This document provides background information on the GCF Policy on Co-financing and presents the policy for the Board’s consideration and adoption. The document explains how the principles that underpin the policy relate to the GCF funding proposal assessment process. The proposed Policy on Co-financing, set out in annex II to this document, (i) establishes the objectives for co-financing in GCF-funded activities; (ii) defines co-financing and related terms that apply to GCF-funded activities; and (iii) sets out guiding principles, approaches for co-financing in GCF-funded activities and reporting obligations, including provisions for monitoring and evaluating co-financing. The policy is not intended to impose any conditions or restrictions on GCF funding allocation, but rather to improve consistency and alignment with the mandate and financing modalities of the GCF.