ICAI report finds more ambitious approach required for the alignment of UK aid with the Paris Agreement

14 Oct 2021

The commitment to align all UK aid with the Paris Agreement reflects the urgency of the climate crisis, but a more ambitious approach is needed to achieve the transformative impact necessary for pursuing low-emission, climate-resilient development, a new review by the Independent Commission for Aid Impact (ICAI) has found.

ICAI’s rapid review, published today (Thursday 14th October), examines the progress the UK government has made towards aligning Official Development Assistance (ODA) with the Paris Agreement – an international treaty that aims to limit global warming and strengthen countries’ ability to deal with the adverse impacts of climate change.

The review recognises that the commitment to ‘Paris align’ all UK aid, made in June 2019 by the former prime minister Theresa May, is important. But it warns that an acceleration of action is needed to reflect the scale and importance of the task and calls for the commitment to be embedded at the heart of the forthcoming International Development Strategy.

ICAI’s chief commissioner, Tamsyn Barton, said:

“The UK’s decision to align all UK aid with the Paris Agreement was an important commitment, signalling its intention to be a leader in the pursuit of international climate goals. It recognises that delivering sustainable development cannot be achieved without tackling climate change.

“While we applaud the government’s ambition, its progress to date has been slow and urgent action is required for the government’s approach to achieve the kind of transformative impact that is required to tackle the climate crisis.”

The Foreign, Commonwealth and Development Office (FCDO) has developed four tools to support the Paris alignment process: a climate risk assessment; shadow carbon pricing (which applies a price to programme’s expected emissions and emission reductions); a fossil fuel policy; and alignment with country partners’ own climate mitigation and adaptation plans. In April 2021, the application of the four tools became a mandatory requirement for all new FCDO programmes.

ICAI’s review found that the FCDO’s four tools for alignment reflect emerging good practice for screening out high-emission development projects and identifying those with high risks of adverse climate impacts. However, ICAI said the evolving UK approach also needs to select positively, choosing and adapting projects to support the transformational shifts necessary to achieve low-emission, climate-resilient development.

ICAI also expressed concern that lines of reporting on Paris alignment are currently unclear, and that the lack of transparency about measurements and metrics limits public accountability and the ability of the government to track progress over time.

The aid watchdog acknowledged that the Paris alignment of aid is a challenging commitment, and that the UK’s approach is a work in progress. ICAI commended the FCDO for the work already undertaken to operationalise Paris alignment, but emphasised that responsibility for the commitment applies to all ODA-spending departments and raised concerns about the lack of a roadmap to achieve this.

The review notes that the FCDO is planning to introduce an overarching approach to Paris alignment that could help to ensure that the UK’s ambitious alignment goals are pursued across all aid programming and not badged as a ringfenced ‘climate issue’.

Within the FCDO, the review highlighted that a number of exemptions and caveats exist which means that the tools are not a mandatory requirement for a large proportion of aid spend. For FCDO aid spent through multilateral channels and the CDC Group, the UK’s development finance institution, the UK is largely reliant on these institutions’ own efforts to achieve Paris alignment.

Recognising that the doubling of the UK’s International Climate Finance is likely to increase demand on existing climate and environment expertise, ICAI warns that there does not seem to be enough capacity or capability to deliver the application of the complex tools across all FCDO programmes, noting that existing capabilities differ across the overseas network.

The review found that the UK has been an effective influencer of Multilateral Development Banks – whose scale of investment will impact on future emissions pathways in developing countries – but, the watchdog said the UK could extend its influencing role beyond a focus on direct spending, and to other multilaterals.

ICAI recommends that Paris alignment is embedded at the heart of the forthcoming International Development Strategy with timebound milestones and a cross-government reporting and accountability process. It further recommends that the UK should urgently build capacity and capabilities across its ODA spending teams to deliver Paris alignment and should work with other countries to establish and promote international best practice.

Read the review.

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