Climate Finance: Bridging Anti-corruption and Social

Accountability – The role of Civil Society

UNDP /BDP Democratic Governance Group and the International Policy Centre for Inclusive Growth

(IPC-IG)June, 2012

by Tsegaye Lemma, BDP/DGG and Leisa Perch, IPC-IG

Global discourse on Development Finance has been focused on scaling up financial resources less on preventing leakages through corruption and

mismanagement For instance, the 2010 MDG summit failed to explicitly

acknowledge corruption as a major bottleneck Yet, the statistics are frightening:

$1 trillion per year: annual illicit money flowing out of all developing countries

$10/$1: The ratio of illicit money flowing out of poor nations to the amount of foreign aid

$148 bn or 25% of national income: cost of corruption in Africa

Evolving discourse on Anti-corruption in development effectiveness

Plethora of climate change financing schemes emerging with the promise of mobilizing several billions of dollars Raises optimism as well as real concerns

These concerns arise from: the complexity of the schemes themselves, the sheer size of funds (attracts big players – good and

bad), the multitude of players and stakeholders layers of accountability and extent of social accountability underlying weak governance and vulnerabilities to

corruption, etc. Access and benefit-sharing by the poor Social inclusion in criteria and accountability mechanisms The possibility of not achieving development results

(particularly in an era of scarce resource)

Will climate financing mechanisms bring in

additional challenges?

CC Finance Architecture (2012)

Source: Climatefundsupdate.org

Focus of Funding in 2010Focus of Approved Funding by theme (2010)

Source: Climatefundsupdate.org Sourced from: http://www.climatefundsupdate.org/themes

Focus of approved funding by theme (2012)

Warning Signals – Inclusiveness in planning?

Source: Perch, 2010

Analysis of Inclusion by Group or by Vulnerability in NAPAs to Date (see coding process in Annex 2)*

Inclusivity factor Yes % of available

NAPAS No

% of available

NAPAs

Mentions gender 25 78.0 7 22.0

Prioritises gender 12 37.5 20 62.5

Mentions poverty 31 97.0 1 3.0

Prioritises poverty 26 81.0 6 19.0

Mentions ethnicity 7 22.0 25 78.0

Prioritises ethnicity 31 97.0 1 3.0

Lists vulnerable groups 21 65.5 11 34.5

Identifies participatory actions 18 56.0 2 6.0

* 10 NAPAs did not make clear the level or types of participatory efforts undertaken.

Awareness raising and public education Reduce information asymmetry related to CC

funds Stakeholder engagement and community

participation Strengthen social accountability

Legal education and assistance to communities Ensure transparency and equity in the process of

recognition and titling of rights to land & carbon Monitoring and oversight of use of funds

and distribution of benefits Surveys and participatory budgeting processes

What role for CSOs (NGOs, CBOs, think-tanks, media, IP organizations)?

CSOs/KBIs already play a key role

Civil Society Organization Role played ActionAid Raised important questions about community participation in the

Adaptation Fund Board process, highlighting the lack of clarity and consistency as one of its more significant weaknesses (ActionAid, 2009)

Focus on the Global South Exposed inconsistencies in the Clean Development Mechanism. Example their report on the CDM in the Philippines (see http://www.focusweb.org/books/cdmphilippinesreport)

Germanwatch Watching brief on the Adaptation Fund process for the review of projects, preparing and disseminating reports after Board meetings (see Kaloga and Harmeling, 2010). Highlighted for example the lack of agreement over key criteria for funds: “adequate adaptation reasoning in projects and programmes”.

Knowledge-Based Institutions Overseas Development Institute and HBS (partners in Climate Update. Org)

Provides updated data about the state and distribution of climate finance including search and analytical capacity. The World Resources Institute leads on tracking Fast Track Finance (FSF)

FIELD Prepares legal briefs to delegations and other interested parties about the implications of negotiations and has also provided analysis on negotiations around REDD+ (see http://www.field.org.uk/files/FIELDREDDPlusBriefingPaperOCT10EN.pdf ).

Hybrids Oxfam, WOCAN and the Institute of the Green Economy

Targeted the governance of climate finance overall as well as REDD+, access and benefit-sharing, respectively including for women (Perch, 2011).

GenderCC, IUCN, WEDO (as part of the GCCA and separately)

Worked alongside other actors to keep gender and climate change on the agenda and fought for gender to be mainstreaming in critical instruments including finance instruments

Heinrich Boll-Stiftung Governance Issues (Madzwamuse, 2011), Strengthening access to women (Petrie et al, 2010) and calling into question the reliability and efficacy of the World Bank’s safeguards policy and mechanism (Schalatek, 2011)

Table 1. Select CSO/KBI roles emerging from past research

What role of social risk mitigation

Social Risk Mitigation Potential Role for CSOs

The burdens that women’s unpaid work place on their time and use of resources, and accordingly their capacity to adapt and resile will largely remain outside the policy framework.

Advocate for and ensure policy coherence between REDD and REDD+ and the Beijing Platform of Action, the Convention on the Elimination of Discrimination Against Women (CEDAW) and Belém do Pará.

Clear procedures to challenge priority mitigation adaptation actions do not exist or are not easily enforceable possible creating new social risks.

Challenge/query priority mitigation and adaptation actions including benefit-sharing for the poor and most vulnerable. Identify options which would strengthen social resilience.

Policy guided good intentions remain grand ideals rather than defined outcomes.

Ensure that processes of inclusion do more than consult but indentify clear means and process for participation and benefit-sharing.

The demand for rapid carbon emissions reductions will likely also increase the premium on land. Short-term food production may become even more costly and challenge and the poor may find it even more difficult to compete financially.

