Among the limited progress made at the United Nations Climate Change Conference (COP29) in November last year was an agreement to mobilize at least US$300 billion a year of finance for climate action in developing countries by 2035. This New Collective Quantified Goal (NCQG) trebles the $100 billion target for climate finance originally set at COP15 in 2009.
The adequacy of the new goal aside—many campaigners and experts believe it falls far short of what is needed or fair—another important question is how to ensure that enough of the mobilized funds are used to benefit the people most vulnerable to the impacts of climate change. According to the Organisation for Economic Co-operation and Development (OECD) the $100 billion target was finally achieved in 2022 (although that is still hotly disputed). Nevertheless, several independent reports have found that too little of the $100 billion went to benefit the most vulnerable, especially those in countries affected by fragility and conflict who are struggling to adapt to climate change.
A recent SIPRI study revealed a range of issues in how climate finance is reported and analysed. It focused on reported commitments and disbursements of climate-related bilateral or multilateral official development assistance (ODA) between 2015 and 2021 in two of the OECD data sets most commonly used to track climate finance: the creditor reporting system and climate-related development finance data set. Addressing these issues could make it easier for donors and others to close gaps in climate finance and ensure that it is used effectively to help the most vulnerable.
Current climate finance tracking
The OECD is a key reference for climate finance data: at the request of donor countries, it has been reporting regular analyses on progress towards the $100 billion goal since 2015. It does this using an accounting framework that is aligned with the modalities for measuring climate finance agreed at COP24 in 2018.
The OECD currently includes four types of climate finance in its regular assessment reports and databases: bilateral public funds (from public institutions and development banks); multilateral public funds (provided by multilateral development banks and multilateral climate funds, such as the Green Climate Fund and the Climate Investment Fund); climate-related export credits; and private finance mobilized by bilateral and multilateral public climate finance.
The OECD databases use so-called Rio markers to identify the climate finance component of development finance flows; that is, those flows having climate mitigation or climate adaptation as a ‘principal’ or ‘significant’ objective. However, only bilateral donors who are part of the OECD Development Assistance Committee are obliged to use these markers in their reporting. The OECD system also includes a field for the country or region to which the finance was directed.
Data gaps and pitfalls
While headline figures may appear to provide a clear picture, assessing climate finance flows is complicated, and involves several methodological complexities. The SIPRI study identified multiple ways in which data choices can influence results, sometimes leading to a distorted picture. Some of these are discussed below.
One of the key challenges in climate finance data is the gap between how much finance is promised and how much is actually disbursed. Most climate finance assessments are based on commitments rather than disbursements. However, the SIPRI assessment found that throughout the period 2015–21, disbursements of climate-related ODA were consistently around 40–50 per cent below the sums committed. Furthermore, data on disbursements was not always available and was often hard to link to earlier commitments.
Another related challenge is how climate finance is identified. Multisectoral or ‘nexus’ programming—where climate action is integrated with peacebuilding, humanitarian, food security or other objectives—can be hard to assess. This is because it is not always clear how much of the finance provided to initiatives with diverse objectives went specifically to the climate-related objectives. This can often lead to large overestimates of climate finance.
Destination unknown
More important than headline figures is the question of whether climate finance—particularly finance for adaptation—is reaching the most vulnerable. The OECD found that of the $115.9 billion it claims was raised in 2022, around $80 billion went to middle-income countries and only $11 billion to low-income countries. Around $20 billion of the remaining finance could not be attributed to an income group. The SIPRI analysis found that donors had reported the destinations for around 20 per cent of climate finance commitments and 26 per cent of disbursements as simply ‘regional’ or ‘bilateral non-specific’, making it impossible to say where in the world they were directed.
Since COP21 in 2015, there has been a political aspiration, as set out in Article 9 of the Paris Agreement, to achieve a balance in climate finance between mitigation and adaptation efforts, while prioritizing adaptation support for vulnerable countries. According to analysis by SIPRI researchers only around 32 per cent of the total disbursed climate ODA between 2015 and 2021 was allocated to adaptation.
Our analysis also suggests that the most vulnerable have received a disproportionately small share of this adaptation finance, particularly if considered on a per capita basis. For example, Afghanistan, a highly climate-vulnerable and conflict-affected country, received only an average of $2.5 per capita per year in adaptation ODA in 2015–21. In contrast, Georgia, which is neither affected by conflict nor among the most vulnerable to climate change, received $20 per capita per year in the same period. Among countries receiving the least adaptation ODA per capita were the Central African Republic, the Republic of the Congo, the Democratic Republic of the Congo, Guinea and Sudan, which received only $0.4 to $0.7 per capita per year on average, despite ranking among the 25 per cent most climate-vulnerable countries. Furthermore, much of the climate adaptation going to fragile and conflict-affected countries has been criticized as of poor quality.
