Second Report - Global Britain in demand: UK climate action and international development around COP26

We are concerned that the FCDO might focus more on fast results than on tackling the root causes of social vulnerability in its interventions. Furthermore, we are concerned that social vulnerability might be considered less a core focus of the UK’s delivery of climate action and more just another tick box in project design. If adaptation is meant to protect the most marginalised people, the focus should be on improving their well-being and on the root causes of their social vulnerability. By investing in nature as a ‘default position’ instead of in partnership with local communities, the FCDO risks reinforcing or even worsening the vulnerabilities of marginalised groups and contributing to their displacement, continued discrimination or impoverishment.

We are concerned about the extent to which the priorities and knowledge of marginalised groups are factored into measures tackling climate change. Ensuring that the voices of the most marginalised, local communities are fully taken on board will improve the quality and sustainability of adaptation programmes. We urge the FCDO to apply the Principles for Locally-Led Adaptation in order to address the root causes of social vulnerability in its programmes and to reduce the scope for maladaptation and unintended consequences of Nature-based Solutions. By 31 January 2022, the FCDO should present us with their pathway of how they will apply and promote the Principles for Locally-Led Adaptation in support of Least Developed Countries (LDCs) and Small Island Developing States (SIDS) during the COP26 Presidency.

Building the capacity of local authorities and grassroots organisations in LDCs and SIDS to tackle climate change requires more attention. We urge the FCDO to grow long-term capacity in LDCs and SIDS by lengthening programme cycles to 5–10 years for climate adaptation programme cycles. The FCDO should also provide multiannual funding for the Least Developed Countries Initiative for Effective Adaptation and Resilience (LIFE-AR). Further, in line with the fourth Principle for Locally-Led Adaptation, “Investing in local capabilities to leave an institutional legacy”, the UK should sponsor courses in climate change and development in civil service training institutes and universities in LDCs and SIDS reflecting their priorities as well as offer training and exchange programmes in the UK for civil servants from LDCs and SIDS. (Paragraph 33) 1 Gov.uk, PM remarks at the Petersberg Climate Dialogue: 6 May 2021, 6 May 2021 4 Global Britain in demand: UK climate action and international development around COP26 Providing sufficient, long-term and reliable funding

Access to climate finance remains a significant challenge for LDCs, SIDS and grassroots organisations. For Global Britain to be a credible “force for good”, we urge the Government to use its COP presidency and position as a key donor to the multilateral climate funds to accomplish the following: • Firstly, to champion the introduction of simplified criteria for the accreditation process of multilateral funds and for assessing applications from LDCs and SIDS in line with their limited capacities. • Secondly, to encourage other donors to make direct access a priority in their investments in LDCs and SIDS. • Thirdly, the Government should tell us in their response the date on which they are finally going to publish their International Climate Finance strategy. • Finally, to present us by 31 January 2022 with the measures that the Government is proposing to multilateral organisations to shorten the length of the approval process as announced by the Rt Hon Lord Goldsmith during our oral evidence session. The Government should set out how these measures address the full range of issues raised by LDCs and SIDS at the Climate and Development Ministerial in March 2021.

We believe that the current level of international climate finance is fundamentally over-reported, reducing the credibility of declarations and scope for achieving climate adaptation and resilience. We are calling for full transparency in the reporting of climate finance to enhance the ability of third parties to track funding from start to finish. To reach the UK-backed goal of channelling 70% of climate finance directly to local communities, we urge the FCDO to report in full transparency how much climate finance is reaching the local level through its main reporting channels—such as the UK’s Development Tracker and the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD)—and to encourage other donors to do the same. Further, the UK Government should host regular meetings between fund-recipient institutions from LDCs and SIDS, bilateral and multilateral donors during its COP presidency to devise a functional definition of climate finance as well as a clearer definition of the term ‘new and additional’ for use by donors. The Government should provide a progress report by 31 March 2022 . (Paragraph 62) Reinforcing policy coherence across UK climate action

We are concerned about the broad list of exemptions in the Government’s new fossil fuel policy as it raises questions about the UK’s credibility as a “force for good” and its commitment to net zero. We therefore urge the Government by 31 October 2022 to drastically scale up its investment in renewable energy abroad and to end all exemptions for direct and indirect investment in fossil fuel projects abroad through CDC and other channels apart from support for clean cooking methods for people Global Britain in demand: UK climate action and international development around COP26 5 living in poverty. The Government should also instruct CDC to publish a full list of its existing investments in coal, oil and gas and how they intend to divest from fossil fuels by 31 October 2022.

We understand the call of many contributors to create a separate funding stream for loss and damage from climate events, such as from sea-level rise, and acknowledge the challenges in accomplishing this at this time. Nonetheless, we urge the Government to ensure the operationalisation and adequate funding of the Santiago Network for Loss and Damage by 31 January 2022 and thus keep the momentum on formulating policies and interventions to tackle loss and damage during its COP presidency. Further, the FCDO should work closely with LDCs and SIDS in developing practical measures to address loss and damage, especially where people are forced to migrate or change livelihoods to reduce risks to their livelihoods and lives.

We welcome the Government holding a Climate and Development Ministerial meeting in March 2021 to capture the concerns of climate-vulnerable countries in the run-up to COP26. We recommend that the FCDO hosts a Climate and Development Ministerial with climate-vulnerable countries every year starting in 2022 to follow up on the measures listed in the “Climate & Development Pathway” of March 2021 and to keep the momentum gained from that first Climate and Development Ministerial.

Tackling climate change and biodiversity loss as the Government’s “number one international priority” will inevitably involve international development. We are concerned that the Integrated Review does not include explicit initiatives building the capacity of FCDO’s network to maximise the synergies between departments dealing with development, climate, energy and the environment.

A failure to anchor climate change in development and to ensure greater policy coherence in Whitehall will increase the scope for maladaptation, the negative consequences of poorly designed Nature-based Solutions and wasteful spending of the reduced ODA. By introducing a Climate and Development Minister, the UK would demonstrate that it is putting its words into action and implementing its Integrated Review and the concept of Global Britain in a coherent manner.

We believe that climate and development are closely intertwined. The Integrated Review prioritises climate change “in 2021 and beyond” and suggests using UK ODA to increase the Government’s impact as a “force for good”. We therefore recommend the introduction of a Climate and Development Minister at the FCDO with a focus on adaptation and resilience to ensure alignment between the FCDO’s climate and development strategies during COP26 and beyond. (Paragraph 97) 6 Global Britain in demand: UK climate action and international development around COP26 Summary Global Britain has a great opportunity to be a “force for good” in climate action and international development. The last year has been particularly challenging for low- and middle-income countries and marginalised communities, as they have been bearing the brunt of an increasingly unstable climate, while addressing the impacts of covid-19. The UK’s presidency of COP26 comes at an important time in climate action and development. Decisions taken at COP26 will influence the fates of the UN Sustainable Development Goals and of the Paris Agreement. The list of outstanding tasks for the Government is considerable but the UK has the diplomatic network, influence, funds and soft power to steer international climate action in the right direction and at least start addressing some of the challenges for the Global South during its COP presidency. In our inquiry, we focussed on climate change adaptation (adaptation) and resilience. We heard that adaptation in the most climate-vulnerable countries and communities often lacked sufficient funding and expertise to improve conditions over a longer period of time. We also heard that the countries and groups which are most vulnerable to climate change struggled to access timely and sufficient amounts of funding due to cumbersome application processes and ill-defined purposes of instruments and key terms. Although we welcome the Government’s actions on adaptation and resilience, we

