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A new report out this week titled ‘Climate Finance Shadow Report’ from Oxfam shows New Zealand still has much more to do to support poorer countries adapt and respond to the climate crisis.
Oxfam Aotearoa’s Climate Justice Lead Nick Henry said:
“Oxfam’s report reveals that as governments around the world begin negotiations of a new global goal for climate finance, rich countries have already broken their promise to deliver US$100 billion a year to assist developing countries.
“The New Zealand Government is doing better than most on climate finance, but unfortunately the bar is very low. It is time for New Zealand to commit to increasing its climate finance and call on other rich countries to do the same. And deliver on their promises.
“The new report reveals that globally only a quarter of climate finance is given as grants, meaning most climate finance is provided in the form of loans. Although the New Zealand Government has a long way to go in order to do its fair share, one positive take away is that New Zealand has a strong commitment to give climate finance as grants, not loans. Loans only increases the burden on poorer countries as they take on expensive debt. Debt created from the failure of rich countries to deliver on their promises.
“It is also encouraging to see New Zealand increasingly integrate gender-equitable approaches to climate finance, but the Government is a long way off from making sure that the needs of people in all their diversity are met. New Zealand must stand with our whānau in the Pacific – the women, girls, and LGBTIQA+ and others who are on the frontlines of the climate crisis.
“Rich countries must find new ways to fund climate finance by taxing the wealthiest and the big polluters. In addition, Oxfam Aotearoa calls for new and additional finance to respond to loss and damage caused by climate change. This is a separate negotiation leading up to COP28, and should come with new funding.”
Notes:
Click here for the report: https://www.oxfam.org.nz/wp-content/uploads/2023/06/Climate-Finance-shadow-report.pdf
New Zealand’s current climate finance commitments end in 2025. Commitments for the next period from 2026 will need to contribute New Zealand’s fair share of the new global quantified goal on climate finance to be set at COP28 in December. Discussions on the process for setting the new global goal are underway this week in Bonn, at the intersessional meeting of parties to the UN Framework Convention on Climate Change.
Rich countries’ continued failure to honor their $100 billon climate finance promise threatens negotiations and undermines climate action
As global greenhouse emissions continue to rise, and climate change wreaks more havoc upon the people and places least responsible for the problem, rich polluting countries are now three years overdue on their promise to mobilize $100 billion a year in climate finance for low- and middle-income countries.
To make matters worse, says Oxfam, the actual support they provide is much less than reported numbers suggest, and is coming mostly as debt that has to be repaid.
Oxfam’s ‘Climate Finance Shadow Report 2023’ published today shows that while donors claim to have mobilized $83.3 billion in 2020, the real value of their spending was —at most— $24.5 billion. The $83.3 billion claim is an overestimate because it includes projects where the climate objective has been overstated or as loans cited at their face value.
By providing loans rather than grants, these funds are even potentially harming rather than helping local communities, as they add to the debt burdens of already heavily indebted countries —even more so in this time of rising interest rates.
Donor countries are repurposing up to one-third of official aid contributions as climate finance rather than putting forward new and additional money, while more than half of all climate finance going to the world’s poorest countries is now coming as loans.
Among bilateral providers, France has the highest share of its bilateral public climate finance through loans, at a staggering 92 percent. Other loan-heavy culprits include Austria (71 percent), Japan (90 percent), and Spain (88 percent). In 2019–20, 90 percent of all climate finance provided by multilateral development banks, like the World Bank came as loans.
“This is deeply unjust. Rich countries are treating poorer countries with contempt. In doing so, they are fatally undermining crucial climate negotiations. They’re playing a dangerous game where we will all lose out,” said Oxfam International’s Climate Change Policy Lead, Nafkote Dabi.
In the lead up to the Bonn Climate Summit (5 to 15 June), Oxfam also finds that climate-related development financing is largely gender-blind. Only 2.9 percent of all funding identified gender equality as worth prioritizing. Only one-third of climate finance projects in 2019-2020 mainstreamed gender, meaning that they took into account both women and men’s specific needs, experiences and concerns.
Oxfam estimates that the real value of funds allocated by rich countries in 2020, to support climate action in low- and middle-income countries was between $21 billion and $24.5 billion, of which only $9.5 billion to $11.5 billion was directed specifically for climate adaptation —crucial funding for projects and processes to help climate-vulnerable countries address the worsening harms of climate change.
