Climate Finance Institutions

From reform to delivery: What existing evidence says about the Green Climate Fund’s performance
This synthesis study establishes the state of existing evidence on the performance of the Green Climate Fund across five areas: its role in the multilateral climate finance system; organizational policies and processes; performance as a funding agency; implementation and delivery; and results and paradigm shift. The evidence documents recent strategic and operational reforms of the Fund that are intended to improve accreditation, readiness, project preparation, approval processes, oversight, risk management and learning. It also finds that important implementation challenges persist, including lengthy or inconsistent project-development processes, uneven institutional capacity, slow project start-up and uneven disbursement, and incomplete monitoring and feedback systems. Because several reforms are recent, evidence on their effects is still developing. The study therefore identifies both established findings and evidence gaps that require further investigation through the Third Performance Review of the GCF. It is an interim evidence synthesis and does not constitute the final findings of that review.

Programmatic Climate Finance and Transaction Costs in SIDS
Climate finance increasingly uses programmatic approaches to reduce fragmentation, improve coordination, and give small states access to technical support they could not sustain alone. Yet in countries with populations below 200,000 and thin public administrations, these approaches may impose coordination burdens that exceed absorptive capacity. This session examines that trade-off using an evaluation of three GEF programs and 19 child projects across 14 Pacific small island developing states, within a wider portfolio of 140 interventions totaling $528 million. The evaluation combined theories of change, quality-at-entry review, terminal evaluation evidence, project-cycle benchmarking, contribution analysis, field visits, and stakeholder interviews.

The evidence shows genuine additionality in cross-country coordination, knowledge transfer, use of expiring national allocations, and private capital mobilization. However, every child project was delayed, with delays accumulating across the project cycle. Start-up was a binding constraint: recruitment, project boards, procurement plans, and operating arrangements were often not ready at approval. Governments reported transaction costs above bilateral alternatives, reflecting multiple implementation layers and consultative demands on limited capacity. Limited regional expertise and high staff turnover also weakened sustainability; none of nine rated projects was assessed as likely sustainable.

The findings suggest that programmatic approaches should be used where coordination and knowledge benefits are essential, while readiness conditions and recipient administrative costs should be explicit in design. For very small states, programmatic approaches create value only when their architecture reduces rather than transfers coordination burden.

The Mobilization Myth? - In how far is public climate finance delivering on private investment in the case of Germany‘s development cooperation?
The Mobilisation Myth? - In how far is public climate finance delivering on private investment in the case of Germany‘s development cooperation?

Background/ context:
In the 3rd Financing for Development Conference in Addis Abeba donor countries committed to increase the use of financing mechanisms that involve the private sector in development financing.
From 2018 to 2020 32% of mobilised private capital can be allocated to SDG 13 (climate action) and 18% to SDG 7 (access to affordable, reliable, sustainable and modern energy).

Hypothesis 1: In the area of funds relevant to climate mitigation, a greater amount of private capital is mobilised due to their attractiveness to investors.
Hypothesis 2: This is expected to be the case, above all, with instruments in which the BMZ assumes a higher level of risk for private investments, i.e. in so-called structured funds.

Population of the analysis: all BMZ fund investments and direct investments managed in trust by KfW with a Rio marker for climate change mitigation of 1 (mitigation as a secondary objective) or 2 (mitigation as the primary objective) in the period from January 2017 to June 2023

Results Mobilisation: Between 2017 and 2023, the BMZ mobilised a total of EUR 137 million in private capital for climate change mitigation
(Measurement approach 2 according to the OECD, 2020)
Results Mitigation: Flat funds (per fund) leverage private capital more effectively than structured funds when it comes to climate-related investments.
Comparative Analysis: Mitigation-relevant fund investments do not generate higher leverage of private capital. Also the assumption that taking on greater risk leads to higher leverage cannot be confirmed. Rather, the level of leverage is linked to the size and standardisation of the fund.

Authors and Affiliations: Magdalena Orth, DEval; Dr. Thomas Wencker, DEval; Marian Wittenberg, UN Habitat; Dr. Hanne Roggemannt, Institut für Finanzdienstleistungen