By Brice Böhmer, Transparency International, 1st April 2022
Humanity’s future depends on our collective response to climate change. But we continue to lose time and money by missing a critical step. In 2019/2020, climate finance amounted to US$632 billion globally. Yet, about 30-40% of climate funding was probably spent inefficiently or stolen because of corruption – considering that at least 30% of development aid is lost to corruption.
The reason is clear: the systemic abuse of entrusted power for private gain. That’s how we at Transparency International (TI) define corruption. Corruption erodes trust, weakens democracy, hampers economic development, and further exacerbates inequality, poverty, social division, and the environmental crisis.
The climate finance situation is compounded by the fact that a majority of climate funding goes to countries in the global south ranking low on TI’s corruption index – a widely acknowledged measurement tool used for assessing corruption perception levels in countries around the world. Safeguards to prevent corruption are simply missing. Take Bangladesh for example: a 2021 report found that 35% of climate project funds in Bangladesh were embezzled.
Philanthropy can and must play a crucial role and act now to help stop the leaky pipeline of climate funding. Philanthropy can act faster and take more risks to spearhead solutions and change the conversation than traditional bi-lateral sources of funding. And consider this: even with the best intentions, philanthropic funding can unwittingly perpetuate inequalities and inefficiencies without making sure that governance safeguards are in place. Good governance and integrity mechanisms embedded in climate projects are a must.
Building on comprehensive analysis and research over the past ten years, we recommend six concrete and tangible actions for funders to take in 2022:
- Support efforts to monitor climate funding abuses
We need more data and a clearer understanding of how, where, and why climate funding is falling through the cracks. Our Climate & Corruption Case Atlas, launched at COP26, is an important step in this direction. The 50 case stories – representing just the tip of the iceberg – underscore the importance of shielding funds and political decisions from corruption. In addition to adding and analyzing cases in order to paint a more complete picture of climate change corruption, we plan to use this platform to share resources and solutions at a later stage. We invite funders to use the Atlas – and hopefully help us grow it by sharing information.
- Insist on governance risk analyses to limit undue influence
Governance and climate change experts must do a better job of breaking down silos to avoid capture of climate policy making that delays the transition. For instance, climate technology funders tend to disregard transparency and accountability aspects. The result: money is spent inefficiently, and inequalities persist. Purely technical approaches are often inefficient due to a failure to understand the political economy. Funders need to support integrated good governance considerations to make the most of technological breakthroughs. Funders can break down silos by insisting on, and funding, multistakeholder governance risk analyses for new climate technologies and other climate initiatives. Nonprofits can help with advice on how to set this up and close loopholes.
- Ensure communities have a seat at the table
Key initiatives like Forest Link and SNOIE (Standardised External Independent Monitoring System) are monitoring systems that give an independent role to civil society. TI’s Integrity Pacts are also a proven tool for preventing corruption in public or private contracting: they empower communities by giving access to information and ensuring civic oversight for high financial volume climate action is done with complete transparency and accountability every step of the way. Funders would be well-advised to include these tools into their program design. This way, we can be sure that all stakeholders, in particular the most vulnerable groups, are heard and have a say.
- Help protect environmental defenders and whistleblowers
Wherever you look, environmental and anti-corruption defenders are increasingly under attack. Supporting defenders directly or via civil society organizations goes a long way in preventing corruption and associated environmental damage and human rights abuses. We invite funders to think big and help support networks of whistleblowers and defenders, like the Alliance for Land, Indigenous and Environmental Defenders (ALLIED). These networks can be instrumental in driving awareness & positive change for local communities and safeguarding ecosystems across borders; an important initial step to investigate how policies can be improved.
- Reinforce complaint mechanisms and investigations
Complaint mechanisms give people a chance to sound the alarm on potential instances of corruption. This can be done for instance by setting up a hotline. Support for journalists and enforcement agencies in exposing networks of corrupt actors through investigation and litigation is also proven to be highly impactful. Operating in more than 60 countries, TI’s Advocacy and Legal Advice Centres (ALACs) can help environmental and land defenders to safely report corruption when they see it happen. The Environmental Investigation Agency (EIA) and the Organized Crime and Corruption Reporting Project (OCCRP) are also key players in uncovering illicit practices hurting the environment.
- Sharing good practices
Transparency International’s Climate Governance Integrity team and the Transparency and Accountability Initiative (TAI) are exploring ways to support funders by sharing good practices, knowledge, and proven ways to increase climate finance accountability and integrity. If your foundation is interested in learning more, please contact climate@transparency.org or contact@transparency-initiative.org.
TI calls on philanthropy to do its part in saving our planet by stopping corruption. We can’t afford to let the desperately needed climate funding fall through the cracks year after year. Unless the world takes action against corruption, the climate emergency will remain insurmountable and progress towards all of the Sustainable Development Goals will be seriously stunted.
To learn more about any of the tools and mechanisms laid out in this blog, contact Transparency International.
Brice Böhmer is the Lead on Climate & Environmental Governance at Transparency International.
Keywords: climate change, effectiveness, funding overseas