Media Releases

189 million people per year affected by extreme weather in developing countries as rich countries stall on paying climate impact costs

October 25, 2022

Lower-income countries paying the highest price as emissions and fossil fuel profits rocket

An average of 189 million people per year have been affected by extreme weather-related events in developing countries since 1991 – the year that a mechanism was first proposed to address the costs of climate impacts on low-income countries – according to a new report published today.

The report, The Cost of Delay, by the Loss and Damage Collaboration – a group of more than 100 researchers, activists, and policymakers from around the globe – highlights how rich countries have repeatedly stalled efforts to provide dedicated finance to developing countries bearing the costs of a climate crisis they did little to cause.

Analysis shows that in the first half of 2022 six fossil fuel companies combined made enough money to cover the cost of major extreme weather and climate-related events in developing countries and still have nearly US$70 billion profit remaining.

The report reveals that 55 of the most climate-vulnerable countries have suffered climate-induced economic losses totalling over half a trillion dollars during the first two decades of this century as fossil fuel profits rocket leaving people in some of the poorest places on earth to foot the bill.

The report also reveals that the fossil fuel industry made enough super-profit between 2000 and 2019 to cover the costs of climate-induced economic losses in 55 of the most climate-vulnerable countries almost sixty times over.

Finance to address ‘loss and damage’ – the term used to refer to the destructive impacts of climate change that aren’t avoided by mitigation or adaptation – is set to be the defining issue of COP27, the UN climate talks taking place in Sharm El-Sheikh in November, as developing countries call for action after decades of delay.

The report estimates that since 1991, developing countries experienced 79 per cent of recorded deaths and 97 per cent of the total recorded number of people affected by the impacts of weather extremes. Analysis also shows that the number of extreme weather and climate-related events that developing countries experience has more than doubled over that period with over 676,000 people killed.

The entire continent of Africa produces less than four per cent of global emissions and the African Development Bank reported recently the continent was losing between five and 15 per cent of its GDP per capita growth because of climate change.

Lyndsay Walsh, Oxfam’s climate policy adviser and co-author of the report said: “It is an injustice that polluters who are disproportionately responsible for the escalating greenhouse gas emissions continue to reap these enormous profits while climate-vulnerable countries are left to foot the bill for the climate impacts destroying people’s lives, homes and jobs.

“This is not a future reality, it is happening now, as we are seeing with the devastating floods in Pakistan and unprecedented drought in East Africa.

“But it is not too late. COP27 starts in just two weeks and finance to address loss and damage must be agreed. News that the issue will be on the agenda for COP27 is welcome and an ambitious outcome is critical not only for those dealing with climate impacts in developing countries, but also for maintaining trust and credibility.

“We must end this delay. The best time to start was 31 years ago, the next best time is now.”

At COP26 last year, developing countries were united in calling for the establishment of a Loss and Damage Finance Facility, to ensure a comprehensive approach to climate impacts, but this was shot down by developed countries in favour of a three-year dialogue – the Glasgow Dialogue – with no mandated outcomes.

Professor Saleemul Huq, director of the International Centre for Climate Change and Development in Bangladesh, said: “As one of the few people who has attended every single COP over the last three decades, I have personally witnessed the resistance from the developed countries to every attempt by the vulnerable developing countries to discuss loss and damage from human-induced climate change. If it doesn’t get on the agenda from COP27 onwards the UNFCCC will have failed in its responsibilities.”

The catastrophic flooding in Pakistan this year, directly affected at least 33 million people and costs were estimated at over US$30 billion. Yet the UN humanitarian appeal for the floods is set at only US$472.3 million (just over one per cent of what is needed), and only 19 per cent funded. The flood response is not considered to be anywhere near enough to help the millions of people who have lost their livelihoods and homes and face hunger, disease and psychological impacts.

Pakistan will have to take out another IMF loan to help recover from the floods, in contrast, funds from a loss and damage finance facility would be new and additional and come in the form of grants, to ensure the country was not burdened by debt in the aftermath of a climate-induced disaster.

Every fraction of a degree of further warming means more climate impacts with losses from climate change in developing countries estimated to be between US$290 billion and US$580 billion by 2030. These estimates do not include non-economic losses and damages, such as psychological impacts and biodiversity loss, which are profound but cannot be translated fully into monetary terms, meaning the true cost is far higher than what is accounted for.

With current global policies projected to result in about 2.7°C warming above pre-industrial levels, and huge gaps between the amount of finance required by developing countries to adapt and what is being provided, the urgent need for finance to address loss and damage is clear.

