One of the most critical – and contentious – issues that the COP-16 will address in the current round of negotiations in Cancun will be how to establish a climate change finance regime. Given the substantial investment of resources – financial, political, technical – that will be required to address climate change, and the potentially devastating impacts of failing to do so, it is imperative that the flow and use of funds for mitigation and adaptation are transparent, participatory, and accountable.
- Contributing countries should adopt a standardized financial reporting format with common definitions and methodologies to quantify climate finance based on components of existing systems. (However, in launching an effort to either revise or initiate a new means to collect finance data, countries that are Parties to the Convention will need to determine the kinds of data a climate finance reporting system should provide, which will determine the extent of any expanded data collection effort and its likely cost.)
- Contributing countries should establish a more robust process to review reported data. This could include launching voluntary pilot projects to establish review processes, using independent, nonpolitical technical financial experts; formally establishing clear rules and guidelines for civil society participation in the review process; and improving record keeping so that data between countries can be compared.
- Parties to the UNFCCC should make a long-term commitment to investing in a robust reporting system. The introduction of an improved reporting system will require this commitment and take time to implement. In the short-term, in particular for “fast start” funding, countries need to build on the current reporting and address some of the factors leading to inconsistent reporting in order to lay the foundation for a more transparent and accountable climate finance regime.
- As part of overall confidence building, it is important to ensure that financial support to developing countries is accounted for in a clear and transparent manner during the “fast start” period through existing reporting systems and through short-term efforts on the part of multilateral institutions and donor countries. Lessons learned from this experience could shape the implementation of new long-term reporting and review systems.
- The parties should also develop a process and format for governments receiving climate funds to report complete information on their use of the funds and encourage all governments to participate in this reporting process. These reporting formats should be aligned with donor reporting formats and should ensure complete public access within countries to this comprehensive data.
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