Why the Green Climate Fund plays a unique role in climate finance

The executive director of the Green Climate Fund is driving the organization to ramp up its efforts in delivering climate finance, particularly for the world’s most vulnerable nations. Since its establishment in 2010, GCF has committed approximately $16 billion across 130 countries, positioning itself as the world’s largest climate fund. And since taking office last year, Mafalda Duarte has announced the ambitious “50 by 30” plan, which is to manage $50 billion by 2030. “We need to set ambitious targets because we are in a crisis, and the scale of the resources has to be many times higher than what we are currently supporting developing countries with,” Duarte said at a Devex event on the sidelines of the United Nations General Assembly in New York. Duarte also discussed GCF’s place in an increasingly crowded ecosystem of climate financiers while emphasizing the fund’s unique mandate to distribute its resources between mitigation and adaptation. She believes GCF’s role complements that of other major financial institutions, such as multilateral development banks. “MDBs are one piece of the puzzle and we enable them to do their work better,” she said. While large institutions such as the World Bank focus on bigger, less risky projects, GCF plays a crucial role in addressing the gaps. “We have flexibility to an extent that the multilateral development banks don't have,” Duarte said. “We can provide to the private sector resources that will actually enable them to invest in these markets that otherwise, they wouldn't invest in. So that's why the ecosystem needs to come together,” she said. Another key area in which GCF is well-positioned to help is through climate adaptation financing. “We know that there's a major gap in adaptation finance,” Duarte said. “The GCF is actually a fund that has a mandate to split its resources half in mitigation, half in adaptation.” Securing funding for climate adaptation has proven challenging. While global climate finance doubled to $1.3 trillion in 2021-2022, up from $653 billion in 2019-2020, an analysis from the Brookings Institution revealed a relative decline in adaptation finance. The share of finance directed toward adaptation fell to 5% in 2021-2022 from 7% in the previous period. Notably, Africa — one of the regions most vulnerable to climate change — received just 20% of all adaptation flows. The Green Climate Fund has made strides in addressing this gap, particularly in Africa. It has partnered with an equity infrastructure fund to support investments in resilient infrastructure, providing junior equity and other financial instruments that enable these projects to move forward, said Duarte. Duarte also pointed to another key initiative: empowering local commercial banks and financial institutions to offer lines of credit to farmers and entrepreneurs, helping them fund climate-resilient projects. Looking ahead, Duarte is focused on scaling up successful models rather than on funding a series of pilot programs. “While it’s important to pilot new initiatives, our priority must be scaling up what already works,” she said. “With the limited time we have, it’s essential to expand proven solutions.”