What defines a climate project, and how does it differ from other environmental or development initiatives? These are some of the questions that come up when projects are labelled ‘climate finance’.

Developing a solid climate rationale is needed to resolve these ambiguities, serving as evidence of the funding’s measurable impact in combatting the climate crisis. However, locally led projects, despite their crucial role, face significant challenges in proving this climate attribution – as this process can be difficult, time-consuming, and costly. Nevertheless, alternative approaches warrant exploration to achieve this objective efficiently, simply, and in a manner that resonates with communities. 

Philanthropy has an important role to play in this process, and a joint strategy is needed to coordinate efforts for effective grantmaking to generate proof of concept that can transform the traditional ways of developing a climate rationale. This objective is at the core of BASE (Building Approaches to fund local Solutions with climate Evidence), an initiative launched by a coalition of partners and coordinated by Fundación Avina.

Accountability for climate finance

Debates about what can accurately be considered as climate finance continue to take place and are an ongoing topic of discussion in climate policy. These debates about climate finance play a crucial role in helping sectors in their work to achieve a just transition, by providing support to those most affected by climate change and those with the greatest potential to expedite the transition.

Meanwhile, developed countries have not fulfilled their pledge to mobilize $100 billion in climate finance to developing countries by 2020. And there is a lack of assurance that resources allocated to climate projects effectively contribute to reducing greenhouse gas emissions or addressing vulnerabilities to climate change. This issue was exposed in an investigative report by Reuters and Big Local News, a journalism program at Stanford University that tracked how resources are being spent on combating the climate crisis. The report revealed that many of the projects analysed showed ‘little or no direct connection to climate change.’ This evidence underscores the stark reality that humanity is not doing nearly enough to respond to the climate crisis, even as climate change pushes more and more people into poverty and threatens their lives and livelihoods.

Tracking the climate rationale of climate funding is a way to ensure accountability in addressing this urgent global challenge.

Developing a climate rationale

The problem becomes more complex when we examine the responsibilities and burdens for accounting for the finance allocated. While ‘resource providers’ report on the sum of climate finance they have mobilised or provided, ‘resource recipients’ will be requested to use stringent indicators and methodologies to meet the funders’ request to prove the climate relevance of their activities. It is important to balance the demanding requirements of climate finance providers with the specific needs and means of local communities. Addressing this imbalance is also a matter of climate justice.

In this context, we need to understand the role that developing a climate rationale has and find the most effective, accessible, and streamlined approaches to do so. A climate rationale, or climate basis, refers to the narrative and evidence gathered to show that a project intends to reduce greenhouse gas emissions and climate change impacts, and that it will be fit for a changing climate. Often, justifying the extent to which a proposal will effectively address climate change requires many studies and is time-consuming, becoming an obstacle for funds to quickly and effectively reaching those who need it most to drive the transition. For instance, project proponents have to develop baseline studies on emissions or climate vulnerability assessments that often costs thousands of dollars and take several months to be developed. 

BASE: An innovating resourcing model

To tackle this challenge, Fundación Avina launched BASE with the support of Skoll Foundation. Fundación Avina has a long track record of work in the climate arena, encompassing a broad range of actions, such as accelerating the climate action agenda of nonstate actors and collaborating closely with regional and national governments to enact effective climate policies. The Initiative was launched in November 2022 at COP27, with a diverse plenary of partners, including Forest Trends, Brainforest, Grupo de Financiamiento de América Latina (GFLAC), Hivos, Pawanka Fund, Reos Partners, and United Nations University – ViE. In addition, BASE aligns its efforts with three initiatives, Adaptation Research Alliance, Voices for Climate Action, and Impulsouth.

Through a tri-pillar strategy of funding, learning and scaling, BASE will implement a diverse range of grant schemes to fund locally led climate solutions while minimizing the cost and time required to gather or prepare the relevant information that substantiates a climate rationale. By doing so, the initiative aims to unlock the potential of communities to drive impactful initiatives and promote effective climate action at the grassroots level. BASE aims to serve as a taskforce that complements rather than competes with existing philanthropic mechanisms, enhancing their efforts by accelerating resource mobilization. In this spirit, BASE is continuously seeking new allies to amplify this strategy by implementing different approaches to finance locally led solutions that can account for effective reductions of GHG emissions and climate change impacts.

In its inaugural round of grants, BASE will finance the development of eight climate solutions for tropical forest management. These initiatives were recommended by BASE’s partner and will be led by local organizations, each of which will receive a one-year grant of $40,000. With the support of a dedicated researcher, these solutions will advance the transformation of their territories while furthering their understanding and enhancing their capabilities to explain the connection of their solution to climate change mitigation and adaptation. This will generate a proof-of-concept of alternative, community-led approaches to labelling this type of finance as ‘climate finance’ that will be shared financing institutions and governments, laying the groundwork to reshape climate finance practices to prioritize local communities.

An innovative and trust-based approach was designed for this first call, where applicants were given the flexibility to explain their proposals in a manner that worked best for their team, ensuring that diverse voices and creative expressions can be accommodated in the process. Applicants also received support from BASE throughout the application to reduce burdensome and to help them navigate climate finance and project development.

BASE selected eight projects for the first round of funding. Three will be implemented in Latin America (Costa Rica, Ecuador and Brazil), three in Africa (Ghana, Democratic Republic of Congo and Cameroon) and two in Asia (Indonesia). You can learn more about the projects at avina.net.

Victoria Matusevich is Head of Secretary of the BASE Initiative at Fundación Avina, Andrés Mogro is Coordinator of the Climate Programme at Fundación Avina and Laura Señan is responsible for Strategic Alliances at Fundación Avina.