Management Response and Action Plan (MRAP): Evaluation of Global Affairs Canada’s Climate Finance Programming
Recommendations: Climate Finance Commitment
Recommendations 1 to 4 are forward looking and seek to improve the planning and delivery of future climate finance commitments.
Recommendation 1: Strategic Orientation
When seeking policy authorities for future climate finance commitments, the International Assistance Partnerships and Programming Branch (YFM), in partnership with Environment and Climate Change Canada (ECCC), should clearly:
- Identify a strategic focus and targeted priorities to operationalize the broad climate finance policy framework and address various policy objectives. The updated strategic policy guidance should inform the investment approach and reflect evidence of what works.
- Review the alignment of available climate finance instruments with the new strategic focus and the commitment’s funding profile to maximize the relative strength of each instrument in reaching targeted climate finance priorities.
- Communicate the strategic focus and targeted priorities to implementing partners to guide partner programming selection. For Unconditionally Repayable Contributions (URCs), ensure that agreements include programming requirements, (e.g., percentage distribution to lower income countries, thematic or sector areas, as apply) to enhance their alignment with the targeted priorities.
Management response and commitment
YFM partially agrees with the recommendation. While management notes that the current commitment had a policy framework, policy targets and thematic programming areas, it agrees that the link between higher level policy targets and implementation areas could be more clearly translated into a program strategy in any subsequent commitment. Future policy and strategic orientations will be grounded in evidence from the past 3 climate finance commitments and will focus on where Canada’s specific value-add lies; which projects and funding instruments are best suited to achieve desired impacts; how financial instruments are structured; and the roles that bilateral, multilateral, and blended finance partners play in achieving aggregate portfolio outcomes.
| Actions | Expected Deliverables / Outcomes | Responsibility Centre (Bureau / Division) | Target Date |
|---|---|---|---|
| 1.1 Conduct a comprehensive review of the current climate finance portfolio and funding approaches to inform the development of a renewed strategic focus and targeted policy priorities. | 1.1 Review conducted. | 1.1 YLD/YLC with support and input from ECCC, YLI, YOO and geographic branches and regional desks | 1.1 September 2025 |
| 1.2 Develop, implement, and communicate a programming framework and investment strategy that aligns financial instruments and partnerships with the new strategic focus, ensuring coherence across government and integration into partner negotiations. | 1.2 Programming framework and investment strategy developed and used to guide decision making. | 1.2 YLD/YLC with support and input from ECCC and YLI as relevant | 1.2 April 2027 |
Recommendation 2: Portfolio Management
In implementing future climate finance commitments, YFM, in consultation with People and Corporate Management Branch and Chief Financial Officer (SCM) and Pan-geographic Affairs Branch (GFM), should:
- Pursue a portfolio-level programming approach to maximize the strengths of partners and purposefully seek initiatives in relation to the strategic policy guidance.
- For a future concessional finance portion, seek the Department of Finance authority to manage accrual space within the commitment timeframe and strategically leverage the use of available space through a combination high and low-risk investments to maximize the impacts according to commitment objectives.
Management response and commitment
YFM agrees with the recommendation. YLC will develop and implement a rolling investment plan to align upcoming investments to strategic policy guidance and results targets. For future concessional finance, YFM will seek the Department of Finance’s approval to manage accrual across the life of the commitment, with the goal of being able to manage accrual space between fiscal years to adapt to changing circumstances. This will enable the dynamic allocation of concessional finance across high- and low-risk investments, optimizing the use of fiscal space to maximize climate impact and mobilization outcomes.
| Actions | Expected Deliverables / Outcomes | Responsibility Centre (Bureau / Division) | Target Date |
|---|---|---|---|
| 2.1 Seek authority from the Department of Finance to manage expected returns on a portfolio basis, across the URC portfolio, and over the 5-year duration of the next climate finance commitment. | 2.1 Authority sought. | 2.1 YLD/YLC with support from SGI | 2.1 Fall 2025 |
Recommendation 3: Performance Measurement
YFM, in partnership with ECCC, should revise and streamline the performance measurement framework for the International Climate Finance Program to include climate finance policy results, key performance indicators, methodologies, baselines, targets, and a standardized data collection approach based on best practices in climate finance performance measurement. In operationalizing the framework, YFM should strengthen and peer review its monitoring, evaluation, reporting and learning (MERL) system for climate finance and share results in appropriate forums.
