UNFCCC financial procedures and established funds
In line with Article 7.2(k) of the Convention, COP 1 adopted, by consensus, financial rules for itself, the secretariat and the Subsidiary Bodies (SBs) (“financial procedures”, contained in Annex I of decision 15/CP.1). The financial procedures apply to the Kyoto Protocol and to the Paris Agreement mutatis mutandis (Article 13.5 of the Kyoto Protocol, Article 16.5 of the Paris Agreement).
These rules provide for a two-year financial period, of which the first year must be an even numbered year. Every two years, the Executive Secretary proposes a programme budget for consideration by the Subsidiary Body for Implementation (SBI), setting out the proposed activities and budget of the secretariat for the coming two years. The SBI considers the proposal and forwards a recommended programme budget to the Conference of the Parties (COP) for its approval and for endorsement by the Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol (CMP) and the Conference of the Parties serving as the Meeting of the Parties to the Paris Agreement (CMA). The budget is adopted by consensus.
The COP and the CMP adopt scales of contributions that indicate the contributions by each Party to the Convention and the Kyoto Protocol, respectively. The indicative scales are based on the United Nations scale of assessments that is adopted by the General Assembly every three years and follows the principle that all Parties should contribute to the core budget. Contributions are due on 1 January of each calendar year.
The COP regularly authorizes the Executive Secretary to make transfers between each of the appropriation lines of the core budget, up to an aggregate limit of 15 per cent of total estimated expenditure for those appropriation lines, provided that a further limitation of up to minus 25 per cent of each such appropriation line shall apply, while ensuring no negative impacts on the activities under each division.
The UNFCCC accounts and financial management of funds are subject to the internal and external audit processes of the United Nations.
The financial procedures include the request to the United Nations Secretary-General to establish two trust funds which bear costs related to the Convention, namely:
- the Trust Fund for the Core Budget of the Convention, which receives contributions from Parties, according to an indicative scale based on the United Nations scale of assessment; and General Assembly resolution 55/5 of 22 January 2001.
- the Trust Fund for Participation in the UNFCCC process, which receives voluntary contributions and supports participation of eligible representatives from developing country and EIT Parties in the sessional meetings of the governing and subsidiary bodies.
Subsequently, additional trust funds were established in line with the provision contained in the financial procedures that, subject to the approval of the COP, the United Nations Secretary-General may establish other trust funds, provided that they are consistent with the objectives of the Convention:
- Trust Fund for Supplementary Activities, which receives funding provided by Parties in addition to their contributions to the core budget and supports a large range of activities for the implementation of the biennial work programme;
- Trust Fund for the Special Annual Contribution of the Government of Germany (the “Bonn Fund”), which consists of an additional annual contribution from Germany, the host of the secretariat, and primarily supports conferences and other meetings in Bonn (decision 16/CP.3);
- Trust Fund for the Clean Development Mechanism for the receipt of fees and shares of proceeds for the administration of CDM (decision 11/CMP.3);
- Trust Fund for the International Transaction Log (ITL) for the receipt of fees and the administration of the ITL (decision 11/CMP.3);
Furthermore, UNFCCC classifies specific financial activities into special accounts:
- Special account for programme support costs;
- Special account for conferences and other recoverable costs;
- Special account for cost recovery related activities;
- End-of-service and post-service employee benefits fund.
Recent developments
In 2023, the appropriate legislative bodies approved key UNFCCC budgets for the biennium 2024-2025:
- The Conference of the Parties (COP) adopted decision 19/CP.28 on the programme budget for the biennium 2024-2025 at its 28th session held in Dubai from 30 November to 12 December 2023
- The Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP) adopted decision 5/CMP.18 and therein endorsed decision 19/CP.28 as it applies to the Kyoto Protocol
- The CMP also adopted decision 6/CMP.18 on the budget for the international transaction log (ITL) for the biennium 2024–2025;
- The Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA) endorsed decision 19/CP.28 at its third session (refer to CMA5 report para. 106);
- Supplementary requirements as well as requirements for the Trust Fund for Participation in the UNFCCC Process were taken note of at the COP in decision 19/CP.28. The secretariat depends on voluntary contributions to fund these requirements.
The originally proposed programme budget for the biennium 2024-2025 is contained in the following documents: FCCC/SBI/2023/2, Add.1 and Add.2. The revised work programme of the secretariat for the biennium 2024-2025 is contained in FCCC/SBI/2023/2/Add.1/Rev.1.
The updated work programme as of 1 January 2024 is contained in a document which will be published soon.
The report on budget performance and programme delivery as at 31 December 2023 is contained in a document which will be published soon.
In 2021, the appropriate legislative bodies approved key UNFCCC budgets for the biennium 2022-2023:
- The Conference of the Parties (COP) adopted decision 22/CP.26 on the programme budget for the biennium 2022-2023 at its 26th session held in Glasgow from 31 October to 13 November 2021; and further adopted decision 26/CP.27 at its 27th session held in Sharm el-Sheikh from 6 to12 November 2022 with regard to revised indicative scale of contributions for 2022-2023
- The Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP) adopted decision 8/CMP.16 and therein endorsed decision 22/CP.26 as it applies to the Kyoto Protocol; and further adopted decision 8/CMP.17 with regard to revised indicative scale of contributions for 2022-2023
- The CMP also adopted decision 9/CMP.16 on the budget for the international transaction log (ITL) for the biennium 2022–2023;
- The Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA) endorsed decision 22/CP.26 at its third session (refer to CMA3 report para. 107);
- Supplementary requirements as well as requirements for the Trust Fund for Participation in the UNFCCC Process were taken note of at the COP in decision 22/CP.26. The secretariat depends on voluntary contributions to fund these requirements.
The originally proposed programme budget for the biennium 2022-2023 is contained in the following documents: FCCC/SBI/2021/4, Add.1 and Add.2
The updated work programme as of 1 January 2022 and 1 July 2022 is contained in the following documents: FCCC/SBI/2022/INF.3 and FCCC/SBI/2022/INF.11
The report on budget performance and programme delivery as at 31 December 2022 is contained the the following document: FCCC/SBI/2023/6.
Information on the preparation of the budget and work programme for the biennium 2024–2025 is available here.