Lab Advisor Meeting on the strategic direction and organization of The Lab

Lab Advisors met in Venice on 1 July to consider the strategic direction and organization of The Lab in 2015-2016. Advisors decided to launch a Second Lab Cycle in October 2015, contingent on support from funders. Final decisions on the structure of the Lab, call for ideas, and subsequent timeframes and milestones will be taken by September. There was recognition of the importance of The Lab in light of the upcoming Paris COP in December, as it demonstrated positive and concrete collaboration between the public and private sectors on the effective delivery of climate finance.

Lab 2_1506 Lab 5_1506 Lab 3_1506

In the opening remarks, Head of the Lab Secretariat Barbara Buchner informed Advisors that the four final instruments endorsed by The Lab have already collectively attracted over USD 170 million in initial funding, including a £50.5 million commitment from the UK Government to the Climate Development and Finance Facility. There was broad consensus that The Lab had achieved its goal of moving quickly from talk to action, but that maintaining and building on this success by delivering fully-fledged pilots and continuing learning is necessary to ensure longer term success.

With these challenges and opportunities in mind, the meeting focused on two main objectives: defining the design, funding needs and timing of a Second Lab Cycle; and refining governance and the organization of The Lab including the Secretariat, to ensure lessons learned are integrated into future efforts. It would also be important to communicate the work of The Lab, especially in light of the Paris COP; an opportunity to highlight the benefits of The Lab as a positive example of public and private collaboration, and the effective delivery and mobilization of climate finance.

The Secretariat proposed a straw-man which was supported by Lab Advisors. The final structure will be agreed to by the end of August 2015. Based on decisions made at the meeting, the Second Lab Cycle would be structured to include:

1. Continued support for the four instruments from the first cycle, with the aim to encourage implementation. This support would be in the form of:

  • Logistical support, with lead analysts for each instrument from the Lab Secretariat contributing to calls with potential instrument funders; and
  • Technical support, with lead analysts for each instrument from the Lab Secretariat providing clarification or answering questions on specific instruments based on the analysis done to date (e.g., to help donor governments build their business cases).

2. Analytical services extended to provide tracking and sharing of lessons learned with the implementation of pilots and work resulting from the first Lab cycle.

3. A second analytical cycle that would include:

  • A call for ideas for both a general stream and a thematic stream that would focus on adaptation – climate resilience and land use;
  • Ideas screened with the aim of narrowing submissions to 7 instruments for detailed analysis;
  • 3-4 of these instruments, representative of both streams, to be further developed to present concrete implementation paths for pilot or replication; and
  • Communications, outreach, and convening coordinated by the Lab Secretariat in close interaction with the Secretariat funders.

The final structure of The Lab and its exact scope of activities going forward will depend on the funding secured.

In preparation for a second Lab cycle, the Secretariat conducted an internal review of processes and sought feedback from Lab Members on the first cycle, identifying four key issues for consideration. Discussions at the Lab Advisor Meeting focused on these issues, and decisions are summarized below:

Governance, organization, and engagement: With the development of a further analytical cycle, The Lab’s governance and membership structure will reflect lessons learned, the appetite of current and potential new Members, and support a dynamic and relatively informal network. The Lab currently has 22 Principals and their Advisors, and while it was agreed that the size of The Lab should remain relatively similar, it was also recognized that membership would benefit from greater diversity. In particular, the Secretariat will follow-up with Lab Members for suggestions and introductions with the view to expand the Lab network to include additional private sector and global corporations from developing countries. The addition of these actors would in fact work towards achieving a more balanced Lab membership. Lab Advisors reflected about potential limitations to membership; however as the goal of The Lab is to use public resources to effectively catalyze private investments, new donor governments might strengthen The Lab’s potential for impact, and would be welcomed if their interest is demonstrated through concrete funding. The respective roles of Lab Principals and their Advisors were discussed, further refining the expectations from Principals and tailoring meetings that engage them in a way so that they have a clear role. The governance of the NCE may offer options to be considered in this respect. Lab Advisors agreed that establishing a “friends and family” network approach, where experts can be engaged for specific instruments or issues as required, constitutes a possible solution to maintaining a similar Lab membership. In this context, the Secretariat will also develop and propose a tiered engagement approach, with different entry points for different organizations and/or members, to particularly bridge the gap between The Lab and institutional investors. The outcome of these discussions was an agreement that the roles of Lab Members and detailed principles for engagement for Principals, Advisors, experts and proponents, including time commitments and allocation of resources, will be refined and shared by the Secretariat.

