The role of transparency in managing climate finance

The role of transparency in managing climate finance

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Date: 26th November 2012
Author: CDKN Global
Type: Feature
Organisations: Publish what you fund, UNFCCC

Maya Forstater, Climate Finance Advisor at Publish What You Fund considers the benefits of transparency over spreadsheets when tracking climate finance.

One of the discussions least likely to make headlines at the COP18 Climate Summit in Doha this year is the plan to adopt a ‘common tabular format’ for reporting on climate finance.

While only the most dedicated of statistical junkies may get excited by such talk, there is broad consensus that transparency matters for climate finance.

There are three main reasons for this. Without transparency negotiators and campaigners cannot assess whether funds delivered measure up to international commitments, or to the scale of the challenge. Finance and line ministries are not able to plan where funding can best be used and – lastly - legislators and citizens are not able to hold their governments to account on spending and be confident that spending has not been double counted.

To date, the main focus in tracking climate finance has been assessing the submissions by ‘Annex I’ countries on the fulfillment of their ‘fast start’ commitment. The multi-lateral development banks have also been working to develop and harmonise systems for tracking multilateral lending aimed at low-carbon and climate-resilient development, issuing their first joint report earlier this year.

There is already a cluster of efforts dedicated to making sense of the available data at the international level, and new initiatives to track how funding is being applied in recipient countries. However, even where information is made public, making sense of it is no simple task; without a common data format the information is difficult to synthesise and compare. Just to compile the information on the climate finance flows from one country as part of the Open Climate Network’s analysis, the research team found that it had to comb through over two hundred documents.

The challenge of tracking climate finance will only become harder as the fast-start period comes to an end and countries shift towards the longer-term goal of scaling-up to mobilise $100 billion a year of ‘new and additional’ funding from a wider variety of sources.

The Climate Policy Initiative last year mapped the landscape of climate finance revealing spaghetti strings of intermediaries, instruments, channels, and end-users. Overall they counted US$97 billion worth of flows but emphasised that this could not be equated to the US$100 billion promised by developed countries in the Copenhagen Accord, as it is not yet clear what should be counted ‘in’ and what should be counted ‘out’.

Georg Børsting and Zaheer Fakir, Co-chairs of the UNFCCC Work Programme on Long Term Financing, highlight the urgent need to “improve the transparency of climate finance at the international level while keeping systems simple and manageable” in their report to COP 18.

One key obstacle is the lack of a global agreement on what counts as ‘climate finance’, what ‘mobilising’ means, and against what benchmark ‘new and additional’ should be counted. These thorny issues will be amongst the topics discussed (again) at the UNFCCC meeting in Doha. But developing simple, manageable and usable systems does not have to wait until agreement is found.

Discussions on climate finance reporting tend to envisage a reporting standard as a table of funding themes on one axis and categories on the other; essentially a single template that allows each institution’s statistics to be entered into a central database. Accommodating additional information such as on project level funding flows or the types of finance, technology and category of support means adding more cells and columns to the x and y axis of the table, an approach which would quickly become impossibly unwieldy.

In order to reach agreement, there is therefore a risk that a ‘common tabular format’ adopted in Doha would take a minimalist approach, leaving out much more information than it includes. That would defeat the very purpose of climate finance transparency.

The aid transparency movement demonstrates that it does not have to be this way. Rich information can be reported in a common format, but first you have to forget about single mega-tables and databases.

In our report Towards Climate Finance Transparency, Publish What You Fund and Aidinfo argue that new approaches developed for aid transparency could be used to unlock climate finance data to meet the needs of many different users, without blurring the (as yet undefined) boundaries of what can be counted as climate finance for the purposes of the Copenhagen Accord.

The International Aid Transparency Initiative (IATI) was set up to solve the problem of hard to publish, hard to find, hard to use data, which is common both to climate finance and development cooperation. The solution it offers is not a bigger ‘common tabular format’ or more sophisticated database but an open data standard that enables funders to publish detailed information in a timely, accessible and comparable way on their own websites. The location of the data is recorded in a central registry, which acts as a single point of access for data users. Crucially, this makes the data machine readable, unlocking it from individual databases and opening it up to interactive data use and visualisation.

This global standard was agreed in early 2011 and funders have begun to use it. Country signatories include Australia, Belgium, Canada, Denmark, Finland, Germany, Ireland, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, the UK and the U.S. This means that around a third of all fast start finance is being provided by agencies that are already committed to implementing the IATI standard.

What these countries lack means to cross-reference between the projects and budgets they are already publishing through IATI and the themes, sectors and commitments that are relevant to climate change. Small modifications to the IATI standard could allow users to provide additional detail on climate actions and impacts as part of their IATI publication. For example, ministries could tag the percentage of each budget intended for climate mitigation, adaptation or REDD goals and state whether this is part of a UNFCCC climate finance commitment.

The tool itself would not answer the political questions determining what is ‘in’ or ‘out’ for the purposes of counting mobilised climate finance. But it would provide finance and line ministries, civil society, legislators and citizens with timely, comprehensive, accessible and comparable information about climate finance flows, which could then be mapped onto domestic budgets and priorities.

Systems for tracking climate finance should not just spit out a big global number every two years, but support the effective use of this funding. This means that it at least as important to ensure that information can be unlocked from climate finance reports as it is agree on how it should be defined within them. Publishing climate finance data via the existing, successful IATI registry would require the least effort, allow the most flexibility and – above all – make the information more comparable and useful for the full range of interested actors.

We  invite bloggers from around the world to share their experiences and views. The views expressed here are those of the author[s], and not necessarily those of CDKN.

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