Management response and commitment
YFM agrees with the recommendation. It will take a phased approach to strengthening the International Climate Finance Program MERL system, focusing on improvements that can be made within the auspices of the current $5.3B commitment first, and moving towards more strategic or complex improvements, such as streamlining the performance measurement framework (PMF) to align with the theory of change, as part of any future commitment.
| Actions | Expected Deliverables / Outcomes | Responsibility Centre (Bureau / Division) | Target Date |
|---|---|---|---|
| 3.1 In collaboration with ECCC, strengthen the current Climate Finance Program MERL system with a focus on data flow, management, analysis and interdepartmental coordination. | 3.1 Results data and findings are more robust and accessible to a variety of key user groups. | 3.1 YLD/YLC with the support of YLI, YLP, YOO, YSF, SXD, ECCC | 3.1 March 2026 |
| 3.2 Based on future changes to policy objectives or programming parameters, produce a streamlined theory of change, results framework, and MERL system that describes program impacts to Canadians. | 3.2 New theory of change, results framework, and MERL system is based in good climate finance MERL practice and on measuring program impacts. | 3.2 YLD/YLC with the support of ECCC and SXD | 3.2 October 2026 |
Recommendation 4: Interdepartmental Governance
YFM, in partnership with ECCC, should review the International Climate Finance Program governance functions to ensure appropriate level of oversight and delegation of authority, and leveraging of financial risk management and climate expertise.
Management response and commitment
YFM agrees with the recommendation. GAC and ECCC have joint responsibility for the oversight and governance of the commitment, however departmental authorities for programming and financial risk will be applied. Sharing of climate expertise to support the implementation of programming and crafting of policy for oversight of the commitment will continue.
| Actions | Expected Deliverables / Outcomes | Responsibility Centre (Bureau / Division) | Target Date |
|---|---|---|---|
| 4.1 For the next Climate Finance commitment, outline a framework, including criteria, to create a strategically relevant pipeline of climate finance projects under management. | 4.1 Future project selection and related evaluation criteria are revised, and advisory committee meeting terms of reference are modified to effectively leverage relevant departmental expertise. | 4.1 YLD/YLC in collaboration with ECCC | 4.1 April 2026 |
Recommendations: Climate Finance URCs
Recommendations 5 and 6 intend to strengthen the current and future delivery of climate finance URCs.
Recommendation 5: Transparency of URC investments
YFM, in consultation with ECCC, should improve the communication of climate finance URC investments within GAC and the Government of Canada (GoC) to enhance Canadian, bilateral and regional engagements and externally to increase transparency and visibility of the GoC’s international public climate finance.
Management response and commitment
YFM agrees with the recommendation. The Climate Finance Program will take measures to strengthen communication of the program’s intent and objectives, and to further strengthen information flows to Missions and the Canadian public.
| Actions | Expected Deliverables / Outcomes | Responsibility Centre (Bureau / Division) | Target Date |
|---|---|---|---|
| 5.1 In collaboration with RDD and SGSC, review and clarify existing guidance on Canadian recognition and visibility in climate finance programming, with a focus on projects funded through URCs. | 5.1 Language review completed and language strengthened to ensure appropriate recognition and visibility is provided to Canada in URC-funded projects. | 5.1 YLD/YLC with the support and input of RDD, SGSC | 5.1 March 2027 |
| 5.2 Increase awareness of Climate Finance Program objectives, scope, and financial innovations through Mission engagement and learning initiatives. | 5.2 Updated briefing material related to climate finance URC portfolio and results distributed to Missions. | 5.2 YLD/YLC with the support and input of Geographic Desks and GFM | 5.2 March 2026 |
Recommendation 6: Environmental and gender equality marker coding
YFM should review and update the environmental and gender coding of climate finance URC agreements during the investment period to ensure they reflect actual investments.
