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Udenrigsudvalget 2013-14
URU Alm.del Bilag 248
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ORGANISATION STRATEGY

Organisation Strategy for Denmark’s Co-operation with the Global

Environment Facility (GEF), 2014-2017

1. Introduction

The organisation strategy for GEF forms the basis for the Danish cooperation with and contribution

to GEF, and is the key platform for Denmark’s dialogue and partnership with the organisation. It

establishes the Danish priorities for GEF’s performance during the 6

replenishment 1 July 2014 –

30 June 2017 and outlines specific results that Denmark will pursue in the cooperation with the or-

ganisation. Denmark will continue to work closely with other partners in the efforts to promote spe-

cific goals and priorities. Together with Norway, Latvia and Lithuania, Denmark is sharing a seat in

the GEF Council and will continue the close coordination. Denmark is presently the Council Mem-

ber (until autumn 2016).

2. Relevance and Justification of Future Danish Support

Supporting GEF contributes to fulfilling the policy recommendations outlined in “The Right to a

Better Life”, The Strategy for Denmark’s Development Cooperation. Albeit GEF cannot be charac-

terized as a development organization, where poverty alleviation is the overarching goal, the focus

on sustainable management and use of natural resources, environmental protection, innovative

technological and financial solutions, sustainable energy etc. correspond well with the green growth

chapter in the afore mentioned strategy. Furthermore environmental sustainability and poverty erad-

ication are increasingly seen as two sides of the same coin.

While GEF is a funding and not an implementing organisation, it has adopted policies and guide-

lines vis-à-vis it’s implementing partners (see also para 5) with specific demands on environmental

and social safeguards and gender mainstreaming in the project implementation. These policies and

guidelines ensure that the rights and wellbeing of people and communities (including indigenous

peoples), as well as a sound environmental standards, are important considerations in the GEF-

funded activities.

As outlined in Danida’s NEC-strategy (Strategic Framework for Priority Areas – Natural Re-

sources, Energy, and Climate Strategy, 2013) GEF has an important role as the financial mechanism

of the Rio conventions, the Stockholm Convention, the Montreal Protocol and the recently agreed

Minamata Convention to which Denmark is a party and finds of great value. By supporting GEF,

Denmark contributes to improving the global environment in these important areas.

Climate activities, in a GEF context, have traditionally been biased towards mitigation projects.

Against this background it was decided in the climate COP process to task GEF to administer two

separate climate funds: “Least Development Countries Fund (LDCF)” and “Special Climate Change

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Fund (SCCF)”. Particularly LDCF is relevant for Denmark in a development cooperation context

with its objective of addressing the special needs of Least Developed Countries under the Climate

Convention and focus on the poorest and most vulnerable countries. The focus of LCDF is that of

financing preparation and implementation of National Adaptation Programs of Action (NAPAs).

3. About GEF

In 1994

, after the Rio Earth Summit, the Global Environment Facility (GEF) was established as an

independent financial mechanism for providing grants and concessional funding to cover the incre-

mental or additional costs associated with transforming a project with national benefits into one

with global environmental benefits thereby promoting environmental sustainable development. The

World Bank serves as the Trustee of the GEF Trust Fund and provides administrative services. The

GEF Council is the governing body and meets twice a year discussing and deciding on policy mat-

ters and approving project concepts. Of the 32 Council members, 18 are from recipient countries

(16 from developing countries and 2 from countries with economies in transition) whereas 14 are

from developed countries,

GEF is a financial mechanism for a number of key international environmental conventions. Fur-

thermore funding is provided to a few other key areas where no convention has been adopted. GEF

provides grants for projects and programmes related to the following areas: biodiversity, climate

change (mitigation and adaptation), international waters, land degradation, ozone layer depletion,

persistent organic pollutants, sustainable forest management and the recently adopted convention on

mercury. Since 1991 GEF has provided 11.5 billion USD in grants and leveraged 57 billion USD in

co-financing for over 3,215 projects in more than 165 countries.

The funding for climate change activities has traditionally taken up more than 30 % of GEF’s re-

sources. Only a limited decrease is expected for GEF-6 due to the fact that the Green Climate Fund

(GCF) is not yet operational. When the GCF becomes functional, the question of how to allocate

funding for adaptation and mitigation more effectively at the international level will be accentuated.

