How would you like your accounting, readers? Consistent, well done, and accurate? (In that case I’d recommend our MDB special.)
Or maybe you’d like a loan soufflé? Or perhaps lots of different methods all mixed together – with sprinkles of figures plucked from the air (for the climate component of aid programmes)?
Seriously though, accounting rules are important, as this is what will incentivise good quality climate finance.
The SCF and the OECD both delivered reports this week. They gave us some figures, which sound very nice, but when we looked a bit closer they seem inflated. And there are worrying trends on adaptation, and on flows to LDCs.
We have some top tips:
- Measure what matters: We need to encourage more spending on adaptation. Both the OECD and the SCF show that this is still underfunded. No more than one quarter of climate finance, which is far from the Paris Agreement’s stating that “provision of resources should also aim to achieve a balance between adaptation and mitigation”.
- Furthermore, the need to keep track of how much goes to LDCs. The OECD forgot. Standing Committee on Finance said this was only 24%, and 2% to SIDS. Grant-equivalent accounting: We’d also recommend you account for the climate finance that developing countries pay back to donor countries – those South-North flows – because loan repayments are not captured at the moment. The trend is that loans are growing much faster than grants. And at a time when many people predicting a new debt crisis, it’s worth keeping an eye on that.
- We know you know this already, but it also needs to be new and additional. So as not to divert from critical health, education and humanitarian needs. For those Parties who are in favour of re-labelling aid budgets, we would happily re-label their COP badges, from pink to orange.
