Escaping the 20th Century neoliberal prison complex

Financialized policy is ubiquitous across a wide range of environmental policy areas, such as carbon trading or biodiversity offsets, but contributes little to averting climate catastrophe. At best, financialized policy produces a spectacle or illusion of care, a globalized narrative which is embedded and generated within traditional supranational institutions like the United Nations and new institutional architecture such as the Green Climate Fund (GCF).

The Governing Instrument for the GCF was approved by the Conference Of the Parties (COP) to the UNFCCC on 11 December 2011 in Durban.[2] It was conceived as something that would catalyze a “paradigm shift” in climate finance toward “low emissions development pathways”; which would be able to raise much larger sums than current flows of climate finance; and that would grant or lend to both the public and private sector simultaneously; while also generating funds from both. It was designated as an operating entity of the Financial Mechanism of the Convention.

Since then, and incentivized by small “victories” over voting, participation, consultation forum and contribution powers at Board meetings, convenings and conferences, Civil Society Organizations (CSOs) have invested much discursive effort and energy on the GCF, which inevitably prevents them from tackling other institutions and issues that may have better outcomes in addressing climate change. This opportunity cost is rarely discussed.

For example, last year, CSOs worked to attract public and private finance into the Green Climate Fund on behalf of, and in cooperation with, the Board Members and Secretariat. They also assisted in writing technical documents and helping organizations in gaining the status of accredited entities. Inputs have been provided for the investment framework, safeguarding, ethics and integrity policy, targeting, voting procedures and country readiness, among many others.

But empirically, in the aftermath of the world financial crisis, there is a case to be made that specific pools of finance directly contribute to the worsening climate crisis. Those heavily invested in the fossil fuel sector represent the most obvious example. Other pools of capital and managers of capital offer “climate solutions” yet simultaneously provide financial resources to some of the largest carbon polluters. The World Bank falls into this category; alongside a great number of development banks and large private banks and, at the time of writing, the GCF itself, which will also invest in fossil fuels. Notably, the World Bank disputes the size of some of its carbon pollution investments – the Bank has never denied making those investments. Neither has it ever released a public statement to cease fossil fuels investments. Many of the 20 accredited entities of the GCF (as of July 2015) are of this polluting type.

By July 2015, the Green Climate Fund’s Investment Framework protocols remain ring-fenced in a less than publicly transparent private sector facility. GCF managers are answerable only to overarching targets and goals in the investment framework and its (eventual) derivative investment contracts which will be required to be loosely referenced to poorly elaborated “priority areas”.

In technical terms, the GCF is a ‘fund-of-funds’ institution: it uses a largely mitigation based expenditure model; is managed using private finance oriented results and evaluation techniques; and it will generate dirty energy subsidies. Additionally, the GCF will use offshore funds which are overseen by equity fund managers promoted to decision-makers over portfolio expenditures, which it will distribute using multilateral entities as gatekeepers that stand to profit (or quite possibly compradors). In less technical terms: the GCF is murky.

HAS THE GCF TAKEN CIVIL SOCIETY ACTIVISTS HOSTAGE?

Fundamentally, the GCF promises incremental reform over strategic withdrawal, structural change and the insistence on effective regulation.[3]

In its own words, the Green Climate Fund claims it “will provide simplified and improved access to funding, including direct access, basing its activities on a country-driven approach and will encourage the involvement of relevant stakeholders, including vulnerable groups and addressing gender aspects.”[4] Such an approach is codified in terms of ‘international best practice’, while concepts such as ‘country-driven’, and ‘relevant stakeholders’ have been used vaguely to show how the politics of climate change is negotiated and by whom.

However, when CSOs are arguing and assisting in revenue generation and pledging for the new Green Climate Fund, there is a lack of empirical analysis that spending of the increased revenue would indicate any improvement to a cleaner economy whatsoever, or whether by supporting this structure we are delaying or retarding the type of changes needed to actually address the problem.

Yet the nexus between markets, climate finance, expenditures and environmental destruction is very strong. Carbon trading is the poster-child of this crisis: as one commentator put it: “Carbon trading is one final bloated corpse that needs to be hoisted into a hearse and whisked away quickly before it poisons genuine investment initiatives.”[5]

THE GREEN CLIMATE FUND DESIGN FOLLY

Designated as an operating entity of the Financial Mechanism of the UN Convention, the Governing Instrument for the GCF has key concepts, such as “paradigm shift to climate resilient development”, “country ownership”, and even “climate finance”, with weak foundational definitions and little international legal or institutional precedent.