Dr Lisa Schipper also told us that staff at the FCDO faced pressure to deliver results swiftly.26 She added that the FCDO officers to whom she presented her paper on maladaptation were “fully aware” of the risks of maladaptation but were “operating within a structure that does not allow them to step away from these kinds of problems”.27 17 United Nations Framework Convention on Climate Change (UNFCCC), Glossary of key terms, accessed 26 October 2021 18 Q7 [Dr Lisa Schipper], Q19 [Cecília da Silva Bernardo] Q34 [Julius Ng’oma] 19 British Red Cross (CDC0028) 20 Q7 [Dr Lisa Schipper] 21 Q8 [Dr Lisa Schipper] 22 Q6 [Dr Lisa Schipper] 23 Q7 [Dr Lisa Schipper] 24 Reference to the “The Villagisation Programme targeting pastoralists and the Ethiopian Agricultural Development Led Industrialisation (ADLI) strategies”. See: Eriksen et al, Adaptation interventions and their effect on vulnerability in developing countries: Help, hindrance or irrelevance?, World Development, Volume 141, p.4, May 2021 25 Eriksen et al, Adaptation interventions and their effect on vulnerability in developing countries: Help, hindrance or irrelevance?, World Development, Volume 141, p.4, May 2021 26 Q10 [Dr Lisa Schipper] 27 Q8 [Dr Lisa Schipper] Global Britain in demand: UK climate action and international development around COP26 11 UK’s response—maladaptation

The FCDO told us that effective sustainable development takes into consideration “all factors and risks, including climate change and social vulnerability”.28 The Government has engaged in numerous measures to ensure global progress on adaptation and resilience in the run-up to COP26. On 25 January 2021, the Government committed itself to the ‘Principles for Locally-Led Adaptation’ alongside forty institutions such as Irish Aid, the UN Development Programme (UNDP), and Zurich Insurance.29 The eight principles include devolving decision-making to the lowest appropriate level, tackling structural inequalities faced by marginalised groups and providing patient and predictable funding which is more readily accessible.30

On the same day, COP26 President the Rt Hon Alok Sharma MP launched the Adaptation Action Coalition,31 in order to accelerate progress on adaptation in partnership with five countries and the UN32 as well as the “Race to Resilience” campaign to build the resilience of four billion climate-vulnerable people by 2030.33

In its Adaptation Communication to the Secretariat of the United Nations Framework Convention on Climate Change (UN Climate Change) in December 2020, the Government stated that it was: committed to ensuring women and girls, indigenous peoples, people with disabilities, and marginalised groups, particularly those from parts of the world that are most adversely affected by climate change can express their priorities and concerns on an equal basis.34

However, Eileen Mairena Cunningham, Active Observer at the Green Climate Fund representing the Civil Society, Indigenous Peoples and Local Community Network, told us that in terms of UK interventions in the Green Climate Fund, which is the world’s biggest multilateral climate fund: the UK Government are not so vocal about indigenous people or local community action.35

Asked about unintended consequences of green energy projects, Lord Goldsmith, the Minister for the Pacific and the Environment at the FCDO and the Department for Environment, Food and Rural Affairs (Defra), told us that the FCDO’s approach was “generally a pretty robust and holistic one”.36 He said: 28 Foreign, Commonwealth and Development Office (CDC0016) 29 IIED, Forty governments and leading institutions commit to support locall- led climate adaptation, 25 January 2021 30 IIED, Forty governments and leading institutions commit to support locally-led climate adaptation, 25 January 2021 31 Gov.uk, New Global Coalition launched to address impacts of Climate Change, 25 January 2021 32 Gov.uk, Adaptation Action Coalition: an overview, 5 August 2021 33 Gov.uk, Climate Adaptation Summit Talks: launching the Race to Resilience, 25 January 2021 34 Gov.uk, United Kingdom of Great Britain and Northern Ireland’s Adaptation Communication to the United Nations Framework Convention on Climate Change, pp.25–26, 12 December 2020 35 Q48 [Eileen Mairena Cunningham] 36 Q113 [Lord Zac Goldsmith] 12 Global Britain in demand: UK climate action and international development around COP26 I can say with absolute certainty that, if there was a sense that, by doing a particular thing to tackle one problem, we were going to be generating another problem, that would show up in the comprehensive process that FCDO pursues.37

Vel Gnanendran, Head of the Climate and Environment Directorate (CED) at the FCDO, added that the Department followed a “do no harm” principle and that “every business case has to have a gender equality assessment, and social development advisers are involved in some of the social implications of all programmes”.38 Nature-based Solutions (NbS)

Nature-based Solutions are: actions to protect, sustainably manage, and restore natural or modified ecosystems, that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits.39

Contributors told us that Nature-based Solutions (NbS) must be implemented with the full engagement and consent of local communities to effectively build their resilience.40 According to Christian Aid, NbS can either result in “considerable potential co-benefits” for biodiversity, people and the climate if done well, or in “disastrous outcomes” if not carefully embedded into local social and ecological systems.41

The Institute of Development Studies stated that NbS are neither a “silver bullet” nor a substitute for phasing out fossil fuels and warned against the expansion of tree planting to remove carbon dioxide from the atmosphere instead of the protection of existing, intact ecosystems, of biodiversity, of land rights of local populations and of access to natural resources.42 In its words: Technical fixes will not take us very far, and in most cases will perpetuate the systems of inequity and injustice in the form of displacement and resource grabs, something we are already witnessing with green energy solutions.43 UK’s response—Nature-based Solutions

In its Adaptation Communication to UN Climate Change in December 2020, the Government stated that: [t]hrough the UK COP 26 nature campaign, we are seeking to ensure that finance, capacity building and co-operation are available to unlock the potential of nature-based solutions.44 37 Q113 [Lord Zac Goldsmith] 38 Q113 [Vel Gnanendran] 39 International Union for Conservation of Nature (IUCN), Nature-based Solutions, accessed 26 October 2021 40 Christian Aid (CDC0047), Institute of Development Studies (CDC0015), Tearfund (CDC0031) 41 Christian Aid (CDC0047) 42 Institute of Development Studies (CDC0015) 43 Institute of Development Studies (CDC0015) 44 Gov.uk, United Kingdom of Great Britain and Northern Ireland’s Adaptation Communication to the United Nations Framework Convention on Climate Change, p.23, 12 December 2020 Global Britain in demand: UK climate action and international development around COP26 13

The FCDO told us that it would “kick-start a just rural transition towards sustainable land use to benefit people, climate and nature” by earmarking £3 billion of the £11.6 billion in UK ICF for 2021–2026 to fund programmes that “protect, restore and sustainably manage nature”.45 Lord Goldsmith said that: You tend to get much more bang for your buck investing in nature-based solutions. You tend to be dealing with mitigation, adaptation, poverty and a whole bunch of other issues when you invest in nature as your default position to solve problems.46

We are concerned that the FCDO might focus more on fast results than on tackling the root causes of social vulnerability in its interventions. Furthermore, we are concerned that social vulnerability might be considered less a core focus of the UK’s delivery of climate action and more just another tick box in project design. If adaptation is meant to protect the most marginalised people, the focus should be on improving their well-being and on the root causes of their social vulnerability. By investing in nature as a ‘default position’ instead of in partnership with local communities, the FCDO risks reinforcing or even worsening the vulnerabilities of marginalised groups and contributing to their displacement, continued discrimination or impoverishment.

