Green Climate Fund under pressure after accrediting contested banks

gcfDespite strong opposition from the civil society, the Green Climate Fund (GCF) board last week accredited two entities – HSBC and Crédit Agricole – that have been contested for money laundering, investment in fossil fuel and poor protection of human and environmental rights. This unveils a double standard in accountability when accrediting either big or small entities.

From 8-10 March, the GCF held its 12th Board meeting in Songdo, South Korea. Many important decisions were taken, including the accreditation of new entities, the adoption of the Fund’s first strategic plan, and a comprehensive information disclosure policy.

The most echoed decision coming out of Songdo was the accreditation of 13 new entities. This included HSBC and Crédit Agricole which have been in the cross hairs of civil society organization since the last Board meeting in Zambia. A statement signed by 170 CSOs was calling on GCF to refrain from partnering with the two entities due to involvement in money laundering and other fiduciary mismanagement scandals, poor record on climate pollution, investments in coal industry and weak policies to safeguard social, gender, and environmental impacts of their lending.

Despite the request to at least defer the accreditation until the Accreditation Panel has had an opportunity to fully review the findings of the independent monitor, the Board decided to accredit both banks and expanded its pool of partner entities to 33. HSBC was accredited with the condition that their application can be suspended if the Accreditation Panel makes such recommendation based on the review with regard to anti-money laundering and sanctions compliance mechanisms.

The general argument by the GCF Board is that such big banks are needed as they can get ‘big money flowing’. This however clearly points to a double standard between big and small entities, as it is highly unlikely that the Board would accredit small entity from a developing country with the same track record as the two banks in question.

In addition, the GCF approved its first strategic plan, which is a living document that frames the Fund’s vision, core operational priorities and action plan to be implemented by 2018. The strategic plan repeats its aspirational goal of approving projects worth USD 2.5 billion in 2016.

An important decision was also taken on promoting transparency though an information disclosure policy. For the first time the Board decided to provide live web streaming of GCF Board meetings, a decision that will be reviewed in 2017.

The next GCF Board meeting will take place from 28-30 June in Songdo, where the Board will most likely move forward with approving new projects and programmes towards its target of making funding decisions worth USD 2.5 billion by the end of this year.

by Urska Trunk