Report on Workshop Corruption Risks and Anti-‐Corruption Strategies in Climate Fina
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25-27 May 2015, Manila, Philippines U4 WORKSHOP REPORT Report on Workshop Corruption Risks and Anti-Corruption Strategies in Climate Financing – Good Governance towards Integrity, Transparency and Accountability in Achieving Objectives in Climate Mitigation and Adaptation May 25 - 27, 2015 | Asian Development Bank | Auditorium C 6 ADB Avenue, Mandaluyong City, Metro Manila 1 25-27 May 2015, Manila, Philippines U4 WORKSHOP REPORT Corruption Risks anD Anti-Corruption Strategies in Climate Financing – GooD Governance TowarDs Integrity, Transparency, anD Accountability in Achieving Objectives in Climate Mitigation anD Adaptation Facilitators Kendra Dupuy Aled Williams Host U4 Agency GIZ Venue Asian Development Bank Headquarters No. 47 Participants Length 2.5 days Summary The objectives of the workshop agreed with This two-and-a-half day workshop involved staff from U4 partner agencies present in the host U4 partner agency (GIZ) and ADB were to: Manila (Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), British Embassy); representatives of the • Develop a common and general Asian Development Bank (ADB) (from understanding of climate finance Resident Missions and headquarters); flows. representatives from government agencies • Develop a common understanding of (Department of Environment and Natural corruption risks, causes, and Resources; Department of Energy; consequences in climate finance Department of Public Works and Highways; flows and uses, with reference to Department of Agriculture; Department of natural resource management. Interior and Local Government; Department • Examine existing and potential anti- of Transportation and Communications; corruption strategies to mitigate Office of the Ombudsman); representatives corruption risks in climate finance from civil society organiZations and in natural resource (Transparency International-Philippines management. chapter; WISE); and other relevant • Formulate concrete stakeholders (Anti-Corruption Commission recommendations for how to of Bhutan; USAID; University of the mitigate corruption risks in climate Philippines Ateneo School of Governance; finance flows to, and within, the Institute for Climate and Sustainable Cities). Philippines. 2 25-27 May 2015, Manila, Philippines U4 WORKSHOP REPORT The following is a summary of the main corruption, such as poverty and the role of issues covered in sequential order according social norms, were presented. A framework to the workshop proceedings. (See Annex 1 for understanding why corruption occurs for the full agenda.) The workshop’s main was presented. First, Klitgaard’s formula for conclusions are provided at the end of this how corruption occurs was presented; this report as well as in the group exercises formula posits that corruption is likely to (found in Annex 3), as is a summary of occur in situations in which there is a high participants’ feedback (Annex 2). A list of level of monopoly power, a high level of key resources on climate finance discretion over some function, and a low transparency and accountability is in Annex level of accountability. Second, principal- 4, and a list of the participants can be found agent theory was introduced as a further in Annex 5. way to understand how and why corruption occurs. In this framework, a principal has delegated power to an agent. When the agent’s interests and motivations diverge Welcome from those of the principal, and when there is an information asymmetry between the The workshop was opened by Claudia two parties due to the principal’s inability to Buentjen, Principal Public Management fully monitor the agent, corruption is likely Specialist and OIC, Technical Advisor to occur. The presentation concluded with (Governance), ADB, and Bernd-Markus Liss, an overview of the costs and consequences GIZ Philippines Principal Advisor Climate of corruption on political, social, and Program, Focal Point Anticorruption. They economic outcomes, and a brief overview of welcomed participants and outlined the the trends regarding corruption in the background and rationale for the workshop Philippines’ context. and the effective partnership between U4, ADB and GIZ to organiZe the training. Session 2 – Trends and Session 1 - Introduction Patterns in Climate Finance Aled Williams, Senior Advisor, U4/CMI Kendra Dupuy, Advisor, U4/CMI, gave a gave an introductory presentation to U4, presentation on general climate finance and solicited the participants’ expectations terms and patterns. She first presented about the workshop. definitions of climate finance, which is understood as local, or transnational Kendra Dupuy, Advisor, U4/CMI gave an financing, drawn from public, private, and introductory presentation on corruption. alternative sources of financing that is The presentation started with a group designed to lower emissions, fund exercise called “Is it corruption?”, wherein adaptation, and to reduce the impact of participants were given nine questions and climate change. Climate finance also entails asked to determine whether the behaviour the flow of money from developed to described in the questions was corruption, developing countries. There is no commonly and why or why not. See Annex 3 for a copy accepted definition of climate finance, nor is of this exercise. there any commonly accepted system for tracking all climate finance flows. Academic and practitioner definitions of corruption were provided, and the different Climate finance has been an integral part of types of corruption (grand and petty) as climate change discussions from the mid- well as corrupt behaviours were defined 1990s. The 2009 Copenhagen Accord and discussed. Theories about the causes of committed developed countries to 3 25-27 May 2015, Manila, Philippines U4 WORKSHOP REPORT mobiliZing $100 billion per year by 2020 to The presentation concluded with a address the needs of developing countries discussion of the link between climate to mitigate and adapt to the effects of finance and natural resource management. climate change. This commitment was Natural resources are impacted by climate reconfirmed at the 2010 Cancun conference change, and resource use can aggravate of parties under the United Nations climate vulnerability. Natural resources Framework Convention on Climate Change such as oceans and forests will play an (UNFCCC). important role in the response to climate change, and smart resource use can lead to Climate finance is important, as large good development outcomes. However, investments are required to reduce natural resource sectors are often emissions and to adapt to the effects of characterized by high levels of corruption in climate change. The poorest countries will many developing countries. Corruption in be hardest hit by climate change as they resource-related climate finance contributes have fewer resources, and climate change to environmental destruction and the threatens to deepen poverty. Climate improper use of resources – which can finance will help poor countries to manage enhance, rather than mitigate, climate the trade-offs between the economic growth change. needed for poverty alleviation and reducing greenhouse gas emissions. Michael Rattinger, Climate Change Specialist, Climate Change Coordination The sources, channels, and types of climate & Disaster Risk Management Unit, ADB, finance were presented. These include gave an overview of the many sources of, public and private sources that are and funding instruments channelling, distributed in a variety of ways and through climate finance. The Philippines is among a variety of funding institutions and the top five recipients of climate finance in mechanism. The climate finance Asia and the Pacific region. He noted that architecture is extremely complex, with there is an acute need to make sure that many actors, institutions, and flows at there is smart use of public money for international, national, and sub-national climate finance, whether that money comes levels. The majority of climate finance from international or domestic sources. (58%) comes from private sources, while the rest come from public sources. Public The ADB emphasises in its long-term contributions come from national and strategic framework the importance of multilateral development financial inclusive economic growth, regional institutions and development cooperation integration, and environmentally agencies, national and multilateral climate sustainable growth. Environment and funds, and government to government climate change is one of ADB’s ten strategic flows. Developed to developing country priorities. ADB has five strategic priorities flows are primarily public money. for its climate change work: to scale up clean energy; to encourage sustainable Some of the world’s major greenhouse gas transport and urban development; to emitters are located in the Asian region, manage land use and forests for carbon including the People’s Republic of China, sequestration; to promote climate-resilient India, Indonesia, and Japan. East Asia and development; and to strengthen policies, the Pacific is now estimated to be the largest governance, and capacity. global destination of climate finance flows (30% of the total), most of which funds ADB has a number of active mitigation mitigation activities. The Philippines is a initiatives that fall under the previously major global recipient of climate finance. mentioned five strategic priorities. ADB also has a number of adaptation initiatives, such as mainstreaming climate resilience in core 4 25-27 May 2015, Manila,