Authors: Athena Ballesteros, Dennis Tirpak, Kirsten Stasio, Heather McGray
The full contents of the World Resource Instituten (WRI) working paper can be viewed HERE.
The importance of reporting and reviewing financial information has become an increasingly urgent issue in the international climate negotiations. In the Copenhagen Accord agreed to by over 120 countries at the United Nations Climate Change Convention in Copenhagen in 2009, developed countries pledged to provide $30 billion in “fast start” funding over three years (2010-2012) and $100 billion per year by 2020 for climate adaptation and mitigation. Developing countries want assurances that developed countries are keeping their pledges to provide climate finance. However, Parties have yet to determine how this funding will be tracked and what, if any, common reporting format will be required.
Current United Nations Framework Convention on Climate Change (UNFCCC) reporting guidelines are neither transparent nor comprehensive, and efforts by other institutions to fill this gap have been limited in scope. As a result, current data collection systems cannot address whether funds are new and additional, and they provide only limited information on the levels of financing, what financing is used for and which countries are benefiting. The result is a lack of trust between Annex 1 Parties and non-Annex I Parties to the Convention that hinders progress in the negotiations for a post-2012 international treaty to address climate change.
Therefore, for climate financing to flow effectively and efficiently, it is critical that funds be reported and reviewed. Depending on the level of detail required by a reporting system, the reported data should help determine whether Parties are meeting their financial commitments, improve understanding of sectoral and technological investment trends and lead to assessments of the effectiveness of different forms of financing.
This paper discusses different ways to improve the current system for reporting and compiling information on public financing for climate change. Its goal is to help Parties to the UNFCCC develop robust reporting processes for climate finance. The paper discusses:
- How and what kind of financial data is currently collected and reported by the UNFCCC, private organizations, and multilateral development banks (MDBs).
- A vision for an improved financial reporting system, and different options to achieve that goal.
- The potential implications and operational consequences of an improved reporting system.
- Examples of proposed reporting formats (See Appendix 1)
Parties could make significant improvements by adopting a standardized financial reporting format based on components of existing systems. This reporting format should ensure that reporting is complete, transparent, comparable, accurate, and efficient. However, before launching an effort to either revise or initiate a new means to collect financing data, Parties to the Convention will need to determine the kinds of data they want a climate finance reporting system to provide. This will determine the extensiveness of any expanded data collection effort and its likely cost.
Parties should consider implementing a more robust process to review reported data. This could include launching voluntary pilot projects to establish how reviews could be successfully conducted, using independent, non-political technical financial experts, formally establishing clear rules and guidelines for civil society participation in the review process, and improving record keeping so that data between countries can be compared.
A revised reporting system will likely require the redesign of existing databases and search engines. If Parties wish to have a centralized data system, they will need to decide where such a system should be located and will need to develop new procedures for collecting and processing financial data.
The introduction of a revised/new reporting system will take time to implement. A key step in this process is the adoption of a decision at COP 16 (2010), if not sooner, to request the UNFCCC secretariat to cooperate with the MDBs, the OECD DAC, and experts from developing countries to formulate a proposed decision on draft guidelines for reporting of financial information..