RFQ: Development of An Investment Policy For The Tonga Climate Change Fund

The TCCF aims to serve as the primary channel for the environment and climate mitigation and adaptation funding from international and domestic sources and could function as the framework financial mechanism and the primary means for implementing Tonga's ambitious climate action targets. Monies within the Endowment Fund, existing since the CRSP project 2017, were invested in compliance with relevant laws and to ensure prudent risk management the investments. The Investment Committee establishes and maintains the investment policy of the Fund, advises and reports to the Management Committee on investment strategies, transparent fund management, and monitors financial aspects. The Government of Tonga has also pledged an annual budgetary contribution to the TCCF.

The objectives of the TCCF are to;

• collect resources and direct them toward approved climate change activities, programmes and projects that promote national climate change priorities, facilitate disaster risk reduction and build national resilience; 
• manage funds from public, private, multilateral and bilateral sources to maximise the Kingdom's ability to advance national climate change priorities and ensure the long-term sustainability of the Fund; and
• assist the Kingdom to achieve the goals of the United Nations Framework Convention on Climate Change, the United Nations Convention on Biological Diversity, the United Nations Convention to Combat Desertification and other climate-related Conventions.
• The Endowment Fund is to be managed on an ongoing concern basis. Within the levels of risk identified in the investment policy, the overriding objective is to maximise the fund’s total long-term investment return; generate sufficient income to meet annual spending requirements; prevent capital erosion; and provide consistent results.

 The Department of Climate Change of Tonga is seeking for the services of a consultant to develop an Investment Policy for the TCCF Endowment Fund to be submitted to Cabinet for approval, including providing investment recommendations to guide the investment committee of the fund.

Scope of Work

• Assessing the investment history and performance of the TCCF Endowment Fund, its sources of capitalisation and governance structure, including proposing recommendations on an appropriate investment process, reviewing fund performance and decisions on investment/reinvestment.
• Review the current investment policy and make recommendations on how the document can be restructured for ease of updating annually, including how it can serve as a strategic guide to the planning and implementation of the investment program.
• Include or add to the investment policy, investment strategies (how to do) in the context of the TCCF Endowment financial plan, short- and long-term objectives, risk tolerance, and preferences.
• Analyse a realistic long-term return on investment rate (6%) for the endowment incorporating annual costs of managing the Fund (typically no more than 20% of total expenditures) and determine how large an endowment is needed to achieve grant-making yearly targets. Consider providing recommendations on other financing sources (revolving or sinking Fund) to generate enough investment income to carry out effective environmental and climate change programmes.
• Assess the capital market locally in Tonga and overseas (Australia, New Zealand, US, etc.) and provide investments recommendations on different avenues of investments, including securities, bonds and forex markets. 
• Ensure gender mainstreaming in the investment policy

Skills and experience required:

The selected Consultant will need a key combination of skills and experience including:

• A post-graduate qualification (master’s degree) in any of the following: Finance, Economics, Business Administration, Climate Change, Environmental Studies and/or related discipline.
• In depth knowledge and understanding of climate change, NDC processes and climate finance.
• In depth knowledge and understanding of the interlinkages between climate change, inclusive finance with a focus on women, and gender issues.
• At least eight years of relevant experience and expertise in designing and implementing financial instruments with those that incorporate gender as an added advantage.
• Expertise in conducting stakeholder engagement especially with microenterprises and local communities.
• Experience in designing financial products/mechanisms preferably blended financial mechanisms preferably in the climate change area.
• Experience in designing funds and developing its operational manual and procedures.
• Experience in developing or working in gender-centric financial products/mechanisms.
• Considerable knowledge, understanding and experience on climate change and climate finance within the Small Island Developing States (SIDS) context and the Asia and Pacific regions.
• Strong analytical and writing skills with fluency in both written and spoken English are essential.

Please apply for this contract by submitting a Proposal to: [email protected] 5 PM GMT on 15 December 2023.  Applicants must also complete the Quote Submission Documents attached to the Request for Quotation (RFQ) document. 

The brief proposal should show how the consultancy would be carried out to meet the specific objectives set out in this TOR. It should include a short statement of the candidate’s relevant expertise and experience.  

Evaluation will be based on competency and cost.