International climate finance is the main means of reconciling equity (developing countries have contributed little to climate change but are extremely vulnerable to its effects) with effectiveness and efficiency (a large share of the required mitigation is required in developing countries if global emissions targets are to be met).
Climate finance also presents a huge opportunity for developing countries to gain from win-win investments in adaptation and mitigation.
Transparency and accountability for climate finance is key to unlocking these gains. The International Budget Partnership recognizes that funds to respond to climate change are likely to be the single largest source of development finance for the foreseeable future and has initiated a program of activities to promote climate finance transparency and accountability.
Recognizing this, ‘climate budgeting’ by governments has developed over the last decade, particularly in the Asia-Pacific region, with the support of development partners such as the UNDP and the World Bank. An important motivation has been to package public investment projects for external financing.
This requires new systems to track government climate-related expenditures because they cut across existing expenditure classification systems – in the same way that gender-related or poverty-reducing expenditures require specially designed tagging systems if a country wishes to identify and report all related spending.
Following the world’s first Climate Budget in Nepal in 2013, climate budget tagging (CBT) systems have been introduced in about 20 countries. Many have published climate budgets parallel to the government’s annual budget using a variety of specially designed CBT methodologies.
While CBT is not costless, the benefits in many countries are likely to far outweigh the costs given the scale of climate finance and the long-term nature of climate change.
However, two things are noteworthy.
First, no country that has published a climate budget to date has disclosed environmentally harmful expenditures. Climate budget reports only cover those expenditures that are intended to be favorable for the environment.
Yet governments around the world continue to spend vast sums on direct subsidies and tax concessions for brown activities while paying lip service to their green credentials.
Second, the nearly 40 countries that have issued sovereign green bonds are contractually committed to transparent project evaluation and selection criteria and to the regular publication of detailed reports on how the funds have been spent, and on their impacts e.g., reductions in greenhouse gases. They provide no such assurances regarding all their other environment-related spending.
This means that countries issuing green bonds are now committed to providing far more transparency on their environmental spending to private investors than they are to their own legislatures, taxpayers, and citizens.
How can this greenwashing be offset?
One approach recently advocated is for in-country civil society organizations to publish their own ‘Green Guide to the Budget’ using publicly available information in existing documents and reports.
In this way, a picture could be built of the volume and allocation of public resources directed both to environmentally favorable and harmful activities, set in the context of the government’s environmental commitments and framed by cross-national benchmark indicators.
A Green Guide to the Budget could also incorporate civil society recommendations on green tax and expenditure policies to improve environmental outcomes and environmental justice, and a push for more transparency. It could be a vehicle to give more voice to women, indigenous peoples, and other marginalized groups that are often the most adversely affected by climate change and would help to offset the inside influence of fossil fuel and other environmentally destructive lobbies.
There are obvious capacity challenges, but a civil society initiative of this type may have the potential to shift the needle in some countries on accountability for environmental stewardship.
By Claire Schouten, Senior Program Officer, International Budget Partnership and Joe Powell, Deputy Chief Executive Officer, Open Government Partnership
Restoring the notion of government of, for and by the people will be essential as we seek to renew societies and build resilience in the post-pandemic global recovery. This crisis exacerbated and exposed inequality and injustice around the world, hitting the most vulnerable hardest. Now is the time for governments to make more robust investments in rebuilding societies.
These investments are too important to be made opaquely and without public input, especially when inequality and perceived corruption have already undermined public trust in many governments. In recent years, governments globally have made commitments to be open about what they’re doing with the public’s money.
Fiscal openness is a mainstay of the open government movement. In the last decade of the Open Government Partnership (OGP), over 90 percent of OGP members have made a total of 671 fiscal openness commitments – more than nearly any other policy area. Fiscal openness is not just a consistently popular policy area in OGP, it’s also one of the four core eligibility criteria for membership, based on data from the Open Budget Survey. Redoubling those commitments, and most essentially, making sure they translate into accountability – so that communities have a say in public spending and can ensure governments use scarce resources for the public good– has never been more important to our democratic future.
The good news is that these efforts are paying off. As per the Open Budget Survey, we’re at the highest level of transparency since the International Budget Partnership started assessing open budget practices more than fifteen years ago. In the 77 countries assessed in every round between 2008 and 2019, the average global score on budget transparency increased by 20 percent. The latest OGP Vital Signs research also shows that OGP countries that have made open budgeting commitments – especially if they are ambitious and over multiple action plans – have improved their scores more than other countries.
