Are Vertical Funds Right for Climate Finance?

The aid industry has periodically sought to improve the effectiveness of aid, with the latest attempt, the 2005 Paris Declaration, focusing on five key themes generally agreed to be important (Ownership, Alignment, Harmonisation, Mutual Accountability and Managing for Results). Progress against these five themes has seen mixed results. In particular, vertical funds, such as the proposed Global Climate Fund, have been found to have both positive and negative impacts.  Although the climate finance landscape is highly fragmented, the proposed Global Climate Fund is emerging as a likely major modality for climate finance, channelling significant international public flows for both adaptation and mitigation.

This meeting will draw out the major lessons from the aid effectiveness agenda and examine how relevant these are for climate finance, with discussions focused around the particular example of vertical funds. The successes and failures of the push for aid effectiveness will be charted and parallels will be made with the existing international climate finance architecture. The question is whether climate finance can learn the lessons from development finance quickly, without having to waste valuable years making the same mistakes?