GEF is coordinating closely with the World Bank climate funds and the participation in the negotia-

tions on the GCF modalities are given high priority and the implications for GEF funded activities

are expected to increase as the Green Climate Fund becomes operational.

As of today GEF is a global partnership among 183 countries, international institutions, NGO’s and

the private sector. GEF has not been playing a particularly visible role up to and after the Rio+20

Conference in 2012. The GEF leadership is keen to place GEF prominently in the new environmen-

tal and financial landscape including the process on developing sustainable development goals. For

the same reason a new GEF 2020 strategy is under preparation with a focus on environmental driv-

ers and synergies between activities under various conventions and agreements (see also below).

4. GEF’s resource allocation system

1991 GEF began activities in a so-called pilot phase program in the World Bank.

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Country eligibility criteria for GEF funding correspond to the eligibility criteria decided by the Con-

ference of the Parties of each convention that GEF is serving. Eligibility criteria for grants that can-

not be attributed to any convention follow the World Bank (IBRD and/or IDA) criteria for borrow-

ing of loans or the eligibility for receiving UNDP technical assistance. As a consequence, large

emerging economies and developing countries such as China, Brazil, Mexico, Russia and India

have access to GEF funding.

The majority of GEF’s resources are allocated according to the System for Transparent Allocation

of Resources (STAR). 144 countries can access GEF funds under STAR. STAR covers the three

focal areas: biodiversity, climate change and land degradation

. Allocations are calculated based on

a combination of the GEF benefits index, the GEF performance index and a social and economic

index based on the GDP. The GDP-based index is a relatively new design (2009), the rationale be-

ing that poorer countries need additional funding to build the capacity that is required to ensure the

success of GEF project development and implementation. Apart from country allocations GEF is

funding a considerable amount of regional projects.

GEF has established so-called floors and ceilings which establish a minimum and a maximum

amount any given country can receive. During the 5

replenishment period ending in 2014 the top-5

countries (Mexico, Russia, Brazil, India and China) have received 21.4 % of the total resources dis-

tributed under STAR. SIDS/LDC’s have received 20.6 % and the group of other countries 34.7 %.

During the current deliberations leading up to the adoption of a number of policy recommendations

for GEF-6, many countries have argued for a greater degree of solidarity among GEF recipient

countries. In concrete terms it has been suggested to alter the present parameters under STAR with

a focus on decreasing the weight of GDP (=high income countries will receive less funds), raising

the floors for LDC allocations and lowering the ceiling for the amount of funds any given country

can access. Changes along these lines are to be expected in GEF-6.

The top-5 countries have argued that global environmental benefits should be the key concern for

GEF. The compromise for GEF-6 is expected to be slight changes in the parameters while at the

same time not alienating the major recipient countries. Denmark supports such a compromise which

will contribute to keep GEF as an institution with a high degree of country ownership and interna-

tional legitimacy. It is impossible to give any accurate estimates as to the effects, whether positive

or negative, on the global environmental benefit from changes in the parameters. The effects may

also be different depending on the three focal areas. To offset negative consequences – if any - of

the changes in the parameters for the global environmental benefits, the wealthier recipient coun-

tries will be encouraged to increase their contribution to the GEF-6 replenishment (several recipient

countries have increased their pledges to the GEF, yet these continue to be lower than their contri-

bution to other international organizations). Another measure will be to seek higher levels of co-

The other focal areas are excluded from the STAR system because of the limited availability of suitable indicators of glob-

al environmental benefits and a lack of adequate datasets.

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financing in countries with greater capacity as a means to achieve greater impact and broader adop-

tion of higher standards and green technologies in any given country.

5. GEF’s implementing partners

12 international institutions are today designated as GEF implementing partners (see Annex 1). The

IP’s comprise multilateral banks and major UN organisations. Most recently WWF-US and Conser-

vation International have been appointed implementing partners after a long review process examin-

ing the organisations compliance with demands in relation to gender, human rights, fiduciary stand-

ards etc. Another seven organisations are currently being examined. A discussion in the Council on

the future policy in relation to accreditation of new IP’s is foreseen at the end of 2014. While add-

ing new IP’s enlarges the partnership model and – as is the case with the two new IP’s - strengthen

the ties to the civil society, there is also a strong risk that GEF will lose efficiency dealing with so

many different partners. At the same time there is a strong hesitation among several countries in the

GEF Council towards opening up for accreditation of national development organizations as IP’s

which potentially could threaten the objectivity among countries when judging the quality of vari-

ous projects and programmes.