We are concerned about the extent to which the priorities and knowledge of marginalised groups are factored into measures tackling climate change. Ensuring that the voices of the most marginalised, local communities are fully taken on board will improve the quality and sustainability of adaptation programmes. We urge the FCDO to apply the Principles for Locally-Led Adaptation in order to address the root causes of social vulnerability in its programmes and to reduce the scope for maladaptation and unintended consequences of Nature-based Solutions. By 31 January 2022, the FCDO should present us with their pathway of how they will apply and promote the Principles for Locally-Led Adaptation in support of Least Developed Countries (LDCs) and Small Island Developing States (SIDS) during the COP26 Presidency. Challenges in capacity-building

In 2019, our predecessor Committee concluded that DFID-funded programmes: • ran for two to three years on average instead of the seven to ten years which NGOs preferred; • were terminated instead of being scaled up on a regular basis even if they were successful; and • were often accompanied by high-cost, short-term consultants.47 45 Foreign, Commonwealth and Development Office (CDC0016) 46 Q107 [Lord Zac Goldsmith] 47 International Development Committee, UK aid for combating climate change (HC 1432), Paragraphs 77–88, 8 May 2019 14 Global Britain in demand: UK climate action and international development around COP26

Vulnerable countries and grassroots organisations are still calling for high-income donor countries and multilateral financial institutions to engage with them meaningfully in ways which build their capacity, knowledge and experience in adaptation in the long term.48

Cecília da Silva Bernardo, Representative of the Least Developed Countries Group and Co-Chair of the Adaptation Committee of the UN Framework Convention on Climate Change (UNFCCC), told us that one of the biggest challenges for LDCs was insufficient capacity and expertise to plan and implement adaptation programmes by themselves in the long term.49 In her words: Capacity is not being built at a national level […] When the consultants are gone, their knowledge goes with them.50

We heard that capacity-building at a local level was hampered by weak digital infrastructure,51 the complex design of programmes52 and a lack of sufficient adjustment of projects to the needs of local communities.53 Furthermore, we were told that projects implemented in the Global South might appear to be running for longer in individual LDCs than they are. Julius Ng’oma gave us the example of a project funded by the Scottish Government, which had already been running for two years by the start of its implementation in Malawi.54 In his words: On paper, the project would appear to be for five years. Because it has some international attachments to it with international advocacy […], we tend to have a short-term project of three years. Two years have already been done, maybe in the UK or somewhere else. Then they want to get experience from Malawi […]. That has always been a problem.55

We received several examples of well-run, successful projects focussing on climate change which had not been scaled up.56 The International Institute for Environment and Development (IIED) concluded that, overall, the UK continued to provide climate finance for four years or less, with many programmes terminated even earlier due to change of donor priorities rather than the performance or quality of the project in itself.57 Julius Ng’oma told us that: With these one, two or three-year projects, if it is a resilience-building or capacity-building project, we introduce the project to the communities, but […] [they] are always so short term that we cannot even see or elaborate the impact on the ground. […] They would come to Malawi and try to build 48 Q8 [Dr Lisa Schipper], Q19 [Cecília da Silva Bernardo], Q29 [Suranjana Gupta], Q30 [Julius Ng’oma], Q45 [Eileen Mairena Cunningham], Q54 [Marek Soanes] 49 Q14 [Cecilia da Silva Bernardo] 50 Q19 [Cecília da Silva Bernardo] 51 Q27 [Julius Ng’oma] 52 Q30 [Julius Ng’oma] 53 Q29 [Suranjana Gupta], Q30 [Julius Ng’oma] 54 Q32 [Julius Ng’oma] 55 Q32 [Julius Ng’oma] 56 Q52 [Marek Soanes], International Institute for Environment and Development (IIED) (CDC0048), World Vision UK (CDC0008) 57 International Institute for Environment and Development (IIED) (CDC0048) Global Britain in demand: UK climate action and international development around COP26 15 capacity in civil society and grassroots organisations, but they then leave them with only the experience to show that this is something that can work without having the funding to upscale […].58

Catherine Pettengell, Interim Director at Climate Action Network UK (CAN- UK), told us that it did not make sense to close down efficient programming which was delivering the intended outcomes only to reopen it a few years later.59 She added that “there is significant wasted impact, wasted resources and wasted cost” in doing so and that: We will also lose the trust of the communities that are involved in these projects and leaving them vulnerable and facing impacts for the next few years until that can be picked up again.60 UK’s response—capacity-building

In its response to our predecessor Committee’s report, the Government partially agreed with the Committee’s conclusions but stressed that average programme duration was six to seven years and that projects were extended or scaled up if they were effective.61

Building the capacity of local authorities and grassroots organisations in LDCs and SIDS to tackle climate change requires more attention. We urge the FCDO to grow long-term capacity in LDCs and SIDS by lengthening programme cycles to 5–10 years for climate adaptation programme cycles. The FCDO should also provide multiannual funding for the Least Developed Countries Initiative for Effective Adaptation and Resilience (LIFE-AR). Further, in line with the fourth Principle for Locally-Led Adaptation, “Investing in local capabilities to leave an institutional legacy”, the UK should sponsor courses in climate change and development in civil service training institutes and universities in LDCs and SIDS reflecting their priorities as well as offer training and exchange programmes in the UK for civil servants from LDCs and SIDS. 58 Q32 [Julius Ng’oma] 59 Q57 [Catherine Pettengell] 60 Q57 [Catherine Pettengell] 61 UK Parliament, UK aid for combating climate change: Government Response to the Committee’s Eleventh Report, Twelfth Special Report, point 11, 18 July 2019 16 Global Britain in demand: UK climate action and international development around COP26 3 Providing sufficient, long-term and reliable funding We cannot continue with a situation where adaptation is the poor cousin of mitigation. Rt Hon Alok Sharma MP62 Volume of funding for climate adaptation

Globally, adaptation plays “second fiddle” to mitigation in terms of international climate finance.63 Following a threat by low- and middle-income countries to walk out on the negotiations in Copenhagen in 2009, higher income countries pledged to provide “scaled up, new and additional, predictable and adequate funding” to meet “a goal of mobilizing jointly US$100 billion per year by 2020 to address the needs of developing countries” in addressing climate finance through mitigation and adaptation.64 The Paris Agreement committed nations to provide a balance of support to adaptation and mitigation.65

The US$100 billion goal has yet to be met.66 The balance between mitigation and adaptation is also unmet as only 25% of climate finance has been invested in adaptation globally in recent years.67 The United Nations Environment Programme (UNEP) suggests that adaptation already costs low- and middle-income countries an estimated US$70 billion per year and that this is set to rise to US$ 140–300 billion in 2030. At COP21 in Paris (2015), the Parties agreed to set US$100 billion per year as the minimum target from 2020 to 2025.68 UK’s response—UK International Climate Finance (UK ICF)

We heard that the UK has “a really good story to tell on adaptation”.69 On average, 47% of UK ICF was spent on adaptation in the past four years.70 Furthermore the UK provided 89% of its ICF in grants rather than loans between 2016 and 2019,71 bucking the global trend of an increasing share of loans, rather than grants, in public climate finance between 2013 and 2018.72 62 The Climate Centre, ‘We cannot continue with a situation where adaptation is the poor cousin of mitigation’, 1 April 2021 63 Christian Aid (CDC0047) 64 United Nations Framework Convention on Climate Change (UNFCCC), Copenhagen Accord, point 8, 18 December 2009 65 United Nations Framework Convention on Climate Change (UNFCCC), Paris Agreement, Article 9.4, p.15, 12 December 2015 66 United Nations, Delivering on the $100 billion climate finance commitment and transforming climate finance, p.7, December 2020 67 Organisation for Economic Co-operation and Development (OECD), Climate Finance Provided and Mobilised by Developed Countries: Aggregate Trends Updated with 2019 Data, p.9, 17 September 2021 68 United Nations, Background note on the USD 100 billion goal in the context of UNFCCC process, in relation to advancing on SDG indicator 13.a.1, accessed 26 October 2021 69 Q57 [Catherine Pettengell] 70 Foreign, Commonwealth and Development Office (CDC0016) 71 Gov.uk, UK Biennial Finance Communication to the UN Framework Convention on Climate Change 2020, p.5, 12 December 2020 72 OECD, Climate Finance Provided and Mobilised by Developed Countries in 2013–18, p.9, 6 November 2020 Global Britain in demand: UK climate action and international development around COP26 17

