The World Bank serves as the interim trustee of the Adaptation Fund by invitation of the Parties to the Kyoto Protocol. On behalf of the Fund, the World Bank performs two core functions: it sells the Certified Emission Reduction certificates that help support the fund and manages the Adaptation Fund trust fund.

Certified Emission Reduction Sales

The Adaptation Fund receives financing from two percent of total proceeds from the sales of certified emission reductions (CERs)issued by the Clean Development Mechanism under the Kyoto Protocol . The World Bank manages the sale (also called “monetization”) of the CERs received by the Adaptation Fund in accordance with guidelines developed by the Bank itself and approved by the Adaptation Fund Board. The monetization program converts CERs into cash to support commitments and disbursements to adaptation projects and programs.

Trust Fund Management

The World Bank has established the Adaptation Fund Trust Fund to hold the funds–primarily donations and cash proceeds from the monetization of CERs–and then transfer them for projects and programs as instructed by the Adaptation Fund Board. The Trustee does not hold CERs in the trust fund. When monetized, CERs are transferred directly to buyer accounts in exchange for the cash proceeds that are deposited in the Adaptation Fund Trust Fund. The World Bank also manages the investments, accounting, and financial reporting for the Trust Fund.

The World Bank is accountable to the Board for the performance of its fiduciary responsibilities, in accordance with the terms and conditions of service agreed between the World Bank and the Parties to the Kyoto Protocol.

As Trustee, the World Bank has been working to maximize the value of Adaptation Fund assets, taking into account the objectives of transparency, inclusiveness, efficiency, minimizing financial risks, and availability of cash as needed for the Fund’s commitments and disbursements. In addition, the World Bank has developed guidelines, which have been approved by the Adaptation Fund Board, for accepting donations from sovereign governments as well as non-sovereign entities.