Cynthia Houniuhi, president of Pacific Island Students Fighting Climate Change (PISFCC) at a ruined hotel along a beach in Tonga during the week of the 53rd Pacific Island Forum Leaders Meeting. Photo: Tini Media/Oxfam.
In October 2024, Oxfam published “Climate Finance Unchecked,” a report diving into a significant oversight in the World Bank’s climate finance record-keeping. Specifically, the Bank’s method estimates climate finance only at the time projects are approved, with no assessment of climate finance when projects close. This might not seem like a big deal, but it’s common for projects to change during implementation —for example, adjustments to budgets, timelines and objectives. Such changes can include changes to climate actions, but climate finance estimates are not updated accordingly. So, we set out to understand the implications of this approach, estimating how much climate finance might shift across the Bank’s entire portfolio as a result of changes to projects during their implementation.
We didn’t expect much media attention for what seemed like a niche topic. After all, our report was pretty technical and was published just two weeks before the U.S. presidential election, when it was particularly difficult to break through a busy news cycle. But to our surprise, it grabbed headlines. This media coverage has increased pressure on the Bank to reform its methods, but it also led to interesting questions and some misunderstandings. We’ve put together a short FAQ to explain what we found and why it matters.
1. What does the Bank mean by “climate finance”?
Climate finance supports investments in climate action, covering both mitigation (avoiding or reducing emissions to prevent the planet from warming to more extreme temperatures) and adaptation (changing or adapting our ways of life to withstand and minimize the consequences of climate breakdown that are already happening). The World Bank estimates its climate finance by examining each project before it is approved and tagging elements that qualify as climate-related actions. The process isn’t straightforward and follows a methodology agreed upon by multilateral development banks. Still, the idea is simple: tally up the cost of all climate-related activities from all projects at the time they are approved, and that’s the Bank’s total climate finance number.
2. How did you figure out the impacts of project changes on climate finance?
We kept it simple. We took a sample of completed projects where the World Bank had officially reported climate finance. Then, we compared their initial budgets with what was actually spent. This gave us a sense of how much project spending changed during implementation. From there, we could estimate how much reported climate finance might shift as well.
3. What did you find when looking at these project changes?
On average, project spending deviated from the original budget by 26% to 43%, either above or below what was committed. We assumed that climate finance elements were just as likely to change as any other part of a project. Based on this, we estimated that the climate finance reported for 2017 to 2023 could be off by $24.28 to $41.32 billion. And here’s the kicker: these discrepancies are totally untracked in the Bank’s climate finance reporting. We have no idea if that money stayed within climate-qualifying activities, which countries received it, or whether it was spent on mitigation or adaptation (let alone on which specific activities it was invested in). At the same time, we should note that we found no evidence of systematic over- or under-spend, and have no reason to believe any money has been mismanaged or misplaced.
4. If nothing is mismanaged, what do you mean by “unaccounted for”?
Simply put, no one checked to see if reported climate finance numbers changed after project implementation. We use “unaccounted for” in this way to describe a failure to incorporate information all the time. For example: “our trip cost more than we planned because we didn’t account for extra expenses.” No one has mismanaged any of the travel budget. It’s simply that no one accounted for this information in planning the trip. Likewise, the Bank didn’t factor in how project adjustments affected climate finance. This information is unaccounted for. Effectively the reporting remains static, even though the climate finance amounts change.
5. Does this mean money is missing?
Nope. The idea of missing money is an understandable misconception stemming from the assumption that climate finance is a separate or specific pot of money that the Bank doles out. In this conception, if something goes unaccounted for, it must be lost. But the way the World Bank estimates climate finance is really just a tagging process. The Bank tags parts of projects as climate-related, and that’s the finance figure reported. When projects close, and changes have happened during the project’s implementation there’s no update to these tags, so the money itself isn’t missing; what’s missing is an accurate report of how much of the project ended up qualifying as climate finance.
6. Should this reporting issue mean we give up on raising more climate finance?
Not at all. Current levels of climate finance are woefully inadequate, and we desperately need much more of it. But we also need to know that the money is being used effectively. It’s about creating transparency around where the funds actually end up, so that we can ensure they are genuinely tackling the climate crisis.
7. Should someone be held accountable at the Bank?
Not exactly. The Bank hasn’t broken any rules. It’s following a methodology agreed upon by several multilateral development banks, which only requires reporting at project approval. However, this approach is grossly inadequate. We think it’s time for the Bank to update its practices, and yes, there should be accountability if it continues to avoid improvements.
8. What changes should the Bank make?
The Bank needs to assess climate finance at the end of project implementation, not just at approval. And it should make this information public in a user-friendly, searchable database. This database should include detailed metadata and be machine-readable to ensure anyone can verify the data and understand its implications.