In September 2019, the Government announced that it would double the amount of UK ICF to £11.6 billion for the period of 2021/22–2025/26.73 The Government referred to UK ODA as a means to increase its impact as a “force for good” in the Integrated Review.74 On 13 July 2021, however, the House of Commons backed the Government’s decision to reduce UK ODA to 0.5% of GNI.75 While UK ICF will be protected from cuts, contributors told us that they were concerned about the consequences of the cuts on climate action. The countries which are most in need of development finance are also most at risk of the impacts of climate change.76 In order to achieve the best possible results for vulnerable groups in terms of climate change and development, the UK should at least match the 0.7% of GNI,77 and in effect “lead, not retreat”.78 A ringfencing of UK ICF amid a cut to UK ODA is considered a mismatch resulting in a less comprehensive response to the climate emergency.79 Indeed, speaking for many contributors to this inquiry, one witness asked: What is it [climate finance] going to influence if the development finance is not there to address development deficits?80 Access to funds The difficulty has been access. The money is there and we hear from different Governments, “But we did provide the money.” No, to write a cheque and put it in the World Bank or the GCF is not enough. You have to guarantee access so that we can get ready on time. H.E. Diann Black-Layne, Lead Negotiator on Climate Change, Alliance of Small Island States81

We heard that the process of applying for climate funds remains cumbersome for most LDCs, SIDS and grassroots organisations.82 Only 14% of ICF reached the 46 LDCs and just 2% reached the 39 SIDS between 2016 and 2018.83 73 Gov.uk, UK Biennial Finance Communication to the UN Framework Convention on Climate Change 2020, p.4, 12 December 2020 74 Gov.uk, Global Britain in a Competitive Age: the Integrated Review of Security, Defence, Development and Foreign Policy, p.48, 16 March 2021 75 HC Deb, 13 July 2021, Columns 225 - 228 [Commons Chamber] 76 WaterAid (CDC0023) 77 CARE International UK (CDC0029), WaterAid (CDC0023) 78 Chair of the LDC Group Mr Sonam Phuntsho Wangdi. See: Climate Change News, UK aid budget cuts undermine trust ahead of Cop26 summit, experts warn, 25 November 2020 79 Bond and Climate Action Network UK (CAN-UK) (CDC0045), International Institute for Environment and Development (IIED) (CDC0048) 80 Q57 [Marek Soanes] 81 Q17 [Diann Black-Layne] 82 Qq16–18 [Diann Black-Layne], Q43 [Gebru Jember], Q45 [Eileen Mairena Cunningham], Q55 [Marek Soanes] 83 OECD, Climate Finance Provided and Mobilised by Developed Countries in 2013–18, p.9, 6 November 2020 18 Global Britain in demand: UK climate action and international development around COP26

Our inquiry received many contributions about the largest multilateral climate fund,84 the Green Climate Fund (GCF). Our predecessor Committee previously highlighted the challenges in accessing funding from the GCF,85 and recommended that the Government improve efficiency in GCF decision-making and enable better access to climate finance.86

Since then, little has changed. The evidence that we heard includes accounts of the obstacles that must be overcome to access funding, which disadvantage fragile and conflict-affected states, other LDCs and SIDS as well as grassroots organisations.87

LDCs and SIDS face difficulties in accessing funding from multilateral organisations such as the GCF. H.E. Diann Black-Layne told us that: There is a struggle to keep on reminding the green climate fund and others—not the adaptation fund—that this is not development finance.88

Gebru Jember, Technical Lead of the Least Developed Countries Initiative for Effective Adaptation and Resilience (LIFE-AR) and former Chair of the LDC Group, spoke of lengthy review processes as well as micromanaging by the GCF Board which delayed the disbursement of funds even further..89 In his words: They [the Board of the GCF] do not even want to give the GCF secretariat the right to approve small-scale projects. There are a number of projects that are waiting for the board to approve them. […] There are […] resources being kept there, but they are not accessible for local communities in vulnerable countries.90

He added that: when you submit a proposal, it takes two to three years minimum to access the finance. Then you need to revise, because things change. The impact of climate change invariably becomes a bit more severe, and that means the cost for adaptation and mitigation becomes more and more. The initial plan may be for X amount, but when you receive the finance it is underestimated.91

Contributors also raised the importance of direct access to multilateral funds for grassroots organisations, LDCs and SIDS.92 To access funding from the GCF, for example, applicants have to become accredited first – a process which the GCF describes as a means to “assess whether they [applicants] are capable of strong financial management and of safeguarding funded projects and programmes”.93 Gebru Jember told us that: 84 The Green Climate Fund, About Us, accessed 26 October 2021 85 “140. We heard that accessing climate finance through the GCF can be challenging for developing countries” due to the GCF’s “high environmental, social, governance and fiduciary standards”. See: International Development Committee, UK aid for combating climate change (HC 1432), Paragraph 140, 8 May 2019 86 International Development Committee, UK aid for combating climate change (HC 1432), Paragraph 146, 8 May 2019 87 House of Commons, International Development Committee, Oral evidence: Climate change, development and COP26, HC 99, 22 June 2021 and 6 July 2021 88 Q17 [Diann Black-Layne] 89 Q43 [Gebru Jember] 90 Q43 [Gebru Jember] 91 Q41 [Gebru Jember] 92 Q31 [Julius Ng’oma], Q45 [Eileen Mairena Cunningham], Q47 [Gebru Jember] 93 Green Climate Fund, Entity Accreditation, accessed 26 October 2021 Global Britain in demand: UK climate action and international development around COP26 19 the accreditation of [LDC] institutions […] is becoming a challenge. If a country needs to register for access to large-scale finance, it is not easy. Even small-scale accreditation takes years.94

Grassroots organisations equally face significant hurdles in accessing climate funding. Less than 10% of climate finance committed to low- and middle-income countries to combat climate change reaches the local level as funders of climate adaptation tend to prefer “bulk spending through central governments over tailoring and targeting locally, and directly financing local organisations”, according to the British Red Cross.95

As a result of bureaucratic procedures and accessing funding through intermediaries, the total amount of money at the disposal of grassroots organisations can be as little as 10–15% of the project value.96 Julius Ng’oma told us that his organisation - the Civil Society Network on Climate Change (CISONECC) – had always accessed resources from the FCDO, DFID and the Scottish Government indirectly through international organisations which reduced the amount available to address climate change locally.97 In his words: The two or three organisations in between would always require so many things, such as administrative costs and so on and so forth. By the time the resources would get to a network like CISONECC and then to a grassroots organisation, the money is too little to make an impact on the ground.98

Eileen Mairena Cunningham called for the full, effective and meaningful incorporation of marginalised groups in the global response to climate change and for direct access by them to funds from the GCF.99 She told us that currently: The requirements to access a fund are really difficult and it is always done through third parties.100 […] All of this [application] process makes it so difficult for indigenous people to access the funds. We have to go through accredited entities. […] We do not have direct access to these funds; […] we cannot decide how this process should be in our lands and territories.101 UK’s response—access

