Recommendations & Conclusions
12 items
5
Conclusion
Ninth Report - Investment for developme…
Accepted
We do not find BII’s approach to tracking gender lens achievements to be dynamic or suitably stretching to achieve greater development impact. Performance monitoring of key metrics to track other key indicators is also absent from BII’s strategy and public reporting.
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We do not find BII’s approach to tracking gender lens achievements to be dynamic or suitably stretching to achieve greater development impact. Performance monitoring of key metrics to track other key indicators is also absent from BII’s strategy and public reporting.
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Government response AI summary
The Government agrees BII should promote gender equality and target under-represented groups, noting BII’s existing 2022-26 Strategy, 2X Criteria, and BOLD framework for diversity finance. It commits to ensuring gender, development impact, and environmental and social outcomes are a specified feature of future portfolio and …
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Foreign, Commonwealth & Development Office
7
Conclusion
Ninth Report - Investment for developme…
Accepted
The FCDO should have more oversight of the regional split of BII’s funds. It should actively monitor the thematic and geographic split of BII investments and include this within its annual reporting of ODA expenditure. The profiling of BII investment activity should also reflect the FCDO’s priorities, and this should …
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The FCDO should have more oversight of the regional split of BII’s funds. It should actively monitor the thematic and geographic split of BII investments and include this within its annual reporting of ODA expenditure. The profiling of BII investment activity should also reflect the FCDO’s priorities, and this should be guided by the FCDO setting geographic and thematic handrails. The geographic and thematic areas of BII expenditure should be reported alongside the FCDO’s annual programme expenditure so the UK taxpayer has true sight of how UK ODA has been spent regionally and across thematic areas.
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Government response AI summary
The Government agrees on monitoring BII’s geographic split, noting existing monitoring through Quarterly Shareholder Meetings and publicly available data. The Minister for Development has set a new ambition for BII to commit over 50% of its annual investments to the poorest and most fragile countries …
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Foreign, Commonwealth & Development Office
8
Recommendation
Ninth Report - Investment for developme…
Accepted
BII should articulate the work it strives to do to promote gender equality and target under-represented groups through its investee businesses by setting its own proposal for impact. This should set out the categories of people that are being targeted, the impact that the investments are targeting and the target …
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BII should articulate the work it strives to do to promote gender equality and target under-represented groups through its investee businesses by setting its own proposal for impact. This should set out the categories of people that are being targeted, the impact that the investments are targeting and the target outcomes and key metrics that will be measured to show the change created from BII’s investments.
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Government response AI summary
The Government agrees that BII investments must support inclusive economic growth, stating that BII’s current 2022-26 strategy already includes objectives for inclusive development, integrated through its Impact Framework and Impact Score. The FCDO continues to monitor BII’s performance against this, including an analysis requested in …
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Foreign, Commonwealth & Development Office
10
Conclusion
Ninth Report - Investment for developme…
Accepted
Some of BII’s investments in middle-income countries have been poorly targeted and do not appear to be reaching the poorest and most marginalised people. In some cases, BII investments have tenuous links to development impact. By concentrating its investments in middle-income countries, there is a risk that BII will lose …
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Some of BII’s investments in middle-income countries have been poorly targeted and do not appear to be reaching the poorest and most marginalised people. In some cases, BII investments have tenuous links to development impact. By concentrating its investments in middle-income countries, there is a risk that BII will lose its development focus and prioritise financial returns.
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Government response AI summary
The Government agrees that poverty reduction must be central to BII's investments, stating that BII's existing strategic objectives and Impact Score already integrate productive, sustainable, and inclusive development. It confirms BII's oversight of investments, including through intermediaries, and is satisfied with BII’s existing procedures and …
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Foreign, Commonwealth & Development Office
12
Conclusion
Ninth Report - Investment for developme…
Accepted
To ensure that poverty reduction is central to BII’s investment decisions, BII must pursue investments that demonstrate a clearer focus on driving inclusive economic growth and reducing financial and social inequality.
Government response AI summary
The government describes existing mechanisms for ministerial scrutiny of BII's budget and activities, and highlights independent evaluations that show BII's investments are on track to meet development impact goals, arguing that poverty reduction is already central.
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Foreign, Commonwealth & Development Office
13
Conclusion
Ninth Report - Investment for developme…
Accepted
In some instances BII has not demonstrated the additionality of its investments and is consequently competing with and crowding out commercial investors.
Government response AI summary
The government agrees with the importance of transparency and states that BII will publish a Transparency Roadmap before the end of 2023, outlining its ambition to be the most transparent bilateral development finance institution and detailing specific short-term actions.
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Foreign, Commonwealth & Development Office
15
Conclusion
Ninth Report - Investment for developme…
Accepted
Financial intermediaries can deliver market expertise, but such investment vehicles can result in UK taxpayers’ money being used to reward intermediary agents in low- tax jurisdictions. In some cases, the onward investments made by intermediaries have rewarded businesses with weak or questionable links to development.
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Financial intermediaries can deliver market expertise, but such investment vehicles can result in UK taxpayers’ money being used to reward intermediary agents in low- tax jurisdictions. In some cases, the onward investments made by intermediaries have rewarded businesses with weak or questionable links to development.
