If you’re reading this, I’m sorry to say that you likely live in a Climate Gangster State.

Yet these racketeers, liars and loan sharks (a.k.a. the Global North) aren’t ashamed of their behaviour. In fact, they celebrate it.

Because it’s all entirely legal.

I’m talking about the world of climate finance. And if you already thought it was bad – boy, do I have some revelations for you.

The data detectives

Today I want to use this platform to amplify a wonderful, sorely needed project – The Climate Finance Files.

I write about climate finance a lot because it is so important. Mitigation, adaptation, justice and development – none of these goals will be achieved without channelling the world’s wealth into the right investments. 

The sad truth, however, is that the climate finance system we have today sucks.

No matter how much the world talks about fair financing – the GFC was 2010, remember! - we have failed to rise to the challenge, year after year after year.

COP 28 opened with grand fanfare over a new Loss and Damage fund. Rich countries clapped themselves on the back for raising $700 million – when the world actually needs more like $400 billion, every single year.

(And we have the money: the world spends $700 million an hour on subsidising fossil fuels…)

The Climate Finance Files (CFF) – a collaboration between The ONE campaign and Google, leveraging open data and AI - hopes to change that, by shining a spotlight on the secretive world of climate pledges. Their findings are shocking.

I already knew that we were falling woefully short on the magnitude of climate finance. The headline numbers are nowhere near adequate.

What I didn’t expect was quite how rotten even these inadequate pledges turned out to be. Dig below the surface, and disappointment becomes outrage.

Here are my three big takeaways.

1. The most vulnerable are getting the worst deal

The world’s 20 most climate-vulnerable nations need over $26 billion a year to address climate change.

In 2021, they got just $1.7 billion.

That means for every dollar pledged, they need more than fourteen more – on average.

86% of Micronesia’s climate finance needs went unmet.

Sierra Leone missed out on 90%.

They look lucky against Somalia, Chad, DR Congo and Eritrea, who received 0%-2% of the finance they require.

These are the most vulnerable, least responsible societies. We barely flip them a nickel as we whistle past the graveyard.

2. What is promised is not the same as what is delivered

This is the big headline from the CFF: fully two-thirds of declared climate finance 2013-2021 can’t be meaningfully counted as disbursed.

That amounts to more than $340 billion in broken commitments.

It’s a complex story, but that total is broadly made up of: $70bn in commitments which lack any data; $115bn in mislabelled spending; and fully $228bn in cash that was simply never handed over.

This trend is barely improving over time. In 2016, around 40% of commitments were disbursed. Five years later it was still just 44%. 

Never mind orphan states like Somalia and Eritrea. Kenya received barely half its committed funding in the last decade. Nigeria saw just 24%. These are major partners and leaders in the G77.

Year after year, we are not keeping our promises.

3. Lenders are profiting from climate chaos

This one really shocked me. 

Nearly half of the most indebted countries – including some of the most climate-vulnerable – paid more in debt payments than they received in climate finance.

That’s an average; here are some country-specific figures for 2021.

Egypt (104th in the climate risk index): $763m climate finance in. $4.33bn debt payments out. 

Iraq (126th): $177m climate finance in. Nearly $2bn in debt payments out.

El Salvador (108th): $24m climate finance in. $544m debt payments out. That is 22x more extracted than invested!

It gets worse. 

58% of all new climate finance disbursed to countries with severe debt problems in 2019-21 was…more debt. 

Nearly a quarter carried an interest rate at or above the market.

This is the norm. Fully 64% of providers of climate finance (i.e. most of the Global North, both bilaterally and multilaterally) received more in debt payments from these distressed countries than they paid out in climate finance. 

We are actually profiting from their climate misery.

This is what I mean when I call Northern countries ‘Climate Gangsters.’ 

Centuries of our historic emissions created the violence of climate chaos, which these vulnerable societies don’t have the means to defend against. 

In desperation, they came to the North for help. These gangsters gave them money – on credit, of course.

When interest payments started to bite and they struggled with extreme weather, we reached out a hand – to load them up with more debt, just like any good loan shark.

To add irony to injury, the longer rich countries delay bending the emissions curve, the more desperate poor countries become for climate finance – and the more profit rich countries can extract.

It’s a racket.

Gang-busting

What can we do about it?

Firstly, amplify the message. Our governments are hiding behind promises they won’t keep. This data tells the real story – and it needs to be heard. 

So share this article and spread the word!

Second, we need fundamental changes to the global financial system. I have already explained here why we need the Bridgetown Initiative – and why the Paris Summit for a New Global Financing Pact was the biggest climate miss of 2023. It’s time for root and branch reform.

Finally, we need to re-examine the way we account for climate finance in the first place. What do we allow the numbers to mean? 

The Climate Files contain more shocking revelations on just that topic. Tune in next week for the second part of this story

* I’m assuming most of our audience here comes from the Global North

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.