Recommendation 2

Under the current arm’s-length relationship, BII holds some investments that conflict with the UK Government’s policies, such as those relating to fossil fuels and there have been few attempts by BII to adapt its legacy investment portfolio to align with UK interests. The recent UK Government decision to expand BII’s remit to assist with the reconstruction of Ukraine demonstrates that the FCDO can intervene to steer BII’s investment activity, even where BII does not have necessary deep country knowledge and experience. The United States’ International Development Finance Corporation (DFC) demonstrates that public sector Board representation is not inherently damaging to a DFI’s commercial reputation given that, at the time of writing, this was the largest bilateral DFI. To ensure that BII’s strategy and operations are consistent with the International Development Strategy and FCDO objectives, to protect taxpayers’ interests and to ensure that BII’s investments help the world’s poorest people, FCDO should increase its oversight of BII and take a non-voting seat on the BII board.