GCF was established under the Cancún Agreements in 2010 as a dedicated financing vehicle for developing countries within the global climate architecture, serving the Financial Mechanism of the UNFCCC and the Paris Agreement. Since the approval of the first project funding in 2015, GCF has made rapid strides in building a portfolio of more than 100 projects. 

Their transformative approach involves investing across four transitions – built environment; energy & industry; human security, livelihoods, and wellbeing; and land-use, forests, and ecosystems – and employing a four-pronged approach:

1. Transformational planning and programming: They promote integrated strategies, planning, and policymaking to maximize the co-benefits between mitigation, adaptation, and sustainable development.
2. Catalyzing climate innovation: They invest in new technologies, business models, and practices to establish a proof of concept.
3. De-risking investment to mobilize finance at scale: They use scarce public resources to improve the risk-reward profile of low emission climate-resilient investment and crowd-in private finance, notably for adaptation, nature-based solutions, least developed countries (LDCs), and small island developing states (SIDS).
4. Mainstreaming climate risks and opportunities into investment decision-making to align finance with sustainable development: They promote methodologies, standards, and practices that foster new norms and values.

Climate change offers businesses an unprecedented chance to capitalize on new growth and investment opportunities that can protect the planet as well. GCF employs part of its funds to help mobilize financial flows from the private sector to compelling and profitable climate-smart investment opportunities. 

Key features

Country driven
A core GCF principle is to follow a country-driven approach, which means that developing countries lead GCF programming and implementation. Country ownership of GCF financing decisions enables developing countries to turn NDC ambitions into climate action. GCF’s country-driven approach is underpinned by capacity-building support through its Readiness Programme that is available to all developing countries.

An open, partnership organization
GCF operates through a network of over 200 Accredited Entities and delivery partners who work directly with developing countries for project design and implementation. Its partners include international and national commercial banks, multilateral, regional, and national development finance institutions, equity funds institutions, United Nations agencies, and civil society organizations. This open partnership enables the Fund to foster unprecedented coalitions between private investors, development agencies, and civil society organizations to achieve transformative change and support harmonization of standards and practices.

A range of financing instruments
GCF can structure its financial support through a flexible combination of grant, concessional debt, guarantees, or equity instruments to leverage blended finance and crowd-in private investment for climate action in developing countries. This flexibility enables the Fund to pilot new financial structures to support green market creation.

Balanced allocation
GCF is mandated to invest 50% of its resources in mitigation and 50% in adaptation in grant equivalent. At least half of its adaptation resources must be invested in the most climate vulnerable countries (SIDS, LDCs, and African States). The GCF programming strategy recognizes that it must scale up both mitigation and adaptation efforts. GCF aims to leverage synergies and minimize potential trade-offs between adaptation and mitigation.

Risk-taking, patient capital
GCF adds value to its partners by enabling them to raise the ambition of their climate action. By leveraging the risk management capacity of its partners and its own set of investment, risk, and results management frameworks, GCF can accept higher risks to support early-stage project development as well as policy, institutional, technological, and financial innovation to catalyze climate finance. This capacity to take risk is backed up by a robust second level due diligence system.