Notes to editors:

The full report ‘The cost of delay: why finance to address Loss and Damage must be agreed at COP27’ is available here. (link will go live on 24 October – pdf available on request)

True value of climate finance is a third of what developed countries report

October 19, 2022

Reporting international climate finance remains flawed, and profoundly unfair.

Many rich countries are using dishonest and misleading accounting to inflate their climate finance contributions to developing countries – in 2020 by as much as 225 percent, according to investigations by Oxfam.

Oxfam estimates between just US$21-24.5 billion as the “true value” of climate finance provided in 2020, against a reported figure of US$68.3 billion in public finance that rich countries said was provided (alongside mobilised private finance bringing the total to US$83.3 billion). The global climate finance target is supposed to be US$100 billion a year.

“Rich country contributions not only continue to fall miserably below their promised goal but are also very misleading in often counting the wrong things in the wrong way. They’re overstating their own generosity by painting a rosy picture that obscures how much is really going to poor countries,” said Nafkote Dabi, Oxfam International Climate Policy Lead.

“Our global climate finance is a broken train: drastically flawed and putting us at risk of reaching a catastrophic destination. There are too many loans indebting poor countries that are already struggling to cope with climatic shocks. There is too much dishonest and shady reporting. The result is the most vulnerable countries remaining ill-prepared to face the wrath of the climate crisis,” says Dabi.

Oxfam research found that instruments such as loans are being reported at face value, ignoring repayments and other factors. Too often funded projects have less climate-focus than reported, making the net value of support specifically aiming at climate action significantly lower than actual reported climate finance figures.

Currently, loans are dominating over 70 percent provision (US$48.6 billion) of public climate finance, adding to the debt crisis across developing countries.

“To force poor countries to repay a loan to cope with a climate crisis they hardly caused is profoundly unfair. Instead of supporting countries that are facing worsening droughts, cyclones and flooding, rich countries are crippling their ability to cope with the next shock and deepening their poverty,” said Dabi.

Least Developed Countries’ external debt repayments reached US$31bn in 2020.

For example, Senegal, which sits in the bottom third of the world’s most vulnerable countries to climate change, received 85 percent of its climate finance in form of debt (29 percent being non-concessional loans), despite being at moderate risk of falling into debt distress and with its debt amounting to 62.4 percent of its Gross National Income.

“A keyway to prevent a full-scale climate catastrophe is for developed nations to fulfil their US$100 billion commitments and genuinely address the current climate financing accounting holes. Manipulating the system will only mean poor nations, least responsible for the climate crisis, footing the climate bill,” said Dabi.

“A climate finance system that is primarily based on loans is only worsening the problem. Rich nations, especially the heaviest-polluting ones, have a moral responsibility to provide alternative forms of climate financing, above all grants, to help impacted countries cope and develop in a low carbon way,” said Dabi.

“At the upcoming COP27 climate talks this November, rich countries must urgently commit to scaling up grant-based support to vulnerable countries and to fixing their flawed reporting practices.”

Notes to the editor

Download a full copy of the report, Climate Finance Short Changed Report 2022: The real value of the US$100 billion commitment in 2019-20, here:
The 2020 reported climate finance totalling US$83.3 billion included public finance (US$68.3 billion), private finance mobilised (US$13.1 billion) and export credits (US$1.9 billion) in 2020. Oxfam has assessed the value of finance provided, IE the public finance element. OECD (2022), Climate Finance Provided and Mobilised by Developed Countries in 2016-2020: Insights from Disaggregated Analysis, Climate Finance and the USD 100 Billion Goal, OECD Publishing, Paris, https://doi.org/10.1787/286dae5d-en
Overreporting of loans is incentivising the use of loans which are dominating climate finance provision. According to the latest assessment by the OECD, loans made up 71 percent of public climate finance in 2019-20– a significant share of which were non-concessional – while only 26 percent was provided as grants.^[i] ^[i] OECD (2022a), Climate Finance Provided and Mobilised by Developed Countries in 2016-2020: Insights from Disaggregated Analysis, Climate Finance and the USD 100 Billion Goal, OECD Publishing, Paris.
Oxfam’s US$21-24.5 billion figure includes the estimated grant equivalent of reported climate finance rather than the face value of loans and other non-grant instruments. It also accounts for overreporting of climate finance where action to combat climate change is one part of a broader development project. For more details please check Oxfam methodology note.
Senegal’s debt instrument figures are based on 2013-2018 climate finance reports, according to Oxfam “Climate Finance in West Africa” report, 2022. Please also see (2021). Climate Change: OECD DAC External Development Finance Statistics – Recipient Perspective. Retrieved 10 August 2022.
Senegal ranks Senegal is 134th out of 182, or in the bottom 30 percent in terms of vulnerability according to the ND-GAIN Index.

