Recommendation 22

HM Government · verbatim extract Accepted in Part

Partially Accept The Government agrees with the importance of BII prioritising the monitoring and reporting of its investment activity and financial and impact data. BII ensures transparency Session 2023–24 by reporting all its investments on a public database available on BII’s website. This includes the amount committed, details about the investee, and the anticipated development impact. To further strengthen transparency, BII will publish a Transparency Roadmap before the end of 2023. This will articulate BII’s ambition to be the most transparent bilateral development finance institution as measured by the Publish What You Fund transparency index, as well as specific short-term actions to deliver on this ambition. At a portfolio level, BII already reports against subcategories a) and b) above. For example, in 2022 BII’s investments supported 54,000 additional jobs and BII mobilised $1.35-$1.41 billion of private-sector capital. Moreover, 50% of BII’s 2022 investments were gender- focused investments into 2X-qualified businesses and fund managers. All BII’s 2X qualified deals are published on an annual basis on BII’s website and form part of BII’s Annual Review which is also published online. Typically, 2X qualifications are also included within investment announcements on BII’s website, including which criteria the deal qualified under in line with Recommendation c) above. As part of the Transparency Roadmap, BII will also begin disclosing the qualifying criteria for each new 2X investment. For sub-category d), BII will continue to provide in its Annual Review and other publications examples of how 2X-qualified investments have created positive outcomes for women and girls – providing outline for best practice and learning for the industry. For example, BII’s investment in Kashf Foundation, a microfinance institution that provides finance to female entrepreneurs in Pakistan, has enabled the business to expand its customer reach from 490,000 in 2020 to 639,000 customers by end 2022. Moreover, increased disclosure requirements for 2X qualifications are being set by 2X Global as part of the next phase of the 2X Challenge. BII, together with its 2X DFI peers, will adhere to these new requirements as they are introduced. As part of its commitment to align with the Task Force on Climate-related Financial Disclosures (TCFD), BII already discloses the percentage of assets in its portfolio that can be considered climate finance and ‘carbon-related’ (i.e. in the fossil fuel value chain) as part of its annual TCFD disclosure in its Annual Accounts - and in line with the TCFD recommendations on metrics. In the future, BII will state on their public investment database, where applicable, whether investments in their power generation portfolio are renewable or fossil fuel. This will be included in the Transparency Roadmap milestones and make it easier to identify BII’s fossil fuel investments. The Government does not agree with the recommendation for BII to publish progress against planned annual impact outcomes. BII regularly monitors progress against the short-term impacts of its active investments made since BII’s investment mandate was expanded in 2012 and publishes aggregated impact outcomes for its whole portfolio in its Annual Review. This approach was endorsed by ICAI who concluded in their 2021 review of BII that “all investments in the sample were monitored against the development impact thesis and RAG-rated (red/amber/green) for the quarterly portfolio reviews” (ICAI, 2021). However, as a provider of long-term patient capital, the full anticipated impact of BII’s investments, including longer-term systemic impacts, often takes multiple years or even decades to deliver. As such, and as set out in the response to Recommendation 11, Ministers Session 2023–24 and BII believe the most appropriate and rigorous way of assessing BII’s development impact is through multi-year independent evaluation. BII actively manages investments for impact against a long-term plan, course correcting where possible.