GCF Programming Manual An introduction to the Green Climate Fund project cycle and project development tools for full-size projects GCF GUIDEBOOK SERIES Programming Manual This Guidebook is a living document and will be updated to reflect feedback, lessons learned, as well as policy and operational changes. For that reason, we encourage readers to use the online/electronic version of this document and to refrain from printing. All rights reserved © Green Climate Fund Published in July 2020 Green Climate Fund Songdo Business District 175 Art Center-daero Yeonsu-gu, Incheon 22004 Republic of Korea +82 (0)32-458-6039 [email protected] Cover page photo: © UNDP/Chimwemwe John Paul Manyozo greenclimate.fund GCF Programming Manual An introduction to the Green Climate Fund project cycle and project development tools for full-size projects FOREWORD The mandate of GCF is to promote a paradigm shift towards low-emission and climate-resilient development pathways in developing countries. GCF helps countries design, finance and implement innovative climate initiatives that can be replicated, scaled up and sustained after project completion to achieve transformational change. GCF is a partnership institution. It operates through a network of accredited entities, who work directly with developing countries represented through GCF national designated authorities or focal points, which are appointed by the government of the country, to propose projects and programmes to GCF for funding and implement them once approved. These entities span a wide range of bodies, including multilateral and national development finance institutions, international and national commercial banks, United Nations agencies, conservation organizations, equity funds, government agencies and regional institutions. This enables GCF to create unprecedented coalitions for change. A core GCF principle is to follow a country-driven approach, which means that developing countries must lead GCF programming and project implementation. This principle has been repeatedly reaffirmed by the GCF Board. It also requires that appropriate tools are made available to GCF partners to enable them to engage throughout the entire GCF project cycle. GCF has three programming modalities: (i) the project approval process for full size projects and programmes; (ii) the simplified approval process for projects under a certain funding threshold and with minimal to no environmental risks; and (iii) the Readiness and Preparatory Support Programme grants for strategy, policy and capacity development. This Programming Manual focuses on the project approval process modality and is complemented by two companion programming manuals on the simplified approval process and the Readiness and Preparatory Support Programme. The objective of the Programming Manual is to outline the roles of key stakeholders throughout the entire cycle of the project approval process. It also provides guidance on how to prepare and submit a funding proposal that meets all GCF investment criteria. The Programming Manual aims to make project origination, development, appraisal, approval and implementation processes more transparent and predictable, as well as to simplify and accelerate access to GCF resources. The primary target audience of this manual comprises GCF national designated authorities/focal points and accredited entities. It should prove particularly useful to national and sub-regional direct access entities. However, it should also enable other key GCF stakeholders, such as civil society organizations and private sector representatives, to engage at each project development stage with national designated authorities, accredited entities and the GCF Secretariat. ii GCF GUIDEBOOK SERIES | PROGRAMMING MANUAL I would like to thank all our partners who contributed to the preparation of this Programming Manual and look forward to their continued assistance to make it a living document. The Programming Manual will be updated regularly to reflect user feedback, lessons learned and new Board decisions. It will be supplemented by sectoral guidance on the eight GCF results areas and by project development and assessment tools. The manual is not a legal instrument or a policy of GCF, nor does it intend to reflect or contain all GCF requirements that may apply during the GCF project and programme activity cycle. Yours sincerely, Yannick Glemarec GCF Executive Director AN INTRODUCTION TO THE GCF PROJECT CYCLE AND PROJECT DEVELOPMENT TOOLS FOR FULL-SIZE PROJECTS iii iv GCF GUIDEBOOK SERIES | PROGRAMMING MANUAL CONTENTS Foreword ii List of commonly used acronyms xiii Glossary of key terms xvi Executive summary xxii Part I. Overview of the GCF project/programme approval process and activity programming Cycle 1 GCF