Multilateral climate funds are making changes to support locally led adaptation: where have they got to?
This is the second insight in a series examining the world’s multilateral climate funds, and looks at measures taken by two of the biggest funds to support locally led adaptation.
Local communities in Timor-Leste are working to rehabilitate land to act as a buffer against climate-induced disasters (Photo: UNDP Climate, via Flickr, CC BY-NC 2.0)
Locally led adaptation (LLA) represents a fundamental shift in how climate adaptation finance is designed and delivered. The approach, embodied through eight principles, prioritises mechanisms that enable agency, decision-making power and resources that flow directly to local actors – including communities, Indigenous Peoples, local governments and community-based organisations.
These principles are increasingly shaping how multilateral climate funds structure and deliver on financing mechanisms and programmes.
In this insight, we examine how two multilateral climate funds that are particularly important for adaptation finance delivery – the Adaptation Fund (AF) and the Green Climate Fund (GCF) – are approaching LLA and exploring how to operationalise the principles.
The Adaptation Fund’s LLA journey
The AF adopted the LLA principles in 2021, after having worked alongside the Global Center on Adaptation and other partners on elaborating the principles. The fund brought a lot of experience and learning to the development of the principles, having pioneered the direct access and enhanced direct access approaches to programming adaptation finance.
The fund’s medium-term strategy for the period 2023-2027 (MTS-II) (PDF), adopted in October 2022, introduced a special emphasis on promoting LLA in the fund’s work. Three modalities were discussed in March 2023, which have since formed three windows: the LLA single country grants window (adapted from the fund’s previous enhanced direct access window), the regional LLA window and the LLA global aggregator programme.
1. LLA single country grants window: this window is accessible by National Implementing Entities (NIEs) – nationally accredited institutions authorised to receive and manage climate finance directly. The window targets sub-national actors through frameworks that emphasise community ownership, learning and scaling. NIEs can use these funds to manage small grants programmes or run participatory vulnerability assessments, with local decision-making encoded in project governance structures.
2. Regional LLA window: this modality enables multi-country approaches to locally led adaptation, allowing for knowledge sharing and coordinated action across countries facing similar climate challenges while maintaining local decision-making at the implementation level.
3. LLA global aggregator programme: this window works through intermediary organisations that can aggregate and manage portfolios of smaller, locally-led projects across multiple countries. The aggregator model aims to reduce transaction costs while maintaining local leadership, providing technical support and fiduciary oversight while devolving substantive decision-making to local actors.
The AF LLA windows complement the fund's other access modalities and are becoming a proving ground for innovation in devolved finance. The application forms for these windows explicitly request information based on the eight LLA principles, so these standards are embedded into project design from the outset.
The Green Climate Fund’s LLA Journey
The GCF signed the LLA principles in 2024 and has since adopted the broader framing of locally-led climate action (LLCA), to include locally-led solutions for adaptation and mitigation benefits.
The GCF built language on local engagement into its 2024–2027 strategic plan, the fund’s 50 by 30 vision, and has just published a locally-led climate action framework and guidance on design, implementation and delivery of locally-led context-specific solutions, moving from principles to practice.
While it is still too early to see any tangible results in terms of funding projects, this demonstrates a more concerted shift on the design and delivery of adaptation interventions, building on previous measures from the fund, including its enhanced direct access channel. With 75% of all GCF funding still allocated to international entities, the dedicated effort and space for testing and learning will be required to create lasting change.
Since the launch of the GCF’s enhanced direct access channel in 2015, the GCF has approved seven projects across 14 countries (10 of which are Small Island Developing States and least developed countries) amounting to approximately US$$119 million in funding. These initiatives put decision-making for the allocation of grants to local actors in the hands of a chosen national entity once the project is underway.
This enables financing to be more opportune, more responsive to country and community needs over time and enables greater ownership of activities at the national and local levels – it represents a move towards a locally led adaptation approach.
However, with only seven approved projects in almost 10 years of operation, the uptake for this channel has been very low. A key preliminary barrier (PDF) to access has been the complex requirements put to national access entities coupled with the limited support provided to meet these requirements.
These entities need to illustrate they already have robust mechanisms for devolving decision-making, multi-stakeholder governance and local financing structures, including clarity on how they will manage fiduciary risks and demonstrate results across a portfolio of micro-projects, to be eligible.
Lessons from early enhanced direct access projects found that most Direct Access Entities would require ongoing readiness support to strengthen and develop their systems to achieve these requirements.
How can the funds build on these actions in efforts to provide effective support?
The steps taken by the AF and GCF in furthering their support of locally-led approaches show a promising start on a long journey.
Adapting large and bureaucratic processes for delivering in a very different way – different divisions of power, risk, accountability, and so on – require careful and fundamental reshaping and rethinking of processes and mechanisms.
Three takeaways for the funds to consider at this stage are:
Provide deliberate and focused support
As seen from the GCF’s enhanced direct access channel, opening a channel isn’t sufficient to support this type of delivery.
The climate funds also need to be actively looking at addressing barriers to entry and how preparatory support – or indeed a restructure of mechanisms to improve alignment with the principles of LLA, and enable institutions to grow as they begin to deliver – can enable access and stronger delivery on adaptation interventions that are locally led and inclusive of voices of diverse local context.
Learn from experience, iterate how support is provided
With the LLA windows in the AF now having approved their first few projects, the fund’s attention should turn to careful reflection on whether the fund’s processes and mechanisms are supporting genuine locally led adaptation projects.
While the AF has provided flexibility in design for LLA proposals, this has left room for larger intermediaries with differing internal incentives to intertwine their traditional granting mechanisms and complex bureaucracies, creating a burden for local actors.
The AF and GCF need to examine the barriers that force interventions into business-as-usual delivery, or disadvantage local actors. Projects need to be able to provide spaces for testing, active learning and innovation. The funds also need to engage with accredited entities as well as local communities to understand and learn whether the interventions are truly delivering on local needs and priorities with local agency.
Adapt metrics and indicators
Both funds should look to their results framework to ensure they align with achieving locally-led action to a high quality. Frameworks should standardise metrics to capture the scale and quality of finance flows and access of finance by local actors.
The LLA principles are yet to be operationalised as minimum criteria or investment conditions in the funds' readiness frameworks and fund access performance standards. These and other measures to track progress are crucial in shifting the tide.
The next insight in this series will reflect on what the outcomes of November's UN climate conference COP30 mean for the climate funds.
With thanks to Clara Gallagher, Mohsen Gul and Sydney Church for contributing to the development of this insight.
