The Heat is On

Corruption is an evolving global threat that does far more than undermine development – it is a key cause of declining democracy, instability and human rights violations. The international community and every nation must make tackling corruption a top and long-term priority. This is crucial to pushing back against authoritarianism and securing a peaceful, free and sustainable world. The dangerous trends revealed in this year’s Corruption Perceptions Index highlight the need to follow through with concrete action now to address global corruption. — François Valérian, Chair of Transparency International

Corruption Trends and Climate Change

Although some regions around the world are seeing slight overall improvement, more progress is needed to protect climate-risk mitigation efforts, as well as safeguard the global financial system from abuse. More than 30 countries since 2012 reduced their corruption levels, but the average global score of 43 remains stagnant. Although the CPI noted several improvements, such as The Middle East and North Africa, which raised their regional average score for the first time in more than a decade, the improvements were fragile, with an increase of only one point. The scores for several other regions have declined or remained the same.

• Western Europe and the EU scored at the top of the CPI last year. However, the region marked an overall decrease for the second year in a row, with numerous leaders serving corporate interests that hinder critical legislation to combat climate-related risks and laws being poorly enforced.
• The Americas, according to TI, must urgently address impunity and address the influence of organized crime and corruption in politics. INTERPOL and the UN Environment Programme last year estimated that illegal mining in Latin America, which degrades natural habitats and destroys ecosystems, fueling global warming, generates as much as $48 billion in criminal proceeds per year.
• Governments across Asia Pacific have failed to deliver on their anticorruption commitments. Asia Pacific is the world’s most populous region, has the second largest number of young people, and is the region most prone to natural disasters. And yet, corruption has obstructed environmental policy, misappropriated climate funds, and hindered the enforcement of regulations and policies meant to address climate change, leaving the region vulnerable to climate disasters.

Lack of transparency and accountability increases the risk that funds meant to mitigate the effects of climate change will be diverted or embezzled for corrupt gain, threatening the global financial system, according to TI. Non-governmental organization (NGO) OXFAM International last year estimated billions of dollars in financing by the World Bank to fund climate initiatives is unaccounted for. OXFAM reported that its audit of the World Bank’s 2017-2023 climate finance portfolio found that between $24 billion and $41 billion in financing could not be tracked for between the time projects were approved and when they closed.

“The Bank is quick to brag about its climate finance billions—but these numbers are based on what it plans to spend, not on what it actually spends once a project gets rolling… This is like asking your doctor to assess your diet only by looking at your grocery list, without ever checking what actually ends up in your fridge.” — Kate Donald, Head of OXFAM International’s Washington D.C. Office

High Scorers Are Corruption Targets

For several years in a row, TI has highlighted “trouble at the top,” noting that the world’s advanced economies are targets for illicit actors to launder and hide assets. Denmark in 2024 has once again topped the CPI ranking with a 90/100 score, with Finland and Singapore taking second and third place with 88/100 and 84/100 respectively. This does not, however, mean that there’s no risk of corruption in these countries. A high score means that a country is perceived to have low levels of public-sector corruption, but these countries are still exploited by corrupt financial actors.

• TI analysis late last year revealed that billions of dollars misappropriated from infrastructure projects have been transferred into offshore accounts, luxury real estate, and accounts in western countries.
• Western financial hubs, such as Switzerland, which scored 81/100 in this year’s CPI continue to face scrutiny for facilitating illicit financial transactions.

High-scoring, non-western financial centers such as Hong Kong (74), Singapore (84), and the UAE (68) also warrant closer attention for their increasing roles in facilitating the movement of illicit assets. Although these jurisdictions boast relatively strong rule of law and well-functioning institutions (the UAE was removed from the FATF grey list last year), their banking laws, corporate structures, and secrecy provisions can enable financial criminals to move assets without detection, with real estate being a major tool for laundering illicit funds.