The world has witnessed a vast increase in climate funding in recent years, with sums expected to grow every year as much more is still needed. In 2018, investment in climate action was estimated at US$546 billion.
Yet the effectiveness of what this funding can achieve is threatened by corruption, which finds fertile ground when vast sums of money are involved. Thus, standards of governance in climate finance will be a critical indicator in determining how effective climate funds will be in safeguarding the earth’s climate and environment.
This report – a follow-up assessment to the 2017 A Tale of Four Funds report – reviews the governance frameworks of the Adaptation Fund, the Climate Investment Funds, the Global Environment Facility, the Green Climate Fund and the Central Africa Forest Initiative. Together, these five funds have US$40 billion in pledged commitments for climate action investment.
We assessed them in four areas of governance - integrity, accountability, transparency and methods for assessing policy effectiveness - and examined the funds’ requirements for their implementing entities in these areas. The findings and recommendations in this report highlight the areas of governance where the funds are doing well and where they have room for improvement.
By actively and explicitly bringing integrity, transparency, accountability, inclusiveness and zero tolerance of corruption into climate funding and action, multilateral funds can maximise the effectiveness of mitigation and adaptation programmes. The highest standards in these areas strengthen anti-corruption inputs, such as participatory policy dialogue and training, improved lobbying practices, better laws and policies, open data, monitoring and reporting mechanisms, and whistleblower protection.
Only by preventing corruption can climate practitioners and stakeholders ensure maximum effectiveness of the world’s climate funding and adaptation programmes. Countries receiving climate finance desperately need and deserve it. The recommendations we propose will build trust in the power of climate finance, ultimately increasing the funding delivered to those who need it most.