Governance of climate finance is key to ensuring SDG


Climate change is a global phenomenon and it is estimated that, by 2050, 150 million people of the world may become environmentally displaced due to coastal flooding, river bank erosion, drought, and agricultural inversion (IPCC, 5th AR, 2014).
Though the South Asian countries produce only around 7% of global GHG emission, the Climate Risk Index 2017 ranks Bangladesh and other two countries of this region as amongst the 10 most vulnerable countries, affected by the impacts of weather-related loss (storms, floods, heat waves, etc).
SDG13 is a pledge to strengthen resilience and human and institutional capacity on climate change mitigation, adaptation through effective integration of measures to combat climate change into national policies, planning, and strategies.
The Paris Agreement recognised the contribution of the regional platform, eg SAARC in addressing the climate change impacts. The Kathmandu Declaration of SAARC in 2014 explicitly calls for meeting the SDGs (Article 13) for regional cooperation in the areas of climate change and finance in the SAARC countries, home of one-fifth of the world’s population, with a sizeable number living below the poverty line.
More specifically, the Dhaka Environmental Ministers’ Declaration on Climate Change in 2008 and the Thimphu Statement on Climate Change in 2010 committed to knowledge-sharing, technology transfer, joint initiatives for finance, and investment for the management of climate change impacts. Such joint efforts and agreements by SAARC governments have opened up avenues and created opportunities for increasing both national and cross-boundary cooperation in climate change related actions.
The SDG target particularly emphasises on implementing the commitment undertaken by developed countries to mobilise funds to address the needs of developing countries in the context of meaningful mitigation actions and transparency on implementation, especially from the Green Climate Fund.

The Paris Agreement has also established the global goal on adaptation with a view to contributing to  sustainable development. However, Article 13 of the Paris Agreement underscored the need for promoting transparency for action and supports. However, existing research on climate finance governance carried out by Transparency International and some of its chapters, including TI-Bangladesh, reveals that various governance deficits exist in the allocation and utilisation of climate finance, including inadequate participation of local communities in planning and monitoring of climate change projects, poor integrity in fund allocations, and the absence of meaningful grievance redress systems. It is clear from the above that sustained dialogue and engagement amongst concerned stake-holders in and outside governments are crucial to addressing these issues and finding realistic and long-term solutions. Following that as part of TIB’s advocacy for integrity in climate finance and as a follow up  of the 2016 initiative to arrange Dhaka-Integrity Dialogue-1, TIB organised “Dhaka Integrity Dialogue-2: Climate Finance and Governance in South Asia” in Dhaka on September 18-19, 2017 with the core objective to identify the prospect, challenges, and potential scope, ways, and means of regional efforts in climate finance and governance in South Asia and beyond to meet SDG13 and the Paris Agreement in the context of good governance in climate finance. The Paris Agreement has particularly emphasised on the importance of support for and international  cooperation on adaptation efforts as well as the needs of developing countries, especially those that are particularly vulnerable to the adverse effects of climate change. Consistent with that, the developed economies have pledged “new” and “additional” to ODA of $100 billion annually by 2020 to deal with climate change, especially in developing countries; however, there is increasing concern over the absence of concrete and time-bound commitments from the developed nations and scanty flow of grant-based public funds.
According to the NDCs submitted to UNFCCC, developing countries require a total of $3.5tn by 2030 to curb the climate change impacts, but since 2010, in total, the commitments made by the polluting countries of $37bn in total and the public finance offered by developed countries will result in at least $18.8bn per year by 2020. This includes the UK’s commitment to increase the flow of climate finance to at least £5.8bn between 2016 and 2021.
Among the approved funds from the GCF, only 32% has been allocated for adaptation in vulnerable countries. Specific requirement of adaptation finance for South Asian countries of Bangladesh, India, Sri Lanka, and Maldives is estimated to be $280bn but total climate finance to South Asia has been estimated to be only $2.33bn.
And among funded new projects since November 2016, only 4.05% have been allocated. Moreover, among funds approved from the GCF, 16% were national and 9% were regional focus.
It is a matter of concern that GCF hasn’t been able to release any fund yet against the approved projects, including CRIM project of Bangladesh since November 2015. On the other hand, poor governance has jeopardised the GCF standards for direct access by vulnerable developing countries.
Furthermore, among the approved funds from the GCF, only 42% were grants. Consequently, there is growing concern that, due to unavailability of required climate finance for adaptation, whether the climate vulnerable countries including South Asian small countries are falling into a climate-debt trap.
However, we echoed the same as Aislin Baker, senior governance adviser and governance Team leader, DFID, Bangladesh stressed in the dialogue to ensure aid transparency, in line with IATI principles and the continuous need to develop and further improve fiduciary principals and standards and to guard against fraud and prohibited practices.
Article 13 of the Paris Agreement underscores to be transparent, accountable, inclusive, and participatory at both demand and supply sides of climate finance. The developed countries must be transparent about the delivery of their pledges made to provide the climate funds and also it is equally important for developing economies at the receiving end in using of that fund.
The Paris Agreement particularly obliges that developing countries promote sustainable development and ensure environmental integrity and transparency, and shall apply robust accounting. The adaptation action should also be country-driven, be gender-responsive, preserve ecosystems, have relevant socio-economic, environmental policies, and actions that which are guided by the best available science and the knowledge of indigenous peoples.
In terms of addressing the upcoming risks of the millions of climate vulnerable people, it is a priority to protect their lives and livelihoods. However, these commitments have limited bindings in action due to challenges in addressing governance in vulnerable countries, especially the most vulnerable South Asian countries at the bottom rungs of the corruption perception index (CPI) of Transparency International.
In this backdrop, the South Asian vulnerable countries have utmost requirement of concerted efforts to ensure equity, transparency, accountability, responsiveness, participation, ownership, institutional integrity, and regulatory frameworks integrity in climate finance, especially in utilising the fund for not only resilience of the climate victims but also to achieve the relevant SDG goals.

