Financial Mechanisms for Climate Change: Lessons from the Reform Experiences of the IMF

The "Copenhagen Accord" issued after the 15th Conference of the Parties (COP 15) to the United Nations Framework Convention on Climate Change (UNFCCC), while not unanimously adopted, was nevertheless an important decision relating to further development of the climate change regime. In this twelve-paragraph document, there are seven paragraphs that touch upon issues relating to financial resources and financial mechanisms. Furthermore, COP 16 to the UNFCCC adopted the Cancun Agreements, which also lay down various significant provisions for financial mechanisms, including the newly created Green Climate Fund. This illustrates the importance of financial mechanisms in the adoption and implementation of policies related to climate change mitigation and adaptation. The design and effectiveness of such financial mechanisms-especially the role governance structure plays in ensuring the democratic outcome of producing fair and equitable resources generation and allocation processes-will determine whether any financial mechanism can achieve its goal of assisting developing countries to implement climate change mitigation and adaptation policies. International financial mechanisms for development assistance have been in operation since the establishment of the Bretton Woods institutions, that is, the International Monetary Fund (IMF) and the World Bank Group in 1947. Five decades of intense scrutiny directed at the governance structure of the IMF finally resulted in a series of governance reforms in starting in 2008. Could the IMF's experience with these reforms offer valuable input regarding the design of the governance structure of existing or new financial mechanisms for climate change mitigation and adaptation? This will be the main research question this article seeks to answer.