The UK is a top contributor to the four multilateral climate funds including the GCF.102 As such, it has influence on their policies and procedures. The UK was also instrumental in the establishment of the Least Developed Countries Initiative for Effective Adaptation and Resilience (LIFE-AR), whose goal is to channel 70% of climate finance directly to 94 Q41 [Gebru Jember] 95 British Red Cross (CDC0028) 96 Q41 – Q44 [Gebru Jember, Questions 41 to 44] 97 Q31 [Julius Ng’oma] 98 Q31 [Julius Ng’oma] 99 Q45 [Eileen Mairena Cunningham] 100 Q45 [Eileen Mairena Cunningham] 101 Q48 [Eileen Mairena Cunningham] 102 Of the estimated £21.4 billion held by the four main multilateral climate funds - the Adaptation Fund, the Climate Investment Funds (CIF), the Global Environment Facility (GEF), and the Green Climate Fund (GCF), the UK is responsible for almost one-eighth of all pledges made by donor countries. Source: International Development Committee calculations (as of 8 October 2021). 20 Global Britain in demand: UK climate action and international development around COP26 local levels in LDCs.103 Yet, we heard that the UK had only provided funding to LIFE-AR on an annual basis to date, as opposed to the 10-year partnership funding requested by the LDC Group.104

According to the FCDO, the UK helped facilitate the introduction of the GCF’s Updated Strategic Plan for 2020–2024, which aims to improve access to funding for LDCs, SIDS and other African countries as well as of a new voting procedure in the GCF.105 It has also facilitated work on a simpler approval process, more direct funding for national, regional and local organisations and on increasing the share of GCF adaptation funding earmarked for LDCs and SIDS from 50% to 69%.106

Vel Gnanendran told us that the Government intended to make propositions such as cutting the application process by 100 days as part of a simplified process, at the GCF Board meeting in October 2021.107 He added that: Hopefully, that will be approved, but it will take some time to be implemented.108 Asked about how long it would take for access to climate finance to get easier, Lord Goldsmith said: I am not sure that there will ever be a particular endpoint. The GCF is going to have to work continuously on improving the manner in which it relates to the grantee countries.109

Access to climate finance remains a significant challenge for LDCs, SIDS and grassroots organisations. For Global Britain to be a credible “force for good”, we urge the Government to use its COP presidency and position as a key donor to the multilateral climate funds to accomplish the following: • Firstly, to champion the introduction of simplified criteria for the accreditation process of multilateral funds and for assessing applications from LDCs and SIDS in line with their limited capacities. • Secondly, to encourage other donors to make direct access a priority in their investments in LDCs and SIDS. • Thirdly, the Government should tell us in their response the date on which they are finally going to publish their International Climate Finance strategy. • Finally, to present us by 31 January 2022 with the measures that the Government is proposing to multilateral organisations to shorten the length of the approval process as announced by the Rt Hon Lord Goldsmith during our oral evidence session. The Government should set out how these measures address the full range of issues raised by LDCs and SIDS at the Climate and Development Ministerial in March 2021. 103 International Institute for Environment and Development (IIED) (CDC0048) 104 International Institute for Environment and Development (IIED) (CDC0048) 105 Foreign, Commonwealth and Development Office (CDC0016) 106 Foreign, Commonwealth and Development Office (CDC0016) 107 Q109 [Vel Gnanendran] 108 Q109 [Vel Gnanendran] 109 Q109 [Lord Goldsmith] Global Britain in demand: UK climate action and international development around COP26 21 Definition of terms & transparency

Despite its omnipresence in climate negotiations, there is no officially agreed definition of climate finance.110 In November 2020, the Organisation for Economic Co-operation and Development (OECD) reported that the level of climate finance was US$78.9 billion in 2018.111 Yet, the OECD itself acknowledged that official reporting by higher income countries contains “significant inconsistencies in terms of methodologies, categorisations and definitions adopted across countries”.112

In their paper on climate finance, Roberts et al stated that the “US$100 billion per year climate finance promise had deep flaws, making it impossible to now assess whether it has been met.”113 Although the pledge of US$100 billion per year stated that funding would be derived from bilateral, multilateral and alternative sources which could be public or private, it failed to mention clearly what should be counted as climate finance within those categories.114 As a result, high-income countries have been able to decide themselves what they report as climate finance, making comparison and analysis challenging.115

We heard that another challenge was the different interpretation of the term ‘new and additional’. At COP15 in Copenhagen (2009), high-income countries agreed to provide new and additional funding “approaching US$30 billion” for 2010–2012 for climate adaptation and mitigation.116 Although reiterated at subsequent COPs in 2010 and 2015, it remains unclear what is meant by ‘new and additional’ and how it should be recorded in statistics on ODA.117

In its biennial progress report (December 2020), the Government stated that: Our funding will be new and in addition to our previous £5.8 billion ICF commitment.118 Many contributors criticised this statement for its interpretation of ‘new and additional’.119 The NGOs that wrote to us would prefer climate finance to be in the form of new and additional financial resources by high-income countries above the commitment to 0.7% ODA. The Government’s broader interpretation of ‘new and additional’ has become 110 Q17 [Diann Black-Layne], Q41 [Gebru Jember], Q60 [Catherine Pettengell]. In line with the United Nations, we define climate finance in quite broad terms as “the money which needs to be spent on a whole range of activities which will contribute to slowing down climate change and which will help the world to reach the target of limiting global warming to an increase of 1.5°C above pre-industrial levels”. See: UN News, The trillion dollar climate finance challenge (and opportunity), 27 June 2021 111 OECD, Climate finance for developing countries rose to USD 78.9 billion in 2018, 6 November 2020 112 OECD, Climate Finance Provided and Mobilised by Developed Countries in 2013–18, p.42, 6 November 2020 113 Roberts, J.T. et al, Rebooting a failed promise of climate finance, Nature Climate Change, Volume 11, p.1, 18 February 2021 114 Roberts, J.T. et al, Rebooting a failed promise of climate finance, Nature Climate Change, Volume 11, p.1, 18 February 2021 115 Roberts, J.T. et al, Rebooting a failed promise of climate finance, Nature Climate Change, Volume 11, p.1, 18 February 2021; Shakya, C. and Smith, B., Trust in climate finance requires meaningful transparency, IIED, January 2021 116 UNFCCC, Report of the Conference of the Parties on its fifteenth session, held in Copenhagen from 7 to 19 December 2009, Addendum, Part Two: Action taken by the Conference of the Parties at its fifteenth session, p.7, 30 March 2010 117 UNCTAD, https://unctad.org/system/files/official-docu

Contributors raised significant concerns around the accuracy of the amount of global international climate finance that is being reported as pledged and disbursed for adaptation by the UK and other donor countries.123 In its report published in January 2021, CARE International wrote that “current official figures for adaptation finance are severely overstated and far too high” with US$2.6 billion out of the US$6.2 billion reported as climate adaptation being over-reported.124 It further stated that “donors commonly report more than the actual costs of the adaptation activities in their projects as adaptation finance”.125

In their paper on climate finance, Roberts et al state that funding is “insecure”, unpredictable and based on a “fragmented institutional architecture” which low- and middle-income countries cannot influence sufficiently.126 In their words: climate funds are funnelled through over 100 channels, very few of which are controlled in meaningful ways by developing nations […]. These include developed countries’ aid and export promotion agencies, private banks, equity funds and corporations, and lending and granting arms of multilateral institutions like the World Bank and regional banks.127

Marek Soanes, Researcher in Climate Finance at the IIED, told us in relation to marginalised groups that “It is just impossible to understand where the money is actually hitting their pockets”.128