Statistics about how much finance goes to countries in different income categories can also be misleading, or at least questionable. This is because averages can mask huge variations and are highly dependent on which recipients are included or excluded in a given group—something that is not always made explicit.
This issue is particularly marked when it comes to how much climate finance is directed to conflict-affected countries. Vulnerability to climate change impacts is often gravely exacerbated by the presence of fragility and armed conflict, while climate action can often work synergistically with peacebuilding. Thus, fragile and conflict-affected settings are logically among the most deserving recipients of climate finance. Despite this, conflict-affected countries consistently receive a much smaller share of climate finance than their more peaceful peers. In a stark example from SIPRI’s analysis, despite severe droughts and floods, Yemen received just $0.60 per capita in adaptation ODA between 2015 and 2021, compared to over $100 per capita in non-conflict-affected countries.
However, there are no standardized criteria for which countries to include or how to categorize different levels of conflict when making such calculations, meaning that estimates can vary widely. The way these calculations account for differences in population size also matters, especially when comparing climate finance allocations on a per capita basis.
Towards more equitable, transparent and responsible climate finance
While gaps in reporting and analysis are not the primary reasons why more climate finance does not reach the most vulnerable populations, more comprehensive, reliable and transparent data and analysis are essential for efforts to make the distribution of climate finance more equitable.
Donors have an important role to play by reporting climate finance thoroughly, consistently and accurately to reporting systems such as the OECD databases. However, the reporting systems themselves could also be improved, so that they gather the data needed to give an accurate picture of climate finance, including disbursements, how they are spent and where.
In nexus programmes, it is crucial to more carefully distinguish and report the climate-specific component of the budget, even if the programmes have integrated goals. That way, data can be more transparent, which allows for more accurate tracking of climate finance while still accommodating the broader cross-sectoral nature of the programmes.
The metrics used to analyse data also need an overhaul. The methodologies for generating statistics should be standardized and transparent. Calculations of per capita climate finance allocations can provide a more nuanced and transparent picture than per-country numbers, given the huge variation in population sizes. Reported statistics also need to take into account each recipient country’s vulnerability, conflict status and resources.
Making such changes and acknowledging the many nuances can help to ensure that the increased flows of climate finance promised under the NCQG benefit the most vulnerable populations, making them more resilient and their futures more secure.
ABOUT THE AUTHOR(S)
Abeer S. Ahmad is a Research Assistant in the SIPRI Climate Change and Risk Programme.
Among the limited progress made at the United Nations Climate Change Conference (COP29) in November last year was an agreement to mobilize at least US$300 billion a year of finance for climate action in developing countries by 2035. This New Collective Quantified Goal (NCQG) trebles the $100 billion target for climate finance originally set at COP15 in 2009.
The adequacy of the new goal aside—many campaigners and experts believe it falls far short of what is needed or fair—another important question is how to ensure that enough of the mobilized funds are used to benefit the people most vulnerable to the impacts of climate change. According to the Organisation for Economic Co-operation and Development (OECD) the $100 billion target was finally achieved in 2022 (although that is still hotly disputed). Nevertheless, several independent reports have found that too little of the $100 billion went to benefit the most vulnerable, especially those in countries affected by fragility and conflict who are struggling to adapt to climate change.
A recent SIPRI study revealed a range of issues in how climate finance is reported and analysed. It focused on reported commitments and disbursements of climate-related bilateral or multilateral official development assistance (ODA) between 2015 and 2021 in two of the OECD data sets most commonly used to track climate finance: the creditor reporting system and climate-related development finance data set. Addressing these issues could make it easier for donors and others to close gaps in climate finance and ensure that it is used effectively to help the most vulnerable.
Current climate finance tracking
The OECD is a key reference for climate finance data: at the request of donor countries, it has been reporting regular analyses on progress towards the $100 billion goal since 2015. It does this using an accounting framework that is aligned with the modalities for measuring climate finance agreed at COP24 in 2018.
The OECD currently includes four types of climate finance in its regular assessment reports and databases: bilateral public funds (from public institutions and development banks); multilateral public funds (provided by multilateral development banks and multilateral climate funds, such as the Green Climate Fund and the Climate Investment Fund); climate-related export credits; and private finance mobilized by bilateral and multilateral public climate finance.
The OECD databases use so-called Rio markers to identify the climate finance component of development finance flows; that is, those flows having climate mitigation or climate adaptation as a ‘principal’ or ‘significant’ objective. However, only bilateral donors who are part of the OECD Development Assistance Committee are obliged to use these markers in their reporting. The OECD system also includes a field for the country or region to which the finance was directed.
Data gaps and pitfalls
While headline figures may appear to provide a clear picture, assessing climate finance flows is complicated, and involves several methodological complexities. The SIPRI study identified multiple ways in which data choices can influence results, sometimes leading to a distorted picture. Some of these are discussed below.
