B.19/06: Policies related to the approval of funding proposals: Development and application of incremental cost calculation methodology and/or alternative methodologies

The Board, having noted documents GCF/B.19/34 titled “Incremental cost methodology: potential approaches for the Green Climate Fund” and GCF/B.19/12/Rev.01 titled “Concessionality: potential approaches for further guidance”:

1. Notes the linkages between matters related to incremental costs and concessionality and the policy gaps identified in decision B.11/11, including project eligibility criteria, as well as issues related to co-finance and other matters considered at subsequent Board meetings;
2. Also notes the linkages between such policy gaps and the GCF Results Management Framework, initial Investment Framework, country programmes and entity work programmes, and the Risk Management Framework;
3. Further notes that addressing these policy gaps requires an integrated approach that considers their interlinkages;
4. Requests the Secretariat to develop an integrated approach to resolve these interrelated issues for the Board’s consideration at its twentieth meeting, including:
   
   1. Steps to enhance the climate rationale of GCF-supported activities; and
   2. Policies on the review of the financial terms and conditions of GCF instruments and concessionality, incremental costs, full costs, and co-financing;
5. Agrees that the approach outlined in paragraph (d) above should:
   
   1. Take into account the views expressed by Board members during the nineteenth meeting of the Board and any further written comments that may be submitted before 30 March 2018;
   2. Be aligned with the Governing Instrument for the GCF and GCF strategic frameworks, including the initial Strategic Plan, the Results Management Framework, the initial Investment Framework, country programmes and entity work programmes, and the Risk Management Framework;
   3. Be aligned with the Board work plan and the Secretariat work programme;
   4. Propose an approach to address gaps in the Results Management Framework that is necessary to effectively implement these policies; and
   5. Take note of innovative and useful experiences of other institutions and an analysis of the GCF portfolio; and
6. Requests the Secretariat to include in the approach outlined in paragraph (d) above a capacity-building strategy to support national designated authorities/focal points, and accredited entities, particularly direct access entities, to incorporate these policies into their interactions with GCF, particularly with respect to the proposal approval process and the simplified approval process.