“Don’t be fooled into thinking $11.5 billion is anywhere near enough for low- and middle-income countries to help their people cope with more and bigger floods, hurricanes, firestorms, droughts and other terrible harms brought about by climate change,” Dabi said. “People in the US spend four times more than that each year feeding their cats and dogs.”
Oxfam is highly concerned that adaptation funding is given too little attention when, in the past three years, India, Pakistan and Central and South America have all seen record heatwaves, in Pakistan later followed by flooding that affected over 33 million people, while East Africa is mired in its worst drought in over 40 years, contributing to crisis levels of hunger.
“Despite their extreme vulnerability to climate impacts, the world’s poorest countries, particularly the least developed countries and small island developing states, are simply not receiving enough support. Instead, they are being driven deeper into debt,” Dabi said.
The expectation that private investors can be mobilized by low- and middle-income countries to contribute a sizeable chunk of climate financing has not materialized, raising only $14 billion yearly, mainly for mitigation. Oxfam says it is difficult to find details on how this private finance is used or who benefits from it. According to a recent Organization for Economic Co-operation and Development (OECD) report, mobilized private adaptation financing rose sharply from $1.9 billion in 2018 to $4.4 billion in 2020, mainly because of a big liquefied natural gas energy project in Mozambique that does not reveal any adaptation activities.
Oxfam is highly concerned that funding for “loss and damage” —climate impacts that cannot or have not been mitigated or adapted to— still has no predictable place within the international climate finance architecture. Loss and damage finance needs are urgent, with estimates saying that low- and middle-income countries could face costs of up to $580 billion annually by 2030.
Oxfam says that ongoing deliberations under the UN Framework Convention on Climate Change (UNFCCC) to set a new global goal on mobilizing climate finance from 2025 onwards is a chance to rebuild trust between rich and low- and middle-income countries. But if past mistakes are not resolved and simply repeated, this initiative will have failed before it properly starts.
Climate finance providers should be massively scaling-up their efforts and be reporting climate financing on a case-by-case basis, highlighting the actual proportions channeled towards mitigation and adaptation. There is equally an urgent need for more grant-based financing for climate action, and less momentum toward loaning the money they have all promised to give.
Notes to editors
Download Oxfam’s ‘Climate Finance Shadow Report 2023’.
In East Africa alone, drought and conflict have left a record 36 million people facing extreme hunger, nearly equivalent to the population of Canada. Oxfam estimates that up to two people are likely dying from hunger every minute in Ethiopia, Kenya Somalia, and South Sudan.
The UN currently designates 46 countries as LDCs.
According to the OECD, mobilized private adaptation financing rose sharply from $1.9 billion in 2018 to $4.4 billion in 2020, mainly because of a big liquefied natural gas energy project in Mozambique that does not reveal any adaptation activities.
According to Anil Markandya and Mikel González-Eguino (2018), the costs of loss and damage in low- and middle-income countries could reach between $290 billion to $580 billion a year by 2030.
According to the American Pet Products Association, Americans spent $58.1 billion on pet food and treats in 2022.
Oxfam Aotearoa’s climate justice lead Nick Henry said:
“Despite the undeniable urgency of the climate crisis and the imperative to take immediate and bold action, the Government’s Budget falls far short of what is required to mitigate and adapt to the escalating impacts of the climate crisis. After the year Aotearoa has had, Oxfam is shocked to see the Government still isn’t taking the climate crisis seriously. We know New Zealanders want to see our government take stronger action to avoid the worst impacts of climate change. It is crucial our government stand with our communities in Aotearoa and the Pacific.
“This Budget includes some welcome climate change initiatives. But it’s deeply disappointing that the Government’s poor planning, and failure to act on the Climate Change Commission’s recommendations, have resulted in $800m in devastating slashes to funding available for climate action – and have taken $1.9b away from other important spending to support our communities.
“It’s staggeringly unjust that our Pacific neighbours contribute the least to the climate crisis, and yet they are facing the worst and earliest impacts. In the Pacific, loss and damage isn’t just a future worry – it’s a current reality. People are losing their homes and livelihoods, seeing their whole way of life threatened, by rising seas and extreme weather made worse by climate change.
“Pacific countries deserve the dignity of knowing that Aotearoa New Zealand isn’t just going to drop funding – they need to be able to plan. This Budget gives no reassurance beyond 2025, when previously announced climate finance funds run out. Pacific communities, and governments around the world need certainty that the New Zealand Government will stand with them.
