World Bank’s Climate Finance Lacks Accountability, Oxfam Report Says

World Bank’s Climate Finance Lacks Accountability, Oxfam Report Says

November 2024 – Nairobi — A recent report from Oxfam International has raised significant concerns about the transparency and accountability of the World Bank’s climate finance claims, suggesting that inconsistencies in the Bank’s climate finance reporting could undermine global climate efforts. The report, titled Climate Finance Unchecked, reveals that discrepancies between budgeted and actual expenditures in World Bank climate projects may obscure the true impact of funds meant for mitigation and adaptation, limiting effective action.

Oxfam’s analysis, covering World Bank climate finance projects from 2017 to 2023, found that the actual funds used in these projects often diverged significantly from the original budgeted amounts. The average variance between projected and actual spending ranged from 26% to 43% across the portfolio, translating to an estimated $24.28 billion to $41.32 billion in unaccounted climate finance. These inconsistencies, Oxfam notes, make it challenging to assess the effectiveness of the World Bank’s climate initiatives and to verify if these funds are genuinely addressing climate change impacts.

The World Bank, a major source of global climate finance, has increased its focus on climate action in recent years. In 2023, during the UN’s COP28 summit, the Bank pledged to allocate 45% of its total financing to climate projects by 2025. However, Oxfam’s findings suggest that the Bank’s existing climate finance framework may lack the transparency needed to ensure these funds are used as intended.

A primary concern in the report is the World Bank’s reliance on ex ante (pre-approval) figures for climate finance, which estimate the funds needed for climate-related components before projects are implemented. Oxfam notes that the World Bank does not conduct ex post (post-implementation) analyses to verify if these pre-approved amounts are fully spent on climate initiatives. Without this verification, it remains unclear whether the funds achieve their intended impact or, in some cases, are redirected to unrelated project components. This approach, according to Oxfam, creates significant uncertainty about how much money actually goes toward climate action, with the ambitious targets set by the Bank lacking the transparent follow-through needed to verify results.

Oxfam’s report outlines several recommendations to increase accountability in the World Bank’s climate finance, including detailed project-level reporting from the outset of each project, post-implementation audits to assess actual expenditures against initial budgets, and the creation of a public climate finance database. This database would be searchable and downloadable, providing a comprehensive view of how funds are allocated, adjusted, or reallocated throughout the life cycle of each project.

The report highlights a broader issue, pointing to a “crisis of trust” in global climate finance, especially as developed nations and multilateral development banks work toward meeting the $100 billion annual climate finance goal set under the Paris Agreement. Many recipient countries and organizations have expressed doubts over the credibility of climate finance figures, arguing that “creative accounting” often inflates the real value of these contributions. The World Bank’s lack of detailed reporting on climate expenditures, according to Oxfam, only exacerbates this crisis of confidence.

“The climate crisis requires bold and ambitious action backed by transparent and accountable funding,” Oxfam concludes. “To restore trust and ensure these funds have real impact, the World Bank must enhance its reporting practices and adopt a more rigorous approach to tracking its climate finance.”

As the world approaches critical milestones in global climate policy, Oxfam’s report serves as a call for stronger accountability in climate finance practices and for development banks like the World Bank to provide a clear, detailed account of where their climate investments are directed and what outcomes are achieved.

GAROWE ONLINE 

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