However, progress has also been inconsistent with fluctuating performance in too many countries. Among OGP members, there are now some countries that even risk falling below the core eligibility criteria because they have slipped on their fiscal transparency scores. COVID exacerbated this volatility as many governments have not been as transparent with relief spending as they could be. Despite all of this, there is room for quicker, more sustained progress. If countries around the world simply published budget documents that they already produce for internal use, there would be transparency gains globally of 20 percent. Governments can also focus on proactively providing information that citizens want, such as information on service delivery.
Going beyond transparency
There is also growing recognition that transparency alone is insufficient, that opportunities for public participation and strong oversight are also central to accountable government. Spaces are needed for informed public debate and for those most likely to be adversely affected by inequitable budgets to be involved. Strong oversight by both legislatures, national audit offices and other oversight actors is needed to hold the executive to account throughout the budget process and ensure budgets are fully implemented in line with stated objectives.
As governments launched massive spending measures to address the impacts of the pandemic, some countries have shown that a more transparent, inclusive and accountable way of managing the public purse, even during an emergency, is indeed possible.
In the Philippines, a commitment to hold a series of public consultations called Dagyaw 2020—promoted under the aegis of the Open Government Partnership—was repurposed to ensure continuing public dialogues during the COVID crisis on government response policies.
In South Africa, the civil society-led Asivikelane campaign has highlighted severe public service shortages in South Africa’s informal settlements. Using a simple but effective survey that is implemented via text messages and targeted advocacy, the campaign has already improved access to water, sanitation, and waste removal services from municipal governments affecting more than one million people.
These good practices demonstrate that speedy policy responses do not have to undermine accountability. They provide a useful roadmap for governments to include citizens and critical oversight institutions in deeply consequential spending decisions in emergency times and beyond. By planning and implementing spending in a more open and collaborative way, and keeping citizens informed, governments can ensure public spending is more effective and equitable. Perhaps most importantly, they can strengthen social capital and expand civic space so that all people feel heard and trust that public funds are spent in the public interest. Governments should take heed of these approaches in their ongoing relief efforts. For instance, the EU’s landmark Recovery and Resilience Facility – an essential mechanism to combat the challenges faced by EU member states as they rebuild economies and livelihoods in the wake of the pandemic – should model these good practices. Given the unprecedented size and scale of the funds, it will be crucial to embed enhanced transparency, accountability and civic participation mechanisms to ensure these funds have their intended impact.
We have an opportunity to forge new alliances and strategies that shift politics. It’s an all-hands-on-deck approach to countering authoritarianism and promoting local accountability solutions. It consists of:
Refined political strategy. For public resources to contribute to a more just and equitable society, we need a deeper understanding and response to the political economy of public resource decision-making and implementation. Powerful interests that have built social, political, and economic structures that concentrate wealth and privilege and exclude marginalized groups are at the root causes of deprivation. Further opening up budget processes in meaningful ways requires developing alliances and partnerships that build countervailing power, so that public resources are spent to tackle poverty and inequity. Progress on open spending practices will also generate important information for combating corruption in public contracts and company ownership.
New spaces for impact. New spaces are emerging as opportunities for impact on big political issues of our time. They include meaningful civil society participation in revenue debates and spending monitoring; bridging budget and environmental actors to ensure that recovery funds contribute to a sustainable and green transition and that climate change funds serve vulnerable communities; and strong connections and real gains at the subnational level of government, with a focus on service delivery. Civil society has been a vanguard in carving out new spaces to inform government decisions in a meaningful way– now it is time for national and local governments to scale up and formalize channels for greater public participation on these mission critical issues.
New opportunities for powerful alliances. We can build a robust accountability ecosystem that fosters trust and strengthens democracy. Let’s bring together citizens, social movements, state accountability institutions such as national audit offices and executive ministries to foster a governance system that works for all.
As the Open Budget Survey and good practices above illustrate, it is notable that countries across income levels and geographies have been able to chart new directions to manage public funds in a more accountable and inclusive way. Where there is a will, there is a way. A more inclusive approach is not only possible, but desirable if we are to advance more resilient and democratic societies in which public funds advance the public interest. The Open Government Partnership can help by enlisting new allies, building broad coalitions across government and civic actors with legitimacy and power to rise to the challenges we face and are likely to face going forward.
This article also appears on the Open Government Partnership’s website. Read it here.
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The Open Budgets Blog features content related to transparency, participation, and accountability in government budgeting; civil society budget analysis and advocacy; and public finance management.
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