Climate finance and sustainable development go hand-in-hand


The Paris Agreement on Climate Change and the UN SDGs reinforce the commitment made by developed countries to ensure the needs of developing countries to mitigate climate risks. Towards achieving SDG13 on climate action, especially in climate finance, Goal 16 is fundamental for effective, accountable, and transparent institutions, pertaining to climate finance at all levels.
Particularly, SDG target 13a emphasizes implementing the commitment undertaken by developed country parties to mobilize funds to address the needs of developing countries in the context of meaningful mitigation actions and transparency on implementation, especially from the Green Climate Fund.
Under the Copenhagen Accord, developed countries have pledged “new” and “additional” $100 billion annually by 2025, to cope with adverse effects of climate change, especially in developing countries. The volume of climate finance is likely to increase for the use of developing countries.
Increased transparency, accountability, and integrity are pre-requisites to ensure effectiveness in the implementation of adaptation and mitigation actions to fight climate change. The vulnerable and affected countries deserve their just and equitable share of the climate finance. Also, the UN SDGs and the Sendai Framework on disaster risk reduction embed the Paris Agreement to implement the commitment undertaken by developed countries as soon as possible.
Yet developed countries hardly mention finance in their plans, and unmet financial expectations limit climate action in developing countries and undermine NDCs — the key instrument to implement the Paris Agreement.
Consequently, there is increasing concern over the absence of concrete and time-bound commitments from the developed nations and scanty flow of grant-based public funds. While developing countries’ need is estimated to be $3.5 trillion by 2030 to curb the climate change impacts, altogether only $18 billion will be made available from public sources of developed countries by 2020.
Though attempts have been made to fill the gap created by the US withdrawing from the Paris deal, as per last report of UNFCCC, major carbon emitters such as China, Brazil, France, and Germany have failed to mobilize resources within the agreed timeline for payments.

