat of negative publicity had on the Secretariat, it undoubtedly had some influence on its conduct.
Thus, the IRM relies on soft modes of power to influence the conduct of the Board and the Secretariat. Though it is too early to gauge whether this will prove to be effective, judging by the record of other accountability mechanisms that rely on not dissimilar tools, the prospects look encouraging. The Inspection Panel, for instance, has on several occasions been able to influence the conduct of the World Bank. Recently, for example, the Inspection Panel published two reports bringing to light the World Bank’s failures with regard to identifying, preventing and responding to issues of gender-based violence and sexual exploitation in its projects.32 The reports attracted great attention and ultimately prompted several reforms. This is but one example amongst the many stories that accountability mechanisms like the GCF have to share about the successful application of “soft” accountability tools like persuasion and pressure.
Given the general difficulties of bringing litigation against an intergovernmental organisation such as the GCF, the IRM provides stakeholders with an alternative and potentially more powerful tool with which to hold the GCF to account. By allowing developing countries to lodge requests for reconsideration of funding decisions and allowing project-affected people to complain about adverse impacts of GCF-funded projects, the IRM facilitates direct accountability. In other words, it affords affected or potentially affected stakeholders the opportunity to bypass other more long-winded routes of accountability, such as lobbying at the COP, complaining to the government, or bringing judicial proceedings. Crucially, the IRM has also built upon the work of other accountability mechanisms in making its procedures more user-friendly and in widening access to accountability.
In achieving its ends, though the IRM indeed lacks the firepower of a court of law, it harnesses the forces of soft power such as pressure and persuasion. Whether the IRM proves to be successful in this venture will be a tale told by time, for its current case-load is too scanty to allow us to make any such general observation. Despite this, as noted above, from the one case it has processed, and drawing on analogies with other similar mechanisms, there is good reason to be optimistic.
Endnotes
1Independent Evaluation Unit. 2019. Forward-Looking Performance Review of the Green Climate Fund. Final Report. Second edition, at 167. Songdo: Green Climate Fund.
2139 S.Ct. 759 (2019).
3Wickremasinghe, C. 2012. “International Organizations or Institutions, Immunities Before National Courts”. Max Planck Encyclopedia of Public International Law 6: 10.
4Accountability in climate finance is often analysed using principal-agent theory. For an overview, see Basak, R. and van der Werf, E. 2019. “Accountability Mechanisms in International Climate Change Financing”. International Environmental Agreements 19: 297–313, at 299. Other approaches include using accountability as a means of building the legitimacy of climate finance institutions; see Ballesteros, A. et al. 2010. “Power, Responsibility, and Accountability: Rethinking the Legitimacy of Institutions for Climate Finance”. Climate Law 1: 261–312.
5For a general discussion, see Schedler, A. 1999. “Conceptualizing Accountability”. In: Schedler, A. et al. (Eds) The Self-Restraining State: Power and Accountability in New Democracies. Boulder CO: Lynne Rienner Publishers; Keohane, R.O. 2003. “The Concept of Accountability in World Politics and the Use of Force”. Michigan Journal of International Law 24(4): 1121–1141; and Mashaw, J.L. 2006. “Accountability and Institutional Design: Some Thoughts on the Grammar of Governance”. In: Dowdle, M. (Ed.) Public Accountability: Designs, Dilemmas and Experiences. Cambridge University Press.
6Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies (Outer Space Treaty), Article 7. 610 UNTS 205.
7Green Climate Fund, Procedures and Guidelines of the Independent Redress Mechanism, para. 2(b).
8Ibid., para. 2(c).
9Ibid., para. 2(a).
10Ibid., para. 20.
11Ibid., para. 27.
12Ibid., para. 21; see Inspection Panel at the World Bank, Operating Procedures (April 2014), para. 16; and Asian Development Bank, Operations Manual on the 2012 Accountability Mechanism Policy (OM Section L1/BP), para. 26.
13Supra, note 7, para. 36.
14Ibid., para. 38.
15Ibid., para. 50.
16Ibid., para. 61.
17Ibid., para. 63.
18Ibid., para. 20.
19Ibid., paras 25 and 26.
20Ibid., para. 71.
21Ibid.
22Ibid.
23Ibid.
24Ibid., para. 72.
25Ibid., para. 8.
26Ibid., para. 18(a) and (b).
27Ibid., para. 18(c).
28See the IRM’s Case Register, accessible at https://irm.greenclimate.fund/case-register. Accessed 16 April 2020.
29Supra, note 1.
30Independent Redress Mechanism, Case C – 0002 – Peru. Case data accessible at https://irm.greenclimate.fund/case-register. Accessed 16 April 2020. For a summary of the preliminary inquiry report, see Independent Redress Mechanism, “Summary of the Preliminary Inquiry Report, and Undertakings Provided by the GCF Secretariat” (IRM Summary of the Preliminary Inquiry Report). Online at https://irm.greenclimate.fund/documents/1061332/1198301/IRM_initiated_proceedings_C-0002_-_Peru.pdf/4e333fd6-22b5-4fbe-a28d-0513b57a3eb4. Accessed 16 April 2020.
31IRM Summary of the Preliminary Inquiry Report, ibid., paras 47–52.
32World Bank Inspection Panel. 2019. “Republic of Uganda Transport Sector Development Project Additional Financing”. Online at https://www.inspectionpanel.org/sites/www.inspectionpanel.org/files/ip/PanelCases/98-Inspection% 20Panel% 20Investigation% 20Report.pdf. Accessed 16 April 2020; and World Bank Inspection Panel. 2019. “Democratic Republic of Congo Second Additional Financing for the High-Priority Roads Reopening and Maintenance Project”. Online at https://www.inspectionpanel.org/sites/www.inspectionpanel.org/files/cases/documents/120-Inspection% 20Panel% 20Investigation% 20Report% 28English% 29-27% 20April% 202018.pdf. Accessed 16 April 2020.