Climate Finance Leader Accused of Failing on Transparency

One of the basic tenets of responsible accounting and finance is transparency. But according to a new report from Oxfam, the World Bank, one of the principal engines for climate finance globally, is not meeting transparency expectations.

Clouds forming over a climate finance giant

Oxfam found a concerning lack of transparency in the World Bank’s climate financing reporting processes. The nonprofit found that at least $17.2 billion in climate financing claims for Bank-funded projects could not be independently verified, and in fact could be off by as much as $7 billion — or 40 percent of investments. That number could be either over- or under-accounted for. 

The Bank has countered that with its use of accepted joint multilateral bank development (MDB) methodology, some of this apparent discrepancy may be related to the fact that some projects are not strictly climate-related, but rather have climate co-benefits. For example, if the Bank is funding the building of a school, the school could be built using climate-resilient building codes or with distributed generation. Further, the Bank states that some of its projects may not appear to be climate finance projects on their face — such as poverty alleviation initiatives — but they feed into building climate resilience through their very nature.

But accounting has to be more robust, as the Oxfam report points out, even with these caveats. According to a 2020 joint report, eight MDBs — including the World Bank…