At the Climate and Development Ministerial in March 2021, LDCs and SIDS offered practical solutions to improve access to climate finance.129 According to the IIED, these solutions included establishing a Taskforce on Access to Climate Finance headed by the UK and Fiji, harmonising and simplifying procedures to access directly ICF from multilateral funds and developing a clear and shared functional definition of climate finance that emphasises the importance of experimenting and taking risks to find effective 120 Bond SDG Group, Sightsavers (CDC0007), CARE International UK (CDC0029), Practical Action (CDC0040), Quakers in Britain (CDC0004), Tearfund (CDC0031) 121 Bond and Climate Action Network UK (CAN-UK) (CDC0045) 122 Bond and Climate Action Network UK (CAN-UK) (CDC0045) 123 Q53 [Cat Pettengell], Q54 [Marek Soanes], Q65 [Laurie Lee]. E3G (Third Generation Environmentalism) (CDC0027), Islamic Relief UK (CDC0041), Practical Action (CDC0040) 124 CARE International, Climate adaptation finance: Fact or fiction?, p.4, 21 January 2021. Research covers 112 projects from 2013–2017 in six countries - Ethiopia, Ghana, Nepal, the Philippines, Uganda and Vietnam (see: same source, p.11) 125 CARE International, Climate adaptation finance: Fact or fiction?, p.5, 21 January 2021 126 Roberts, J.T. et al, Rebooting a failed promise of climate finance, Nature Climate Change, Volume 11, p.2, 18 February 2021 127 Roberts, J.T. et al, Rebooting a failed promise of climate finance, Nature Climate Change, Volume 11, p.2, 18 February 2021 128 Q54 [Marek Soanes] 129 UK COP26, Climate & Development Ministerial Chair’s Summary, 1 April 2021 Global Britain in demand: UK climate action and international development around COP26 23 solutions to climate change.130 There has been little progress on access to climate finance as stakeholders disagree on the specifics of the Taskforce, according to a stocktake by civil society organisations in September 2021.131 UK’s response—definition of terms and

Although the UK was rated among the better performers in this report, CARE stated that, like other countries, the data provided by the UK lacked clarity and completeness in terms of the recipients and programmes to be funded.132

The FCDO told us that the UK reported its ICF at programme level—that is, a more granular level—to the UNFCCC, and provided details such as programme codes.133 It also told us that all its programme documentation is held in the Development Tracker, which listed “details of contracts and funding arrangements, financial data and programme descriptions.”134

We believe that the current level of ICF is fundamentally over-reported, reducing the credibility of declarations and scope for achieving climate adaptation and resilience. We are calling for full transparency in the reporting of climate finance to enhance the ability of third parties to track funding from start to finish. To reach the UK-backed goal of channelling 70% of climate finance directly to local communities, we urge the FCDO to report in full transparency how much climate finance is reaching the local level through its main reporting channels—such as the UK’s Development Tracker and the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD)—and to encourage other donors to do the same. Further, the UK Government should host regular meetings between fund- recipient institutions from LDCs and SIDS, bilateral and multilateral donors during its COP presidency to devise a functional definition of climate finance as well as a clearer definition of the term ‘new and additional’ for use by donors. The Government should provide a progress report by 31 March 2022 . 130 International Institute for Environment and Development (IIED) (CDC0048) 131 E3G, 2021 Climate and Development Agenda Stocktake, pp.5–6, 17 September 2021 132 CARE International, Hollow Commitments: An Analysis of developed countries’ climate finance plans, p.15, 1 June 2021 133 Foreign, Commonwealth and Development Office (CDC0016) 134 Foreign, Commonwealth and Development Office (CDC0016) 24 Global Britain in demand: UK climate action and international development around COP26 4 Reinforcing policy coherence across UK climate action Fossil fuel policy The best thing you can do for us is to cut your emissions […]. H.E. Ms Diann Black-Layne, Lead Negotiator on Climate Change, Alliance of Small Island States135

The volume of greenhouse gas emissions has a significant impact on the capacity of LDCs and SIDS to adapt to climate change. On 9 August 2021, the Intergovernmental Panel on Climate Change (IPCC) published its Sixth Assessment report, which the UN Secretary General referred to as a “a code red for humanity” with the alarm bells “deafening” and the evidence “irrefutable”.136

In March 2021, the Government introduced its new fossil fuel policy, which mirrors that of its development finance institution, the CDC Group (CDC). Both ban new, direct financial or promotional support for the fossil fuel energy sector137 abroad except for special, albeit controversial circumstances.138 The Government’s exemptions include:139 • Support for stand-alone generators and Liquid Petroleum Gas for cooking and heating • Stand-alone diesel or gas generators if they are the “only means of providing power in areas where no mains grid connection is available or where grid power is unreliable, especially in humanitarian contexts” • Gas-fired power generation if: Ȥ the host country has a credible nationally determined contribution (NDC) and a long-term pathway to achieving net zero by 2050 in line with the Paris Agreement; Ȥ UK support does not “delay or diminish” transition to renewable energy; Ȥ the project “intends to follow best practice in environmental and social standards”; Ȥ If these cannot be demonstrated: If they are a source of “domestic energy security” and there are no viable alternatives in the form of renewable energy. 135 Q16 [Diann Black-Layne] 136 UN News, IPCC report: ‘Code red’ for human driven global heating, warns UN chief, 9 August 2021 137 The fossil fuel energy sector overseas is defined as “the extraction, production, transportation, refining and marketing of crude oil, natural gas or thermal coal, as well as any fossil-fuel fired power plants.”. See: Gov.uk, Aligning UK international support for the clean energy transition, p.4, 31 March 2021 138 CDC Group, Our fossil fuel policy, pp. 4–5, 12 December 2020; Gov.uk, Aligning UK international support for the clean energy transition, pp. 6–7, 31 March 2021 139 Gov.uk, Aligning UK international support for the clean energy transition, pp. 6–7, 31 March 2021 Global Britain in demand: UK climate action and international development around COP26 25

Contributors expressed concerns about the Government’s fossil fuel policy and its impact on the investments made by the Government affiliates CDC, UK Export Finance (UKEF) and the Private Infrastructure Development Group (PIDG).140 Dario Kenner, Lead Analyst on Sustainable Economic Development at the Catholic Agency for Overseas Development (CAFOD), told us that: ODA, which is precious and has become more so since the aid cuts, really needs to be going to where it is needed, which is into the low-carbon transition, and particularly in low-income countries.141 NGOs stated that the Government’s climate action was incoherent by professing commitment to climate adaptation while introducing a fossil fuel policy with broad exemptions.142

We also heard concerns about CDC’s level of transparency in its reporting. Dario Kenner told us that although the level of information provided on CDC’s website had improved “a great deal”, third parties sought more disclosure of data especially in the area of CDC’s work with financial institutions and intermediaries.143 Mr Kenner told us that: It is important where CDC money is still invested because it could be undermining that same transition that CDC could play a role in being part of. It really matters what is happening with all of the portfolio, not just what is happening in the future.144

Contributors told us that despite the official “arms-length” relationship between the Government and CDC, the Government had ample scope to influence the latter’s operations and decisions as its sole shareholder.145 NGOs are seeking greater Government influence on CDC’s operations to reduce the scope for funding fossil fuel energy sector abroad. In the words of the Environmental Rights Action/Friends of the Earth Nigeria: The undue influence of the CDC over government policies means they will continue to enjoy stupendous patronage from government spending to continue fossil fuel infrastructure financing.146 UK’s response—fossil fuel policy

