2020: the year to get money where it matters

More new initiatives, such as the Global Commission on Adaptation’s Locally Led Adaptation Action Track, are beginning to recognise the critical role of poor and marginalised people in tackling the climate emergency. From the Gobeshona conference, Andrew Norton and Saleemul Huq explain why a reimagined climate finance system that gets money into the hands of those people must be high on the 2020 ‘super year’ agenda.

The Gobeshona conference brings together researchers and practitioners to discuss climate change in Bangladesh (Photo: Antoine Delepiere, SuSanA Secreriat, via FlickrCC BY 2.0)

For climate and sustainable development policy, 2020 is the most important year since 2015 and the signing of the Paris Agreement. In less than ten months’ time when climate negotiators meet in Glasgow at COP26, they will be charged with reaching agreements and raising ambitions high enough to realise the promises of Paris, which pledged to bring the escalating climate emergency under control.

But for the 2020 ‘super-year’ to truly deliver, decision makers must recognise the interconnected nature of the global challenges we face: the climate emergency is intertwined with rising inequality, ecosystem degradation and biodiversity loss. Only systemic change can tackle such complexity. There are no silver bullets.

Central to this systemic change is ending the marginalisation of poor women and men from decision making, finance, resources and essential services (such as water, sanitation and so on).

Investing in locally driven solutions – where communities are engaged in decisions on how investments are spent – not only addresses this marginalisation of the voices that matter most, but can also tackle the interlinking crises more effectively, efficiently and accountably.

Emerging shifts must embrace ‘business unusual’

Climate finance – money to help developing countries reduce emissions and adapt to climate change – is the ideal ‘lubricant’ to set this systemic change in motion. But IIED has shown that less than 10% of global climate funds prioritised local action between 2003-16.

And that which is delivered is directed to short term interventions by distant ‘experts’, accountable to donors and aid agencies rather than to communities.

These donors and aid agencies tend to engage and listen first to the priorities of powerful stakeholders rather than those of the most vulnerable – despite abundant evidence that communities impacted by climate change often know how best to spend the money.

But, the tide is beginning to turn…

Global initiatives are increasingly recognising the critical role of local communities in addressing the climate, biodiversity and poverty crisis. For example, the Asian Development Bank’s Community Resilience Partnership Programme, launched in September, builds on IIED’s ‘Money where it matters’ programme and initiatives of Slum Dwellers International (SDI) and the Huairou Commission among others. And this week at the Gobeshona conference in Bangladesh, the Global Commission on Adaptation will launch its Locally Led Adaptation Action Track.

For these global and regional initiatives to address the quality and quantity of climate finance reaching the local level, they must set the bar for what ‘business unusual’ really looks like.

Practical framework puts people at its core

Throughout 2020, IIED and partners will continue to champion the ‘Money where it matters’ framework. Through decades of research and on-the-ground support, the framework reimagines the climate finance landscape. It provides practical solutions to overcome donors’ and aid agencies’ real and perceived challenges in financing locally driven climate action at scale.

Importantly, this framework is embedded in local, poor and marginalised people’s lived experiences from rural and urban contexts. It covers many sectors – from energy to forestry – and operates across formal and informal markets. The framework ensures local communities remain at the heart of the systemic shift from business-as-usual to business unusual.

The reimagined climate finance landscape, where state, private and civil society mechanisms deliver flexible finance to the local level across society, acting within an enabling environment and supported by suitable international climate finance (Illustration: copyright IIED)

The framework is built on the following key elements:

  • Grounding principles for good governance15 principles set out how good climate finance is governed. This was validated at London Climate Week with local partners including the Huairou Commission, SDI, WIEGO (Women in Informal Employment: Globalizing and Organizing) and the Least Developed Countries’ Universities Consortium for Climate Change (LUCCC).
  • Mechanisms that deliver: we have identified a set of approaches that enable state, private sector and civil society institutions to deliver – at scale – flexible climate finance that is in line with local communities’ priorities while also tackling fundamental governance challenges.Many are already addressing the poverty and biodiversity crises alongside climate change. Examples include decentralised climate fundsdecentralised renewable energy schemesforest and farm producer organisations and slum dweller urban poor funds. These mechanisms are led by, or place most decisions into the hands of, poor and vulnerable communities.
  • The right enabling environment: delivering climate finance to the local level is complex and cannot work in isolation. We seek to help governments create, and civil society and private sector advocate for, the surrounding policy, governance, safeguards, knowledge and learning context to support poor and marginalised people lead informed and deliberative decisions about their future under socio-economic and climate uncertainty.
  • Measuring success: one of the largest barriers to financing locally driven climate action is being able to track the finance to the ground, and to learn from the many benefits – and challenges – of local activities.IIED is working with partners to develop top-down and bottom-up solutions to the monitoring, learning and tracking of local climate action. This includes research to ensure digital technologies empower rather than disempower poor and marginalised people.
  • Addressing the ‘missing middle’: Currently, donors and aid agencies do not provide finance on suitable terms to deliver locally led climate action. ‘Money where it matters’ can support donors and aid agencies to reform existing or create new climate funds for incubating this reimagined climate finance system.

Over the coming months IIED and partners will publish briefings setting out each of these elements. And throughout 2020 we will deepen this framework and support donors, governments, private and civil society actors to implement it.

We know the framework isn’t perfect and throughout this process we will work closely with community representatives from the frontlines to continue to strengthen the approach. In the meantime, we’re championing the framework here at Gobeshona.

As the GCA launches its Locally Led Adaptation Action Track (on Wednesday, 23 January) we will be encouraging donors, aid agencies and governments to step forward with truly ‘business unusual’ approaches for getting money where it matters.

With thanks to Marek Soanes, who contributed to this blog. Marek leads the ‘Money where it matters’ programme.


Originally this article was published on January 20, 2020 at IIED Website

About the author

Andrew Norton (andrew.norton@iied.org) is director of IIED

Saleemul Huq (saleemul.huq@iied.org) is an IIED senior fellow and director of the International Centre for Climate Change and Development (ICCCAD)