Review of the initial private sector facility modalities and the private sector strategy

The GCF's private sector strategy aims to mobilize institutional finance and private capital for climate adaptation and mitigation in developing countries through a four-pronged approach: promoting conducive investment environments, accelerating innovation, de-risking market-creating investments, and strengthening domestic financial institutions. The report reviews the PSF's performance, noting a co-financing ratio of 3.25:1 and a heavy initial reliance on concessional loans. To meet its updated Strategic Plan targets, the GCF proposes expanding its use of equity and guarantees, improving the accreditation process via a project-specific assessment approach, and implementing a private sector outreach plan.

• Developing countries require between USD 2 trillion and 4 trillion annually to prevent catastrophic climate change.
• The GCF's private sector strategy employs a four-pronged approach to catalyze investment: promoting conducive environments, accelerating innovation in business models and technology, de-risking investments to crowd in finance, and strengthening regional and domestic financial institutions.
• As of December 31, 2021, the Private Sector Facility (PSF) had approved 39 projects and programmes, investing USD 3,418.6 million in GCF resources and mobilizing USD 11,126.8 million in co-financing, resulting in a co-financing ratio of 3.25:1.
• The PSF portfolio has been heavily weighted toward mitigation and energy, with 84 per cent of funds committed to mitigation activities as of the ramp-up phase.
• Geographically, Africa represents the largest share of the PSF portfolio at 53 per cent, followed by Asia-Pacific (27 per cent), Latin America and the Caribbean (14 per cent), and Eastern Europe (6 per cent).
• The GCF is increasing its use of high-impact financial instruments; equity use more than doubled from USD 0.19 billion (2015–2019) to USD 0.57 billion (2020–2021), and guarantees doubled from USD 0.08 billion to USD 0.16 billion in the same periods.
• A significant barrier to the use of guarantees is the GCF's lack of a credit rating, which requires the fund to set aside 100 per cent of the guarantee in cash as a capital reserve.
• The GCF accreditation and project preparation process is viewed as too lengthy and costly for private sector entities, with private sector direct access entities (DAEs) taking an average of one year longer to complete accreditation than international access entities (IAEs).
• To improve access, the GCF is implementing a project-specific assessment approach (PSAA) to reduce processing time for accreditation and facilitate finance for local entities unable to complete the full process.
• The GCF identifies a large insurance protection gap in developing countries and intends to expand its work on parametric insurance and microinsurance to enhance the resilience of vulnerable groups.

APA

Green Climate Fund (2022). Review of the initial private sector facility modalities and the private sector strategy. https://www.greenclimate.fund/sites/default/files/document/gcf-b32-06.pdf

Chicago

Green Climate Fund. Review of the initial private sector facility modalities and the private sector strategy. 2022. https://www.greenclimate.fund/sites/default/files/document/gcf-b32-06.pdf.

Wikipedia

{{cite report |author=Green Climate Fund |title=Review of the initial private sector facility modalities and the private sector strategy |date=25 April 2022 |url=https://www.greenclimate.fund/sites/default/files/document/gcf-b32-06.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{greenclimatefund2022review, author = {{Green Climate Fund}}, title = {{Review of the initial private sector facility modalities and the private sector strategy}}, institution = {Green Climate Fund}, year = {2022}, month = apr, url = {https://www.greenclimate.fund/sites/default/files/document/gcf-b32-06.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }