CFU is glad to feature this guest commentary on climate finance transparency from our colleague Maya Forstater, Climate Finance Advisor to Publish What You Fund.
They say if you like sausages you should never visit a sausage factory. But users of Climate Funds Update’s data tools may be interested to read about the process involved.
The sausage-makers – Charlene Watson, Smita Nakhooda, Alice Caravani, Liane Schalatek – have helpfully outlined the process in their report on The Practical Challenges of Monitoring Climate Finance. Over the past three years they have painstakingly tracked 22 funds; combing through websites, trustee reports, press releases and notes from civil society organisations to identify funding decisions and work out how far the money had got along the chain from pledge to disbursement. They double check this with the Funds involved, before publishing it, then going back two months later to start the whole process again in order to keep the data up-to-date.
All this effort is worthwhile because credible, comparable and up-to-date information is essential to understanding who benefits from public climate financing, and how scarce public resources are being used, and to building trust.
The task is made harder by climate funds that sometimes don’t report regularly, by inconsistent terminology, and by the lack of a system for tracking funding between funds and projects, leading to the potential for double counting.
Furthermore, Climate Funds Update is just one of a cluster of initiatives monitoring overlapping flows of climate finance. Most recently, the multi-lateral development banks released their first Joint MDB Report on Climate Finance which sums together both the dedicated funds which feature on Climate Fund Update, but also mainstream development funding with adaptation or mitigation co-benefits.
The challenge of tracking climate finance will only become trickier as the Fast Start period comes to an end, and countries shift towards the longer-term goal of scaling up to mobilise US$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 public and private 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’.
In their report to the upcoming COP 18 meeting, the co-chairs of the UNFCCC Work Programme on Long Term Financing, Georg Børsting and Zaheer Fakir, highlight the urgent need to “improve the transparency of climate finance at the international level while keeping systems simple and manageable.” One key obstacle is the lack of 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 in Doha, and are likely to go forward to future COPs.
But there is a system already in operation, which could make climate finance data more accessible and useful, and take a great deal of the painstaking effort out of tracking it.
The problem of hard to publish, hard to find, hard to use data is common to both climate finance and development cooperation. In our report Towards Climate Finance Transparency, Publish What You Fund and aidinfo argue that a new approach to data transparency, which originated in the aid sphere could be used unlock climate finance data, without blurring the (as yet undefined) boundaries of what can be counted as climate finance for the purposes of UNFCCC commitments.
The International Aid Transparency Initiative (IATI) is 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 machinereadable, unlocking it from individual databases and reports and opening it up to automated collation and interactive data use and visualisation.
Those providing data to IATI commit to:
- Can update their information at least quarterly, preferably monthly;
- Publish forward-looking data, such as project budgets, planned disbursements, and aggregate country budgets as well as detailed project information, such as which organisation receives the funds, details of disbursements and expenditure, and contact details;
- Publish in a way that allows funds to be tracked through the funding chain and data and reconciled with the financial year of the recipient country.
Published in a common data format, it is readily comparable and easily combined with other datasets to meet users’ individual needs. The standard is not limited to ‘aid’. All funders including providers of ODA and OOF (other official flows), humanitarian flows, south-south development co-operation, NGOs, foundations and other private donors, are able to publish to the IATI standard. Data users are able to filter the data they need by source type, theme, location or any number of criteria they choose.
Countries that have agreed to implement IATI include Australia, Belgium, Canada, Denmark, Finland, Germany, Ireland, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, the UK and the US. This means that over a third of all fast start finance has come from agencies that are already committed to implementing the IATI standard. The World Bank, the European Commission, the UNDP and other multilateral funders have also championed the system, although to date it has not been implemented in the climate specific trust funds.
Small changes to the IATI standard would enable funders to tag the information they publish about funding flows with more detailed climate change markers, for example indicating the percentage of each budget intended for climate mitigation, adaptation or REDD goals and to state whether this is part of a UNFCCC climate finance commitment.
The IATI standard itself would not answer the political questions determining what is ‘in’ or ‘out’ for the purposes answering the US$100 billion dollar question. But it would provide a simple, manageable and powerful system to improve climate finance transparency; providing 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.
 Note by the Co-Chairs, Report on the workshops of the work programme on long-term finance, November 2012: http://unfccc.int/resource/docs/2012/cop18/eng/03.pdf.