Monitoring, reporting and verification of climate finance provided and the funded activities has grown in importance during the last years. Therefore, a consortium of Germanwatch, Ecofys and Wuppertal Institute for Climate, Environment, Energy has developed for the German Federal Environment Agency a proposal for a potential monitoring and reporting system for a bilateral climate funds. The report presents the lessons learned from this development process. After shortly describing the challenges of monitoring and reporting climate action, the proposed concept is outlined. The report ends with concrete lessons and challenges regarding the provision and use of standard indicators, the potential aggregation of project results of various projects as well as regarding the monitoring of qualitative proect results as well as improved adaptive and mitigative capacity.