6. GEF’s efforts to combat corruption and misuse of funds.

GEF relies upon the systems of its implementing agencies to ensure that funds are used for their

intended purposes and that each Agency that implements GEF projects has sufficient systems and

capabilities in place to ensure robust efforts to combat fraud and corruption. In order to ensure

greater financial and programmatic accountability over the use of GEF funds, the GEF Council in

2006 adopted minimum fiduciary standards to apply for all its implementing partners.

The GEF Policy includes minimum standards in the following areas:

Project/Activity Processes and Oversight

Investigation Function

Hotline and Whistleblower Protection

Financial Disclosure

Codes of Ethics

Internal and External Financial Audit and Control Frameworks

Procurement Processes and Guidelines

Monitoring and Project-at-Risk Systems

Evaluation Function

Each agency are required to present a report to the GEF Secretariat on its compliance with the fidu-

ciary standards , and as necessary, plans to remedy any shortfall. The assessment should not only

consider the existence of standards, but also their effectiveness. The GEF Secretariat will then pre-

sent a consolidated report to the Council. Best practice standards evolve over time, so target mini-

mum may need to be adjusted. The Council approved an update of the policy on fiduciary standards

in November 2011. Since then agencies have drawn up action plans in order to come into full com-

pliance with the standards. GEF has regularly reported to the Council meeting on progress. In May

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2014 a final report will be presented to the Council on the 2011 policy on fiduciary standards. All

agencies are expected by then to show full compliance with the policy.

The GEF secretariat has confirmed that there are no recent examples of alleged or proven corrup-

tion involving GEF.

7. GEF - challenges and trends

Among GEF’s core strengths are a high degree of country ownership including a strong alignment

with national priorities and policies, an inclusive business model, a strong rooting in major conven-

tions and environmental agreements and a high degree of international legitimacy. Furthermore

GEF-funded projects in various evaluations generally receive high scores with an average of 80 %

of projects having outcomes that are rated as moderately satisfactory or higher and with substantial

transformational impact.

Finally GEF receives sound advice from a highly acclaimed “Scientific

and Technical Advisory Panel”

on its policies and projects.

A relatively new feature in GEF is support to the so called “National Portfolio Formulation Exercis-

es” whereby recipient countries receive support to national consultations with a wide range of

stakeholders and to the creation of national steering committees to provide a broader decision-

making and coordinating structure for GEF programming.

A key challenge is the GEF project cycle, which is too long and notoriously slow with rigorous ap-

proval process in both GEF and the IP’s. After 2.5 years only half of the project concepts have be-

come a reality on the ground. Implementation takes on average five years. The length of the project

cycle has been reduced in recent years and the target for GEF is now to complete the project prepar-

atory cycle in 18 months (from Council approval to endorsement by the GEF director). Several

streamlining measures to process projects more efficiently through different stages have been initi-

ated. Approval of programs has led to faster approval of projects proposed within the program. The

introduction of less cumbersome rules and delegation of authority for small and medium size grants

have been introduced and a harmonization of project cycles between GEF and the World Bank have

the potential to lead to lower transaction costs and faster processing of proposals.

The GEF Secretariat is engaged in drafting a 2020 strategy for the organisation. The intention is to

present the strategy for approval to the Council in November 2014 with some of the first steps being

ready for implementation during GEF-6. A key feature in the strategy is envisaged to be an in-

creased focus on interventions tackling the root-causes and underlying drivers of environmental

degradation as opposed to focusing on the pressure points only. Other elements are expected to be

increased use of differentiated financing such as changes in parameters determining country alloca-

In the UK “Multilateral Aid Review from 2011 GEF is rated as “good value for money” which is the second best category

out of four categories.

The Panel consists of six members who are internationally recognized experts in the GEF's key areas of work, and are

supported by a network of additional experts. The Science Panel is supported by a Secretariat, based at UNEP's regional

office in Washington, DC.

