EXECUTING ENTITY (EE)

An entity through which GCF proceeds are channeled for the purposes of a funded activity or part thereof; and/or any entity that executes, carries out or implements a funded activity, or any part thereof. An accredited entity may carry out the functions of an executing entity, though it is preferable if local and national actors execute projects/programs.

FEASIBILITY STUDY

A preliminary study undertaken at the early stage of a project that helps to establish whether the project is viable and what are the feasible options.

FIDUCIARY STANDARDS

Fiduciary standards are important criteria an entity needs to meet to get accredited by GCF. An entity seeking accreditation needs to demonstrate its capacity to meet five elements of GCF fiduciary standards. They are:

  • Core financial and administrative functions
  • Good governance
  • Procurement processes and systems
  • Transparency and integrity
  • Project Cycle Management

These are two sets of standards under the GCF-basic and specialized. The basic standards include administrative and financial capacities, and transparency and accountability. The specialized standards include project management, grant award mechanism and on-lending and blending.

FINANCIAL INSTRUMENTS

Financial instruments are monetary assets that can be traded between accredited entities and the GCF to deploy the Fund’s resources to undertake mitigation and adaptation activities. GCF uses various financial instruments such as grants, concessional loans, guarantees and equity investments.

FIT-FOR-PURPOSE

Fit-for-Purpose is a criterion set by GCF to evaluate accreditation applications submitted by prospective entities. It includes four yardsticks i.e. mandate and track record; fiduciary functions; environmental and social risk categories and project size.

GREEN CLIMATE FUND (GCF)

At COP 16 in Cancun in 2010, governments established a Green Climate Fund as an operating entity of the financial mechanism of the Convention under Article 11. The GCF will support projects, programs, policies and other activities in developing country Parties. The Fund will be governed by the GCF Board.

GREENHOUSE GASES (GHG)

Gases like carbon dioxide (CO2), nitrous oxide (N2O), methane (CH4), ozone (O3) in the atmosphere that is contributing to the green house effects are called Greenhouse Gases (GHGs). These gases prevent solar radiation from escaping, trapping the heat near the earth’s surface where it warms the earth’s atmosphere. Primarily, rapid industrialization and vehicular emission have given rise to GHGs thereby leading to increase in earth’s temperature.

IMPACT POTENTIAL

Impact potential refers to potential of the program/project submitted to GCF Board for approval to contribute to the achievement of the GCF’s objectives and eight result areas. The two core indicators for impact potential are:

  • Mitigation core indicators: Total tons of CO2 equivalent to be avoided or reduced per annum.
  • Adaptation core indicators: Expected total number of direct and indirect beneficiaries and number of beneficiaries relative to total population (e.g. total lives to be saved from disruption due to climate related disasters).
INVESTMENT CRITERIA

Six investment criteria adopted by the Board, namely impact potential, paradigm shift potential, sustainable development potential, needs of the recipient, country ownership, and efficiency and effectiveness. There are coverage areas, activity-specific sub-criteria and indicative assessment factors that provide further elaboration. Please refer to the Board Decision on Further Development of the Initial Investment Framework which provides more detailed explanations of the Fund’s investment criteria.

LEVEL OF CONCESSIONALITY

Refers to a measure of the ‘softness’ of a credit reflecting the benefit to the borrower compared to a loan at market rate. Technically, it is calculated as the difference between the nominal value of a Tied Aid Credit (see definition in this glossary) and the present value of the debt service as of the date of disbursement, calculated at a discount rate applicable to the currency of the transaction and expressed as a percentage of the nominal value.