Global anti-corruption coalition Transparency International (TI) has released the ‘Global Corruption Report: Climate Change’, which presented guidelines to prevent corruption which could undermine climate change remedy actions.

“Where huge amounts of money flow through new and untested financial markets and mechanisms, there is always a risk of corruption. Some estimate total climate change investments in mitigation efforts alone at almost $700-billion by 2020. Public investments of no less than $250-billion a year will eventually flow through new, relatively uncoordinated and untested channels. In addition, pressure already exists to ‘fast-track’ solutions, further enhancing the risk of corruption,” said the report.

It called on governments, international organisations, businesses and civil society to ensure good governance in climate policy, because under global climate agreements, substantial funding would be gathered to finance mitigation of emissions, such as renewable energy projects, and adaptation to impacts, such as construction of sea walls, irrigation systems and disaster-ready housing.

TI noted that a robust system of climate governance – the processes and relationships at the international, national, corporate and local levels – would be essential for ensuring that the political, social and financial investments by both the public and private sectors for climate change mitigation and adaptation were properly and equitably managed, so that responses to climate change were successful.

Despite difficulties in reaching consensus at the international level, States, companies and civil society actors recognised the need to establish clear rules and compliance mechanisms for addressing climate change.

Good governance of the climate fund could enhance the process, making it more transparent, accessible and equitable for all, said TI.

New tools to measure the environmental integrity of carbon offsets were relatively untested, and early evidence presented in the report suggested that there were many regulatory grey zones and loopholes that were at risk of being exploited by corrupt interests.

“Careful monitoring, quick learning and an active approach to closing entry points for corruption are essential to ensure that strong governance enables the success of these new tools and instruments at this most critical stage,” said the organisation.

A robust system for the measuring, reporting and verification of emissions was crucial to transparency, and ultimately to the success of mitigation strategies.

Leading mitigation approaches included the establishment of carbon markets, mandated emission standards and energy efficiency policies, and voluntary initiatives to move towards a low-carbon economy.

“Even though some of these approaches are at relatively early stages of development, adequate governance safeguards should be put in place from the outset to ensure that they can best achieve their objectives,” added TI.

As a critical mechanism for mitigation, carbon markets needed safeguards to reduce the risk of corruption, as well as to ensure their sustainability and capacity to reduce greenhouse gas emissions.

The European Union’s Emissions Trading Scheme (ETS) has shown that carbon markets were susceptible to undue influence from vested interests, which in the case of the ETS, may have contributed to the over-allocation of carbon permits. The result was windfall profits of between €6-billion and €8-billion for Europe’s four largest power producers.

TI stated that weak governance of these critical markets could create a lose-lose scenario, in which over-allocation of permits and the resulting low carbon prices provided a disincentive for business to find new low-carbon means of production, and could potentially bring about market collapse.

Integrity in climate policy required a system of interlocking checks and balances. Key action areas included generating and making accurate information publicly available; tracking, benchmarking and comparing the capacity and performance of emitters, regulators, funders and governments; matching capacity at all levels to the scale of the challenge; and anchoring climate governance firmly in existing frameworks for integrity and accountability.

For governments in particular, TI recommended incentivising and designing key climate policy instruments to promote independence and reduce conflict of interest, as well as ensuring transparency in flows of funding for mitigation and adaptation.

TI also said that governments should monitor and oversee national climate policy and projects effectively, and step up policy coordination to bring key departments into line on climate change issues, as well as build robust mechanisms for representation and public engagement that could cope with the increased public demand.

For business, TI said that companies should be a powerful voice in climate policy through open engagement and disclosure, and while ‘going green’, companies should adhere to strong compliance, and anti-corruption regimes and best corporate governance practices. They should also commit ample resources to transparency, the disclosure of carbon emissions and green climate action.

With regards to civil society, TI suggested that organisations should undertake independent oversight and monitoring of governance and corruption risk in the area of climate change, encourage public participation in and oversight of policy development at the local, national and international levels, and build broader coalitions for integrity in climate governance to ensure that the interests of all stakeholders were represented and taken into account.

TI chairperson Huguette Labelle said that the work of TI has demonstrated that, left unchallenged, corruption ruined lives, destroyed livelihoods and thwarted attempts at social and economic justice.

“The same risks apply to climate change. Better governance is the solution, however, and it will be crucial to ensure that the mitigation strategies and adaptation solutions that emerge at local, national and international levels embrace participation, accountability and integrity,” added Labelle.

Greenpeace International executive director Kumi Naidoo stated that by mapping risk in a number of rapidly expanding areas and bringing good governance to the forefront of the climate change debate, the TI report illustrated that decisions made at the global level needed to take account of the effects of corruption at all levels in order to pave the way for future success in combating climate change.

Existing forms of corruption that can have a negative impact on efforts to mitigate and adapt to climate change are not difficult to find, added Naidoo, be it heads of government depriving citizens of a share of their country’s resource riches, authorities failing to take real action against corruption in the oil sector, or documented examples of private sector contributions to public officials that result in clear conflicts of interest and interference in the due process of law.