“Oxfam Aotearoa urges the government to seize this opportunity to demonstrate global leadership by adequately funding climate mitigation, adaptation and loss and damage. We call on the New Zealand Government to commit to continuing our climate finance, and to paying our fair share to support communities in our Pacific region. It is not fair for those least responsible for climate change to bear the brunt of its impacts, and it is our collective responsibility to ensure that they receive the necessary support and resources to cope and thrive.
“Oxfam Aotearoa stands ready to work collaboratively with the government and other stakeholders to develop robust solutions, advocate for stronger climate action, and ensure that no one is left behind in our pursuit of a just and sustainable future.”
A milestone report released today by Oxfam Aotearoa reveals that some popular New Zealand clothing brands are failing to provide basic information on where their clothes are made, despite this being increasingly standard in Australia and in Europe.
Part of the ‘What She Makes’ campaign, the report reveals supply chain transparency ratings for six of New Zealand’s top fashion brands based on public data available to consumers. While some brands performed extremely well, receiving a full five-star rating, popular brands Glassons and Hallenstein Bros received a disappointing two-star rating.
“Well-known fashion brands have really stepped up for this milestone,” said Shalomi Daniel, Oxfam Aotearoa’s Campaign Lead for Gender and Economic Justice.
“We’re thrilled to see New Zealand founded brands and household names Kathmandu and Macpac performing equally as well as large multinational brands H&M and Lululemon all of whom received a full five-star rating. All four brands’ transparency extends to full lists of their Tier 1 factories, where they are located, and data about the people who are working in them.
“It is disappointing that Glassons and Hallenstein Bros have chosen not to share the most updated transparency information with their customers. Through not meeting all our basic criteria, unfortunately they received only a two-star rating. We hope to see them improve this as soon as possible.
“More and more, customers are expecting their favourite brands to be upfront about where their clothes are made. Transparency is the foundation of an ethical supply chain – it allows workers, unions, and groups of people like us to scrutinise the working conditions of these factories and ensure that women who make our clothes are treated and paid fairly.
“If a brand doesn’t share this data, that doesn’t mean the working conditions in their factories are bad – but it does make it that much harder for anyone to find out.
“In some cases, brands themselves don’t even know where their garments are being made. After the Rana Plaza disaster in 2013, some top international fashion brands only learned their workers had been killed when their logos were found in the rubble.
“We’re calling for improved transparency across the fashion industry. It’s clear the basic standards have shifted – and they’ll only continue to. While we focused on Tier 1 suppliers in this report – the factories that directly supply the brands – some of the brands we looked at are already looking into reporting on their Tier 2 suppliers, the ones that supply their Tier 1 factories. This is commendable, and we see this sort of transparency being the future for the industry.”
This transparency milestone is the second in the What She Makes campaign, where Oxfam Aotearoa is working alongside brands on a journey to paying the women who make their clothes in countries like Bangladesh and China a living wage.
In late 2022, the first campaign milestone asked the brands to make a public commitment to paying workers in the supply chain a living wage. The campaign’s next milestone will be next year, when brands will be asked to separate labour costs in price setting and negotiation.
“The good news is this is not the end – we will continue this journey with the brands to ensure that they pay the women who make our clothes a living wage. We welcome anyone wanting to support the campaign to help us demand better for the women who make our clothes by pledging their commitment at oxfam.org.nz/what-she-makes.”
Full list of brand ratings from the What She Makes Brand Transparency Report:
Notes:
The What She Makes campaign calls on clothing brands sold in Aotearoa New Zealand to pay a living wage to the women who make our clothes. Through the What She Makes campaign, Oxfam Aotearoa works directly with the brands to help them achieve each milestone. The ratings help keep brands on track as they go.
About the brand tracker – The brand tracker uses a star-rating system which provides a snapshot of how well each brand is doing in each milestone. The tracker includes five milestones which companies will be evaluated against:
1. Make a commitment (released November 2022)
As a first step, we want brands to make a credible, public commitment to pay a living wage to garment workers in their supply chain. This is a powerful demonstration that the brand is embarking upon their living wage journey.
2. Be transparent (May 2023)
Brands should be transparent and disclose their full supply chain and publish the following information on their website: factory names and addresses, parent companies, number of workers and breakdown by gender, sourcing channel, and date when the list is published or updated along with a statement that it is a complete list of the brand’s tier-one suppliers.
