Ibrahim Pam, Head of the Independent Integrity Unit (IIU) of the Green Climate Fund (GCF) spoke on a panel on integrity readiness in climate finance during the Week on Water for Development (WW4D) Virtual Conference on 28 August 2020. The session focused on challenges and opportunities for climate finance in the water sector.

“GCF currently has 18 water projects in its portfolio, and this amounts to the sum of USD 546.8 million. It reaches over 54 million beneficiaries in 18 developing countries,” Pam explains. “Only last week at the 26th Meeting of the Board, another USD 10-million project was approved for Cote D’Ivoire in West Africa,” he adds. The IIU is matching this growing portfolio with robust monitoring and oversight activities that include the establishment of the GCF integrity policy framework and the conduct of proactive integrity risk assessments.

The increase in funding drives the current for the GCF to strengthen its integrity safeguards through the IIU. The Unit is developing an integrity due diligence platform that makes use of a data-driven approach in its risk scoring for projects to build up its capacity to address integrity issues in the GCF-funded activities. The project will serve as an essential tool for its proactive integrity reviews that employ a hybrid approach of in-depth desktop reviews followed by potential on-site reviews.

The IIU is also in the final stages of drafting the Administrative Remedies and Exclusions (ARE) Policy of GCF. Set for approval by the Board by the end of 2020, the policy provides for an integrity enforcement regime for breaches and is expected to complete the Fund’s integrity framework.

Anti-corruption in the water sector

GCF takes a country-driven approach with all its projects, which include the water sector. “Because of our access modalities for climate financing and our financial model, there are peculiar risks where we try to ensure that fiduciary duties for all stakeholders are properly instituted,” Pam says.

Water Integrity Network (WIN) Programme Coordinator, Binayak Das outlines three critical issues on climate finance in the water sector. First, water is highly political and is at risk of capture and siphoning of funds. Second, countries that are high risk and belong to the lower end of the corruption index have already received large amounts of funding. “Are these agencies absorbing the funds integrity ready?” he asks.

Finally, new funds like the GCF and the Adaptation Fund emerged, adding to the already fragmented water sector. Discussions on fund sharing are ongoing, but as it happens, the climate situation is changing rapidly, and disbursements have already been given out. This status lends itself to difficulty in transparency. “Measures must be set in place early,” Das concludes.

Central American Bank for Economic Integration (CABEI) Integrity and Compliance Specialist Rennie Valladares Alcerro reminded the forum of how water is a vital human right. “You have to do everything that is in your hands for the development objective,” she explains.

She also points out the significance of dialogue and engagement with the population. Understanding the needs of the beneficiaries is core to integrity management in the water sector.  She noted that challenges in transparency and communication must be addressed.

Agencies must also scrutinise the objectives of a project. “Sometimes there is a conflict of interest with some private sectors,” Valladares Alcerro cautions.

Integrity tools

WIN offers two approaches to preventing corruption and supporting integrity in the water sector. Identifying risks through assessments with tools such as the Annotated Water Integrity Scan (AWIS) and the Integrity Management Toolbox brings improvements to water-utility and river-basin organisations. Das invites the forum participants to learn more through their website.

The other method is partnering with government agencies and external coaches through training and mentorships that bring change by minimising vulnerabilities that lead to corrupt practices.

“This approach helps in performance improvement, in building your reputation,” Das explains. “People are very aware when working on corruption. If you want to work with a government agency, the approach has to be more (obvious) – integrity,” he adds and points out how this practice can benefit the revenue of the agency.

These instruments can be applied in the context of climate finance as they are standard practices in governance and management. Das also expresses his interest in a data-driven approach explored by GCF and looks to collaborating on identifying climate change-related risks and integrity readiness of organisations.

Efficient measures to curb corruption

In Das’s point of view, corruption cannot be solved by an individual. Partnerships and coalitions must be built. There is a need to identify leaders from within the government agencies. “You cannot point fingers; you need to acknowledge that there is a problem and [find a way] to resolve this.” Involving the media to serve as watchdogs is also crucial.

Meanwhile, Valladares Alcerro emphasised the most important preventive measure – awareness of red flags in a project. Monitoring should be thorough because “red flags are always present from the starting point to the last day of operations.”

Pam explained the example that GCF sets clear and transparent rules and procedures. He cited a reference in criminal justice, “This is about situational prevention, you take away the excuses by ensuring that people understand what they must and must not do in very simple terms,” he says.

Integrity during COVID-19

“We saw an increase in allegations being reported,” shares Valladares Alcerro. CABEI received reports that are mostly on private practice allegations. The extended effect of COVID-19 for Latin America is awareness of integrity and prohibited practices making the population vigilant. “It brought people to care more about projects and operations, to be present,” she observes.

On the investigation side, there are challenges with conducting interviews or contacting personnel. CABEI augments this by using technological methods for audit, monitoring and supervising operations.

At the close of the conference, the panel offered parting thoughts on anti-corruption for the water sector and climate change. For Das, the keyword is patience. “To tackle corruption, we need to have patience. We need to engage for the long term; short-term processes will not lead to any benefit,” he urges.

“Our message from the IIU is zero per cent corruption, 100 per cent climate action. We think that commitment to integrity must be a hundred per cent,” Pam says, addressing the virtual forum of over 30 participants.
Valladares Alcerro agrees and puts forth the core values of honesty and professionalism. “Never forget who we work for. It’s for those populations who really need it.”

This session is part of a five-day conference hosted by the German development cooperation agency, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).