Secretariat teams involved in the project/programme activity cycle 2 Stage 1. Country, regional and accredited entity programmes 6 1.1 Country programmes 8 1.2 Accredited entity work programmes 9 1.3 Structured dialogues 10 1.4 GCF Readiness and Preparatory Support Programme 11 1.5 Sectoral guidance 12 Stage 2. Targeted generation of project or programme funding proposals 13 2.1 Targeted requests for proposal 14 2.2 Generation of project ideas through dedicated project preparation partnerships and platforms 15 Stage 3. Concept note 16 3.1 Feedback and recommendations on the concept note 18 3.2 Project preparation and development support 19 Stage 4. Development of funding proposals 20 4.1 Applicable GCF policy frameworks 20 4.2 Funding proposal development: First-level due diligence by the accredited entity 22 4.3 Funding proposal submission and completeness check 32 4.4 Additional submission requirements for funding proposals for countries with UN sanctioned regimes 34 4.5 Information disclosure 35 AN INTRODUCTION TO THE GCF PROJECT CYCLE AND PROJECT DEVELOPMENT TOOLS FOR FULL-SIZE PROJECTS v Stage 5: Funding proposal review process: Secretariat and Independent Technical Advisory Panel 36 Funding proposal review process 39 5.1 Initial review 40 5.2 Technical assessment and detailed review of the funding proposal 42 5.3 Second-level due diligence by the office of risk management and compliance and clearance to proceed to the independent technical advisory panel 45 5.4 Assessment by the independent technical advisory panel 47 5.5 Publication of the funding proposal package on the GCF website and submission to the Board 49 Stage 6: Board consideration and decision 50 6.1 Questions and answers from the Board 50 6.2. Information day/informal Board meeting 51 6.3 Board meeting 51 Stage 7: Legal arrangements for approved funding proposals 52 7.1 Funded Activity Agreement 52 Stages 8, 9 and 10: Portfolio implementation, monitoring and management 55 Stage 8: Monitoring for performance, results and compliance 59 8.1 Monitoring tools for performance and compliance 60 8.2 Monitoring of individual funded activities (projects and programmes) 61 8.3 Assessing information from monitoring tools 64 Stage 9: Adaptive management 64 9.1 Adaptive management triggers 66 9.2 Adaptive management measures 67 9.3 Policy on Restructuring and Cancellation 69 9.4 Major Changes and Restructuring 72 Stage 10: Evaluation, learning and project closure 73 10.1 Evaluation 73 10.2 Learning 76 10.3 Knowledge generation 76 10.4 Project closure 78 vi GCF GUIDEBOOK SERIES | PROGRAMMING MANUAL Part II. The how-to guide on the GCF funding proposal template 80 Cover page of the funding proposal 83 Section A. Project/programme summary 84 Section B. Project/programme information 89 Section C. Financing information 106 Section D. Expected performance against investment criteria 112 Section E. Logical framework 126 Section F. Risk assessment and management 136 Section G. GCF policies and standards 140 Section H. Annexes 146 H.1. Mandatory annexes 147 H.2. Other annexes, as applicable 167 Annexes 170 Annex I: Independent Technical Advisory Panel lessons learned for project consideration 171 Annex II: Scope of work of the Climate Investment Committee 173 Annex III: Investment Criteria Scorecard and project success rating 175 Annex IV: Guidance on the application of the performance measurement frameworks indicators as part of the development of the logical framework 177 Annex V: Indicative Terms of reference – interim/final evaluation (consultant) 211 Annex VI: Minimum items to be addressed in Section B.3 (Project/Programme Description) of funding proposal 217 AN INTRODUCTION TO THE GCF PROJECT CYCLE AND PROJECT DEVELOPMENT TOOLS FOR FULL-SIZE PROJECTS vii LIST OF FIGURES Figure 1 GCF project/programme activity cycle xxiii Figure 2 Application of the investment framework across the programming cycle xxiv Figure 3 Areas of action in which GCF seeks to invest xxv Figure 4 GCF programming frameworks xxvi Figure 5 GCF structure and programming units xxvii Figure 6 GCF project/programme activity cycle 2 Figure 7 GCF origination tools 7 Figure 8 Climate Investment Platform 16 Figure 9 Development and submission of concept notes 16 Figure 10 Development and submission of funding proposals 20 Figure 11 Areas of action in which GCF seeks to invest 21 Figure 12 Indicative timeline for the review of funding proposals 37 Figure 13 Key elements for consideration as part of the project/programme review by the origination and structuring team/Climate Investment Committee 2 41 Figure 14 Application of the Investment framework across the programming cycle 43 Figure 15 Key elements of the project/programme appraisal carried out by the Office of Risk Management and Compliance 45 Figure