Improved national financial monitoring systems will increase accountability of climate change spending

New UNDP, GFLAC study highlights a gap in finance for climate change adaptation and innovative ways to foster transparency

Bangkok, 20 February 2018 - Improved national financial monitoring systems will increase accountability on climate change spending and foster transparency for global efforts to reach the goals outlined through the Paris Agreement and 2030 Agenda for Sustainable Development, according to a joint study issued today by the United Nations Development Programme (UNDP) and the Latin American and Caribbean Climate Finance Group (GFLAC).

“Climate finance data is key to measuring and reporting on how we are responding to the risks of climate change and building more climate resilient lives and livelihoods across the globe. Climate change is one of the greatest challenges of our time, improving national financial monitoring systems will be essential in providing reliable, transparent and accountable reporting on global investments to reach our global goals for low-carbon climate-resilient development," said Rohini Kohli, UNDP Lead on National Adaptation Plans, Global Environmental Finance Unit.

The study – "A Review of Domestic Data Sources for Climate Finance Flows in Recipient Countries" – examined successes and challenges in tracking climate change finance in six countries: Colombia, Guatemala, Kenya, Nepal, the Philippines and Zambia.

The study underscores a finance gap for spending on climate change adaptation. 

“Research indicates that most of the climate change funding being allocated to developing countries through multilateral funds is going towards mitigation efforts - even though the number of vulnerable countries and the costs of climate change impacts are already producing significant social and economic losses that require immediate adaptive responses,” said Sandra Guzmán, General Coordinator for GFLAC.

Limited capacity to report on climate finance, define and quantify its impact, and connect climate information with improved planning, present obstacles to improved tracking of climate finance, according to the study.

To meet these challenges, and provide increased transparency for climate financial flows, the study underscores a need to improve national financial monitoring systems that are capable of capturing, comparing and analysing data.

"It is essential that improved climate finance monitoring systems be connected with national planning and budgeting processes," said Kohli. "This will enhance cross-sectoral sharing, create harmonized guidance on how to measure and classify this information, and establish clear institutional arrangements to monitor and track the effectiveness of these approaches. This improved accountability and identification of financial gaps will be an essential component toward achieving Nationally Determined Contributions as outlined through the Paris Agreement."

In many cases, countries already have the necessary tools to gather and analyze information, according to the study findings.

"The essential next step is using these tools, and improving national capacities, to create Measuring, Reporting and Verification Systems (MRV) that builds a whole-of-government approach to climate finance accountability," said Guzmán.

For instance, Colombia has an​​ MRV system that stores information on a central platform. This system allows people to track resources received from international sources, as well as climate finance allocated through public expenditure and private sources, according to the study.

The Philippines has also made progress with the establishment of a nationally integrated database. Currently the system is more focused on mitigation, but it is being expanded it to cover adaptation actions, according to the study.

These improved financial reporting systems will work to increase transparency and accountability of new-generation climate change initiatives financed by global citizens through multilateral donors such as the Green Climate Fund (GCF).  

For instance, a new GCF-financed project to scale up climate resilient water management practices for vulnerable communities in Colombia was approved last year.

"By building the accountability and transparency of flows to these projects, and supporting countries in building more effective National Adaptation Plans, UNDP and the United Nations Development System as a whole is creating the strong institutions and capacities we need to reach our goals to build climate resilient livelihoods for the billions of people worldwide at risk from the increased uncertainty that climate change brings," Kohli said.

The study was commissioned under the joint FAO-UNDP Integrating Agriculture in National Adaptation Plans Programme (NAP-Ag). The NAP-AG Programme supports partner countries to identify and integrate climate adaptation measures for the agricultural sector into relevant national planning and budgeting processes. The programme is funded by the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety through its International Climate Initiative (IKI).

The full report can be found on UNDP’s Governance of Climate Change Finance website.

Editor’s Note: An earlier version of this press release made an incorrect reference to the Adaptation Fund. In fact, the Adaptation Fund does not fund mitigation projects, and is focused only on adaptation. It funds concrete, tailored adaptation projects to the most vulnerable communities in developing countries, and has committed about US$ 460 million to 70 concrete adaptation projects on the ground to date.