Aotearoa top 10 in global inequality index, but tax system’s inequality impact 136th

October 12, 2022

Oxfam Aotearoa communications and advocacy director Dr Jo Spratt said about the Commitment to Reducing Inequality index:

“The inequality index shows Aotearoa is doing pretty well overall, but there is still work to be done. The fact that rich and poor countries alike have exacerbated an explosion of economic inequality since the outbreak of the pandemic from 2020 is unacceptable.

“Billionaire wealth and corporate profits have soared to record levels during the Covid-19 pandemic, while over a quarter of a billion more people could crash to extreme levels of poverty this year because of coronavirus, rising global inequality, and the shock of food price rises supercharged by the war in Ukraine.

“Tax is one of the most powerful tools we have to fight inequality. It is disappointing to see New Zealand’s tax system contributing to the gap between the rich and poor. Especially in these extraordinary times, tax is crucial to boosting government resources to support welfare systems and public services.

“An excess profits tax on supermarkets could be used to support the poorest households most hit by the increase in food prices. Excess profits and windfall tax revenues can help tackle the biggest challenges of our times like the explosion in inequality and the climate crisis.”

The 2022 Commitment to Reducing Inequality Index (CRI Index) is the first detailed analysis into the type of inequality busting policies and actions that 161 countries might have pursued during the first two years of the pandemic.

New Zealand ranks eighth overall, and seventh in the world on tax progressivity. The index found that New Zealand’s tax system is effective at collecting revenue; however, this comes at a cost as New Zealand’s tax system makes a direct contribution to an unequal income distribution. On this, New Zealand ranks 136th in the world. Oxfam says the Government has made some progress since 2020 by slightly increasing the top income tax rate, but needs to do more by taxing wealth and exploring better ways to tax corporate profits.

The table below shows New Zealand’s ranking on the key indicators that make up the CRI.

INDICATOR	RANK
PUBLIC SERVICES
Education spending	98
Social protection spending	35
Health spending	9
Public service spending average of indicators	14
Public service implementation	18
Public service impact on inequality (Gini)	33
Progressivity of public services	22
TAX
Tax policy	91
Tax productivity	3
Tax impact on inequality (Gini)	136
Progressivity of tax	7
LABOUR
Labour rights	74
Women’s labour rights	29
Minimum wage	35
Labour policy average of indicators	50
Coverage of labour rights	36
Wage impact on inequality (Gini)	53
Progressivity of Labour Legislation	35
OVERALL RANK
Commitment to reducing Inequality	8

New index shows governments worldwide stoked an inequality explosion during COVID-19 pandemic

October 12, 2022

Half of the poorest countries saw health spendings drop despite the pandemic, while 95 percent of all countries froze or even lowered taxes on rich people and corporates

Rich and poor countries alike have exacerbated an explosion of economic inequality since the outbreak of the pandemic from 2020, reveals new research by Oxfam and Development Finance International (DFI).

The overwhelming majority of governments cut their shares of health, education and social protection spending. At the same time, they refused to raise taxes on excessive profits and soaring wealth.

The index shows that despite the worst health crisis in a century, half of low and lower middle-income countries cut their share of health spending of their budgets. Almost half of all countries cut their share going to social protection, while 70 percent cut their share going to education.

As poverty levels increased to record levels and workers struggled with decades-high prices, two thirds of countries failed to raise their minimum wages in line with economic growth. Despite huge pressure on government finances, 143 of 161 countries froze the tax rates on their richest citizens, and 11 countries even lowered them.

France fell five places in the index after cutting corporate tax rates and eliminating its wealth tax altogether in 2019. Jordan dropped its budget share for health spending by a fifth, despite the pandemic. Nigeria did not update its minimum wage since before the pandemic, and the US has not raised the federal minimum wage since 2009.

“Our index shows that most governments have completely failed to take the steps needed to counter the inequality explosion created by COVID-19. They ripped away public services when people needed them most and instead left billionaires and big corporations off the hook to reap record profits. There is some good news of valiant governments from the Caribbean to Asia bucking this trend, taking strong steps to keep inequality in check,” said Gabriela Bucher, Oxfam International Executive Director.

Strong actions to reduce inequality were taken by both low and middle income countries:

Costa Rica put up its top income tax by 10 percent
The Occupied Palestinian Territory increased its social spending from 37 to 47 percent of its entire budget.
Barbados introduced a comprehensive set of laws to improve women’s labor rights, and the Maldives introduced its first national minimum wage.

