Europe's Political Economy

Corruption in climate governance - why is it an issue for Europe?

Lisa Elges, Climate Governance Programme Manager, Transparency International (TI), began with an overview of the TI Global Corruption Report: Climate Change. The report looks at the transparency, accountability and integrity of current frameworks, institutions, and mechanisms to identify weaknesses and strengths.

Capacity building is essential to deal with corruption and integrity risks throughout the system. Civil society and citizens need reliable and accurate information on policy development and implementation. New enforceable frameworks of accountability need to be established for corporate affairs and the banking and financial sector, and strict and robust compliance systems are needed for all the actors involved.

Andrea Pinna, Senior Climate Specialist, European Investment Bank (EIB), said that the role of multilateral banking and international financial institutions in the fight against climate change is extremely important. The amounts of money involved are ‘staggering’. One crucial challenge in climate change is inequality; the poor in developing countries will be hit soonest and hardest.

The EIB has an articulate framework for climate action to make sure its objectives, targets, standards and safeguards are in line with EU and international climate policy. It is actively mainstreaming climate change considerations into its operations, and has adopted policies to ensure that its projects are not exposed to corruption and fraud.

Henry Derwent, President and CEO of the International Emission Trading Association (IETA), said the TI report is an excellent contribution, but a worrying factor was the way it ‘spreads the boundaries’ of corruption from the usually definition to include distortion of scientific fact or abusing the implicit trust of future generations.

Reform of institutional practice takes a long time; transparency is hard to achieve. The authors of the Kyoto protocol did not anticipate the extent to which the system would be dependent on commercial monitoring, reporting and verification. The EU is doing well in many aspects of climate change mitigation, but the EU Emission Trading System (ETS) has elements of weak governance.

Mary Veronica Tovšak Pleterski, Director for European and International Carbon Markets, DG Climate Action, European Commission, said important new features have been introduced into the ETS. The Commission is working with industry stakeholders and has had near universal support for regulatory action on the EU level in carbon market oversight. It is preparing a comprehensive review of financial markets rules and giving serious consideration to classifying carbon allowances as financial instruments. These new measures are not simply a ‘quick fix’ for the current market situation - the new framework must be able to stand up to the challenges the growing markets.