3. Separate labour costs (May 2024)
Separation of labour costs during price negotiations helps to quickly identify if the wages being paid to garment workers correspond to a living wage or not. It also allows the clothing brands and factories to negotiate a price without affecting the wages.
4. Publish a plan (November 2024)
Brands should develop and publish a step-by-step strategy outlining how and when a brand will achieve its commitment to pay workers a living wage and meet all requirements with clear milestones and targets.
5. Pay a living wage (TBC)
Within 4-6 years of making a commitment, brands should be paying a living wage within their supply chains. This requires collaboration, consultation, and public reports on their progress throughout the process.
The top-paid CEOs across four countries enjoyed a 9 percent pay hike in 2022, while workers’ wages fell 3.19 percent during the same period, reveals new analysis from Oxfam ahead of International Workers’ Day (1 May).
The figures, adjusted for inflation, are based on the latest data from the International Labor Organisation (ILO) and government statistics agencies.
One billion workers in 50 countries took an average pay cut of US$685 in 2022, a collective loss of US$746 billion in real wages, compared to if wages had kept up with inflation.
Women and girls are putting in at least 380 billion hours of unpaid care work every month. Women workers often have to work reduced paid hours or drop out of the workforce altogether because of their unpaid care workload. They also continue to face gender-based discrimination, harassment, and less pay for work of equal value as men.
“While corporate bosses are telling us we need to keep wages down, they’re giving themselves and their shareholders massive payouts. Most people are working longer for less and can’t keep up with the cost of living. Years of austerity and attacks on trade unions have widened the gap between the richest and the rest of us. On a day meant to celebrate the working class, this glaring inequality is both shocking and sadly unsurprising,” said Oxfam International’s interim Executive Director Amitabh Behar.
“The only rise workers have seen is that of unpaid care work, with women shouldering the responsibility,” Behar said. “This incredibly hard and valuable work is done for free at home and in the community.”
Brazilian workers’ real wages fell 6.9 percent (equivalent to 15 unpaid working days) last year, while in the US and the UK, the average worker took a real terms pay cut of 3.2 percent (6.7 unpaid working days) and 2.5 percent (5 unpaid working days), respectively.
Big business chiefs, however, are thriving. Oxfam’s analysis of corporate and survey data for 2022 found that:
Meanwhile, shareholder dividends hit a record US$1.56 trillion in 2022, a 10 percent real-term growth compared to 2021. US corporations paid out US$574 billon to their shareholders, more than double US workers’ total real wage pay cut. Brazilian shareholders received US$34 billion, just shy of what the country’s workers lost in real wages.
Exorbitant shareholder payouts benefit the richest in society, exacerbating already high levels of inequality. The wealthiest 1 percent of South Africans own more than 95 percent of bonds and corporate shares, while the richest 0.01 percent own 62.7 percent. In the US, the richest 1 percent hold 54 percent of shares held by US households.
However, taxes on income from dividends and shares, which help to fund public services like healthcare and education, have continued to fall, down from 61 percent in 1980 to just 42 percent today.
“Workers are tired of being treated like sacrificial lambs every time a crisis hits. Neoliberal logic blames inflation on everyone except profiteering corporations. Governments should stop relying only on interest rate hikes and austerity that we know hurts ordinary people, particularly those living in poverty. Instead, they should introduce top rates of tax of at least 75 percent on super-rich corporate bosses to discourage sky-high executive pay, and windfall taxes on excessive corporate profits. They must also ensure minimum wages keep up with inflation, and that everyone has the right to unionise, strike and bargain collectively,” said Behar.
Notes for editors
Download Oxfam’s methodology note and dataset.
May Day, celebrated by workers across the globe as International Workers’ Day, falls on May 1.
Download Oxfam’s report “Survival of the Richest” for more information about taxing the super-rich to fight inequality. Oxfam recommends introducing top rates of tax (marginal rates) of at least 75 percent on all personal income for the highest earners (e.g., for those making US$5 million a year, or the top 0.1%) to discourage sky-high executive pay.
According to Oxfam America’s report “The crisis of low wages in the US”, nearly a third of all workers in the US earn under US$15 an hour.
The Janus Henderson Global Dividend Index publishes data on annual dividends by country.
According to the United Nations University, the top 1 percent of South Africans own 95 percent of bonds and corporate shares, while the richest 0.01 percent own 62.7 percent. The US Federal Reserve publishes data on corporate equities and mutual fund shares by wealth percentile group.
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