AF project in Peru implemented by Profonanpe is building coastal resilience to climate change by providing sustainable livelihoods in the fisheries sector and expanded opportunities for women. (Photo by Profonanpe)

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Despite the ongoing challenges of the COVID-19 pandemic, the Adaptation Fund (AF) continued to deliver its concrete adaptation projects on the ground to the most vulnerable while expanding its innovative programs and support for developing countries throughout 2021.

The Fund was rewarded near the end of the year with a successful COP26 outcome that reflected wide recognition for its work and furthered its fundraising and policy goals in serving the Paris Agreement, bringing excitement into 2022 as it develops its next five-year strategy to continue to build on its pillars of Action, Innovation, and Learning and Sharing.

In concluding its productive year in December the Fund started the process of developing its next five-year Medium-Term Strategy (MTS) for 2023-2027. Although very early in a process that will involve comprehensive stakeholder consultation, it will build on the successes of AF’s first MTS (2018-2022) and take into account findings from a mid-term review by the Fund’s independent Technical Evaluation Reference Group. The review concluded that the first MTS was a good fit-for-purpose strategy, ambitious, forward-looking and responsive to global processes and imperatives for adaptation, reflecting good practices and being fully responsive to the Paris Agreement while also enhancing quality and project compliance. Progress during the first half of the MTS was significant, with AF launching seven new funding windows that received significant responses and enabled it to go beyond past achievements.

AF also released its Annual Performance Report reflecting continued growth across its pillars.

This followed a highly successful resource mobilization effort at COP26 in Glasgow in November, during which AF received unprecedented support with a record US$ 356 million in new pledges – triple what it raised in 2020 and nearly triple its US$ 120 million fundraising goal for 2021. A record 16 contributors included first-time supporters U.S., Canada (national level) and Qatar as well as a record EUR 100 million pledge from the European Union. Announcing the first ever-contribution for the Adaptation Fund at US$ 50 million from the U.S., H.E. Mr. John Kerry, Special Presidential Envoy for Climate of the U.S. outlined President Biden’s emergency plan for adaptation and resilience and said, “We see the Adaptation Fund as a key partner in this effort,” at the dialogue. “It’s led the way in supporting developing countries as they adapt to climate change.” New multi-year pledges from Norway and Ireland followed a trend set by Sweden a couple years ago, and AF’s largest historical contributor Germany and other consistent donors came through again. Parties to the UN Framework Convention on Climate Change also made several policy decisions expressing support for AF, including finalizing the Paris rulebook with a 5 % share of proceeds from issued emission reduction credits going to AF once the new mechanism becomes operational. With one of the conference’s top goals being enhancing adaptation ambition, the results reflected broad support for AF’s effective work on the ground for climate-vulnerable countries and innovative finance programs that build country ownership, as well as the high demand for its work.

In October, AF’s Board approved or cleared more than US$ 42 million in new projects including several new learning and small innovation grants for the Fund’s national implementing entities (NIEs) under Direct Access. The first grant concepts through AF’s explicit Enhanced Direct Access and Large Innovation Grant windows were also endorsed. “The importance of innovation and local ownership in adaptation is pivotal, and these windows foster both,” said Board Chair Mattias Broman after the meeting. “These larger innovation projects will help scale up and accelerate proven innovative solutions that are needed to address the climate urgency, and the Enhanced Direct Access projects build further on the Adaptation Fund’s pioneering Direct Access modality by directly empowering developing countries’ own institutions to allocate funding for local adaptation projects.”

In August AF enhanced support for developing countries by accrediting the Pacific Community (SPC)
as a regional implementing entity (RIE) through a mutual Fast-Track Accreditation process available to
entities that have already been accredited by the Green Climate Fund or AF. It expands opportunities for
regional projects and collaborations as SPC members are home to more than 100 million people, many in uniquely climate-vulnerable small island developing states. AF also accredited a new NIE
in Bangladesh and approved more than US$ 17 million in new projects in southwestern Africa. The fasttrack accreditation of Palli Karma-Sahayak Foundation in Bangladesh opens new opportunities for
adaptation projects in the least developed country.

