COP26: Is corruption on the agenda?

As world leaders gather this week at COP26 to negotiate their climate change commitments, we ask – will they include a credible commitment to fight corruption? Because if there is one thing that will scupper efforts to address the climate crisis, it is corruption. Yet corruption is strangely missing from the conversation. Here are some things that deserve to be talked about louder.

Stealing money from climate and clean energy projects

At a basic level, renewable energy and climate mitigation or adaptation projects are as vulnerable to embezzlement and fraud as any other major public investment. Indeed clean energy is a lucrative business for criminals. When a Sicilian renewable energy entrepreneur was jailed in 2018 for a corrupt scheme involving securing windfarm permits, EUR 1.3 billion in illicit funds were confiscated plus assets including 43 companies, 98 properties and fleets of cars and boats. Did you pay extra to offset your carbon footprint last year? Carbon offsetting programmes and nature-based climate mitigation solutions, like the REDD+ forest conservation scheme and similar internationally funded projects, are a really important part of our global response to climate change. But they are also vulnerable to corruption. They can even fuel it, by channelling cash into contexts with weak governance and few controls. Corrupt elites have a lot of practice in capturing foreign aid. So when there is a lack of transparency and accountability in the allocation and tracking of climate funding – not to mention allegations of financial mismanagement – corrupt officials find it even easier to game the system. And at an even bigger scale are the corruption risks in emissions trading schemes, important to achieving net zero, but only effective when they are free from corruption.

Weakening laws, skewing incentives, undermining investment

Beyond the usual theft of funds, corruption in climate finance is known to “negatively impact climate change interventions, undermining mitigation efforts to reduce emissions and decreasing the quality of adaptation infrastructure”, according to this U4 Brief on Corruption and Climate Finance. Bribery, kickbacks, conflicts of interest and other forms of corruption can among other things:

• Weaken environmental regulations, for example with the result that consumers are sold illegally logged wood, eat fish from a global catch that is alleged to be up to 50 percent illegal, unregulated and unreported, and drive electric vehicles packed with minerals from a mining sector plagued by corruption and other abuses.
• Negatively influence project choices by skewing decision-makers’ incentives towards building unnecessary infrastructure or opting for large and non-renewable energy projects that offer greater possibilities for nepotism and bribes.
• Enable industry lobbies to have undue influence on government policies, which may explain some countries’ reluctance to move away from fossil fuels and even to attempt to water down the findings of scientific reports.

If the above factors weren’t enough to stymie investment in sensible and well-governed climate mitigation and adaptation projects, there’s another: numerous studies such as this one by the EBRD show that “corruption imposes additional costs on investors and increases uncertainty surrounding future costs and revenues”. And we stand now at a point in history in which effective climate-related investment is an essential driver for slowing down and stopping climate change.

Destroying trust, hindering humanitarian action

Whatever happens at COP26 and beyond, we can expect climate change to deliver us more frequent humanitarian disasters in the form of floods, droughts, heatwaves and the resulting mass migration. Yet when disaster strikes, corruption and its co-conspirators – lack of transparency and accountability – hinder humanitarian action. And it’s not just about cash and emergencies, of course, but about the corrupt informal networks and collusion that stifle progress towards the sustainable development goals (SDGs) and destroy social trust.

Can real commitments to fight corruption contribute to climate change goals?

Yes, they can and they must. First, for the money. If corruption deprives countries of funds desperately needed to address climate change and achieve the SDGs, then there is an obvious solution. The World Economic Forum estimated in 2019 that “Corruption, bribery, theft and tax evasion, and other illicit financial flows cost developing countries $1.26 trillion per year.” That is more than 10 times the USD 100 billion that rich countries promised to send annually to help developing countries address climate change under the 2015 Paris Agreement (that promise was broken, but that is a different story). It is more than double even the UN’s highest estimate of annual investment needed for climate adaptation in developing countries, which ranges from USD 140 to 500 billion per year. You could do any number of sums with any number of estimates – the results give the same clear message. Stop corruption, Minister, and there’s your budget for the ambitious climate change strategy that your people and the planet need. With change to spare. Second, fighting corruption is not only about the money. It’s about creating just, safe societies where citizens can trust politicians and institutions to act in their interest. In our work at the Basel Institute, we see that this vision can be very real. We see how anti-corruption and asset recovery efforts can not only mobilise significant funding for sustainable development, but also, as we show in our Working Paper on Recovering Assets in Support of the SDGs “strengthen some of its key foundations of sustainable development, such as the rule of law and strong, transparent and accountable institutions”. Precisely the level of governance that is needed to bring everyone on board in tackling climate change, domestically and internationally.

Corruption affects the whole of humanity and our future world

Corruption is not a standalone topic to be dealt with at corruption-focused conferences or only by government anti-corruption agencies, corporate compliance departments and civil society organisations with an anti-corruption mission. Corruption affects the whole of humanity and profoundly hurts people, especially the most vulnerable, directly and indirectly through its negative impact on climate change. Green corruption destroys our environment, our wildlife and biodiversity, and the natural resources we depend upon for our lives and livelihoods, at a time they most need protection. So as the politicians debate their climate commitments at COP26 this week, perhaps those who really care about the planet and its people can bring corruption into the conversation.