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tions, increased use of non-grant financing such as loans, guarantees and equity (now 6 % of GEF´s

total programmed amount). The strategy will emphasize gender mainstreaming considerations and

increasing the use of multi focal area projects (see below). A limited number of integrated pilot ap-

proaches are suggested in order to address key underlying drivers by creating joint upfront plat-

forms among key stakeholders. Concepts for the pilots are still being developed but are expected to

be in three key areas: “Taking deforestation out of the Value Chain”, Commodities, Sustainable

Cities and Food Security in Africa.

GEF has the ability to support activities in recipient countries that can meet their commitment to

more than one global convention within the context of their sustainable development needs. A

growing share of multi-focal area (MFA) projects relevant to more than one GEF focal area are in-

creasingly seen in the portfolio reflecting increased synergies across GEF focal areas. Biodiversity

and Land Degradation are the focal areas most often involved in MFA projects. The increasing

trend towards MFA projects and programs has accelerated during GEF-5. As of September 30

2013, 42 % of the funding was directed towards to MFA projects.

8. Private Sector and Gender Mainstreaming

GEF has not been particularly successful in getting the IP’s and the recipient countries to involve

the private sector in GEF-funded activities. Recipient countries are responsible for presenting and

formulating projects ideas and the private sector has often been absent from the concepts presented.

Under GEF-5 special funds have been designated for the private-sector. This model is expected to

continue during GEF-6 together with additional efforts to mainstream private sector activities in the

projects and programmes. Further it is the expectation that an increased use of non-grant funding

will spur private sector engagement. Particularly in relation to climate change mitigation funding

opportunities to involve the private sector are seen as promising. The GEF Secretariat has been re-

quested to report to the Council on actions taken to enhance private sector engagement with time-

lines for future actions on mainstreaming.

GEF’s gender engagement is based on the “GEF Policy and Gender Mainstreaming” that was

adopted by the GEF Council in May 2012. Integration of gender in the GEF projects has improved

but still varies significantly among focal areas and its programs. The GEF Secretariat is working on

developing an action plan for enhancing gender mainstreaming to be presented to the Council at the

end of 2014.

9. Intended Results of Danish Support

Denmark will focus attention on the following issues:



Enhancing gender mainstreaming.

A robust and workable Result Based Management System.

Increased use of multi-focal area approaches including integrated approach pilots.

Shortening and streamlining of the project cycle.

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

Efficiency in achieving lasting global environmental benefits also through mainstreaming of

GEF policies into national development policies and plans.

GEF’s effort to combat corruption and misuse of funds.

10. Danish support to GEF

Denmark’s contribution to GEF for the 5th replenishment (July 2010 – June 2014) amounted to

DKK 400 million out of total replenishment sum of 3,542 million USD

. This made Denmark num-

ber 13 in absolute terms with a contribution totalling 2.12 % of the total replenishment. The Danish

contribution to GEF-6 is DKK 435 million. This implies an increase of 8.75 % in Danish currency.

Due to changes in the reference exchange rates for GEF-6

, Denmark’s contribution is, however, set

to increase by 5 %.

Denmark contributed to the LDCF with DKK 50 million in 2013. It is being considered in 2014 to

undertake a review (possibly together with other donors) looking into past results and lessons

learned of bilateral and multilateral Danida climate adaptation funding, with a view to inform future

decisions on support in this area.

Denmark has presently a JPO placed in the GEF Secretariat dealing with international waters. In

addition two professionals of Danish Nationality (former JPO’s) are working in the GEF Secretari-

at. This means that out of a total staff of approximately 100 professionals 3% are Danish Nationals.

11. Monitoring and Evaluation

GEF is one of the most thoroughly monitored and evaluated international organizations. External

independent evaluation takes place for every replenishment period in order to inform the next re-

plenishment cycle. The so called “performance studies” are done by the GEF Independent Evalua-

tion Office established in 2003. In between the performance studies various smaller evaluation re-

ports are presented on cross cutting issues, impact, country portfolio reports etc.

The GEF Independent Evaluation Office has gained increased autonomy with the budget of the Of-

fice now linked to the project portfolio instead of to the administrative budget. The Office cooper-

ates extensively with other evaluation agencies and is about to undergo a peer reviews performed by

a group of other agencies. An annual monitoring report is presented to the Council in two separate

parts – one with a focus on aggregated macroeconomic results stemming from the projects portfolio

and the other with a focus on the specific projects.