Management response and commitment
YFM agrees with this recommendation. Recognizing that the context and profile of URC investments changes over time, YLD and YOD will collaborate to ensure that the coding of URC-funded projects is reflective of the results that sub-projects expect to achieve by reviewing coding assessments throughout the investment period.
| Actions | Expected Deliverables / Outcomes | Responsibility Centre (Bureau / Division) | Target Date |
|---|---|---|---|
| 6.1 Throughout the investment period, assess the project-level investment portfolio to ensure alignment with the gender equality and environment coding of URC-funded projects, informed by technical guidance from specialists to strengthen gender equality and environmental results, where required. | 6.1 Gender equality and environment results accounted for appropriately. | 6.1 YLD/YLC with the support of YOD, YOO, and SWS | 6.1 March 2026 |
Recommendation 7: Financial risk management for repayable contributions
SCM, in partnership with YFM, should improve the financial risk management of repayable contributions in the following areas:
- Define roles and responsibilities for financial risk management of repayable contributions and ensure appropriate separation of authority.
- Review existing methods for calculating the accrual profile of repayable contributions and select a standardized methodology to ensure a consistent financial risk management approach across the department.
- Implement a repayable contribution management system that meets market standards and enables risk management throughout the lifecycle of repayable contributions – from initial assessment, disbursement, investment and repayment.
Management response and commitment
SCM agrees with the recommendation. It will work with YFM to further develop GAC’s approach to the risk management of innovative finance, including adjusting business processes and defining and adjusting roles and responsibilities for the financial management of repayable contributions. The goal will be to improve the “risk-aware” culture of repayables within the Department. This will include development of a consistent approach to the modeling of expected accrual that reflects best practice. SXD will lead the work to set up user classes in the Impleo system that will reflect proper division of responsibilities and authorities (and segregation of duties where applicable).
| Actions | Expected Deliverables / Outcomes | Responsibility Centre (Bureau / Division) | Target Date |
|---|---|---|---|
| 7.1 Review and adjust GAC’s operational model, drawing on lessons learned since the inception of climate finance/ innovative finance programs. Revise the division of responsibilities and authorities between S-Branch and Y-Branch, for the entire life cycle of repayable contributions, and for each unit working on repayables within the branches. Develop and implement an implementation plan for the roll out of changes in responsibilities. | 7.1 Processes, roles, authorities and responsibilities are clearly defined and recognized, and are rolled out for the financial management of repayable contributions. | 7.1 SGD and YLD | 7.1 September 2026 |
| 7.2 Review current processes for calculating the accrual estimate for unconditionally repayable contributions. Seek external review and recommendations. Agree on a standardized methodology to be used across the department for all URCs. | 7.2 Standardized methodology for the calculation of accrual for URCs adopted across the department. The approach is consistently implemented by all GAC branches. | 7.2 SGI with the support and input of YLD | 7.2 March 2026 |
| 7.3 SXD will work closely with YLD, SGD and SMD to collect specific requirements for a repayable contribution management system that meets market standards and enables risk management throughout the lifecycle of repayable contributions. SXD will ensure that project management requirements are integrated into Impleo or another approved platform, and will propose best options to meet the financial and investment related requirements. | 7.3 The new Gs&Cs management system, Impleo, or another approved platform, supports the management of repayable contributions throughout their lifecycle, and a solution is implemented for their financial requirements. | 7.3 SXD | 7.3 March 2027 |
Recommendation 8: Internal governance and oversight
SCM, in partnership with YFM, and in consultation with GFM, should review the set-up of the Investment and Triage Committees to increase the level of expertise and challenge function and ensure a thorough review of financial, environmental and developmental impacts of proposed investments.
Management response and commitment
SCM agrees with the recommendation and will work with YFM to increase the effectiveness of the Investment and Triage Committees with the view to improving the overall governance and oversight of repayable contributions.
| Actions | Expected Deliverables / Outcomes | Responsibility Centre (Bureau / Division) | Target Date |
|---|---|---|---|
| 8.1 Develop recommendations for changes to the mandates and terms of reference, composition, required skill sets, and authorities of the Triage and Investment Committees. Agree and approve enhancements to increase the effectiveness of the 2 governance bodies. | 8.1 Governance committee terms of reference are revised and approved by DME. | 8.1 SGD and YLD | 8.1 March 2027 |
- Date modified:
