The use of middlemen to leverage private sector climate cash is putting investments at risk because of the rich world’s negligence in ensuring transparency and adequate monitoring, according to a new report by the European Network on Debt and Development (Eurodad).
‘Cashing in on climate change?’ argues that vast amounts of climate cash are currently being channeled through tax havens, where there can be no oversight of the funds’ final destination.
The Eurodad report was released earlier this month, just days after it emerged that Nigerian officials were investigating the €3.4 billion-valued UK-owned subsidiary CDC Group for allegedly allowing €36.5m to be invested in a Nigerian money-laundering front.
“When you channel public money through tax havens, you lose track of it and many times, we just don’t know where the money is being invested, and who is directing the companies,” said Javier Pereira, the report’s author.
Financial intermediaries such as private equity funds and credit unions are increasingly being used to ‘leverage’ private sector climate mitigation investments, by using a line of credit provided by public sector sources in the developed world to cover investor risk.
“The problem is that they are not complying with the same accountability and transparency obligations that we have in Europe for instance,” Pereira told EurActiv.