Climate change is one of the most pressing threats to development today. Addressing climate change requires that countries take an integrated approach to climate and development planning so that policies and actions across multiple sectors and scales facilitate the adaption to climate change and deliver poverty reduction gains. An important tool for countries to manage climate finance is the National Climate Fund (NCF). NCFs are nationally-driven and nationally-owned funds that help countries to collect climate finance from a variety of sources, coordinate them, blend them together and account for them. This guidebook is part of a series of practical guidance documents and toolkits to support national and sub-national governments to achieve low-emission, climate-resilient development. It is based on UNDP’s decades of experience in delivering climate change programming in order to help countries design and establish an NCF.
The guide presents the following as key goals of NCFs:
•collect sources of funds and direct them toward climate change activities that promote national priorities
•blend finance from public, private, multilateral and bilateral sources to maximise a country’s ability to advance national climate priorities
•coordinate country-wide climate change activities to ensure that climate change priorities are effectively implemented
•strengthen capacities for national ownership and management of climate finance, including “direct access” to funds.
The publication states that countries must consider the following set of key decisions when designing and establishing an NCF:
•defining the objectives
•identifying capital
•instilling effective governance
•ensuring sound and ethical financial management
•supporting efficient implementation arrangements
•facilitating effective monitoring, reporting and verification.
It also highlights the following common functions of NCFs, which also serve as recommendations:
•support goal setting and the development of programmatic strategies
•fundraise toward climate priorities
•manage partnerships - stakeholder engagement and capacity development are a critical part of the design and establishment of NCFs
•provide project approval and support implementation
•supply policy assurance – NCFs should be firmly rooted in, and aligned with, existing national strategies, frameworks, systems and other initiatives on climate change
•provide financial control - strengthen national institutions and align with international fiduciary (financial trusteeship) standards so that they can meet the criteria associated with those funds
•manage performance measurement, including monitoring and reporting on activities and resource disbursement
•support knowledge exchange and management.
The summary was prepared by Eldis.
