World Resources Institute report – 'Power, responsibility and
accountability: Rethinking the legitimacy of institutes for climate finance'.
The report states that by signing the Copenhagen Accord—developed countries agreed to “provide new and additional resources … approaching USD 30 billion for the period 2010–2012” and to a goal of jointly mobilizing USD 100 billion a year by 2020 from both public and private sources, to address the needs of developing countries. As the negotiations on a global climate deal continue, disagreement remains on how much of these funds will come from public or private sources and whether these billions should be delivered through new or existing institutions. There is also heated debate over whether a single centralized institution or a decentralized approach that coordinates international, regional, and national institutions would be more effective.
This report seeks to ground the debate on the future of climate finance in
an objective analysis of existing efforts to finance climate mitigation and
adaptation in developing countries. The authors step back from the question of which institutions should be entrusted with new flows of climate finance to examine instead how governments can design a climate financial mechanism in a way that is widely perceived as legitimate.
The authors define three crucial dimensions of legitimacy: power, responsibility, and accountability They review the governance structures, operational procedures, and records to date of 10 international
and national fi nancial mechanisms, with reference to these core dimensions of legitimacy, to draw lessons for future institutional arrangements, with special emphasis placed on the Global Environment Facility (GEF), which, in operation since 1994, is the longest serving operating entity of the United Nations Framework Covention on Climate Change (UNFCCC) financial mechanism.
The report concludes that a new global deal on climate finance is likely to
significantly redistribute power, responsibility, and accountability between
traditional contributor and recipient countries. Most significantly, the
power of emerging economies to control climate finance mechanisms will grow, as will their responsibility and accountability for the performance of these institutions.
The key conclusions and recommendations are:
reinterpret the principles that in the past have guided the design of
climate finance mechanisms in a way that significantly redistributes power, responsibility, and accountability between traditional contributor and recipient countries.
enhance recipient country ownership. Greater representation of developing countries on the governing bodies of international financial institutions more generally, and climate finance mechanisms more specifically, should help ensure greater emphasis on the national and local “ownership”—and thus the effectiveness—of climate finance investments.
finance necessary to move developing countries onto a low-carbon, climate-resilient pathway, the capacity and the creativity to spend these
resources well will necessitate the creation of one or more new financial
mechanisms at the global level and multiple nationallevel institutions.
climate change challenge and of the scale of the funding necessary to
respond to that challenge will also necessitate the reform of existing
financial institutions, many of which have been supporting fossil fuel–led
growth and have yet to mainstream concerns about the impacts of climate change into their strategies.
development agencies, such as the GEF, U.N. Development Programme (UNDP), the U.N. Environment Programme (UNEP), and MDBs, and creating new financial mechanisms will raise issues of institutional economy and effectiveness. In order to generate a greater sense of trust and ownership, backers of existing agencies may have to accept a degree of duplication of existing capacity through the creation of new mechanisms and to accept strengthened lines of accountability of climate finance mechanisms to the UNFCCC Conference of the Parties (COP). On the other hand, those calling for the creation of new institutions may need to concede that it may waste precious resources to replicate the staff and services provided by existing agencies.
will likely involve multiple mechanisms, both new and reformed. This is true because of the complex politics of the international negotiations and the differing views of legitimacy held by contributors and donors. The urgency and complexity of delivering funds at scale argues for moving forward, at least in the near term, with the institutions that we have, and investing in the strength and quality of COP guidance and national planning processes to ensure coordination and coherence. This experience should then guide the design and operation of the new institutions that will become necessary as the scale of resources grows.
for all countries and has potential risks as well as benefits. While high
standards will have to be developed and maintained to ensure emissions fall and the vulnerable are protected, climate finance will necessarily entail experiments with new policies and technologies that will need to be watched closely for unintended environmental and social impacts.
finance and to de-link them from the levers of informal power. If existing
institutions are to meet evolving standards of legitimacy, then their
fundamental governance structures, as well as their operational procedures, will need to be reformed to give greater voice to developing country recipients.
development finance to build national institutions that reflect universally
accepted principles of good governance. Strong provisions for accountability should be put in place, including sound fiduciary management, anticorruption measures, and grievance mechanisms and inspection procedures that ensure compliance with environmental and social standards and safeguards.
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