by Howard T. Anderson
Pressure to do more about climate change is everywhere, but while debates on the subject are frequent and often contentious, they seldom focus on the threat that corruption poses to preventing and mitigating climate-related disasters. A recent project by the United Nations and the World Bank can help draw attention to this problem.
The United Nations Office on Drugs and Crime (UNODC) and the World Bank have prepared a draft report intended to inform “anticorruption and climate change policymakers and practitioners about existing corruption risks and further areas for research.” (UNODC website post, “The corruption climate: how corruption stands in the way of the response to climate change,” June 18, 2024) The report, Addressing Corruption Risks to Safeguard the Response to Climate Change, Discussion Draft II, is scheduled to be published in final form in November 2024.
As observed in the draft report (p.4), climate change-related corruption “is a broad subject area,” affecting “a wide range of activities in the extractive industries and in the spheres of environmental and biodiversity protection,” among other areas. As the UNODC’s June 18 post summarizes, corruption can “distort decision-making and the implementation of key policies. Large financial flows, such as those in renewable energy projects, climate mitigation funds or responses to climate emergencies, among other factors, make this sector extremely lucrative for exploitation:”
These scenarios reveal a harsh irony: while vast sums are pledged to fight climate change, corruption ensures that these funds do not reach those who need them most. Across the globe—in the global north and the global south—similar stories unfold. In countries where the capacity for oversight and accountability of institutions may be limited and/or supervision is weak, attention to corruption risks and their mitigation needs to be an integral part of the design of climate response policies.
While the subject area is vast, this discussion will focus on two aspects of climate change-related corruption: the role of fraud in construction projects and the importance of the rule of law and supporting institutions in undergirding the fight against corruption.
Fraud-Enabled Corruption in Construction Projects
Converting the world’s energy production to green fuels and methods requires construction projects—lots of them costing, in the aggregate, fantastic amounts of money. See Deloitte Report, “Financing the Green Energy Transition: A US $50 Trillion Catch,” (November 2023). The great majority of this construction work will need to occur in developing economies widely perceived as too risky to attract sufficient private capital. Thus, financing green energy and infrastructure projects will require large contributions by governments, charitable NGOs, and international organizations such as the UN and World Bank. Persuading such funders to spend on the scale needed to meet climate goals is hard enough when everyone believes that substantially all of the money allocated for the projects will be spent as intended; it will be impossible if the perception takes hold that large chunks of the funds will be diverted to the pockets of corrupt government officials, criminal cartels, favored private contractors, and other bad actors.
To reduce corruption-related risks to acceptable levels, it will be necessary to incorporate anticorruption measures into the design of each project, both at the procurement and implementation stages, which in turn requires adequate oversight, compliance, investigative, and enforcement structures.
As described elsewhere on this website, IACRC can support anticorruption efforts aimed specifically at construction projects. While proving bribe transactions directly can be as difficult in construction contexts as in others, corrupt construction projects are invariably accompanied by predictable kinds of fraud. Experts in the field can help detect and prove these frauds, which provides an alternative way to deal with the corruption underlying them.
Governance, Transparency, and the Rule of Law
The UN-World Bank draft report notes that many of the developing countries where resources must be directed in response to climate change have corruption risks associated with “governance challenges:”
Due to their geographies, developing countries bear the responsibility of safeguarding many of the world’s existing carbon sinks. Many of these countries also face development challenges such as low human capital outcomes in health and education, poor land management policies, inequality in access to opportunities, lack of voice for minorities, and low-capacity governance institutions at the state and local levels. These factors facilitate corrupt practices, whether in the form of administrative corruption or capture by political elites. (p.5)
Of course, corruption-friendly “governance challenges” are not confined to developing economies in relatively poor parts of the world. The draft report calls for “decision-making processes around climate change to promote the active participation of relevant public institutions, private actors, civil society organizations, and academic experts, to ensure proper representation of the interests of affected parties in policymaking:”
This also needs to include accountability in the enforcement of rules and regulations. Poor access to information about climate tagged expenditures heightens the risk of corruption as it enables public officials to take decisions on the basis of personal rather than public interest. (p.5)
Later (p.10) the draft report calls for supporting “the involvement of civil society, including the protection of investigative journalists in the oversight of climate funds.”
While democracies are hardly immune to corrupt influences, many of the factors identified in the draft report are inevitable characteristics of autocracies. Governments that are ruled by autocratic elites—whether they take the form of communist or fascist dictatorships, oligarchies, charismatic “Great Leaders,” or theocracies—do not by their nature subordinate themselves to the rule of law, hold themselves accountable, or promote transparency. They are much more likely to jail independent journalists than protect them; the same goes for anticorruption activists and political dissidents. Recent well-publicized cases in Russia offer examples of this tendency and illustrate a difference between democratic and autocratic “anticorruption” campaigns. Such campaigns in autocracies are typically directed against the regime’s enemies or former allies who have fallen from favor. Thus, the genuineness of efforts to reduce corruption is inextricably linked to the character of a country’s political system.
By raising awareness of corruption’s threat to climate change responses, the UN-World Bank joint project has helped fill a vacuum. As important and influential as these two institutions are, however, their reach is limited—not least because a great many of their constituent members are autocracies which cannot be relied upon to implement the draft report’s calls for action. Other international organizations, public and private, nations, and coalitions will have to do their part to remove corruption’s threat to protecting the world from destructive climate change.