The FCDO told us that the Government’s new fossil fuel policy “determines the UK’s voting position at the boards of Multilateral Development Banks and can be used to influence the investment policies of other development financial institutions (such CDC Group PLC and the Private Infrastructure Development Group) that receive UK government funding.”147 140 Bond & CAN-UK (CDC0045), CAFOD (CDC0039), ODI (CDC0035) 141 Q79 [Dario Kenner] 142 Bond & CAN-UK (CDC0045), CAFOD (CDC0039), Global Justice Now (CDC0049), E3G (CDC0027), Tearfund (CDC0031) 143 Q96 [Dario Kenner] 144 Q87 [Dario Kenner] 145 Bond and Climate Action Network UK (CAN-UK) (CDC0045), Friends of the Earth England, Wales and Northern Ireland (CDC0042), Global Justice Now (CDC0049), Tearfund (CDC0031) 146 Environmental Rights Action/Friends of the Earth Nigeria (CDC0021) 147 Foreign, Commonwealth and Development Office (CDC0016) 26 Global Britain in demand: UK climate action and international development around COP26

The FCDO also stated that it would accelerate the transition to clean energy through the COP26 Energy Transition Council, which would “bring together energy ministers, leaders of multilateral development banks, and heads of expert agencies […] to ensure that for every country considering new power generation, clean power is the most attractive option.”148 Further, the Government would use UK ODA, UK ICF and their expertise to “help the most coal-dependent communities [...] achieve a just transition.”149

In July 2020, CDC presented its new Climate Change Strategy, with the aim of further aligning CDC’s measures with the Paris Agreement.150 CDC told us that it had committed over US$1 billion in climate finance since 2017, including for measures to provide renewable energy sources to people in hard-to-reach areas.151 It added that gas could play an important transitionary role where renewable energy sources were not yet a reliable alternative.152 As of 2021, it is committing 30% of its funding to climate finance.153

On the exemptions to CDC’s new fossil fuel policy, Colin Buckley, General Counsel and Head of External Affairs at CDC, told us that it would “respect the individual country road maps to net zero” as “developing countries will all have slightly different paths to get to net zero by 2030”.154

On the pace of transition, CDC state on their webpage that: we avoid short-term policy changes. We are a long-term investor who thinks in decades rather than years.155 Colin Buckley told us that the perceived slow pace at aligning with the Paris Agreement of 2015 was due to “investment decisions that were made over a decade ago” and to the “importance of natural gas as a transition power […] in countries that simply do not have the renewable structure yet”.156 Mr Buckley also told us that: the [CDC’s] strategy does not have any overall time when fossil fuels would cease, because it would depend on the individual country’s Paris path to net zero.157

On transparency and availability of data on CDC investments, Dr Amal-Lee Amin, Director of Climate Change, Value Creation Strategies team at the CDC, stated that it was “very much an evolving process.”158

We are concerned about the broad list of exemptions in the Government’s new fossil fuel policy as it raises questions about the UK’s credibility as a “force for good” and its commitment to net zero. We therefore urge the Government by 31 October 148 Foreign, Commonwealth & Development Office (Annex A) (CDC0052) 149 Foreign, Commonwealth & Development Office (Annex A) (CDC0052) 150 CDC Group, Climate Change Strategy, accessed 26 October 2021 151 CDC Group (CDC0053); 152 CDC Group (CDC0053); CDC Group, Annual Review 2020: Rising to the Challenge, p.22, 6 July 2021 153 CDC Group, Annual Review 2020: Rising to the Challenge, p.22, 6 July 2021 154 International Development Committee, Oral evidence: The Philosophy and Culture of Aid, Question 71, 9 March 2021 155 CDC Group, Our corporate governance, accessed 26 October 2021 156 International Development Committee, Oral evidence: The Philosophy and Culture of Aid, Question 71, 9 March 2021 157 International Development Committee, Oral evidence: The Philosophy and Culture of Aid, Question 72, 9 March 2021 158 Q95 [Dr Amal-Lee Amin] Global Britain in demand: UK climate action and international development around COP26 27 2022 to drastically scale up its investment in renewable energy abroad and to end all exemptions for direct and indirect investment in fossil fuel projects abroad through CDC and other channels apart from support for clean cooking methods for people living in poverty. The Government should also instruct CDC to publish a full list of its existing investments in coal, oil and gas and how they intend to divest from fossil fuels by 31 October 2022. Loss and damage

We heard that loss and damage159 remained underserved in international climate action—even more so than climate adaptation.160 Contributors called for new and additional funding for loss and damage and for a more ambitious approach to addressing loss and damage.161 Bond and CAN-UK told us that: The UK has not yet shown the leadership necessary on loss and damage to stand up for those suffering the worst impacts of climate change.162 They added that loss and damage was being subordinated to adaptation despite having an entire Article dedicated to it in the Paris Agreement.163 In their words: The theme of Adaptation and Resilience ignores loss and damage entirely and uses instead the term “resilience” as a blanket term, ostensibly to include loss and damage without explicit recognition.164

H.E. Diann Black-Layne, Lead Negotiator on Climate Change, Alliance of Small Island States, told us that: The frequency and intensity [of hurricanes] is increasing, and this increase is caused by pollution that is not our fault. […] Ideally, climate justice should kick in and those who are polluting should compensate us. What happens is that they say, “Oh no, go to the World Bank. Borrow this money and then you are going to have to borrow every single time.” That is not sustainable.165

At the Climate and Development Ministerial on 31 March 2021, the Government launched the ‘Climate and Development Pathway’, including the commitment to operationalise the Santiago Network for Loss and Damage before COP26.166 While participants of a subsequent Ministerial meeting on 25-26 July 2021 agreed on the need for urgent action, they disagreed on the creation of a separate funding line for loss and damage.167 159 As with climate finance, there is no official definition of loss and damage. In line with our predecessor Committee, we understand it as “the impacts of climate change that cannot be avoided through mitigation or adaptation.” See: International Development Committee, UK aid for combating climate change (HC 1432), Paragraph 158, 8 May 2019 160 Q58 [Catherine Pettengell], Q76 [Nick Mabey] 161 Bond and Climate Action Network UK (CAN-UK) (CDC0045), CARE International UK (CDC0029), Practical Action (CDC0040), Quakers in Britain (CDC0004) 162 Bond and Climate Action Network UK (CAN-UK) (CDC0045) 163 Bond and Climate Action Network UK (CAN-UK) (CDC0045) 164 Bond and Climate Action Network UK (CAN-UK) (CDC0045) 165 Q16 [Diann Black-Layne] 166 UK COP26, Climate and Development Pathway, accessed 26 October 2021 167 UK COP26, July Ministerial Chairs Summary, 5 August 2021 28 Global Britain in demand: UK climate action and international development around COP26 UK’s response—loss and damage

The FCDO told us that the Government would use its COP26 presidency “to increase efforts to avert, minimise and address the challenges arising from loss and damage, including through effective disaster preparedness, risk reduction and response.”168

Lord Goldsmith agreed with the premise that those who had done the least were suffering the most from climate change but considered the introduction of a separate finance stream for loss and damage “highly unlikely”.169 He said: it is a political issue. If countries wanted to step up, they could, but it is hard enough getting countries to step up on existing climate commitments for adaptation.170

He added that: Our approach of pushing very hard for a clear, even split between adaptation and mitigation is, in a sense, probably the most elegant way through what would otherwise be an impasse, by getting countries that may not accept the language of loss and damage, or compensation, to accept the idea that we need to help those frontline countries that are most vulnerable to climate change to prepare, to become more resilient and to adapt to climate change.171

We understand the call of many contributors to create a separate funding stream for loss and damage from climate events, such as from sea-level rise, and acknowledge the challenges in accomplishing this at this time. Nonetheless, we urge the Government to ensure the operationalisation and adequate funding of the Santiago Network for Loss and Damage by 31 January 2022 and thus keep the momentum on formulating policies and interventions to tackle loss and damage during its COP presidency. Further, the FCDO should work closely with LDCs and SIDS in developing practical measures to address loss and damage, especially where people are forced to migrate or change livelihoods to reduce risks to their livelihoods and lives. Leadership and the Climate and Development Ministerial

As a “stress multiplier”,172 climate change could increase the number of people living in poverty by an additional 100 million by 2030,173 while covid-19 and its secondary impacts have significantly slowed down the economic and social development of particularly marginalised groups in the Global South.174

COP26 is the starting point of a one-year opportunity for the UK to shape the direction of climate action and development in this decade significantly. As COP President, the UK 168 Foreign, Commonwealth and Development Office (CDC0016) 169 Q125 [Lord Goldsmith] 170 Q125 [Lord Goldsmith] 171 Q126 [Lord Goldsmith] 172 Institute of Development Studies (CDC0015) 173 UN News, The trillion dollar climate finance challenge (and opportunity), 27 June 2021 174 United Nations News, Global economy projected to show fastest growth in 50 years, 15 September 2021 Global Britain in demand: UK climate action and international development around COP26 29 will play an important role in increasing the resilience of climate-vulnerable countries and trust between stakeholders as the Parties seek ambitious commitments on climate action and volume as well as access to climate finance.