Identify and promote mixed-model approaches which balance livelihoods and emissions-reduction. Promote existing innovations which could be scaled up.

REDD+ policies narrow the income inequality gap but does not eliminate overall poverty. Existing forms of economic exclusion become further entrenched particularly for women

Highlight the differentiated needs within communities including gender and other biases and promote the need for economic empowerment rather than payment for environmental services (make PES pro-poor).

REDD+ finance does not trickle down and is not invested in regeneration and long-term economic empowerment strategies

Conduct research which identifies the costs of such risks and identify mechanisms for improving access to finance such as mobile finance. Make recommendations for improved budgeting and allocations between macro and local development frameworks.

Table 2. Social Risks emerging in CC mitigation (Perch, 2011)

What role for social accountability? Table 3 : Selected Social Accountability Issues emerging from Natural Resource Extraction (Khoday and Perch, 2012)

Social Accountability Issues Potential CSO Role

Missed opportunity for mitigation finance including REDD to help transform the consistently underfunded agricultural sector in Africa in the face of increasing food insecurity

Advocate for, backed up evidence, of the co-benefits to be derived from linking re-afforestation and other REDD+ activities with more sustainable agriculture

The social uses and allocations to which REDD+ resources are directed. Should they be universal or targeted to the specific community?

To help to navigate this discussion and expand the dialogue and engagement on diverse opinions and interests. Ensuring that some of the resources are targeted to the communities who are creating the environmental goods.

Who decides how such royalties are used and who accounts for the benefits and impacts?

Ensuring rigorous debates on these issues and robust accountability mechanisms for government, private sector and civil society.

Ensuring indigenous land rights, cultural autonomy and the need for prior and informed consent as prescribed in the UN Declaration on Indigenous Rights passed in 2007.

Keeping attention on this issue and the need for broad engagement with the indigenous communities as well as the need for accountability mechanisms and payment structures to mesh with and respect rights frameworks and cultural autonomy.

Who owns the land and therefore receives the benefits? Can REDD+ accommodate customary land tenure frameworks and other community ownership arrangements?

Ensure and advocate for rigorous investigations to make sure that the right-holders are appropriately identified and recognized as beneficiaries. Advocate and promote systems of governance as as “nested structures of rules within rules, within further rules”.

Who accounts for what? Advocate and promote the benefits of full transparency of REDD+ arrangements as well as reporting. Leverage lessons from the decentralized forest management approach in Cameroon for example.

Coherence between REDD+, social safeguards and the Nagoya Protocol

Actively engaging on and promoting the need for and benefits of policy coherence between these 3 Institutional frameworks.

What role for mitigating corruption?

Potential Corruption Risks in REDD+ Role of CSOs in curbing corruption risks

Powerful individuals influencing the design of the overall national REDD+ framework to benefit from it

Conduct/participate corruption risk assessments in REDD+ and facilitate multi-stakeholders consultations at all stages of development of national REDD+ framework

Loggers exert undue influence to exclude large areas of high value timber from areas designated for conservation

Advocate for establishing and enforcing objective criteria to guide land use planning decisions

Project developers or interest groups bribe public officials to ensure that the land areas they own are allocated to, or excluded from, REDD+ plans

Promote full information disclosure of land allocations, (re)zoning applications and decisions and ensure it is in accessible format and be subject to a public consultation process

Powerful actors exert undue influence to obtain fraudulent licenses, land titles or carbon rights

Ensure transparency and equity in the process of recognition and titling of rights to land & carbon and assist customary communities with land registration and carbon rights allocation processes

Benefit-Distribution Systems (BDSs) are designed behind closed doors to the disadvantage of deserving beneficiaries

Ensure that an independent, effective and accessible recourse and complaints mechanism is available to the public, including to indigenous peoples and other forest-dependent communities

Design and apply participatory monitoring tools to ensure REDD+ related benefits are shared equitability and transparently

Table 4 – Potential role of CSOs in Mitigating Corruption Risks in REDD+ processes

Enabling environment: Policy space; freedom of association, information and civic

engagement; recognition of IP rights; protection of whistleblowers; etc.

Organizational capacities: Clarity of vision and missions; predictability of funding;

internal audit and control systems; SOP; M&E systems; etc. Technical know-how:

Expertise in climate change negotiation processes and related thematic issues; understanding of anti-corruption instruments and tools; knowledge of budget tracking tools; evidence-based advocacy techniques; knowledge management (to capture and codify both modern and indigenous/local)

Capacity determinants of CSO engagement

Multi-stakeholder engagement Ensuring IPs, local communities and CSOs participate

effectively in national and international REDD+ decision making, strategy development and implementation.

Developing guidelines for application of Free, Prior and Informed Consent (FPIC) and recourse mechanisms

Curbing corruption risks in REDD+ and strengthening capacities of stakeholders including CSOs Participatory governance assessment, corruption risk

assessment Specialized capacity development support and trainings Technical and Funding support

Global policy advocacy for greater space for integrity institutions and CS partners in climate finance mechanisms

Highlights of UNDP’s initiatives

Research on Inclusive Green Growth and opportunities to integrate a triple wins approach

Identifying and documenting relevant case studies and innovations

Supporting and promoting South-South cooperation for development

Targeted research on issues on economic governance challenges in NRM for improved policy practice and design

Putting lessons into practice through the Poverty and Environment Initiative

Capacity development in key institutions such as Parliaments (Green Guide for SADC Parliamentarians)

Highlights (2): Building Knowledge for Change

For more information www.undp.org/goverance http://www.un-redd.org/ or

http://www.unredd.net/ www.ipc-undp.org/ http://www.climatefundsupdate.org/