UK aid’s international climate finance commitments

Review

This rapid review found that UK aid’s £11.6 billion international climate finance (ICF) commitment to support developing countries to adapt and respond to climate change will be challenging to meet in light of stretched resources.

Findings

• To meet the £11.6bn pledge by 2025-26, the government will have to spend 55% of the total in the final two years.
• The government “moved the goalposts” by changing the way meeting the target is calculated, and reviewing existing spend to include all eligible ICF. This amounted to an additional £1.724 billion categorised as ICF, which was not new and additional spending for developing countries.
• The new approach does not pay sufficient attention to the developing countries most in need, as it represents a shift towards the channelling of concessional loans rather than grants, a modality less appropriate for the poorest and most vulnerable states.
• While pressures on the aid budget mean there will be inevitable trade-offs with non-climate programmes to meet the target, the impact was found to be much smaller than suggested by media reporting in 2023.
• There is insufficient transparency about the accounting changes, making it hard to replicate the government’s calculations and hold the UK to account for its climate finance commitments.
• ICF programming paid less attention to gender than needed, with 48% not applying the OECD Development Assistance Committee’s gender marker – a reporting tool for tracking the promotion of gender equality through aid.

Recommendations

1. ICF-spending departments should produce a combined detailed internal plan, setting out how much of the remaining spend will be through which channels, (multilateral, bilateral, development capital, research and development), and how the balance between adaptation and mitigation financing will be reached. 
2. ICF spending departments should publish an annual report which enables people in the UK and around the world to track whether they are meeting their public commitments on climate finance.
3. All ICF spending departments should integrate consideration of gender in their programmes, including by identifying gender-specific programming, using the gender marker where it is relevant, and providing disaggregated reporting.
4. In line with the white paper commitment, ICF should track the delivery of international climate finance to small-island developing states, fragile and conflict-affected states and least developed countries.