The Investment Framework approved at the seventh meeting of the GCF in Songdo in May 2014 prioritized the delivery of private sector prerogatives. While committing to a 50:50 portfolio divide between adaptation and mitigation “over time” in its “portfolio targets”, the document also commits to a “significant allocation to the Private Sector Facility” without it being entirely clear whether this is accounted for before or after the 50:50 guideline is measured.[6]

By the seventh meeting, the “paradigm shift potential” looked very much like the late 20th century definitions of the “catalytic” and “demonstration” effects of development finance. These effects suggest that public funds can catalyze private sector counterparts by demonstrating a “good idea”, here indicated by “replicability”, “scalability”, “knowledge and learning” and the contribution of spending to an “enabling environment”.[7]

Resource mobilization was begun in early July 2014 aimed at reaching capitalization of between US$10 and US$15 billion for an expected operational start in November 2014. However, in June 2014, the Indian country representative, among others, noted at the UNFCCC’s Ad Hoc Working Group for Enhanced Action under the Durban Platform in Bonn that the lack of a legal definition of terms such as “climate finance” and “additionality” still warned of the problem of financial fungibility, or re-classifying, of current Official Development Assistance (ODA) as “climate finance”. How could anyone tell if funds were “additional” or merely reclassified ODA? The complexity of counting between promises, pledges, commitments, contracted and dispersed finance is compounded by some confusion over the differences between the categories, and ‘roll-overs’ within and between them, which add even more complexity to the counting game.

The World Bank, as trustee, was allowed during negotiations in Durban in 2011 to become an embodiment of this “international best practice” and was influential in designing many operational procedures from its pre-existing funds, while timid IMF safeguarding standards were adopted in May 2014, albeit as an interim measure, for at least three years.

However, the term “international best practice” fails to generate detail on the specifics of GCF operations. For example, accounting standards for climate or development finance do not exist, and the safeguarding and impact evaluation models currently employed by generic development finance institutions, from which climate funds seek to borrow, are thin and problematic, including the IMF system.[8] The Investment and Business modalities drew on the same methodology of global ‘experts’ selected opaquely and from the realms of finance.

In short, the GCF has become a murky, pooled private equity fund, lacking sufficient public look-through rights, with a firewall to stop the cognitive connection between what is needed to prevent catastrophic climate change, and what capital is prepared to do in the GCF.[9]

A NON-PERFORMING SPECTACLE?

Two clear outcomes are consequent upon the GCF’s ‘existence’ to date: the non-performance of actual climate change governance and expenditures from 2009 to 2014 (current global public expenditure on climate change by OECD members remains a derisory US$9 billion in financial year 2013–2014) and the locking of CSOs concerned with the GCF into complex technical engagements which drain their resources and time, but which contribute to the performance of environmental care as non-material spectacle.[10]

The non-performance of climate change governance must be our starting point in respect to improving influence and traction at a global level. In this respect, it is unfortunate that many observers prefer to frame the problem as many neoliberals would, not as a problem of unequal power and a lack of democracy, but as a temporary problem of implementation, capacity, or resources. Non-outcomes suit the powerful, such that we are observing an ‘anti-politics’, where the appearance and performance of care and concern has taken over from the actual practice of beneficial policy and government action. In reality, within the GCF powerful countries, corporations and banks have extended their control over and non-delivery of climate finance. Sadly, to date, most CSOs involvement has no direct relationship to furthering the objectives of ecological justice, not least because the technologies they are helping to design are legitimating devices that are thinly referent to science. The significance of operating modalities to eventual investment decisions and their substantive outcomes is also unknown, since inbuilt flexibility allows Board members some largesse in the commitment of resources, not least because of the non-fixity of key categories and concepts to date, and the amorphous and broadly conceived nature of monitoring, evaluation and results areas.

In short, the current form of CSO practice is problematic in a number of ways. First, there is time and energy spent which are resources not spent on building movements in national contexts for changing national environmental policies and the behaviors of nationally-authored representatives in supranational structures. Second, having an inflated and not very well proved faith in the ability of supranational structures to change our future also detracts from efforts to build it ourselves in the everyday now. Third, participation within the GCF and indeed the climate negotiations process more broadly seems to lend itself to people believing that the problem of responding to climate change is financial, and that more money will help solve it. This leads to uncomfortable alignments with corporate power, where CSOs join a chorus asking for fiscal resources from states, many of whom are hard-pressed with funding social welfare. Or, CSOs become involved in trying to persuade corporate entities to commit with financial resources. Either way, the entrapment is in the language of financialization. At some point, it is better to stop and consider a new model, or in our case, a whole new lifestyle designed to live with different technologies altogether.

