The summer of 2023 was the hottest on record – until the summer of 2024. This is the very real background to U4’s policy research on corruption and climate finance: the world needs climate finance because the energy transition to net zero requires a massive investment of capital, but corruption could jeopardise it all.

In 2021–2022, climate finance increased 230% to US$1.27 trillion. Climate finance will continue to grow if climate action is to contain global warming and achieve a just transition to net zero.

The process of researching and writing U4’s new paper Climate governance in a fast-changing world: Evolving patterns of corruption risks, highlighted important challenges facing workers at the interface of the anti-corruption sector and climate change mitigation and adaptation projects. Findings from the paper were presented at the Second symposium on supranational responses to corruption: Integrity in climate finance & action in London, UK in May 2024.

The ensuing discussions brought these challenges into sharp focus. There are four main challenges, but also positive developments that will help ensure future integrity and anti-corruption controls in climate finance.

The four challenges are:

1. Obtaining information about corruption cases
2. Knowledge gaps between anti-corruption professionals and the climate sector
3. Undue industry influence
4. Narrow space for civic action

1. Obtaining information about corruption cases

Having sound information about corruption cases in climate finance is essential for understanding integrity risks and the controls that could be used to manage these risks. However, this information can be difficult to find. As noted in Transparency International’s online Climate and corruption case atlas, a large proportion of reported cases of corruption in climate finance are in the Global North. While these countries undoubtedly face corruption risks, the likely reason for the region’s larger number of cases is its press freedom and greater transparency around reporting corruption. Having access to such information is critical for learning how corruption in climate finance occurs and how to stop it. In particular, we need data about what laws are broken, and what charges are laid against perpetrators. This information helps with law reform and educating investigators, prosecutors, and law-makers about legal and investigative precedence. Anti-corruption agencies, police authorities, parliamentarians, researchers, and investigative journalists all play an important part in making this information available to the public.

2. Knowledge gaps between anti-corruption professionals and the climate sector

Anti-corruption professionals need to tell a compelling story about corruption and its impact on climate-mitigation projects. They must engage climate actors who appreciate the urgency of a just transition, but do not always understand how ‘suboptimal’ use of climate finance impedes progress.

By contrast, anti-corruption stakeholders are guided by integrity principles. They are usually persuaded that such principles have a useful role across all sectors – for example, by reducing theft, fraud, and waste – and do not concern themselves with the specific technical impacts on climate targets caused by corruption. Yet, the benefits brought to climate initiatives by improved corruption-prevention work is critical for making the case that it is worth investing in anti-corruption tools. Fortunately, the anti-corruption sector is gradually improving its technical knowledge of the impact of corruption on climate change, on issues such as carbon trading, emissions data fraud, or falsified records of forest preservation. Therefore, it is also able to tell more compelling narratives about the benefits of anti-corruption work for the climate. Better access to case studies is one way to drive improved messaging.

3. Undue industry influence

A third challenge is countering undue influence. Undue industry influence risks perverting the energy transition by:

• Slowing the phasing out of fossil fuels
• Delaying the construction of renewable energy networks
• Causing community interests to be ignored
• Directing subsidies to wealthy corporations

The creeping effect of undue influence has been documented at all recent meetings of the United Nations Framework Convention on Climate Change (UNFCCC), where a large number of attendees have direct ties to the fossil fuel industry.

One reason for the prevalence of undue influence is that there are frequently no specific laws against it, so it occurs in a grey zone of being ‘not quite corruption’. In democracies, (and sometimes other regime types), regulated lobbying is frequently accepted as having an important role in enabling law-makers and policymakers to understand different perspectives on an issue. Different stakeholders also want to lobby, to explain their interests and ideas.

But there are two major problems with unregulated undue industry influence:

1. It happens in secret. The lack of transparency means that no one knows what is going on behind closed doors.
2. Influence (or lobbying) is patently unequal: individuals or organisations with lots of money are able to influence policies and laws for their own benefit – and the public interest gets crowded out, remains unheard, or is forgotten. Businesses that can’t afford to buy access also miss out.

The only positive angle is that undue influence is an issue that brings anti-corruption professionals and climate activists together: they are natural allies because they see the risks that undue influence brings to the energy transition. Anti-corruption professionals are experienced in assessing options for legal and regulatory tools that help manage influence on policymakers, including across different sectors and different regime types. This is precisely the advice climate activists need to manage undue influence in forums such as the UNFCCC.

4. Narrow space for civic action

Investing climate funds without the input of civil society risks weakening climate initiatives. In countries with authoritarian regimes, this is another issue in managing corruption risks around climate finance.

A restricted civic space complicates anti-corruption action: civil society stakeholders can face arrests, closing media outlets, or harassment (of individuals and organisations). Some governments may ignore or tolerate environmental and climate initiatives, as long as they focus on solutions, do not overtly criticise government policy, or link corruption to heightened impacts from climate change. But obtaining and investing climate finance is inherently political, because it requires investment in public goods (such as renewable energy infrastructure) that is guided by public policy.

Civil society and communities are good at identifying the impacts of climate change. They can also see whether an initiative’s proposed benefits are likely to be shared equitably. There are also examples of civil societies that have managed to advocate on climate issues despite the narrow civic space available to them. For example, in Morocco and Tunisia, new constitutions were adopted in response to civic pressure (in 2011 and 2014, respectively).

These precedents laid the groundwork for more participative, accountable, and transparent policymaking. This is essential for multi-stakeholder debates around climate change, climate finance, integrity, and the importance of a just transition to net zero. Progress is frequently ‘two-steps-forward-one-step-back’, which has been the case in Tunisia. Nevertheless, over time there has been progress towards expanding civic space and making that space safer for participants.

Of the four challenges, is there one issue to address first?

Yes, the priority should be reducing undue influence, and regulating lobbying in the climate sector generally. Undue influence has potential overlap with many corrupt behaviours, such as bribes and kickbacks, falsification of consultation records, and undeclared and unmanaged conflicts of interest. All of these factors can undermine the energy transition by skewing energy policies towards fossil fuel interests.

The positive news is that the risks for such behaviours can be managed. Anti-corruption professionals know how to do this. And, in collaboration with climate activists, with the support of other stakeholders such as civil society organisations and donors with climate action programmes, they can work together to achieve success.

Read more in: Climate governance in a fast-changing world: Evolving patterns of corruption risks (U4 Issue 2025:2)