Contributors told us, however, that the cuts to ODA reduce the scope for the UK to support vulnerable countries to address climate change alongside the impact of the covid-19 pandemic and high levels of public debt.175 We were also told that the aid cuts might damage the trust of climate-vulnerable countries.176 Cecília da Silva Bernardo told us that: Right now, somehow the UK’s leadership is lacking. […] For example, we did not hear from the UK a strong commitment on continued support and provision of funding to LDCs or to the most vulnerable. We also saw that there was a cut from 0.7% to 0.5% in development assistance from the UK. Those things that happened do not provide us with a good sense of confidence. I believe the UK is in a good position to change the way we are seeing it and really become the leader in this fight.177

H.E. Ms Diann Black-Layne, Lead Negotiator for the Alliance of Small Island States (AOSIS), spoke of a “broken trust” of LDCs and SIDS in the credibility of the UK and other donors because of the failure to contribute US$100 billion per year for low- and middle- income countries178—a stark contrast to the billions that were mobilised comparatively quickly in response to addressing covid-19 by higher income countries.179 UK’s response—leadership

The FCDO told us that COP26 “is a key demonstration of the government’s vision of a Global Britain, the UK’s diplomatic and international convening power, and the newly formed FCDO.”180 During its COP presidency, the UK could put in place several measures to help deliver its ambition thanks to its diplomatic reach, ODA and membership of high- level multilateral institutions. Climate and Development Ministerial

On 31 March 2021, the Government hosted a Climate and Development Ministerial to discuss the challenges and priorities for delivering the Paris Climate Agreement and meeting the SDGs.181 The meeting brought together ministers of 35 countries and representatives of international finance institutions to produce practical actions regarding adaptation, access to finance, the volume and quality of finance and debt.182 175 Bond and Climate Action Network UK (CAN-UK) (CDC0045), Christian Aid (CDC0047), E3G (Third Generation Environmentalism) (CDC0027), International Institute for Environment and Development (IIED) (CDC0048), WaterAid (CDC0023) 176 Bond and Climate Action Network UK (CAN-UK) (CDC0045), Christian Aid (CDC0047), Institute of Development Studies (CDC0015), E3G (Third Generation Environmentalism) (CDC0027), Tearfund (CDC0031), Fairtrade Foundation (CDC0034), WaterAid (CDC0023) 177 Q24 [Cecilia da Silva Bernardo] 178 Q24 [Diann Black-Layne] 179 Q41 [Gebru Jember] 180 Foreign, Commonwealth & Development Office (Annex A) (CDC0052) 181 Gov.uk, Climate and Development Ministerial meeting, March 2021: overview, 16 March 2021. UK COP26, Climate & Development Ministerial Chair’s Summary, 1 April 2021 182 Foreign, Commonwealth & Development Office (Annex A) (CDC0052) 30 Global Britain in demand: UK climate action and international development around COP26

Bond and CAN UK told us that the Ministerial had failed to address loss and damage directly.183 Further, the International Committee of the Red Cross highlighted a distinct lack of mentioning conflict and fragility in the Chair’s summary and the small number of participants from conflict-affected countries.184 UK’s response—Climate and Development Ministerial

The FCDO told us that the Climate and Development Ministerial had been a “key step in demonstrating that the UK Presidency and wider donor community is listening to and actively working to address the concerns of climate vulnerable countries”.185

Overall, we consider the Ministerial a notable step in making the UK a “force for good” and increasing the Government’s credibility as climate leader. We therefore agree with contributors that delivering on the issues raised at the Ministerial would help the Government build trust and momentum on decisive issues during its presidency.186

We welcome the Government holding a Climate and Development Ministerial meeting in March 2021 to capture the concerns of climate-vulnerable countries in the run-up to COP26. We recommend that the FCDO hosts a Climate and Development Ministerial with climate-vulnerable countries every year starting in 2022 to follow up on the measures listed in the “Climate & Development Pathway” of March 2021 and to keep the momentum gained from that first Climate and Development Ministerial. Climate and Development Minister

In 2019, our predecessor Committee heard that DFID had been “hollowed out in terms of expertise”.187 Two years later, the FCDO’s largest thematic network consists of climate, energy and environment attachés and advisors.188 Alongside the FCDO, the Government also created the “Climate and Environment Directorate (CED)” with around 100 members of staff within the new Department who are all engaged in COP26.189

The FCDO has taken a number of encouraging steps to address the impact of climate change in vulnerable countries such as the “Race to Resilience” campaign, the Adaptation Action Coalition, backing the Least Developed Countries Initiative for Effective Adaptation and Resilience (LIFE-AR) and signing up to the “Principles for Locally-Led Adaptation”. Furthermore, the FCDO has introduced a rule requiring all new FCDO programming to align with the Paris Agreement “to ensure that no environmental harm is done.”190

Having heard of the challenges vulnerable countries and communities face and the measures taken by the Government, we would see value in the introduction of a Climate and Development Minister in the FCDO with a focus on adaptation and resilience. 183 Bond and Climate Action Network UK (CAN-UK) (CDC0045) 184 International Committee of the Red Cross (CDC0024) 185 Foreign, Commonwealth and Development Office (CDC0016) 186 BRC/CDC0028 187 International Development Committee, UK aid for combating climate change (HC 1432), Paragraph 39, 8 May 2019 188 Foreign, Commonwealth and Development Office (CDC0016) 189 Foreign, Commonwealth and Development Office (CDC0016) 190 Foreign, Commonwealth and Development Office (CDC0016) Global Britain in demand: UK climate action and international development around COP26 31

Tackling climate change and biodiversity loss as the Government’s “number one international priority” will inevitably involve international development. We are concerned that the Integrated Review does not include explicit initiatives building the capacity of FCDO’s network to maximise the synergies between departments dealing with development, climate, energy and the environment.

A failure to anchor climate change in development and to ensure greater policy coherence in Whitehall will increase the scope for maladaptation, the negative consequences of poorly designed Nature-based Solutions and wasteful spending of the reduced ODA. By introducing a Climate and Development Minister, the UK would demonstrate that it is putting its words into action and implementing its Integrated Review and the concept of Global Britain in a coherent manner.

We believe that climate and development are closely intertwined. The Integrated Review prioritises climate change “in 2021 and beyond” and suggests using UK ODA to increase the Government’s impact as a “force for good”. We therefore recommend the introduction of a Climate and Development Minister at the FCDO with a focus on adaptation and resilience to ensure alignment between the FCDO’s climate and development strategies during COP26 and beyond. 32 Global Britain in demand: UK climate action and international development around COP26