Parties to the UNFCCC established the Adaptation Fund in 20081 to help developing countries adapt to the impacts of climate change. The Fund has gradually evolved since then, and it’s about to embark on its newest development: a safeguard policy to ensure that its investments do not have unintended negative consequences for people or the environment.
The move represents potential progress in the effort to promote climate justice and adaptation. The Adaptation Fund holds a small but important share of global climate finance, distributingmore than US$ 180 million to adaptation activities spanning 28 countries. An Environmental and Social Policy—which the Board recently released a draft of—can help ensure that that these funds do not support projects that generate unintended environmental or social impacts. For example, the policy could ensure that a dam aimed at limiting flooding in one area doesn’t cause flooding in another, or that protection of a forest does not negatively impact the impoverished communities who rely on it.
But this Policy can only succeed if it’s drafted and implemented effectively. To that end, the Adaptation Fund’s leaders should consider two strategies to improve its draft plan: clarifying its investment requirements and defining how the various climate finance donors and recipients can work together to implement the newEnvironmental and Social Policy.
One of the main questions that the Adaptation Fund must grapple with in creating this new policy is how to design it in a way that supports effective implementation. One important step will be to decide on the degree of detail to include. The policy could simply state, for example, that anyone who is negatively affected by the project should be treated fairly, or it could provide details on what type of treatment the Adaptation Fund considers fair.
The Adaptation Fund’s draft policy currently errs on the side of flexibility. While it admirably covers many of the key areas of global concern – like the investment’s potential impact on climate change, human rights, and natural habitats – it fails to provide many details. For example, the draft states that projects should “avoid significant reductions” in public health or biodiversity, but does not explain what a significant reduction would look like. For example, would a 2 percent reduction in biodiversity be considered significant? What about 12 percent? Would the size of the area, or the types of species involved matter?
The Adaptation Fund will benefit from at least providing thorough guidance documents to accompany the policy in order to help people understand what specific requirements apply to its recipient projects.
Defining Roles and Responsibilities
Second, the Adaptation Fund can support effective implementation by further clarifying the roles and responsibilities of the actors involved in both delivering and benefiting from adaptation finance. This includes the Adaptation Fund Board and Secretariat, national governments, affected stakeholders, and the so-called “implementing entities” responsible for overseeing project implementation. The current draft policy makes clear that the Adaptation Fund Board is responsible for reviewing the systems of the implementing entities to ensure that they adequately protect people and the environment. The implementing agency, in turn, is responsible for assessing risks associated with the project, making plans to reduce those risks, and monitoring implementation of those plans. The draft policy is also clear in calling for public disclosure and consultations with affected communities.
Yet some ambiguity still remains regarding what influence the Environmental and Social Policy will have over those involved. For example, under the Adaptation Fund’s current rules, implementing entities must be accredited before they can receive money from the Fund. The draft policy indicates that in the future, the accreditation process may need to reflect “the capacity and commitment to address environmental and social risks.” Further clarity on what effect the Environmental and Social Policy will have on the accreditation process will help implementing entities understand requirements and assist the Board in making decisions. Questions on the role of the policy also arise in the draft‘s section on grievance mechanisms. The draft policy allows people to contact the Adaptation Fund Secretariat with complaints. No details are provided, however, on when such complaints can be submitted to the Fund, who can submit them, and how the Secretariat should respond. Additional clarity on how policy violations will be identified and dealt with will help ensure that the policy is effective.
By creating the new Environmental and Social Policy, the Adaptation Fund is recognizing that even funding aimed at protecting the environment and vulnerable people can have negative consequences. This is a critical step forward in ensuring that climate adaptation activities not only receive the funding they need, but that these projects are carried out in ways that are fair, equitable, and effective.