When Climate Finance Enters Fragile Regions, Can Its Controls Travel With It?

Adapt the control, not the integrity objective.

The places where climate finance is hardest to deliver are often among the places where it is most urgently needed. Climate shocks do not wait for institutions to become stronger, markets to deepen or political conditions to stabilize. In countries already affected by conflict, displacement, weak administrative reach or severe humanitarian pressure, climate impacts can intensify existing stresses on livelihoods, public services and social cohesion. The UNFCCC’s Needs-Based Finance project now includes pilot work in countries affected by conflict and severe humanitarian needs, including Chad, South Sudan and Yemen, addressing country-specific challenges in accessing climate finance.

That reality creates a problem that receives less attention than the question of how much finance reaches fragile and conflict-affected contexts. Climate-finance controls are usually designed with assumptions about the environment in which they will operate. Procurement rules assume something about the availability of suppliers and the possibility of competition. Due diligence assumes that relevant information can be obtained and checked. Monitoring assumes that evidence can be gathered. Grievance mechanisms assume that people can safely use them. Verification assumes that somebody sufficiently independent can reach the activity being verified.

Once those assumptions stop holding, institutions can make one of two mistakes. They can preserve the control exactly as designed, even when the procedure has become poorly suited to the environment in which it is being applied. Or they can relax the requirement because the context is difficult and delivery still has to proceed. The first may preserve form while losing practical effect; the second may preserve flexibility while weakening protection. The real integrity question is whether the objective behind the control survives the change in operating environment.

A control is not portable merely because it can be copied

Fragility is not one condition. A conflict-affected province, a remote region with limited administrative infrastructure, a state in which public authority is contested and a country whose institutions are simply overstretched may all create very different integrity problems. The World Bank’s work on climate action in fragile, conflict-affected and violent settings reflects this diversity. Its framework provides guidance on tailoring climate action to the challenges and capacities of different fragile settings. The same logic should apply to integrity controls.

Consider a hypothetical climate-resilience program procuring equipment from local suppliers. Its ordinary due-diligence process requires corporate-registration records, beneficial-ownership information, audited financial statements, tax documentation and evidence of previous contracts. In a stable market, those requirements may provide useful information about ownership, financial capacity and potential integrity risk. Now place the same procurement in an area where the company registry is incomplete, internet access is unreliable, public records cannot always be independently checked and several capable local suppliers are young or operate through relatively informal structures.

Applying the original requirements without modification may exclude much of the available market and leave the project dependent on a narrow group of larger or distant firms. Waiving the requirements altogether creates the opposite problem: the institution loses visibility over ownership, conflicts, capability and potential misuse. Neither response is particularly satisfactory because both confuse the control itself with the purpose the control is supposed to serve.

A more disciplined approach begins by separating the integrity objective from the mechanism used to achieve it. If the purpose of the ownership check is to understand who ultimately controls the supplier, inaccessible registry information does not make that objective disappear. It creates a need for other credible evidence, perhaps through declarations triangulated against banking information, locally available records, independent references or relationship checks. If audited financial statements are unavailable, alternative evidence of financial capacity may be possible. Where ordinary competition is constrained, the integrity burden may shift toward market mapping, price benchmarking, stronger conflict checks and clearer justification of how the supplier was selected.

None of those alternatives becomes adequate simply because it is more convenient or more feasible. The institution still has to establish whether the adapted mechanism provides enough evidence to protect the original objective. That is what distinguishes adaptation from waiver.

A control can solve one problem and create another

Fragile settings also expose a less obvious difficulty: a control can reduce immediate exposure while producing a different weakness elsewhere in the system.

OECD reporting on development cooperation in Yemen illustrates the tension. Country-specific results showed no use of national public financial-management systems by development partners. The report attributes this to severe concerns about the absorptive capacity of national systems, compounded by high political and reputational risks and stringent development partner procedural constraints, and says these factors have entrenched parallel implementation arrangements.

There may be very good reasons for doing this. Where national systems cannot provide adequate fiduciary assurance, routing funds through a parallel structure may be the only responsible way to protect resources in the short term. But the decision is not costless. It can move financial management, information and accountability outside the institutions that would ordinarily carry them, while leaving open the question of what remains when the external arrangement ends.

The point is not that country systems should always be used, nor does the Yemen evidence establish that parallel systems are inherently harmful. It shows something narrower and more useful: a control decision can alter the institutional environment around the risk it is intended to manage. Integrity analysis therefore needs to ask not only what exposure a control reduces, but also what dependency, exclusion or displacement it may create.

That question matters in climate finance because many interventions are intended to endure long after individual projects close. Resilience systems, land arrangements, adaptation infrastructure and public-service capabilities cannot remain permanently dependent on exceptional delivery structures. Immediate fiduciary protection may still justify a parallel arrangement, but the longer-term consequences should be visible rather than treated as irrelevant to the integrity decision.

Some controls depend on understanding power, not simply process

The portability problem becomes even clearer where climate finance intersects with land, natural resources and community rights.

