Climate Finance Transparency – ‘Show Me the Money’ and Beyond

January 22, 2013
This is a joint post with Maya Forstater, Climate Finance Advisor at Publish What You Fund. In the context of fraught negotiations and funding gaps, demand for climate finance transparency is often a diplomatic way of saying ‘show me the money’. As Ban Ki-moon said at the UNFCCC climate conference in Doha last December, a transparent long-term roadmap of financial commitment “is a matter of credibility of member states and an issue from which we can give a sense of hope.” Because of the importance of climate finance to the overall negotiations, developing countries, researchers and climate advocates are keen to be able to assess the quantity and quality of climate finance.  In the run-up to Doha researchers from The UN Economic Commission on Africa,  IIED and Oxfam, amongst others, tried to sift through available information to count up climate funding provided over the past three years. Since climate finance is meant to be “new and additional” to development assistance, the team sought to assess whether funding said to be part of the $30billion ‘fast start’ commitment for 2010-2012 passed this test.  Most of the research teams thought not. The Open Climate Network (after searching through up to 200 reports per country to find the relevant data) concluded that while the volume of climate finance definitely grew between 2009 and 2013, comparisons over time or between countries were impossible because of a lack of commonly agreed definitions of baselines and what funding to count. In the end the effort to ascertain how much finance had actually been delivered was overtaken when negotiators pragmatically agreed to declare that the fast-start promise had indeed been successfully fulfilled. Over the same period, colleagues and I here at the Center for Global Development, together with collaborators at Brookings have been working to develop an index to assess the quality of climate finance, building on the approach set out in a similar index on the Quality of Development Assistance (QuODA).  This work has also been hampered by a lack of agreed definitions and, more fundamentally, by a lack of available data. In Doha, countries agreed to adopt a common template to ensure clarity and comparability in future reporting. This common tabular format requires countries to release information on funding they provide for mitigation, adaptation and cross-cutting activities, how much of it they consider “new and additional,” and by what definition. Totals are to be broken down by bilateral and multilateral channels and sectors, labeled as pledged, committed or disbursed and on what terms (loan or grant). This is a step forward, and will make the job of adding up and mapping funds provided against the commitment to mobilize $100 billion in climate finance by 2020 undertaken at the UNFCCC climate summit in Copenhagen in 2009 easier in the future. But the need for transparency in climate finance goes beyond the UNFCCC reporting.  A single form filled in every two years by a sub-set of funders and a central database maintained by the UNFCCC won’t be enough to allow recipient countries to plan and manage their programs and funders to assess potential funding gaps. Fortunately there is a proven solution that comes from the aid transparency movement and could be readily adapted for climate finance. The International Aid Transparency Initiative (IATI) takes a different approach to the single big database envisioned by the UNFCCC as a collection device for the promised tabular data. The open data standard agreed by aid donors in 2011, enables funders to publish detailed information on projects and budgets on their own websites using a machine readable code. This makes it possible for many different users to access information easily, and to collate information from many sources. Publish What You Fund recently published a study on the potential for applying the IATI aid transparency approach to climate finance. Imagine if climate finance information were published in this way! Instead of spending months searching through up to 200 documents per country, researchers and recipient country policy makers could set up their own database in a single afternoon and automatically collate information from every country that provides climate finance. Data about funding for low-carbon, climate resilient development in a sector or region could easily set alongside data on aid unrelated to climate concerns. Cross-referencing between the statistics provided to the UNFCCC and detailed project data would be straightforward.  The work now underway on traceability as part of the IATI standard would enable governments and citizens to trace high-level announcements of millions of dollars for climate finance to particular investments on the ground. Unfortunately there is a real risk that the opportunity to learn from the IATI experience to improve transparency of climate finance will be missed. For now, discussions about climate finance monitoring, reporting and verification (‘MRV’) and aid transparency continue on completely separate tracks. Although half of climate finance provided under ‘fast start’ came from countries that have committed to implementing IATI, none of them mentioned this approach in the Doha workshop discussions. Technical transparency is no substitute for the political will to scale up finance and ambition.  Nonetheless, establishing a simple, easily usable and useful technical basis for climate finance transparency is important. The availability of detailed, accessible and timely information on climate finance will be crucial to address the “trust gap” between developed and developing countries.  With guidance from the UNFCCC on definitions, an open data standard modeled on and compatible with IATI for climate finance could help to ensure that essential funding for mitigation and adaptation is available in the countries that need it most. Countries and organizations that have led the way in IATI— the UK, Netherlands, European Union, UNDP, Sweden —have a real opportunity to once again show the way by publishing data on the climate finance they have provided in an open, comparable, machine-readable format which is compatible with IATI and urging universal compliance in intergovernmental discussions that are ongoing between climate summits. This is a no brainer.  Here’s hoping that by the time of the next climate summit, Poland next December, use of  the IATI open data standard for reporting on climate finance will be fait accompli.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.