One of the key challenges in climate finance data is the gap between how much finance is promised and how much is actually disbursed. Most climate finance assessments are based on commitments rather than disbursements. However, the SIPRI assessment found that throughout the period 2015–21, disbursements of climate-related ODA were consistently around 40–50 per cent below the sums committed. Furthermore, data on disbursements was not always available and was often hard to link to earlier commitments.
Another related challenge is how climate finance is identified. Multisectoral or ‘nexus’ programming—where climate action is integrated with peacebuilding, humanitarian, food security or other objectives—can be hard to assess. This is because it is not always clear how much of the finance provided to initiatives with diverse objectives went specifically to the climate-related objectives. This can often lead to large overestimates of climate finance.
Destination unknown
More important than headline figures is the question of whether climate finance—particularly finance for adaptation—is reaching the most vulnerable. The OECD found that of the $115.9 billion it claims was raised in 2022, around $80 billion went to middle-income countries and only $11 billion to low-income countries. Around $20 billion of the remaining finance could not be attributed to an income group. The SIPRI analysis found that donors had reported the destinations for around 20 per cent of climate finance commitments and 26 per cent of disbursements as simply ‘regional’ or ‘bilateral non-specific’, making it impossible to say where in the world they were directed.
Since COP21 in 2015, there has been a political aspiration, as set out in Article 9 of the Paris Agreement, to achieve a balance in climate finance between mitigation and adaptation efforts, while prioritizing adaptation support for vulnerable countries. According to analysis by SIPRI researchers only around 32 per cent of the total disbursed climate ODA between 2015 and 2021 was allocated to adaptation.
Our analysis also suggests that the most vulnerable have received a disproportionately small share of this adaptation finance, particularly if considered on a per capita basis. For example, Afghanistan, a highly climate-vulnerable and conflict-affected country, received only an average of $2.5 per capita per year in adaptation ODA in 2015–21. In contrast, Georgia, which is neither affected by conflict nor among the most vulnerable to climate change, received $20 per capita per year in the same period. Among countries receiving the least adaptation ODA per capita were the Central African Republic, the Republic of the Congo, the Democratic Republic of the Congo, Guinea and Sudan, which received only $0.4 to $0.7 per capita per year on average, despite ranking among the 25 per cent most climate-vulnerable countries. Furthermore, much of the climate adaptation going to fragile and conflict-affected countries has been criticized as of poor quality.
Statistics about how much finance goes to countries in different income categories can also be misleading, or at least questionable. This is because averages can mask huge variations and are highly dependent on which recipients are included or excluded in a given group—something that is not always made explicit.
This issue is particularly marked when it comes to how much climate finance is directed to conflict-affected countries. Vulnerability to climate change impacts is often gravely exacerbated by the presence of fragility and armed conflict, while climate action can often work synergistically with peacebuilding. Thus, fragile and conflict-affected settings are logically among the most deserving recipients of climate finance. Despite this, conflict-affected countries consistently receive a much smaller share of climate finance than their more peaceful peers. In a stark example from SIPRI’s analysis, despite severe droughts and floods, Yemen received just $0.60 per capita in adaptation ODA between 2015 and 2021, compared to over $100 per capita in non-conflict-affected countries.
However, there are no standardized criteria for which countries to include or how to categorize different levels of conflict when making such calculations, meaning that estimates can vary widely. The way these calculations account for differences in population size also matters, especially when comparing climate finance allocations on a per capita basis.
Towards more equitable, transparent and responsible climate finance
While gaps in reporting and analysis are not the primary reasons why more climate finance does not reach the most vulnerable populations, more comprehensive, reliable and transparent data and analysis are essential for efforts to make the distribution of climate finance more equitable.
Donors have an important role to play by reporting climate finance thoroughly, consistently and accurately to reporting systems such as the OECD databases. However, the reporting systems themselves could also be improved, so that they gather the data needed to give an accurate picture of climate finance, including disbursements, how they are spent and where.
In nexus programmes, it is crucial to more carefully distinguish and report the climate-specific component of the budget, even if the programmes have integrated goals. That way, data can be more transparent, which allows for more accurate tracking of climate finance while still accommodating the broader cross-sectoral nature of the programmes.
The metrics used to analyse data also need an overhaul. The methodologies for generating statistics should be standardized and transparent. Calculations of per capita climate finance allocations can provide a more nuanced and transparent picture than per-country numbers, given the huge variation in population sizes. Reported statistics also need to take into account each recipient country’s vulnerability, conflict status and resources.
Making such changes and acknowledging the many nuances can help to ensure that the increased flows of climate finance promised under the NCQG benefit the most vulnerable populations, making them more resilient and their futures more secure.
ABOUT THE AUTHOR(S)