Countries are expected to contribute according to a UN formula, based on relative wealth and development status, and the US should provide 21% of the core budget as CF. Within the backdrop, the executive secretary of UNFCCC has emphasized: “It is essential that the response of the international community also accelerates and is scaled up, so that countries can green their economies and build resilience to the inevitable impacts of climate change.”
The emission/pollution tax, eg aviation tax, should be imposed by developing countries to mobilize the grant-based climate finance for their sustainable development. Unfortunately, this has not yet been practiced properly, and in the absence of such tools, developed countries are dumping their coals into developing countries, ultimately damaging their ecology and environment, without taking emission liabilities.
Article 13 of the Paris Agreement has included a Transparency Framework emphasized to promote transparency, accuracy, completeness, consistency, and comparability of both demand and supply sides. However, the Adaptation Finance Transparency Gap Report 2016 by Adaptationwatch has identified that “Overall findings suggest that countries are not being adequately transparent in their reporting of climate finance, and at the very least are failing to meet UNFCCC guidelines in their reporting process.”
In the absence of an agreed definition of climate finance, considering the “polluter’s pay principle,” the earlier agreed “new” and “additional” to ODA has gradually been disappearing from the climate finance landscape.
The powerful multilateral development banks, some UN agencies, and experts are promoting loans for climate adaptation in vulnerable countries, in the name of private sector financing. That would ultimately deprive the legitimate rights of the vulnerable people and will lead towards a climate-debt burden.
It is also important to note that developing countries are already using their revenue for climate change adaptation, and individual donation, CSR, zakaat etc could play vital roles to protect recurring loss and damages.
On the other hand, countries that are adversely affected by global climate change also happen to be widely affected by governance deficit and corruption. The Global Climate Risk Index 2018 identified that Honduras, Haiti, Myanmar, Nicaragua, Philippines, Bangladesh, Pakistan, Vietnam, Thailand, and Dominican Republic are among the most vulnerable countries (between 1997 and 2016) in terms of climate change respectively.
However, according to Transparency International’s Corruption Perception Index 2016, Honduras ranked 123; Haiti 159; Myanmar 136; Nicaragua 145; Philippines 101; Bangladesh 145; Pakistan 116; Vietnam 113; Thailand 101, and Dominican Republic ranked 120. The Environmental Performance Index 2018 has revealed that “Good governance emerges as the critical factor required for balancing between distinct dimensions of sustainability, which are environmental health — which rises with economic growth and prosperity — and ecosystem vitality — which comes under strain from industrialization and urbanization.”
Several vulnerable countries including Bangladesh are slow in meeting stringent fiduciary, environmental, and other standards for the direct access from the GCF. That’s why, in case of climate funds, the vulnerable countries should utilize scientific evidence of climate vulnerability, adaptation plans, projections of environmental, ecological and other impacts, and review innovative solutions and practices, prioritizing community-led adaptation.
To ensure the proper delivery of climate funds, strictly following the top-down approach is required for effective coordination among policy-makers and implementers. Subsequently, the level of people’s awareness is still not up to the mark, neither is the capacity of project implementers. Information regarding delivering climate finance should be well-accessible, and government and other agencies’ auditing capacity should be up to the standard. Even the adaptation fund needs to be utilized properly, by strengthening the project monitoring system and engaging communities at all levels of project implementation.
The Transparency Framework under the Paris agreement should follow the “whole-of-governance” approach in climate finance as well as finance for loss and damages. There is no one-size-fits-all approach in meeting SDGs, as industrialized, emerging, and developing, or least developed countries are facing different challenges and opportunities.
Climate finance could be a vehicle to meet SDG targets, but overall greening of the economy will depend on governance status, social equity or inclusion, resource endowments, particular environmental pressures, intensity of human capital investment, employment generation, and well-designed tax/transfer redistribution policies.

Climate finance brings sustainability to the agricultural sector

A necessity for the vulnerable sector

Bangladesh is recognized as one of the most vulnerable countries to climate change because of its geographical location and socio-demographic features. Agriculture is the most significant economic sector in Bangladesh. Despite Bangladesh’s remarkable achievement in improving agricultural productivity, the sector is facing risk from climate change, extreme weather events, and sea level rise to address the adverse impact of climate change on agriculture. Climate change is expected to decrease Bangladesh’s agriculture GDP by 3.1 % each year (World Bank). For example, the damage from climate change effect in 2007 and 2009 cyclones were estimated at around 2 million metric tons of rice, which is enough to feed 10 million people.  Transforming the agricultural sector and building resilience will not be possible if there is no significant amount of capital available for climate-smart investments in agriculture. Moreover, robust financial investments are needed to support the global food system.

