Full abstract:

5/Leap-of-faith may or may not be effective, but the structure raises accountability issues and represents a fundamental break from trends of contributors tightening control over IO resources through stringent monitoring and reporting requirements and earmarked funding arrangements.

4/We call this the “leap-of-faith” approach: Through their investments, IOs are attempting to increase the ability of other actors—such as commercial banks or limited liability —to finance climate projects.

3/when de-risking, IOs allocate funds through guarantees, equity investments, loans, and other instruments, often (not always) intending to mobilize private capital for mitigation/adaptation efforts that will materialize DOWNSTREAM (rather than for projects identified and vetted in advance)

2/de-risking projects expand the work of env/climate IOs to include economic and financial policy; this often includes advice to states and domestic banks more often associated with institutions like IMF and WB.

Takeaways: 1/de-risking and institutional investor language has risen across ALL five IOs in our study: (MDB and UN; development and climate; regional and global) since around 2016. The language is as prevalent or more prevalent at the UNFCCC financial mechanisms and UNDP than at the MDBs.

We document the rise in the language of de-risking and institutional investors at 5 IOs (GCF/GCF/IDA/ADB/UNDP) that deliver climate finance and evaluate how de-risking projects are changing the work of the GCF and GEF.