State Should Further Improve Its Reporting on Financial Support to Developing Countries to Meet Future Requirements and Guidelines
GAO-13-829: Published: Sep 19, 2013. Publicly Released: Sep 19, 2013.
What GAO Found
To implement the United States' fast-start finance (FSF) commitment, the Department of State (State) reported that the United States contributed $7.5 billion in fiscal years 2010 through 2012 for a variety of activities related to climate change. State, the U.S. Agency for International Development (USAID), and the Department of the Treasury (Treasury) provided $2.5 billion for activities under the Global Climate Change Initiative (GCCI) that were designed to address climate change as a primary goal. State reported that USAID and other agencies, including the Millennium Challenge Corporation (MCC), the Export-Import Bank of the United States, and the Overseas Private Investment Corporation provided $4.9 billion for activities that were not part of the GCCI but had climate-related benefits. Contributions consisted of grants, loans, development finance, and export credit. The majority of these funds were reported as supporting mitigation activities focused on clean energy or sustainable landscapes. According to State, the U.S. FSF contributions were "new and additional" because the funding was appropriated on an annual basis and not guaranteed from one year to the next.
Between 2010 and 2012, State improved its method for collecting data for its FSF reports, but it is uncertain how it will meet future reporting requirements and guidelines. Following its initial FSF report in fiscal year 2010, State developed a structured data collection tool to facilitate and standardize data collection across the agencies. Nonetheless, challenges in tracking climate change assistance remain. USAID, the largest FSF contributor, is not able to track climate change obligations and expenditures because of the lack of a dedicated State/USAID budget code for climate change assistance. While the FSF reports were voluntary, reporting is required beginning in 2014 based on decisions by the Conference of the Parties to the United Nations Framework Convention on Climate Change (Framework Convention). Future reports must contain climate finance data elements that State did not include in the FSF reports and, in some cases, does not currently collect. For example, State does not collect information on the annual status of climate finance contributions provided, committed, and/or pledged, as specified in the new reporting guidelines. State officials said that they have not determined how they will collect and report this information.
The overall effectiveness of U.S. FSF activities is difficult to determine because of the challenges involved in monitoring and evaluating assistance to address climate change. These challenges include difficulties in measuring the effects of individual activities within the larger context of global climate change, and the fact that many of these activities are just beginning to be implemented. Under the GCCI, State, USAID, and Treasury fund activities with a primary goal of addressing climate change, and State and USAID are refining their climate change performance indicators to improve monitoring of these activities' results. USAID is also drafting an evaluation plan for its climate change assistance. Treasury does not directly monitor and evaluate its climate change funding but requires the multilateral institutions that receive and implement this funding to monitor and evaluate these activities. Other key agencies' FSF activities were not part of the GCCI, and these agencies' approaches to monitoring and evaluation vary based on their respective missions and requirements. For example, MCC primarily assesses its projects on the basis of the progress made in achieving its goal of poverty reduction.
Why GAO Did This Study
In 2009, the United States and other developed nations pledged to contribute funding approaching $30 billion in new and additional assistance between 2010 and 2012 for developing countries to address climate change. This type of assistance is called "climate finance" and funding for this period is known as "fast-start finance." The pledge was made under the Framework Convention, a treaty that seeks to address climate change. State is the lead agency responsible for reporting the United States' FSF contributions between 2010 and 2012 and plans to continue reporting on U.S. climate finance in the future. GAO was asked to review climate finance. This report examines (1) the extent to which the United States contributed to FSF, (2) how State collected and reported U.S. FSF data, and (3) what is known about the effectiveness of U.S. FSF activities. To address these objectives, GAO reviewed FSF data, interviewed agency officials, and visited three countries receiving significant FSF assistance in three regions.
What GAO Recommends
To ensure the United States meets future climate finance reporting requirements and guidelines under the Framework Convention, GAO recommends that State determine how it will collect and report climate finance information and review current capabilities for meeting the requirements and guidelines. GAO also recommends that State, in consultation with USAID, consider providing a budget code to improve tracking of climate change assistance. State agreed with GAOs recommendations.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: State Department agreed with our recommendation. In response to the recommendation, the State Department reported on several of the data elements that it did not previously collect or report on and reviewed its capabilities for meeting the remaining reporting guidelines. In reporting to the United Nations Framework Convention on Climate Change in the 2014 Biennial Report, the State Department reported on several items not previously reported in the Fast Start Finance reports. For example, State reported on the annual status of climate finance contributions provided, committed, and/or pledged; the funding source; and the type of support (mitigation, adaptation, cross-cutting). In addition, State also included an explanation of how it determined funds were climate-specific in the 2014 Biennial Report Methodologies attachment to the report. In the U.S. 2014 Climate Action Report, the State Department's quadrennial submission to the United Nations Framework Convention on Climate Change included its definition of how it determines which climate funds are new and additional. Lastly, although the State Department did not report a specific dollar amount in private financial flows leveraged by bilateral climate finance in any of its reports to the United Nations Framework Convention on Climate Change, it did provide an explanation of why such an assessment was currently not within its capabilities in its June 2014 submission to the United Nations Framework Convention on Climate Change.
Recommendation: To ensure the United States meets its future reporting requirements and guidelines under the Framework Convention, the Secretary of State should determine how it will collect and report climate finance information that will be required beginning in 2014. In doing so, State should review the capabilities of its current data collection and reporting process and consider what changes, if any, are needed to meet the requirements and guidelines.
Agency Affected: Department of State
Status: Closed - Implemented
Comments: State Department agreed with our recommendation. In response to the recommendation, State and USAID have elevated climate change within the foreign assistance standardized program structure from the sub-element level to the program element level. Specifically, in the updated structure, State and USAID have elevated climate change into separate program areas for the three climate change pillars: adaptation, clean energy, and sustainable landscapes. Within each pillar, focus areas are then broken out at the Program Element level. State reported that the updated standardized program structure will be implemented when the next generation of the foreign assistance database is released in 2016.This change will allow State/USAID to improve tracking of USAID climate change assistance.
Recommendation: As State conducts reviews of the foreign assistance standardized program structure, the Secretary of State, in consultation with USAID, should consider the merits of elevating climate change within the program structure to provide a specific budget code that improves tracking of USAID climate change assistance.
Agency Affected: Department of State