Continued support for the current instruments: Establishing ongoing support for the current instruments, while differentiating between selected and not selected ideas ensures that The Lab fulfills the goal of moving quickly from talk to action, and works to demonstrates concrete progress. Lab Advisors agreed that an important role of The Lab is to go beyond the selection of a predetermined number of instruments per year, and to use these successes to generate evidence of what is feasible; proof of concept is critical to trigger innovation. Beyond the resources and committed funding that will go toward pilots themselves, continued support for the current instruments therefore requires ongoing logistical and technical support from the Secretariat, and tracking and sharing of lessons learned throughout the implementation process. Lab Advisors tasked the Secretariat to establish a strategy for the tracking and sharing of lessons learned, including both the final selected instruments and the additional three from Phase 2. Advisors also recommended that this support should be time-bound, with an initial suggestion of limiting it to maximum one year, and there should be an upfront agreement regarding the expectations of support from The Lab.

The Second Lab Cycle: Lab Advisors agreed to continue The Lab’s analytical approach to sourcing, developing, and testing new climate finance instruments in the form of a Second Lab Cycle. There was agreement that the methodology and selection criteria are still applicable for the Second Lab Cycle. While there needs to be a careful balance between innovation and scalability, capacity of proponents, pilot pipelines, and policy implications – there needs to be a continued flexibility in the Lab process and structure. Lab Advisors agreed with the Secretariat’s suggestion to have a second call for ideas that includes both a general stream and a more specialized stream; and there was support for the specialized stream that focuses on adaptation, including climate resilience and land use. There was discussion around expanding The Lab impact to include or link to, regional Labs which could help speed up implementation of Lab instruments and also support greater engagement with local government entities, organizations and investors in developing countries. Over time, The Lab will continue to interact with other similar initiatives, such as FiRe, which could strengthen the overall impact of The Lab’s work and ensure its continuation. In light of Bloomberg Philanthropy’s interest in closer coordination between The Lab and FiRe processes, and the complementarity of the two initiatives that were in fact developed in parallel, The Secretariat will explore potential avenues going forward.

The structure and operation of the Secretariat: There was consensus that the structure and operation of the Secretariat added value and that the process could not be faulted in terms of the analytical phases, number of meetings, resources, coordination, and logistics. Advisors asked the Secretariat to play more independent role with greater decision making powers in future, while continuing to ensure the process is transparent and open.

Although the work of The Lab continues and the development of a second cycle is underway, the capacity of the Secretariat remains limited until funding is secured. With the Secretariat currently operating unfunded, the primary focus in the period from now until end-August is to secure ongoing funding. The three existing donors (U.K., U.S., Germany) expressed continued interest in renewing funding, subject to internal budgetary approvals, and the European Commission, the Netherlands, Switzerland and Sweden have signaled additional potential funding. The Children’s Investment Fund Foundation also suggested a potential incubator structure as a means of attracting greater interest from the philanthropic sector. Beyond this a strategic plan to maximize impact and a focus on strengthening communications and outreach to coordinate with key events in the coming months will be developed. Lab Advisors agreed that in addition to the continued support for implementation of the current instruments, the work of The Lab ahead of the launch the Second Lab Cycle will be to: secure funding for continued work of Lab Secretariat; set the strategic direction of the new cycle, and; agree on timelines and milestones with the view to launch in October 2015 in the margins of the Annual Meetings of the World Bank Group and the International Monetary Fund in Lima.