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Government response AI summary
The government partially accepts, agreeing on the importance of poverty reduction but states they are satisfied with BII's existing processes and oversight of investments made through intermediaries, which comply with key policies and support development.
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Foreign, Commonwealth & Development Office
16
Recommendation
Ninth Report - Investment for developme…
Accepted
To ensure that poverty reduction is central to BII’s investment decisions and to prioritise investments that are critical to recipient countries’ development needs, BII must: (a) take responsibility for where its money is invested by exerting greater oversight and control over the activities of financial intermediaries who invest UK taxpayers’ …
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To ensure that poverty reduction is central to BII’s investment decisions and to prioritise investments that are critical to recipient countries’ development needs, BII must: (a) take responsibility for where its money is invested by exerting greater oversight and control over the activities of financial intermediaries who invest UK taxpayers’ money. (b) ensure that its investments reduce inequality by targeting investments that generate tax receipts in the country of operation rather than channelling money through low-tax jurisdictions that ultimately promote tax savings for those intermediary agents. (c) rigorously monitor all its intermediated investments to ensure that it can intervene before its money is invested in companies whose values are not aligned with the International Development Strategy.
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Government response AI summary
The government partially accepts the recommendation, stating that BII already has appropriate oversight and monitoring processes in place, which Ministers are satisfied with. The response highlights existing mechanisms for ensuring compliance with BII's policies and promoting poverty reduction through its strategic objectives, but does not …
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Foreign, Commonwealth & Development Office
17
Conclusion
Ninth Report - Investment for developme…
Accepted
While the Abraaj example suggests that BII’s internal control flagged suspected fraudulent activity, in light of other reports we are forced to conclude that BII’s internal control failed to identify and prevent some investments that appear to have harmed society and the environment in low-income countries. In those cases, BII …
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While the Abraaj example suggests that BII’s internal control flagged suspected fraudulent activity, in light of other reports we are forced to conclude that BII’s internal control failed to identify and prevent some investments that appear to have harmed society and the environment in low-income countries. In those cases, BII was slow to investigate and to act in response to alleged wrongdoing by investee companies.
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Government response AI summary
The government partially accepts, agreeing to hold BII accountable, but details existing mechanisms like corporate governance, FCA regulation, and independent verification by BlueMark, ICAI, and NAO, which it claims already ensure BII's due diligence and monitoring meet best practice standards.
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Foreign, Commonwealth & Development Office
18
Recommendation
Ninth Report - Investment for developme…
Accepted
The FCDO must hold BII accountable for its due diligence and ongoing monitoring of its direct and indirect investments. To that end, FCDO must audit BII’s investment portfolio over a rolling five-year period against a set of environmental, social and governance (ESG) and development impact standards to validate BII’s internal …
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The FCDO must hold BII accountable for its due diligence and ongoing monitoring of its direct and indirect investments. To that end, FCDO must audit BII’s investment portfolio over a rolling five-year period against a set of environmental, social and governance (ESG) and development impact standards to validate BII’s internal assessments. (Paragraph 95) Accountability and Transparency
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Government response AI summary
The government partially accepts, agreeing it should hold BII accountable for due diligence and monitoring. It asserts that existing corporate governance arrangements, FCA regulation, and independent verification by bodies like BlueMark, ICAI, and NAO already ensure best practice and validate BII's internal assessments.
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Foreign, Commonwealth & Development Office
21
Recommendation
Ninth Report - Investment for developme…
Accepted
BII needs to work towards greater transparency of its investment data. As BII has stewardship over taxpayers’ money, there is greater responsibility to ensure propriety over its investments by annually publishing performance data. We welcome BII’s steps towards improving its transparency by creating a new role for a Transparency and …
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BII needs to work towards greater transparency of its investment data. As BII has stewardship over taxpayers’ money, there is greater responsibility to ensure propriety over its investments by annually publishing performance data. We welcome BII’s steps towards improving its transparency by creating a new role for a Transparency and Disclosures Officer. We note however that there is scope for considerable improvement in BII becoming a more transparent institution.
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Government response AI summary
The government accepts the recommendation, setting a goal for BII to rank as the most transparent bilateral DFI. BII will publish a Transparency Roadmap outlining its ambition and specific short-term milestones.
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Foreign, Commonwealth & Development Office
23
Recommendation
Ninth Report - Investment for developme…
Accepted
BII should use Publish What You Fund’s DFI Transparency Index as a roadmap to increase the transparency of its operations and public disclosures. (Paragraph 117) Investment for development: The UK’s strategy towards Development Finance Institutions 59
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BII should use Publish What You Fund’s DFI Transparency Index as a roadmap to increase the transparency of its operations and public disclosures. (Paragraph 117) Investment for development: The UK’s strategy towards Development Finance Institutions 59
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Government response AI summary
The government accepts the recommendation, setting a goal for BII to rank as the most transparent bilateral DFI in the next Publish What You Fund index. BII will publish a Transparency Roadmap with specific short-term milestones to achieve this.
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Foreign, Commonwealth & Development Office