The importance of transparency and efficiency in climate finance
As this year’s UN climate conference, COP28, gets underway in Dubai, a crucial question arises: how to ensure equitable and efficient distribution of climate finance to developing countries?
Encouragingly, rich countries and the European Union recently announced a contribution of $420 million to create a “loss and damage” fund. This fund, proposed at COP27 last year, aims to help developing countries deal with the consequences of climate change. However, it remains to be seen how this money will be used and whether it will actually reach the countries that need it most.
Unfortunately, the recent history of climate finance raises concerns. A recent analysis of UK funding for Africa reveals that almost two thirds of this money has benefited businesses and organizations based in developed countries. Furthermore, a large portion of these funds were awarded to North American and European consulting firms, rather than to international NGOs with more solid experience on the ground.
This trend is concerning because not only are these consultancies often more expensive, but they may also neglect local knowledge and adopt a standardized approach that does not take into account the specific contexts of developing countries.
Another crucial question is that of the definition of climate finance. It is sometimes difficult to distinguish what is truly climate-related from what is considered traditional aid. For example, UN agencies and other multilateral institutions have received a significant share of the UK’s climate funding for Africa, but their funded projects have often been peripheral to the climate issue.
It is therefore essential to improve transparency and accountability in the allocation and use of climate finance. Developing countries have expressed opposition to the idea of entrusting the management of this new fund to the World Bank, fearing that the institution could manipulate the figures to give the impression that developed countries are doing their part, while the Money doesn’t always reach those who need it most.
It is necessary to put in place rigorous monitoring and evaluation mechanisms to ensure that climate finance is truly used for concrete actions to combat climate change in developing countries. This also implies strengthening the participation and autonomy of beneficiary countries in the management of these funds..
Ultimately, the international community must commit to ensuring that climate finance is used effectively and transparently, and that it meets the real needs of developing countries. This will strengthen their resilience to climate change and promote a transition towards a more sustainable and environmentally friendly economy.