Finance Ministry criticises OCED's climate change finance report, calls it 'green-washing, 'creative accounting'

On the eve of Paris talks on climate change, finance ministry's department of economic affairs (DEA) has come out with a report on climate change financing, which criticises the Organisation for Economic Co-operation and Development (OECD) for overstating funding numbers and raising doubts over their credibility, using words such as "greenwashing", "creative accounting" and others. The ministry's discussion paper titled – Climate Change Finance, Analysis of a Recent OECD Report: Some Credible Facts Needed – says, "This paper examines carefully the OECD report's accuracy, methodology and verifiability of the numbers reported. It finds serious problems on all counts. Numbers were derived on self-reported basis from self-interested players, and open to gaming and exaggeration".

Under the climate change finance, the rich countries will provide financial and technological support to poor countries to clean up carbon footprints from the development undertaken by them. The goal is to reach $100 billion climate change finance flows annually by 2020. Apparently, India, which is projected to grow at 8-10% in coming years, is amongst the top countries likely to get a big chunk of the fund. In the discussion note, the government's tone only gets harsher as it analyses the reasons for its conclusion that there was only little truth in the OECD's report and a lot still needs to be done. "The OECD report is deeply flawed and unacceptable (the authors are careful to say their report is preliminary and aggregate). It repeats a previous experience we had of double-counting, mislabelling and misreporting when rich countries provided exaggerated claims of fast-start climate financing in the period 2010-12 – which were widely criticised by independent observers," says the government. The finmin believes that the figure of $57 billion reported by the OECD as the average for 2013-14 was exaggerated.

As per the DEA's estimate, the actual cross-border flows from 17 special climate funds since their inception in 2009 are some $2.2 billion. "We are very far from the goal of $100 billion in climate change finance flows annually by 2020. This OECD report needs improvement. The credibility gap is too big. We have to have more credible facts, from a careful and continuous collaboration," admonishes the report. The finance ministry's department has also found serious flaws in the methodologies, which it believes, are "inconsistent with the literature and best practice" and "bent" in ways to find more climate change finance flows than reality.

It also thinks that the OECD's report lacks transparency and has been done without consulting the developing countries and has concluded that OCED appeared to have "overstated progress". "The attached discussed paper suggests that much more work has to be done. We need to establish more credible, accurate, and verifiable numbers on the true size of the mobilisation of climate change finance commitments and flows from developed to developing countries," said the report that termed the methodology adopted for climate finance as "creative accounting, not climate finance as agreed under the convention." "There are some issues as to why there was so much rush to produce a document with inflated numbers, what has been termed as 'green-washing' of finance," it further added.

Interestingly, according to the hard facts from "reasonably credible third-party source", the government says pledges to the climate fund were $32 billion but they had to yet translate into significant deposits and disbursals, which was a pittance at $2.2 billion.