Further, in August the Intergovernmental Panel on Climate Change released the first part of its 6th
assessment, which reported dire consequences of climate change if dramatic changes are not made soon.

In a move to enhance collaboration in adaptation amid the COVID-19 pandemic, in July AF along with
the Climate Investment Funds, Green Climate Fund, and Global Environment Facility released a joint
statement to support developing countries on the road to a climate-resilient recovery from COVID-19.
This includes collaborative scaling up, blended finance, sharing of results, indicators, knowledge and
engaging stakeholders. The four funds followed up with another statement at COP26, agreeing to advance cooperation further by exploring synergies in programming, monitoring and evaluation, and

In a landmark response to its continued record demand for projects amid the climate crisis, in April the
Board made a historic decision at its 36th meeting by doubling the amount of funding countries can access.

It enhances access to climate finance for vulnerable countries by raising the Fund’s cap on single country
project funding from US$ 10 million to US$ 20 million. Separately, the Board doubled the number of NIEs countries can have under Direct Access, empowering them to expand their adaptation capacities. In raising the cap, the Board included provisions to retain AF’s identity and strong track record in pioneering small-scale adaptation projects that are scalable and replicable by keeping individual country projects to a maximum of US$ 10 million each.

Also in April, Climate Home News published a video on Earth Day showcasing AF’s work in fostering
nature-based solutions and ecosystem-based adaptation, while enhancing lives and livelihoods. AF held virtual project visits during the year with Seychelles, and India-NABARD and produced a study in April of lessons learned in coastal management from another virtual project visit and exchange with
Senegal, as well as a case study on the exchange with NABARD on food security and climate resilience.

In March, the Fund continued to foster gender equality, social and environmental principles across its
work by updating its gender action plan and policy and commemorating International Women’s Day.

AF expanded its growing community of NIEs further in February, with the accreditation of the Mennonite Social Action Commission (CASM) in Honduras. CASM is a member of the ACT Alliance,
working together in over 125 countries to create positive and sustainable change in the lives of poor and
marginalized people — regardless of religion, politics, gender, sexual orientation, race or nationality. The
accreditation represents a broadening of NIEs, which include development banks, foundations,
environmental ministries, NGOs, civic organizations and others. The accreditation was made under AF’s
groundbreaking streamlined accreditation process for smaller entities that may not otherwise have access to climate finance, including those from SIDS and small countries. CASM is the 5th NIE to undergo the process. AF also accredited the International Center for Integrated Mountain Development as its first RIE in continental Asia, to help address potentially dire impacts of climate change on the
Hindu Kush Himalaya region including glacial melt, biodiversity loss and decreased water
availability. The region includes eight countries and 10 large river systems providing ecosystem
services, livelihoods and water to 1.9 billion people.

The new accreditations reflect growth of AF’s accreditation unit and readiness programme, which
provides resources and events to guide NIEs through accreditation and project development.

Showing support for AF’s concrete adaptation actions for the most vulnerable, the Qatar Fund for
Development on behalf of the State of Qatar announced a pledge of US$ 500,000 to the Fund in
January. Qatar broke ground in that it was the first non-Annex 1 Party to provide financial support to
AF and the first Middle Eastern country to do so.

Additionally, AF has continued to increase engagement with youth through its projects, knowledge
management and emerging funding windows such as innovation, showing the importance of involving the next generation in climate action.

Throughout the year, the world continued to experience effects of the twin challenges of COVID-19 and
climate change. AF’s actions since early on in the pandemic to support eligible countries adapt by adding
flexibility to its projects amid uncertainties or constraints imposed by the pandemic has turned out to be
indispensable in enabling countries to continue to build resilience as the pandemic has worn on.

As the Fund embarks on 2022, it begins the year armed with record funding to support new concrete
single-country and regional adaptation projects, including ones in its pipeline of US$ 300 million-plus in
projects that have not yet been funded, as well as foster its new innovative funding windows that will
bring many more urgently needed adaptation solutions to vulnerable communities while continuing to
evolve and adapt to countries’ needs by updating its vision for the next several years.

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