A 2026 U4 study of carbon markets in Mozambique argues that technical carbon standards alone are insufficient in fragile and conflict-affected settings. It identifies weak land governance, insecure rights, political incentives and community exclusion as conditions that can undermine the integrity of carbon projects even where formal requirements are satisfied. The study emphasizes secure and verifiable land tenure, community consent, transparency and conflict-sensitive implementation as conditions for credible delivery.

The wider implication is not that every climate-finance project in a fragile setting faces the same problems as the carbon projects the study examines. It is that some controls depend on understanding how power actually operates locally. A consultation process may be procedurally complete and still fail if the people selected to represent a community lack legitimacy, if displaced groups cannot participate, if women or minorities cannot speak safely or if formal authority bears little resemblance to who actually influences local decisions.

In those circumstances, insisting on the same consultation format used elsewhere may preserve the appearance of consistency while weakening the substance of participation. The integrity objective is not to hold a meeting; it is to give people materially affected by a decision a credible opportunity to influence it. In one setting, a public meeting may achieve that. In another, smaller consultations, separate engagement with excluded groups, trusted intermediaries or confidential channels may provide more credible evidence that participation is real.

This is where uniformity can become misleading. Two projects may follow identical procedures and provide very different levels of protection because the institutional and political environments around those procedures are not the same. Integrity therefore cannot be judged only by whether the method was consistent. It also has to be judged by whether the purpose was preserved.

Context is not a blank check

There is an obvious danger in this argument. “Context” can become an exceptionally convenient explanation for why an inconvenient control should not apply. Records are difficult to obtain. Competition is limited. Verification is unsafe. Consultation takes too long. The deadline is urgent. Any of those statements may be true, but they can also become the language through which weaker controls are normalized.

That is why adaptation requires more discipline, not less. Before changing a material control, an institution should be able to identify the integrity objective the control was designed to protect, explain which assumption behind the original mechanism no longer holds, describe the alternative mechanism, identify the new risks created by that alternative and specify what evidence will demonstrate that the adapted control is actually working. Someone with appropriate authority should accept any residual risk, and temporary adaptations should have a defined point at which they are reviewed rather than simply continuing because they have become familiar.

This is the principle at the center of the argument: adapt the control, not the integrity objective. It avoids the false choice between procedural rigidity and lower standards. The question is not whether every institution follows identical steps. It is whether differences in method have silently produced differences in protection.

The real test is whether the protection survives

Climate finance cannot solve this problem by concentrating only on the easiest operating environments. Climate vulnerability does not follow institutional convenience, and some of the places facing the greatest climate pressure will remain difficult places in which to deliver and supervise finance.

Nor would a single control model solve the problem. A requirement that works well where public records are reliable may be useless where they are not. A grievance mechanism built around formal government structures may fail where those structures are not trusted. A monitoring approach dependent on periodic site visits may offer little protection where access is intermittent or unsafe. What matters is whether the underlying protection can survive the change in context, whatever mechanism carries it.

A portable control is therefore one whose protective purpose remains credible even when the operating environment changes. Sometimes that will mean keeping the original mechanism intact. Sometimes it will require additional verification, different evidence, stronger compensating controls or more local forms of scrutiny. In other cases, the adaptation may still leave too much uncertainty, and the activity will need to be redesigned, delayed or declined.

That boundary matters because adaptation cannot mean that every obstacle has to be engineered around. There are circumstances in which an institution may simply be unable to establish who controls a material counterparty, where significant funds went, whether a serious conflict exists, whether affected people have any credible route to challenge harm or whether reported delivery can be independently tested. At that point, the problem is no longer that the control needs adapting. The protection itself has become too weak to defend.

The challenge for climate finance in fragile and conflict-affected settings is therefore not to decide whether controls should be strict or flexible. It is to understand which elements of protection are non-negotiable and which mechanisms can responsibly change around them. That leaves a more useful question than whether the standard control was applied:

What must remain non-negotiable, and what must change so that it remains real?

References

1. UNFCCC. Needs-Based Finance Project.

2. World Bank (2025). Framework for Promoting FCV-Sensitive Climate Action. 2 July 2025.

3. OECD/UNDP (2026). Making Development Co-operation More Effective: Progress Report 2026. September 2026.

4. Soares da Costa Rosário, C. and Mullard, S. (2026). Integrity in Carbon Markets in Times of Conflict: The Case of Mozambique. U4 Issue 2026:6. U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute, March 2026.

About the Author

Ame I. Odaro-Adjei advises on the governance frameworks, control systems, project safeguards, and institutional arrangements that protect financial integrity and support credible climate finance delivery. Her background spans global investment banking, international development, and multilateral climate finance, including leading the compliance function of the world’s largest dedicated multilateral climate fund. She specializes in anti-money laundering, counter-terrorist financing, sanctions compliance, ethics, anti-corruption, and anti-fraud. She is a qualified attorney.