Nicaragua – Bio‑CLIMA – Climate action to reduce deforestation and strengthen resilience in BOSAWÁS and Rio San Juan Biospheres, Nicaragua

The complaint was found eligible in July 2021. Following the submission of the complaint, no disbursements of funds were made and project implementation was halted before it began.

The assessment phase was then initiated. Although the parties initially expressed an interest in dispute resolution, and after an extended period of back and forth between the parties, the dispute resolution process halted as the parties could not agree on the framework or process design. At the complainants’ request, the complaint was transferred to compliance review.

The first step in the compliance review process was appraisal. There, the IRM identified three key questions that warranted further investigation:

• Whether Indigenous and vulnerable populations will face increased violence, including gender based violence, from non-indigenous settlers, as a result of the project’s non-compliance with GCF policies;
• Whether the rights of Indigenous communities to FPIC have been, or will be, violated as a result of the project’s non-compliance with GCF policies; and
• Whether Afro-descendant and Indigenous communities will face increased invasion of lands titled to them and restrictions on their access to natural resources due to the project’s non-compliance with GCF policies.

A full investigation was conducted. 

The IRM confirmed that the Bio-CLIMA project was to be implemented in areas with serious and ongoing violent conflict, and where the human rights situation for Indigenous Peoples is already very problematic. These conditions directly affected how Indigenous communities can safely and meaningfully participate in the project.

The IRM concluded that the project team did not do enough due diligence before approval: required assessments on conflict sensitivity and human rights impacts were postponed until later, rather than being done during the project design stage. This violated GCF safeguard rules and created risks for Indigenous communities.

The IRM also found that the mandatory process of informed consultation and participation —which should happen before Board approval—was not properly carried out. Key information, such as plans for peaceful cohabitation regime agreements with settlers, was not shared or discussed with Indigenous Peoples, and there was no evidence of the required framework agreement that should set out how a Free, Prior, and Informed Consent (FPIC) process would be conducted. Promising FPIC later at the sub-project level does not replace this missing process.

To fix these problems, the IRM recommended that:

1. A conflict sensitivity analysis be carried out at the project level.
2. A human rights due diligence report be prepared.
3. A proper informed consultation and participation process be conducted with Indigenous communities.
4. The Board’s approval conditions be changed so that the GCF Secretariat, not the AE, chooses the independent monitor.
5. The Secretariat prepare a remedial action plan to address these issues.

Finally, the IRM suggested the GCF Board should provide broader policy guidance for projects in conflict or fragile states, and that the Secretariat’s Sustainability Unit strengthen its oversight of such projects.

In a disappointing turn of events, however, the process broke down once the report went to the GCF Board. Initially, the Board refused to share the final compliance report with complainants, claiming confidentiality, despite sharing a redacted report and obtaining feedback from the GCF Secretariat, CABEI, and the Government of Nicaragua. In doing so, the Board appeared to reopen findings and conclusions already reached by the IRM. After significant delays, the Board failed to adopt the IRM’s recommendations, essentially finding that they were premature and/or not needed, in deference to the GCF Secretariat’s decisions to pause implementation of the project and to address the issues with the Accredited Entity. The final compliance report was eventually published on the IRM’s website, but only after these Board decisions were taken. Subsequently, in March 2024, the GCF Secretariat terminated the project.