IN-SESSION

WORKSHOP ON METHODOLOGIES FOR REPORTING FINANCIAL INFORMATION BY

PARTIES INCLUDED IN ANNEX I
6th JUNE, 2015, BONN, GERMANY






WHY A METHODOLOGY TO IMPROVE MEASURING, REPORTING AND VERIFICATION OF CLIMATE
FINANCE IS NEEDED?

Through E3G and the Latin-American and the Caribbean Climate Finance Group1, (GFLAC for its
name in Spanish) experiences working in Latin-American countries, it has been found that the lack
of a robust and harmonic system under the UNFCCC to track and understand climate finance
undermines its role in supporting effective implementation of climate action. This disincentive the
design and establishment of the tools at national level required to build transparency and
accountability in relation to those flows relevant to each country.
Many developing countries are increasing efforts to better align international climate support to
national priorities and strategic plans. E3G work on Strategic National Approaches to Climate
Finance has found that country driven approaches are key to ensure capacity for addressing
country specific market gaps, catalysing domestic investment and building absorption capacity and
potential for scaled up investment by the private sector. However, as found in various Latin-
American countries, efforts at national level face various challenges to advance on the climate
agenda, some of which are the result of a fragmented international ecosystem for climate finance
and an existing mismatch at national and international level of resources and expectations
between providers and recipients of climate finance.
For that reason, a harmonic methodology to measuring, reporting and verifying climate finance among
donors and recipient countries, according to the work of E3G and GFLAC will help to:

Improve quality and access to climate fiannce flows information to improve the decision-making
Build trust between donors and recipients
Identify gaps on climate financing
Identify areas of opportunity to leverage resources (private and innovative sources)
Improve the effective use of the resources
Avoiding duplication of resources and optimize those that are available
Create synergies among key actors
To inform decisions for effective public policies to mitigate and adapt to climate change

In order to improve transparency, accountability and civil society participation in building an effective
financial architecture to deal with climate change, the GFLAC created a methodology for the analysis of
national and international climate finance flows. The methodology aims to monitor not only the flows
that countries receive from international financing and cooperation, but also flows that countries spend
to combat climate change through their public budgets.

1 Group

of civil society organizations and academic institutions seeking to improve the transparency,
accountability and citizen participation to build an effective climate finance architecture to deal with climate
change. For more information about its work visit www.gflac.org.

Having started in Mexico, the GFLAC expanded in 2012 to other countries in the region. Currently 9
countries in the region (Argentina, Bolivia, Chile, Ecuador, Guatemala, Honduras, Mexico, Nicaragua
and Peru) have or are participating in the application of the methodology, having identified lessons and
challenges for better and more effective execution of funds associated with climate change, for both
mitigation and adaptation. Given the lack of a methodology and a general understanding of how to
classify climate finance flows?, What is the funding for adaptation and mitigation? And other aspects,
the GFLAC established criteria to identify climate change related activities, same as set forth below:
1. CRITERIA FOR THE IDENTIFICATION OF CLIMATE CHANGE RELATED ACTIVITIES, GFLAC.
1. Actions speci-ically assigned and / or labeled for climate change: these actions are those that
were created exclusively for addressing climate change, ie, they are in addition to the actions that
were being done before. Example: Programs climate change, climate change commissions, or any
action whose stated objective is the Cight against climate change and / or is entitled as such.
2. Actions that reduce greenhouse gases emissions in emitting sectors by country
(mitigation) (take into account actions stipulated by the Intergovernmental Panel on
Climate Change (IPCC) as a baseline).
3. Actions that reduce vulnerability and promote adaptation to climate change (based
on the actions promoted by the IPCC).

4. Actions that have both impacts, emission reduction potential and reduction of
vulnerability and increase resilience potential.
5. Exclusion criteria: Activities that can increase the problem or that have a
negative impact in the environmentl and in the society, (nuclear power, large
hydropower, mining activities, etc.:)

ANALYSIS OF INTERNATIONAL CLIAMTE FINANCE FLOWS: BARRIERS AND

RECOMMENDATIONS.
For purposes of this workshop it will be presented barriers and recommendations found in the analysis
and monitoring of international climate finance flows, some of them equally important for the analysis
of public finance flows allocated at the national level. To better understand how the methodology is
applied, it is important to know what sources of information the GFLAC used to find information on
climate finance:
1.
2.
3.

Public sources (reports, balance sheets, and all the documents that are available in websites of aid
agencies, multilateral banks and other financial players that are publicly accessible)
Requests for information and / or interviews
Access via government information systems

BARRIERS FOR ANALYSIS OF INTERNATIONAL CLIMATE FINANCE FOWS FROM DONORS AND
RECIPIENT COUNTRIES PERSPECTIVE
FROM DONOR COUNTRIES
1. Direct-Indirect Financing: There is no clarity
about what is part of the finance provided. Is
important
to
distinguish
between
administrative costs of the donor country
(and / or intermediary agents) and the funds
that benefit the project or the recipient

FROM RECIPIENT COUNTRIES

1. Decentralization and dispersion of
information: Host countries do not have robust
systems that centralize the information about the
finance received, generating dispersion.

country directly.
2. Conceptual limitations about climate
change: There are no general criteria among
donors to define what is considered as
mitigation and adaptation for climate change
(particularly complex in adaptation).