Climate finance plays a pivotal role by supporting developing countries to reduce emissions, decarbonize their economies. Climate finance in agricultural sector innovates ways to use climate finance to improve and increases access to finance for smallholder farmers in the agricultural sector while delivering positive outcomes namely increased resilience and reduced emissions intensity. The smallholder farmers are the most vulnerable vast majority of farmers who have little or no capacity to adapt, lack a safety net, and are highly exposed threat in their livelihood and food security risks.

Bangladesh is among the largest recipients of climate funds from International Finance Corporation, World Bank mostly for adaptation in the agricultural sector. Climate finance budget allocation for the Ministry of Agriculture in 2018-19 is Tk13,915 crore where climate-relevant allocation is 39 percent (Finance Division, Ministry of Finance). Adaptations to climate change for agricultural sectors include: resilient variety crops, new and diverse cropping pattern, irrigation techniques, sustainable land management, early warning systems, new research. In this case, climate finance acts as a remedy as it helps to adopt many strategies to cope with the existing situations and those expected to impact the country in the future.

Bangladesh Climate Change Strategy and Action Plan (BCCSAP) mainly focuses on the promotion of agricultural practises focusing on floating gardens, community-based adaptation, advocacy for climate change adaptation measures, coastline and flood defences. Bangladeshi agricultural scientists have encouraged adopting new technologies and developing climate-smart crop varieties, as a means to diversify the agrarian practices of subsistence farmers. Due to the fund, many farmers are reporting experiencing increasing bumper yields. Thus through the use of new practices and new technologies climate change finance has, for now, improved the situation for some farmers.

Examples of adaptation for the agriculture sector

Floating Gardens are a process used in many regions during the monsoon season, ingenious farmers create their floating seedbeds and grow plants on floating gardens. Hydroponics system in Bangladesh, based on floating gardens, was recognized in December 2014 by the United Nations’ Food and Agricultural Organization (FAO) as a Globally Important Agricultural Heritage System (GIAHS) for innovation, sustainability, and adaptability. Farmers in some parts of the country where flood waters can remain for a prolonged period have developed floating gardens in which plants can grow on the water on floating organic beds of water hyacinth, algae and other plant residues. This environmentally friendly traditional cultivation technique utilizes the natural resources of wetlands to grow vegetables and other crops almost all year round, providing numerous social, economic, agricultural, and ecological benefits to the local population. It helps the farmers to cope with the situation.

Sunflower oil production is recently introduced as a quality-based oilseed crop and is gaining popularity among local farmers because of its easy extraction method. Sunflower is categorised as a low to medium drought sensitive crop. The cultivation of sunflower may be suitable in the coastal environment because of its high yield and wide adaptability. In 16 districts of Bangladesh, sunflower oil is being harvested, and the average production is about 1.2t/ha, which is relatively encouraging.

Shrimp farming is a relatively new form of agriculture introduced in Bangladesh on a commercial scale. Shrimp can cultivation is possible in both brackish and freshwater. Currently, shrimp fish cultivation is widespread throughout the coastal region and Bangladesh produces more than 2.5 % of the global production of shrimp and has become the seventh largest exporter of shrimp to the Japanese and USA markets.

Rainwater harvesting is a method of inducing, collecting, storing, and conserving local surface runoff for agricultural production. Farmers in water-scarce areas face difficulties in agricultural output due to unavailability of water at the right time and in the right amount. It is expected that the use of rainwater will save farmers’ money as well as increase production. Rainwater harvesting can be effectively used by farmers to overcome the hardships of nature. The method of rainwater harvesting for agriculture is standard as a result of the irregular nature of rain in many countries and is widely practised in areas where there is an irregularity in seasonal rains. Rainwater harvesting technology help store water in the rainy seasons, for usage, during the drought period.

Agriculture is the most vulnerable sector as its productivity depends on climatic factors like temperature, rainfall, light intensity, radiation and sunshine duration, which are predicted to become increasingly erratic. The number of climate change induced disasters has and will continue to increase over the coming years. Therefore, climate finance mechanisms have the potential to continue to strengthen the links between financial institutions and smallholder farmers by addressing some of the critical financial-sector constraints on agriculture.