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Corruption and climate vulnerability – a devastating relationship

The negative impact of corruption on climate action is a link we can no longer ignore.

Three people on a dinghy are discussing shelter placement near the river.

Magdalena Michalka © Transparency International

Dana Schran

Project Manager, Climate Governance Integrity Programme - TI Secretariat

Released last month, Transparency International’s Corruption Perceptions Index (CPI) for 2020 was analysed with a particular focus on corruption and its effect on the COVID-19 pandemic. Our research shows that corruption undermines public health systems and democratic institutions, damaging governments’ ability to respond effectively and democratically to public health crises like COVID-19. 

The acute crisis of COVID-19 has made it clear that corruption has contributed to the difficulties we face when responding to global challenges. Yet many people still fail to grasp that corruption’s impact on climate change exacerbates an even more significant crisis. Climate change poses a major threat to our long-term survival, and hits the world’s poorest and most at-risk communities first and hardest.

This week, the 5th annual session of the UN Environment Assembly (UNEA-5) convenes Member States and stakeholders to provide climate leadership, catalyse intergovernmental actions on the environment, and contribute to the implementation of the UN 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs).

We call on the attendees of UNEA-5 to ensure that SDG 16 (Peace, Justice and Strong Institutions) remains a cornerstone in driving climate action among policy- and decision-makers. Strong institutions are essential for ensuring that the transition to a climate equitable global economy remains just and does not fall victim to corruption.

Climate finance: a vaccine for the climate emergency?

Climate finance is one of the key intergovernmental tools for combatting the climate emergency. The Paris Agreement binds developed countries to scaling up efforts to financially support developing nations to prevent climate change and adapt to its effects.

Climate finance works like a vaccine and course of treatment merged into one. Through mitigation, it helps developing nations who are the most vulnerable to the effects of global heating halt the march of global heating whilst readying themselves for its effects through adaptation.

However, the limited funds available for climate adaptation and mitigation are at risk. The Corruption Perceptions Index reveals that countries most vulnerable to the impacts of climate change face high levels of public sector corruption.

This already has a profound effect on those on the front lines of the crisis. In Bangladesh, one of the countries most vulnerable to climate change, an estimated 35 per cent of climate project funds are embezzled, according to a recent report by Transparency International Bangladesh and SOAS, University of London. In Peru, indigenous leaders protecting their lands from illegal deforestation face violent retaliation. In the Maldives, an entire community was relocated and left without adequate housing. The list goes on...

More funds need more transparency

As countries make drastic changes to combat the COVID-19 pandemic, governments around the world are attempting to give a green sheen to their economic recovery plans, seizing the moment to pass measures intended to bring carbon neutrality within reach in a matter of decades.

Such leadership is to be applauded. However, it is imperative to keep a close eye on whether states are over-exaggerating actual efforts towards climate action, while continuing with business as usual. Only small fractions of total budgets (12 per cent) are dedicated to mitigating climate change post-pandemic, less than after the 2008 financial crisis (16 per cent).

Last summer, the EU approved the largest economic stimulus package in its history, at €1.8 trillion, of which approximately a third is earmarked for climate action. For comparison, the world’s state-owned fossil fuel companies are set to invest approximately €1.9 trillion over the coming decade in initiatives that will obliterate any chance of achieving the Paris agreement goals. This European Green Deal has posed a multitude of corruption risks from the get-go with further instances of corruption often unfurling in the form of undue influence as funds start to be used.

Undue influence is a form of corruption in which a person or interest group influence decision makers in an opaque or disproportionate manner.

In climate policy, this can manifest in the form of political interference from vested interests, such as industries (i.e., oil & gas companies) whose profits depend on activities that harm the climate. Ultimately, this results in politicians shaping government policy away from climate action and undermining measures to solve the climate crisis.

A moment of truth

The release of the 2020 CPI coincided with a landmark speech by United Nations Secretary General António Guterres, who spurred Member States to make climate action a top concern and include ‘make peace with nature’ among their priorities for 2021. He called COP26, the UN Climate Change Conference, convened by the United Nations Framework Convention on Climate Change (UNFCCC) scheduled for Glasgow in November, a “moment of truth for climate action.”

Some [countries] face an existential threat – their territories could disappear within our lifetimes. We must never allow any Member State to be forced to fold its flag because of a problem that is within our power to fix […] COP26 in November will be a moment of truth for climate action.
António Guterres

One of the main negotiation topics on the agenda at COP26 is ‘double counting’. In the context of climate change mitigation, double counting is when the reduction or removal of greenhouse gas emissions is used more than once to validate compliance with mitigation targets. Already a sticking point at COP25 in Madrid in 2019, double counting has the potential to jeopardize the integrity of the Paris agreement entirely.

Carbon markets themselves have been found to present a myriad of corruption risks and fraud. With an anticipated upsurge in demand for carbon offsets, integrity measures are urgently needed to protect the vast sums of finance flowing through these mechanisms. However, even well-regulated carbon markets present the hazard of being falsely recognized as a sufficient substitute to conservation. There is an inherent risk that offset credits do not represent real emissions reductions - acting as a pretext for further inaction and delay we cannot afford. ICAO, the UN body responsible for international flight emissions, has created its own carbon market scheme which served to help the airlines industry nearly double its emissions.

To combat these risks, international oversight is needed in the form of a governance body that will oversee and ensure robust common international accounting, including detailed rules rather than general principles to avoid fraud. Clearly defined social, environmental, and anti-corruption safeguards should be installed in climate project activities. They need to be consistent with international obligations, including human rights and the 2030 Agenda, as well as reflect the local environmental and social context. A complaints mechanism and mandatory local stakeholder consultation procedures need to be created to avoid and swiftly address adverse local impacts. Aside from these actions, a conflict of interest policy is urgently needed at the UNFCCC to prevent private interests exerting undue influence and eroding national and international climate policy and ambition. Ensuring these points are on the agenda of this week’s UNEA and subsequent high-level climate forums are key if we want to protect the environment and counteract the climate catastrophe.