Why it’s time to come clean on climate finance

Comment: Transparency in adaptation finance might not be as sexy as other issues in the climate change debate but it’s a key to meaningful progress

Bangladesh is one of the most exposed countries in the world to flooding and sea level rise (Flickr/Nasif Ahmed/UNDP Bangladesh)

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In the year since the meeting of the UNFCCC in Paris, we’ve had many reasons to start feeling hopeful about making meaningful strides against climate change.

Global investment in renewable energy has hit a record high, we’ve seen remarkable dedication to reduced emissions from individual cities and civil society groups, and the global summit on the phase-out of HFC’s in Rwanda this October have all been concrete reasons to see the Paris Agreement as a success.

While these are victories worth celebrating, the past year has hardly been without its pitfalls.

If the ‘name and shame’ mechanism for accountability on climate action – upon which the success of Paris hinges, in the stead of any binding legal agreement – is to have any hope for success, transparency in the reporting of climate finance is absolutely crucial.

Sadly, in the past year, we have observed a backward slide. In spite of the increased attention paid in Paris to the transparency gap, the distance between donor countries’ pledged climate adaptation finance and the trackable reality – our systematic review of the reports wealthy nations submit to the UN show that the gap has expanded since the Paris negotiations.

You heard that right: donor countries as a group are becoming less transparent in reporting their climate finance. In compiling the new report AdaptationWatch Towards Transparency, we analyzed the climate finance reporting of 23 countries and the European Union and compared them with transparency benchmarks set forth by the UNFCCC.

Our overall conclusion was disheartening: The information reporting in countries’ 2016 biennial reports scored only 52% of available points, compared with a 58% average for their 2014 reports.

Donor countries are generally failing to report several vitally important components of their climate financing.

In our analysis, we concluded that the 2016 biennial reports of donor countries were gravely inadequate in reporting how much of their total funding was directed to Small Island Developing States or Least Developed Countries, how contributions are being allocated to specific projects, and on how donor countries are planning on contributing to the $100 billion per year level of climate financing agreed to at COP15.

A lack of transparency in these areas could have dire impacts beyond these reports: transparent climate financing is essential in building the trust between developed and developing countries that undergirds the entire climate negotiation process.
If developing countries are not keeping their end of the bargain, they threaten the very foundation of the Paris Agreement.

This is not to say that there are not bright spots of improved transparency in the 2016 biennial reports. According to our analysis, five countries and the European Union improved their climate finance reporting, and one did not decline.

Despite these bright spots, however, we cannot overlook the worsening reporting of 17 of 23 developed countries in the last reporting period. This kind of decline demands serious and immediate changes on the part of donor countries.

With so many persistent problems in the international effort to slow the onslaught on climate-related impacts — from insufficient funding to inefficient implementation — how does transparency on the part of donor countries factor into the fight against climate change?

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In a word: trust. Transparency in the reporting of climate finance is crucial for building and maintaining trust among nations, if the international community is to reach agreement on solving the existential problem of climate change.

Operating without the safety net of a legally binding agreement, our hope for bold improvements in emissions reductions by large and small emitters alike is predicated on trust and mutual accountability.

This trust is perhaps even more crucial for the least developed countries, for whom emissions reductions can mean slower economic development; if they are expected to slow their own growth by deviating from the path of development via carbon emissions taken by most of the world’s largest emitters, they need to be fully confident that they will be met at least halfway by the donor countries who have pledged their support.

Climate finance is at the core of the UNFCCC’s efforts to help the developing world adequately adapt to climate change, and is absolutely critical to poor countries’ abilities to prepare and protect themselves from climate change’s impacts.

While transparency in adaptation finance might not be as sexy as other issues in the climate change debate (we’re far more likely to see dramatic shots of lonely polar bears on melting ice caps than we are to see accountants tabulating distributed funds), it is nonetheless an essential key to meaningful progress.

With COP22 in Marrakesh less than a week away, negotiators, NGOs, and civil society organizations must focus their efforts on improving upon the progress made on transparency in Paris last year.

While the Paris Agreement that emerged in 2015 is a considerable improvement on previous accords in including substantial language on transparency, it still lacks clear procedures for reporting on funding and resources to flow to developing countries for adaptation in a reliable and transparent way.

Moving forward, there are concrete steps that can be taken at the Marrakesh conference to recover from and improve on the backsliding in transparency we’ve seen in the past two years.

First and foremost, a clear and universal system of accounting modalities for climate finance must be developed, with a clear way to determine what counts as adaptation and mitigation.

Second, project tracking and data checking from the OECD CRS system should be continued, but we should leave behind the outdated Rio Marker categorization system.

Finally, we should develop a universally accessible online tracker for climate finance. Ideally, this program will be accessible, comprehensive, and user-friendly – not flooding users with excessive and confusing data, but neither obscuring the information necessary for real accountability.

This will help to enable the mechanism of peer review and accountability, so that recipient and donor countries alike will be held to the more than reasonable standard of living up to their word.

We must not let the momentum generated by the Paris Agreement and its successive achievements be forestalled by our own unwillingness or inability to be honest and unambiguous about climate finance. The case for transparency has never been more clear.

Caroline Jones and Thomas Culver are researchers at the Climate and Development Lab at Brown University.

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