By Kei Namba
This blog is based on our partners’ work and responses at the webinar “Integrity Readiness of Water Sector for Climate Change Finance – Challenges and Opportunities”, organized by GIZ on August 28th, in partnership with Green Climate Fund Independent Integrity Unit (GCG-IIU), Central American Bank of Economic Integration (CABEI), and WIN.
Thank you to all partners and participants!
See recording:
Water plays a pivotal role in how the world mitigates and adapts to climate change impacts. Extreme weather such as floods, droughts, and heatwaves caused by climate change not only affect water availability and quality but also hinder access to safe drinking water, especially for the most in need.
For these reasons, global climate finance increasingly flows towards the water sector, especially for climate adaptation processes. As all major financing flows however, climate finance to the sector is vulnerable to corruption.
The relatively untested nature of funding sources for climate finance, the increment in the number of interested parties (e.g. energy and agricultural sectors), as well as the rise of multilateral climate finance and the emphasis on mobilization of the private sector boost the potential for corruption.
0% corruption, 100% climate action
Water infrastructure development for climate adaptation is prone to corruption, bribery, and nepotism, especially at the procurement stage. Without integrity and strong governance standards, climate finance can be diverted from vital prevention and adaptation activities into private bank accounts and vanity projects, often leading to catastrophic effects for vulnerable countries.
In response, there is a need to promote integrity readiness of the water sector for climate finance, by building capacity of all relevant actors and raising awareness of red flags for corruption throughout the project lifecycle.
“Integrity readiness is highly important to ensure that these funds are adequately used to safeguard vulnerable communities; who may be affected the most from the consequences of lack of integrity in climate adaptation processes. The water sector already has complex fragmented institutional arrangements. With added complexity comes added risk. That is why integrity readiness within institutions absorbing climate funds and among stakeholders at an early stage is important. We need to prepare for the changing architecture of the water sector.”
– Binayak Das, Programme Coordinator at WIN
The aim is to ensure corruption cannot compromise effective climate action.
Integrity readiness – building block 1: preventive action and capacity building
Green Climate Fund (GCF) is an operating entity of the Financial Mechanisms of the UN Framework Convention on Climate Change. It provides the largest amount of funding to water-related projects in climate finance, approximately 13% of its portfolio.
The GCF Independent Integrity Unit (IIU) registered 40 cases of integrity violations in its 2019 Annual Report. These included project-related fraud, corruption and collusion; staff misconduct such as abuse, harassment, conflict of interests and retaliation against whistle-blowers; and others. The cases marked a 90% upsurge in the number of investigations by the IIU, in comparison to those of the previous year.
The trend is of concern and confirms that increased funding may lead to increased risk. Preventing and managing these risks is essential, an approach GCF-IIU is working actively exploring, in addition to implementing strict policies and a strong control framework.
“We are developing and institutionalizing strong preventative measures as well as investing in capacity building to address risks. The most crucial future development is Proactive Integrity Reviews (PIRs) methodology based on a data-driven integrity risk assessment. We think that descriptive data analytics would help to understand what it is going on from the integrity perspective.”
– Ibrahim Pam, Head of the Independent Integrity Unit, Green Climate Fund.
There are a number of other tools and methods to address integrity risks, from both the water sector and the climate sector, that can be applied and adapted for water-related projects for climate finance. The Integrity Management Toolbox, is one such water sector tool that is adaptable and has already been used by water sector government agencies and river basin organisations.
Integrity readiness – building block 2: involving local communities and civil society
In the water sector specifically, corruption directly affects the most vulnerable. From project selection to implementation, there is also a high risk that vulnerable communities and those most directly touched by an intervention are not able to participate. It is crucial to safeguard and include local communities and civil society at all levels and stages.
“Understanding what the local population are seeking from a project and bringing people’s voices is one of the biggest challenges, but it is fundamental. In most of my experiences, there are conflicts of interest with the private sector. It is important to have close auditing and monitoring with due diligence. We must also have the conversation with the beneficiaries of climate finance, not just follow the procedures.
– Rennie Valladares Alcerro, Country Analyst at CABEI
Integrity readiness – building block 3: building partnerships
In addition to promoting the participation of vulnerable communities and civil society, we need more knowledge-based partnerships to collect data and information, to increase transparency and jointly curb corruption in water-related projects for climate finance.
“We need to work in partnerships and coalition. It is also key to keep the media involved. If you are looking for solutions and measures, it is necessary to think about what we can do to improve together, instead of just pointing out that corruption is happening.”
– Binayak Das, WIN Programme Coordinator
Key takeaways
0% corruption, 100% climate action and commitment
A data-driven approach, as well as strong preventative measures and capacity to address risks is important.
Zero tolerance, honesty, and professionalism must be core values.
Working with beneficiaries and in partnerships is key
About the author:
Kei Namba is an independent consultant, specializing in water governance, climate, and environmental politics. She has been working with WIN on several projects including water integrity and climate finance, Water Integrity Global Outlook (WIGO 2021), building strategies for Asia-Pacific, and promoting WIN’s tools .
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