The systems the rich world uses to deliver climate finance to low-income countries are “obsolete,” grinding down progress on averting a devastating climate crisis, warned the outgoing head of the United Nations’ multi-billion-dollar climate fund for low-income nations.

In an exclusive exit interview as he prepares to leave his post in April, the Green Climate Fund (GCF) Executive Director Yannick Glemarec urged wealthy donors to fix their distribution channels so they are more “flexible” and suited to the needs of the poor. But these governments must also fulfill their broken promises, he added, especially the US$100 billion in annual climate funding to low-income countries that they first pledged more than a decade ago and failed to deliver.

This year’s UN climate conference, or COP 28, set for November, is increasingly seen as a make-or-break opportunity to slow global warming. But low-income nations’ suspicion and wariness of their richer counterparts could significantly obstruct a deal on cutting emissions.

“It has a dramatic impact on trust. It’s seen as a breach of contract,” Glemarec said, as he ends his four-year term. “Reaching the US$100 billion is a precondition for ensuring trust.”

His organisation was set up in 2010 as the UN’s main effort to invest in low-emission and climate-resilient development, giving donors an option to direct finance through the world’s primary multilateral organisation.

However, the GCF has struggled to get donors to cough up the funds they pledge and then move the money to low-income parts of the world. Out of more than US$11 billion in projects the fund has approved, only about US$3 billion has been disbursed to low-income countries.

Former UN. Secretary-General Ban Ki-moon last month slammed the GCF as an “empty shell,” blaming donors for holding up funding and setting up financing terms that do not work for low-income nations.

Glemarec argued that the fund has accelerated and simplified the process since he took the helm in 2019.

“We dramatically cut down the time it takes to move resources through our pipelines,” Glemarec said from his office in Incheon City, South Korea, where the fund is based.

The 35-year veteran of the UN has dealt with wild swings in donors’ moods that have hurt GCF’s budget. The United States, its biggest donor, initially pledged US$3 billion, but that figure was drastically cut under former President Donald Trump. The Biden administration pledged to fix some of the shortfall, but the U.S Congress has since refused to bankroll that promise.

The rollercoaster ride also saw GCF staff satisfaction hit low levels amid accusations of a toxic workplace. Former employees accused member states of political interference in GCF’s funding choices. Glemarec rejected the claims of “systematic” staffing problems, and the organisation has said it is working to improve reporting mechanisms.

But the finance piece, especially given that funding is GCF’s core mission, is the most critical question. Glemarec said his organisation is but one player across a multitude of private and public financiers, and it is a “nightmare” for all of them to come together and harmonise the funding of climate projects.

In other instances, low- and middle-income countries already struggling to pay back existing loans cannot take on more debt to meet environmental targets across transportation, infrastructure, agriculture, and other sectors of the economy.
“People say they cannot take on more sovereign debt. They come and say they need other instruments,” he said, referring to tools such as grants, which don’t need to be repaid. And this dovetails with his message to donors that finance must be much more agile and suited to the situations in each country.

“A lot of finance is not flexible,” he said emphatically, indicating that even discussing flexibility as a part of access to finance can be taboo. “We are wedded to development paradigms that are obsolete.”

Taking a step back to assess the overall climate situation, Glemarec cautioned of a “race between two different trends” that keeps him oscillating between optimism and pessimism.

On one hand, climate change is materializing far faster than what we have planned,” he said, rattling off a litany of numbers showing rapid global warming.

“On the other hand, we are also seeing some positive development. The cost of solar today is a one-tenth of what it was 10 years ago and it keeps going down. And also in terms of policy, the net zero movement is completely changing my outlook,” he said. And a key part of the race is weaning countries off coal and other polluting sources of energy, which is a capital-intensive process. In essence, countries are being asked to spend huge amounts of money now in return for lower operating costs in the future.

“So, it depends on the financing terms” to make it work, Glemarec said, referring to the repayment conditions in the contracts. He added that this includes having the capacity to “de-risk” projects.

He paused for a moment to gripe about “de-risking” and jargon writ large, as he conceded that it’s sometimes easy to slip into industry slang. “Often ‘repricing risk’ would be a much better terminology,” he said, because “actually, the green and climate resilient investments are much less risky than the traditional ones.”

Glemarec looks back on his career and sees how the world failed to rise to the occasion time and again, with a sense of urgency raised in his voice.

Trillions are needed for the climate transition, yet the world’s largest climate fund dedicated to helping low- and middle-income countries has a portfolio of only US$11.3 billion. It wants to use this money in a more strategic way to unlock private capital.

“When I started my career we could have averted catastrophic climate change only through mitigation,” he said. “The days where we could focus only on mitigation are over. The days where we could only focus on mitigation and adaptation are over, too. Now, we have to focus on mitigation, adaptation, and loss and damage.”

Climate mitigation refers to stopping projects like coal burning plants, while adaptation is about creating resilience to floods, droughts, and other catastrophic events. These programmes are critical to keeping global warming below 1.5 degrees Celsius — which would prevent catastrophic changes — and helping countries handle rapidly changing weather conditions.

At the last COP 27 conference in Egypt, a big chunk of the talks was focused on a so-called loss and damage fund, which would get cash to low-income countries suffering from the consequences of climate change that they did not cause. But Glemarec worries that yet another fund could divert donors’ funds away from the climate mitigation and adaptation projects.

“If the money comes at the expense of mitigation financing, or at the expense of adaptation, financing, the net result will be increased loss and damage. Any kind of mitigation financing gap increases adaptation needs, and any kind of adaptation gap increases loss and damage,” he said.

So, as the French national sets to move closer to home after a multi-decade career posted around the world, what is Glemarec’s message to his soon-to-be-named successor at a fund that has its hands in projects totaling more than US$42 billion?

“The main lesson is the power of partnership,” he said. “See yourself as a convener and knowledge sharer.”

He threw in another piece of advice: “Do not focus only on efficiency – also focus on effectiveness. And rethink the idea that one easy instrument works. Do not buy that. Try new approaches.”