As Finance Ministers gather in Washington for the International Monetary Fund (IMF) and World Bank Annual Meetings, developing nations are facing a global economy that is making it ever more difficult to meet the needs of their population. While injecting trillions in their own economies, rich countries failed to increase aid during the pandemic. Economic inequality and poverty in poor countries are further exacerbated by the IMF’s insistence on new austerity measures to reduce debts and budget deficits.,

“The debate has catastrophically shifted from how we deal with the economic fallout of COVID-19 to how we reduce debt through brutal public spending cuts, and pay freezes. With the help of IMF, the world is sleepwalking into measures that will increase inequality further. We need to wake up and learn the lessons; preventing huge increases in inequality is completely practical, and common sense. Inequality is a policy choice, governments must stop putting the richest first, and ordinary people last”, says Matthew Martin, Director of DFI.

Oxfam and DFI analysis shows that based on IMF data, three quarters of all countries globally are planning further cuts to expenditures over the next five years, totalling $7,8 trillion dollars.

In 2021, lower income countries spent 27.5 percent of their budgets in repaying their debts – twice the amount that they have spent on their education, four times that of health and nearly 12 times that of social protection.

“For every dollar spent on health, developing countries are paying four dollars in debt repayments to rich creditors. Comprehensive debt relief and higher taxes on the rich are essential to allow them to reduce inequality dramatically”, said Martin.

Despite historical precedent, nearly all countries failed to increase taxation on the richest or pursue windfall profits during the COVID crisis. After the 1918 flu epidemic, the 1930s depression, and World War Two, many rich countries increased taxes on the richest and introduced taxes on corporate windfall profits. They used this revenue to build education, health and social protection systems. Taxation of the wealthiest and windfall profits can generate trillions of dollars in tax revenue.

“Government leaders in Washington face a choice: build equal economies where everyone pays their fair share or continue to drive up the gap between the rich and the rest, causing huge, unnecessary suffering”, said Bucher.

Notes to editors

The 2022 Commitment to Reducing Inequality (CRI) Index is the first detailed analysis looking at governments’ policies and actions to fight inequality during the first two years of the pandemic. It reviews the spending, tax and labour policies and actions of 161 governments during 2020–2022. Its findings show clear lessons for governments now grappling with inflation and the cost-of-living crisis.
Co-authors Matthew Martin, Director at Development Finance International, and Max Lawson, Global Policy Lead Inequality for Oxfam, are available for interviews.
Dozens of civil society organizations have joined in a campaign to #EndAusterity. In a report they warned for a post-pandemic austerity shock. Oxfam senior policy advisor Nabil Abdo is available for interviews.
In the run up to the World Bank Annual Meeting, Oxfam launched its report Unaccountable Accounting on October 3, highlighting the inaccuracy of World bank’s accounting of climate finance. Poor countries may not be getting the crucial climate funding they need to survive. Oxfam’s climate change policy lead, Nafkote Dabi is available for interviews.
Oxfam Aotearoa reaction to New Zealand’s ranking can be found here.

Oxfam reacts to Government’s farmgate emissions pricing system

October 11, 2022

In reaction to the Government’s farmgate emissions pricing system, Oxfam Aotearoa climate justice lead Nick Henry says:

“A system for pricing agricultural emissions is starting to shape, but there are some major holes that need filing if Aotearoa is to do its part in keeping global warming to 1.5 degrees. Farming is responsible for almost half of New Zealand’s emissions. The system must be transparent, fair and effectively reduce emissions.

“The governments proposed cautious approach does little to help people across the Pacific and beyond to keep their homes and their livelihoods. This is not a business deal; this is our future.

“We already know what it is going to take to tackle agriculture emissions: we need an effective system to price and reduce emissions, with support to turn around the farming sector from being Aotearoa’s biggest polluter, into a solution for tackling climate change and restoring nature. That involves a phase out of synthetic nitrogen fertiliser, and investing billions to support agriculture to transition to low emissions and regenerative agriculture.”

Oxfam reacts to failure to extend the truce in Yemen

October 3, 2022

In response to the failure to extend the truce in Yemen, Ferran Puig, Oxfam Country Director in Yemen said:

“The end of the truce is terrible news for the people of Yemen. Millions will now be at risk if air strikes, ground shelling and missile attacks resume.

‘’The past six months have brought hope to millions of Yemenis who have seen a 60 percent decrease in casualties, a significant reduction in violence, more fuel imports and much easier access to essential services and aid. In addition, fewer people have been forced from their homes.

“Resumed fighting would further exacerbate the crisis and undermine the efforts towards the lasting peace Yemenis desperately need.

“We urge all parties to the conflict to listen to the demands of their people, who dream for a better tomorrow where they are able to rebuild their lives and future. Over seven years of conflict have devastated the lives of millions across the country, making it one of the world’s worst humanitarian crises.”