How Corruption Is Exacerbating the Climate Crisis

Climate finance is entering the trillion-dollar era, but the world is not prepared for the governance risks that come with it.

Climate finance, referring to financial resources that support mitigation and adaptation actions to address climate change, reached a record-breaking $1.9 trillion in 2023, more than doubling over six years. Yet this is still only a fraction of what is needed. Achieving the 1.5°C scenario will require an average of $7.4 trillion annually by 2030 - a fivefold increase from current levels. The sheer scale of this funding brings not only opportunity and hope, but also significant risks: corruption and misuse.

During my time working on climate governance, including attending the UN climate negotiations at SB58 and contributing to Transparency International’s Climate and Corruption Atlas, one pattern came up repeatedly: Countries most vulnerable to climate impacts are often also the ones with the weakest institutional safeguards. According to the Corruption Perception Index 2025, the lowest performing countries on the index are from sub-Sahara Africa and Central Asia, two of the most vulnerable regions to climate. Similarly, the World Justice Project’s Rule of Law Index 2025 points to disappointing results: 68 percent of countries worldwide declined in rule of law, and the bottom-ranked countries, including Afghanistan, Haiti, Venezuela, Cambodia, are the same ones facing worsening climate impacts. These findings reflect decades of underinvestment in governance infrastructure, and it means that scaling up climate finance without addressing corruption risk is not just inefficient, but dangerous.

When regulatory enforcements and corruption control are weak, the conditions are ripe for climate finance misuse. Determining exactly how much climate finance is lost to corruption is difficult, as much of it disappears through procurement fraud, embezzlement, and sheer mismanagement. Transparency International has documented a growing number of such cases, each one representing resources that could have gone toward real climate action. Losing even one percent of the total means hundreds of millions of dollars diverted from the people and ecosystems that need it most.

This not only undermines the fight against climate change but, in some cases, actively contributes to it. While I was working on the Climate and Corruption Atlas, I came across two cases that stayed with me. First, in Papua New Guinea, over AU$2 million was misappropriated from the national climate agency funded by international grants. Second, in Russia, a $7.8 million UNDP project designed to cut emissions was so corrupted that it met none of its reduction targets. The problem is multiplied when climate funds are rushed out the door in response to emergencies: robust monitoring and accountability mechanisms get sidelined precisely when they are most needed.

The stakes are not abstract. In the Philippines, for example, devastating typhoons in 2025 exposed how corruption in flood prevention infrastructure costs lives. Greenpeace Philippines calculated that as much as PHP1.089 trillion in climate-tagged expenditures may have been lost to corruption since 2023, with flood control funds siphoned through ghost projects, inflated contracts, and kickbacks running up to 30-40 percent of project budgets. When funds meant to protect communities are siphoned off or corners are cut, the consequences are unfortunately measured in deaths.

Corruption also erodes public trust in national institutions and weakens confidence in climate action itself. When citizens witness that public funds dedicated to combating the impacts of climate change vanishes into the pockets of contractors, corrupt politicians, or ghost projects, they stop believing that climate finance works. OECD's Survey on Drivers of Trust in Public Institutions found that only around 40 percent of people across 30 countries believe their government will successfully reduce greenhouse gas emissions. This is partly driven by the perception that institutions are not working in the interest of the public. As reflected in the 2024 CPI, governments and multilateral organizations working on addressing climate change must embed anti-corruption measures into climate efforts to restore public trust.

What needs to change? Countries must implement robust accountability mechanisms to get the most out of climate finance. This means empowering national institutions with the resources and political will to hold those responsible for mismanagement accountable. It means establishing effective whistleblowing systems that allow citizens to report misuse, backed by genuinely independent anti-corruption agencies. And it means donors and multilateral funds building integrity safeguards into project design from the start, not as an afterthought.

We live in a moment of geopolitical shifts and shrinking aid budgets. Major donors are pulling back, official development assistance is under pressure, and the political will to fund multilateral climate mechanisms is being tested. If there is less money to go around, there is an even greater need to make sure every penny goes where it is supposed to.

Accountability is not a bureaucratic add-on to climate action. It is a precondition for it.