Update on October 24: At a press conference held at the 16th Conference of the Parties (COP16) to the United Nations Convention on Biological Diversity (CBD) today in Cali, Colombia, China’s Minister of Environment Huang Runqiu announced that the KBF’s Executive Council had just approved the first batch of 9 funded projects. Recipient countries are from Central & Eastern Europe (Albania), Asia Pacific (Bhutan etc.) , Latin America (Chile etc.) and Africa (Malawi etc.). The KBF’s official website has not been updated to include more details of the projects yet (it should soon). But Huang’s comments suggested that the projects might be about supporting countries to better prepare and implement their national plans for biodiversity conservation. He specifically mentioned helping countries build up biodiversity monitoring capacity, which involves supporting standard-making efforts and donating monitoring devices. Today’s press conference also unveiled the make-up of the Executive Council. Besides China and UNEP as co-chairs, the governing body now also includes three country members: Cambodia, Colombia and Egypt.
Original blog from June 26: At the end of last month, the leaders of two United Nations organizations: United Nations Environment Program (UNEP) and Multi-Partner Trust Fund (MPTF) arrived in Beijing to sign agreements with the Ministry of Ecology and Environment (MEE) on the Kunming Biodiversity Fund (KBF), effectively launching the much anticipated multilateral funding vehicle for the UN Convention on Biological Diversity (CBD).
Ever since President Xi Jinping made the pledge of creating the KBF in 2021, there has been much speculation about how China would run the fund, given its relative lack of experience in this field. After all, the South-South Climate Cooperation Fund (SSCCF), also announced by Xi in 2015 to support climate adaptation in the Global South, never really took off.
The latest development shows pragmatism on the side of China this time. Instead of running a solo show, it opts for a collaborative model, wherein the fund will be administered by MPTF governed by UNEP-hosted decision-making body that China sits on as co-Chair.
In many ways, the fund is China’s first attempt at dispersing environmental foreign aid through a multilateral mechanism. Its operation will not only influence biodiversity conservation efforts in the Global South, but also shape the Chinese approach to foreign aid more broadly. In the face of this new international facility led by China, what should prospective recipient countries expect?
Credible, but not operational yet
When it comes to environmental funds, China does not (yet) have a proven track record. In 2015, President Xi Jinping announced ahead of the Paris climate summit that China would set up a RMB 20 billion (USD 2.8 billion) South-South Climate Cooperation Fund. Curiously, the country never makes good on the pledge. By mid-2023, senior climate officials revealed that it had cumulatively spent RMB 1.2 billion on South-South Climate Cooperation, a fraction of the 20 billion that Xi promised.
A main reason for this underperformance is the lack of a proper structure to scale climate foreign aid to the needed level. To be clear, China has been providing donation-based climate aid to developing countries for many years prior to the 2015 announcement. Such aid was often in the form of donated equipment (solar cookers for instance) or training programs for recipient country personnel, coordinated by a long-standing program administered by the National Development and Reform Commission (NDRC). Much of the RMB 1.2 billion worth of aid that has happened was disbursed through this existing channel, now given a new budget line allocated to the SSCCF. However, the existing donation-based approach can only absorb that much funds. Without a stand-alone new institutional entity capable of soliciting and executing fundable ideas from recipient countries, the SSCCF remains just an item on the NDRC’s book.
The KBF is set up differently from the outset to give it a much more credible and promising institutional foundation. The fact that China opts to cooperate with UNEP and MPTF is a good sign that it would like to embed the new biodiversity fund inside the existing multilateral financing framework. This allows the KBF to be built on a more robust footing: the in-and-out of funds, for example, will be administered by MPTF that gives both potential donors and recipients a proven platform for injecting and withdrawing funds. In fact, through the signing of agreement last month, the Chinese government is now contractually bound to wire its committed RMB 1.5 billion to MPTF pertaining to an agreed schedule.
More importantly, the KBF’s main institutional structure will be built inside the UNEP, in partnership with the CBD Secretariat. This international governance structure, with an Executive Council made up of China, UNEP (as co-Chairs), recipient and donor member states, and observers will likely give stakeholders better access to the decision making of the KBF, likely making it more open and accountable.
According to the fund’s Term of Reference (TOR), the first 8 months of its establishment (from May 2024) will be an “inception phase” when a permanent Secretariat serving the Executive Council will be set up while operational procedures and policies will be created. Implementation of the KBF will kick off after the preparations are made.
Who should receive the grants?
While the KBF represents China’s new venture into a multilateral environmental fund, the idea of a host country fund is not new under the CBD framework. Other countries, notably Japan, which hosted the 2010 CBD negotiations that resulted in the agreement of “Aichi Targets”, have set up similar funds before China. The Japan Biodiversity Fund (JBF), set up under the CBD Secretariat with a 5 billion yen (60 million USD) initial contribution, is specifically designed to support countries in their implementation of the UN convention, especially in drawing up their national plans for biodiversity conservation. The relatively narrow and specific focus of JBF is based on an assessment at the time of the needs of CBD’s developing country signatories.
The reaching of the ambitious Kunming-Montreal Global Biodiversity Framework (KMGBF) at the end of 2022 kicked off a new decade of global conservation action with an estimated funding gap to the tune of 700 billion USD. The KBF is therefore expected to mobilize substantial resources to help close the gap in conjunction with other environmental financial mechanisms including the Global Environmental Facility (GEF). From the Theory of Change Diagram in the KBF’s TOR, its funded activities appear to be much broader than JBF.
A key question posed by observers is how different the KBF’s recipient mix will be from the existing financing facilities. GEF’s grantees are usually developing country governments. The KBF’s TOR emphasizes “complementarity” with GEF through co-financing projects, coordinating timing of calls for proposals, and enabling coordinated planning by countries, which implies a somewhat similar pool of recipients. However, environmental groups are already suggesting the KBF’s coverage be extended to community-level grantees taking care of relatively small, biologically vulnerable areas. They argue that the fund’s connection with community-level conservation efforts can be a distinctive feature and a source of true complementarity.
The make-up of the KBF’s grantee pool will likely be determined by the accessibility of its two modalities under which grants will be distributed. The first modality is specifically for country governments to access the fund through KBF’s partner UN Organizations, namely UNEP, UNDP and the CBD Secretariat. Other organizations, including NGOs, should access the fund through a second modality that will be developed “in the initial years of operationalization of the fund.” This indicates that governments will likely constitute the initial batch of recipients before more grassroots projects can appear on the KBF’s funded list. It also depends on the fund’s scope and depth of outreach in its potential recipient countries.
Chinese officials already flagged that they would like to see the first projects to be announced at the CBD’s 16th Conference of Parties (COP16) later this year in Colombia. The initial batch will likely set the tone for the KBF pipeline in the first few years of operation.
Transparency, so far so good
One key advantage of partnering with UN Organizations in running the fund is increased transparency, especially when compared with China-operated initiatives such as the SSCCF that are often more opaque. The creation of the KBF portal webpage on MPTF Office Partner Gateway, with the disclosure of the fund’s TOR and MOUs signed among parties, has already won praise from Chinese environmental watchers.
It will likely also boost confidence in potential new donors. With an open platform pegged on the UN’s administrative infrastructure, China will likely be keen to solicit contributions to the KBF from friendly governments and private philanthropies with an interest in collectively shaping its flagship environmental fund.
As a newcomer to international environmental aid, the KBF puts China in the club of traditional donor countries such as Norway and the UK. Like the AIIB, it will be another Chinese attempt at international leadership through a multilateral rather than unilateral framework. Its future success and failure will contribute to the growing narrative about how the country situates itself vis-à-vis the “rule-based international order.”