A practice of democratic government which can act on science and peoples’ needs at a national and international level is the first requirement in this respect, to assist communities to live differently; a requirement which demands a peoples’ based political movement to make it happen. Intervention needs to be realigned to political movements beyond and outside the epistemic financial elite. As writer Quincy Saul lamented recently, “We need to stop chasing the ruling class around the world… When are we going to stop just conference-hopping… putting up a big pagoda, and having the “alternative people’s tent?” An alternative, according to Saul, is that “we need to build our own autonomous bases of resistance and prefiguration”.[11] We also need a critical realist analysis of what the GCF can and cannot do: it is not very green, its ‘climate’ is business friendly and its funds are missing. Moreover, if it had money it may just trap us further into overly slow and insufficient climate change governance.

* Sarah Bracking is Professor at the University of KwaZulu-Natal, Durban, South Africa and University of Manchester, UK. M. K. Dorsey is a full member of the Club of Rome.

[1] See also: Taibbi, M. (2011). Griftopia: a story of bankers, politicians, and the most audacious power grab in American history. Updated and expanded ed. New York: Spiegel & Grau; Fulcher, J. (2004).
[2] Capitalism: a very short introduction. Oxford [England"> ; New York: Oxford University Press.
[3] Green Climate Fund (GCF) (2012), Governing Instrument for the Green Climate Fund, available from http://gcfund.net/fileadmin/00_customer/documents/pdf/GCF-governing_instrument-120521-block-LY.pdf [Accessed on 9th November 2013">
[4] Bracking, S (2015), “The Anti-Politics of Climate Finance: The Creation and Performativity of the Green Climate Fund”, Antipode, 47, 2, ps. 281-302
[5] GCF. http://www.gcfund.org/about/the-fund.html Accessed 30 June 2015.
[6] Lohmann, L (2009), “Climate as Investment,” Development and Change, 40(6), ps 1063-1083.
[7] GCF (2014), Investment Framework, available from http://gcfund.net/fileadmin/00_customer/documents/MOB201406-7th/GCF_B07_06_Investment_Framework140509__fin_20140509.pdf
[8] GCF (2014:5), Investment Framework, available from http://gcfund.net/fileadmin/00_customer/documents/MOB201406-7th/GCF_B07_06_Investment_Framework140509__fin_20140509.pdf, GCF (2014b), Initial Proposal Approval Process, Including the Criteria for Programme and Project Funding, available from http://gcfund.net/fileadmin/00_customer/documents/MOB201406-7th/GCF_B07_03_Initial_Proposal_Approval_Process_fin_20140508.pdf
[9] Bracking S and Ganho, A (2011), Investing in Private Sector Development: What are the Returns? A review of development impact evaluation systems used by development finance institutions in Europe, Norwegian Church Aid, Oslo, 6th June, 2nd ed. From http://www.kirkensnodhjelp.no/en/About-NCA/Publications/Reports/report-on-investing-in-private-sector-development/
[10] Igoe, J (2014), “Firewall” in Fredriksen A, Sarah Bracking, Elisa Greco, James J Igoe, Rachael Morgan, and Sian Sullivan, “A conceptual map for the study of value: An initial mapping of concepts for the project ‘Human, non-human and environmental value systems: an impossible frontier?”, LCSV working Paper Series No. 2, available from http://thestudyofvalue.org/wp-content/uploads/2013/11/WP2-A-conceptual-map.pdf
[11] Organisation of Economic Cooperation and Development (OECD) (2013), Aid Activities targeting environmental objectives, statistics, available from http://stats.oecd.org/Index.aspx?DataSetCode=RIOMARKERS [Accessed on 26th April 2013">. See also: Igoe J (2013), “Nature on the Move II: Contemplation Becomes Speculation”, New Proposals: Journal of Marxism and Interdisciplinary Inquiry, 6, 1-2, 37-49
[12] Saul Q and J S Castro (2015), “A Discussion with Quincy Saul: On Climate Satyagraha”, Counterpunch, April 10th-12th available from http://www.counterpunch.org/2015/04/10/on-climate-satyagraha/

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