The Danida evaluation office has throughout the years had a good cooperation with the GEF Evalu-

ation Office among others in connection with a joint evaluation of the LDCF in 2009. At present

The total budget for GEF-5 is estimated at 4.2 billion USD comprising replenishment contributions, carryovers, payment

of arrears and deferred contributions.

The reference exchange rate to convert the SDR amount to the national currency is the average daily exchange rate over

the period from 1 April 2013 to 30 September 2013.

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Danida supports a virtual network (community of practice) on monitoring and evaluation of climate

interventions. The network is administered by GEF’s evaluation office.

12. Results-Based Management

A framework for RBM was first implemented during GEF-4. Greater emphasis has since then pro-

gressively been given to RBM. A weakness of the system is an inadequate feedback from the pro-

ject and portfolio level to the Secretariat and the IP’s of results and lessons learned. Work to ensure

that results information is better employed in project development processes is ongoing.

Another weakness of the system is that there are far too many indicators in place. There is broad

agreement that focus has to be on a select handful of core indicators that can be measured in a uni-

form way allowing for aggregation at different levels and help better understand impact. The focal

area strategies in GEF-6 have already taken the step towards being selective in choice of indicators.

Denmark supports efforts underway to request the Secretariat in consultation with IP’s, the Evalua-

tion Office and other bodies, including the GEF-NGO network, to develop a comprehensive work

plan for further strengthening of the RBM system and for building a knowledge Management Sys-

tem. It is envisaged that the Secretariat will present the work plan to the Council by November

2014.

13. Risks and Assumptions

Risk no. 1: Shrinking donor contributions

Donor countries are generally under pressure to reduce budgets and the prognosis for the size of the

GEF-6 replenishment is relatively modest. The anticipation is that the GEF-6 replenishment will be

about the same size as the GEF-5 replenishment. A risk is that the level of funding will be even

smaller which will threaten GEF’s efforts to make a difference and deliver on all its obligations

including to new commitments such as the Mercury Convention.

Risk no. 2: Delays in project preparation and implementation

It has been difficult for GEF to fulfil the target of a maximum of 18 month for project preparation

defined from the presentation of a project form to the GEF Council outlining the project concept up

to endorsement by the GEF director. The implementation period also suffer from being too long.

With even more implementing partners who will have to accustom themselves to GEF procedures,

there is a risk that GEF will not be able to move sufficiently on this issue.

Risk no. 3: Resource allocation biased towards rich countries

Efforts are underway to alter the parameters determining country allocations under GEF giving in-

creasing allocations to LDC’s. The resistance to such revisions are, however, strong and there is a

risk that GEF will end up financing what countries could do themselves under national budgets.

Risk no. 4: Misuse of funds

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There might be a risk that GEF funds are not directed to the intended purposes and that the proce-

dures in place do not detect misuse/corruption. The fiduciary standards and the close scrutiny of all

GEF projects also in the evaluation process do, however, substantially reduce this risk factor.

14. Follow-up

Denmark will monitor and actively contribute to developments in GEF with a view to follow pro-

gress and fulfilment in relation to Danish priorities. The work will first and foremost be monitored

through participation in the Council work and its two meetings per year. A number of important

discussions and decisions with relevance for the fulfilment of Danish strategic priorities are planned

for the upcoming Council meetings (see below).

An important tool for verification of GEF results, developments and trends is the Annual Monitor-

ing Report which is issued in two parts – part I in the autumn with a macro perspective and part II

in spring with a focus on detailed results and experiences.

A review of GEF will be conducted half way through the Danish strategy period. Terms of Refer-

ence for the review including decisions on the format (purely Danish or a joint review) will be de-

cided at a later stage.

Council meeting in May 2014:

1. Council to consider a proposal

for updating the GEF-6 alloca-

tion system including flexible

use of country allocations.

2. Council to consider a policy for

providing clarity in defininsions

and approaches to promoting

effective co-financing (can also

be seen as a proxy of nations

ownership and integration in na-

tional plans)

Council meeting in November

2014:

1. Council to consider

measures to improve the

policies and procedures

associated with the pro-

ject cycle.

2. Council to consider a gen-

der action plan.

3. Council to consider a work

plan for further strength-

ening results-based man-

agement system.