Inadequate reporting and tracking of climate finance data leads to reduced donor accountability. Ahead of COP27, this briefing examines five major issues.

In the pursuit of effective and fair climate action, ambitious climate finance pledges are welcome. Aiming for a substantial target should induce wealthy countries to provide more assistance to those with insufficient resources to avert, minimise and address the impacts of climate change, and hopefully incentivise greater action all round. However, targets are meaningless without a robust and transparent tracking and reporting mechanism. Pledges are difficult to track, and it is impossible to hold countries to account if their progress cannot be measured. Without a standardised approach to accounting and accountability, those most in need of climate finance will continue to be short-changed.

Currently, the data underpinning our understanding is limited at best and at worst, misleading. This undermines its transparency and accountability which are critical to delivering impact. It has also eroded trust between those who have committed to providing climate finance, and those who should be receiving it. That is why it is essential that at COP27, the tracking of these flows is higher up the agenda. Wealthy countries should not have the discretion to measure their commitments in the most politically convenient way. They shouldn’t be able to obscure the link between climate finance and other types of funding, so that it is impossible to tell what is new and what has just been relabelled.

A strong reporting framework that supports mutual accountability would be universally beneficial, helping ensure that bigger commitments translate into more spending, and allowing donors to coordinate their action. To drive effective and fair climate action, ambitious spending targets and pledges must be underpinned by a robust and transparent tracking and reporting mechanism. In advance of COP27, this briefing provides an overview of some of the biggest problems with existing climate finance data to highlight what needs to change in order to reach the next target. It focuses on the following five issues: 1. The lack of uniformity among reporting methods 2. The absence of detail in the reporting of different climate finance modalities 3. The inaccuracy of spending estimates 4. The lack of specificity in regard to transaction details 5. The absence of transparency on finance additionality.