World Bank ‘misplaces’ up to $41 billion in climate funds
The World Bank has lost track of up to $41 billion in international climate funds, according to a recent report.
Oxfam, a British NGO, audited the World Bank’s records and discovered that between $24 billion and $41 billion earmarked for climate change projects have disappeared. The amount equals 40% of all climate funds the DC-based international lender has dispensed over the last seven years. It is estimated that almost $4 billion of the lost funds were donated by the US government.
The financial “misplacement” is reportedly happening because the World Bank records when climate funds are approved for a project but not when they are actually disbursed.
“The Bank is quick to brag about its climate finance billions —but these numbers are based on what it plans to spend, not on what it actually spends once a project gets rolling,” said Oxfam International’s Washington D.C. office chief Kate Donald. "This is like asking your doctor to assess your diet only by looking at your grocery list, without ever checking what actually ends up in your fridge.”
Climate funding: ‘The wild, wild west of finance’
But the problem is not limited to the World Bank. Governments around the world, which collectively raked in over $100 billion last year in climate taxes alone, are “misplacing” billions of dollars in climate funds. Monies earmarked for climate projects often enter a black hole where they are spent without oversight or explanation.
Between 2015 and 2020, developed countries contributed $182 billion towards climate projects. Japan made up the lion’s share, reporting $59 billion in loans, grants, equity investments, and other contributions geared toward climate projects.
According to a Reuters report last year that analyzed only 10% of all contributions, governments are finding ways to include unrelated initiatives in their climate finance reports. The United States, for instance, agreed to lend developers $19.5 million for a posh hotel project in Cap-Haitien, Haiti. Since the hotel was designed with protection against storms and hurricanes, the project was counted as part of the US government’s pledge. Italy spent $4.7 million to open a retail chocolate franchise across Asia and reported it as climate-related, but did not specify how so.
Nine billion dollars of Japan’s reported environmental contributions went to climate projects that used coal and natural gas. The country also reportedly made plans to spend $40 million on projects unrelated to climate, such as car parks, roads, and consulting services.
“This is the wild, wild west of finance,” said Philippines Department of Finance Undersecretary Mark Joven. “Essentially, whatever they call climate finance is climate finance.”
Countries also report ventures that never occur. France earmarked $500,000 for climate initiatives in China, Mexico and Kenya. Even though these projects were later canceled, they remained on France’s report to the UN.
There appears to be no oversight body, either in the respective countries or the UN, which monitors these climate expenditures, and there are no plans to change that.
“Climate negotiators from wealthy countries that oppose stricter rules told Reuters that more restrictions on how funds are spent could limit developing nations’ autonomy in tackling climate change, restrict the flow of money, and hinder the flexibility needed to keep pace with the fast-evolving crisis and the technologies needed to solve it,” reported Reuters.