2. Conceptual limitations about climate change:

Recipient countries have different understanding
about what climate change is, due the lack of
common and harmonic concepts. This is also
relevant considering the national context.

3. Delivered Finance: There is no clarity about 3. Coordination, collaboration and internal

the difference between climate finance communication: lack of communication between
institutions and agencies at national and sub-
committed, allocated and executed.
national level that do not allow the exchange of
information about climate finance flows received.
This generates in many cases duplication of
projects at the national level.
4. Type of Funding: Lack of information about 4. Type of funding: there is a lack a information
the type of funding received (grants, loan, about the type of funding received, but based in
information analysed most of the developing
guarantee, etc.)
countries are receiving more loans that grants,
generating debt for the countries
5. Double counting: It is identified that some 5. Evaluation of funding: There is no robust
countries count bilateral contributions and assessment of the use of funds received.
contributions to other funds doubly.
6. Transparency and accountability: Few
countries have information systems that are
publicly available in a clear and transparent
way.

6. Transparency and accountability: No public

schemes to know the total flows received on
climate change in a clear, transparent and public
way.

RECOMMENDATIONS BASED ON GFLACs EXPERIENCE

FOR DONOR COUNTRIES
FOR RECIPIENT COUNTRIES
1. Common criteria about climate change 1. Common criteria about climate change
definition: For the best monitoring and definition: For the best monitoring and reporting
reporting is necessary to have a common is necessary to have a common characterization
characterization and categorization of actions and categorization of actions to be considered as
to be considered as climate change. Is climate change. Is important to have exclusion
important to have exclusion criteria about criteria about those activities that will not be
those activities that will not be considered as considered as climate change because of their
climate change because of their negative negative externalities (nuclear energy, large
externalities
(nuclear
energy,
large hydroelectric dams, extractive industries such as
hydroelectric dams, extractive industries such mining, among others that endanger the social
as mining, among others that endanger the development and environmental protection).
social development and environmental
protection).
2. Breakdown of information: Provide detailed 2. Institutional arrangements: To designate a
information about the climate finance provided, national institution with full mandate to
including information such as:
concentrate information about the climate flows

Project name; Amount (local currency and US received, documenting the same information:
Project name; Amount (local currency and
dollars);
Source
(specify
{bilateral
US dollars); Source (specify {bilateral
Cooperation Agency) {specify multilateral
Cooperation Agency) {specify multilateral
mechanism) and multi-donor, ex. Climate
mechanism) and multi-donor, ex. Climate
Investment Fund; Intermediate (if applicable
Investment Fund; Intermediate (if applicable
example, UNEP, UNDP); Destination
example, UNEP, UNDP); Destination
(National, state or provincial, social sector);
(National, state or provincial, social sector);
Project executed by (institution and / or
Project executed by (institution and / or
organization); Implementation status of the
organization); Implementation status of the
resource (committed, paid, executed, and
resource (committed, paid, executed, and
others); Type of funding (grant, loan, etc.);
others); Type of funding (grant, loan, etc.);
Temporary financing; This tracking period
Temporary financing; This tracking period
covered in each country.
covered in each country.
3. Coordination intra and inter cooperation 3. Coordination, collaboration and cooperation:
agents: create and maintain communication Encourage greater involvement of ministries
and coordination schemes among countries beyond environment in reporting systems of
climate finance. This must be based on the
and other financial agents to avoid
mainstreaming of climate change in the planning
duplication of projects and encourage of the countries (including public budgets).
complementarity among them.

4. Update Information: Update information on

financial flows issued at least annually.
5. Transparency, accountability and social
participation: Publish information about the
financial flows transferred in a public, clear and
transparent way. Preferably on websites.
Encourage participation in the analysis and
monitoring of the information provided. Create
advisory councils of climate finance.

4. Update Information: Update information on

financial flows received at least annually.
5. Transparency, accountability and social
participation: publish information on financial
flows received in a public, transparent, accessible
and clear way, making an annual report. This
through websites (within the agency in charged
with link to other institutions) and elaborate
public reports. Encourage participation in the
analysis and monitoring of the information
received. Create advisory councils of climate
finance.

6. Criteria effectiveness in the MRV: Include
criteria for analysing effectiveness and impact of
the financial resources provided to warrant a
transformational change in the use of resources
(population served, emissions reduction, capacity
building, etc.). The analysis must be based on ex
ante and ex post vision.

6. Criteria effectiveness in the MRV: Include

criteria for analysing effectiveness and impact of
the financial resources provided to warrant a
transformational change in the use of resources
(population served, emissions reduction, capacity
building, etc.). The analysis must be based on ex
ante and ex post vision.

CONTACT:

Sandra Guzmn, General Coordinator, GFLAC sguzman@gflac.org
Marcela Jaramillo, E3G, marcela.jaramillo@e3g.org