International Development Committee
Oral evidence: ICAI’s review on UK aid’s alignment with the Paris Agreement, HC 1116
Tuesday 22 February 2022
Ordered by the House of Commons to be published on 22 February 2022.
Members present: Sarah Champion (Chair); Theo Clarke; Mrs Pauline Latham; Chris Law; Mr Virendra Sharma.
Questions 1-49
Witnesses
I: Dr Tamsyn Barton, Chief Commissioner, Independent Commission for Aid Impact; Catherine Cameron, Review Team Leader, ICAI, and co-founder, Agulhas.
II: Rt Hon Lord Zac Goldsmith, Minister for the Pacific and the International Environment, Foreign, Commonwealth and Development Office; Vel Gnanendran, Climate and Environment Director, FCDO.
Witnesses: Dr Tamsyn Barton and Catherine Cameron.
Q1 Chair: I would like to start this session of the International Development Committee. We are looking at ICAI’s review on UK aid’s alignment with the Paris agreement. We are very fortunate to have the chief commissioner, Tamsyn Barton, and the review team leader at ICAI, Catherine Cameron. The first question is to Tamsyn. Could you please summarise the main findings of your review for us?
Dr Barton: What we are looking at in this review is alignment with the Paris agreement of all aid, so this is going beyond climate finance. The idea is that it is a commitment to ensure that all aid is low emission and climate resilient. That is a big and commendable ambition made in the context of the UK’s leadership of COP26. That reflected the urgency of the climate crisis. However, we found that after that commitment was made in June 2019, it took until April 2021 for any visible action to implement it, which came with a new rule for FCDO programming—it is known as rule 5—and with four tools. We looked at these tools and considered that they reflected good practice.
What we were concerned about, though, was that however good the tools are, they will not be useful unless you have the experts to help ensure they are used. We had concerns about capacity, which we can talk more about. We were also concerned that, beyond FCDO, there was much lower awareness and fewer plans for implementation, so it is going to be very interesting to hear today what progress has been made since we took our evidence. You should just take into account that we were looking at the situation last year and our review was published in October.
Q2 Mrs Latham: Are you satisfied with the Government’s response?
Dr Barton: I am sure the Government feels that ICAI is never satisfied. We work to you, and I am sure that you, equally, always demand the highest standards of response. There were of course elements of this response that we were pleased to see. There were some really good promises and commitments, and we hope that those will be implemented in practice. There was a clear commitment, for example, in relation to the international development strategy, which I think we are all eagerly awaiting, that Paris and London will be at the heart of that. What we have not seen any sign of yet—we are eagerly waiting for that strategy to come out—is whether there will be a road map with time-bound milestones. In the response from Government, they said that they were working to progress time-bound milestones, so we want to see them there—that is very important.
On capacity, the response was encouraging in relation to the learning and development offer, but we have advocated in the past for increased capacity and heard some promises that ultimately did not really seem to have been fulfilled, and we are waiting to see whether that is really going to happen in practice. I should stress that we are not saying that the Government needs to recruit a lot more civil servants to do this. What we are saying is that, if you double climate finance and have the ambition to align all aid with Paris, you need to ensure that the focus of the people you recruit, and the level of knowledge, is sufficient to implement those ambitions. Those are areas where we are particularly looking for more.
Last but not least, we noted that in the Government’s commitment, which is excellent, to work with others on best practice for the Paris alignment and to ensure that everybody can learn from that, we did not see any reference to working with developing countries, as we had suggested. That would be something to hear about, I hope, later. Otherwise, it might seem like an imposed agenda from those countries that can more easily afford to be Paris-aligned.
Q3 Mrs Latham: You’ve mentioned one of the recommendations that the Government only partially accepted—recommendation 2, which said, “The UK needs to develop a cross-government reporting and accountability process for Paris alignment”. It said it will maintain its existing accountability structures. Do you think those existing structures are sufficient?
Dr Barton: I should stress that at ICAI we are obviously not telling the Government that it should reorganise its lines of accountability to Parliament, ultimately, through Ministers. Clearly, each Minister and each permanent secretary has those clear lines of accountability. But I don’t think that means that we should necessarily accept that there is no accountability, simply because they are separate Departments with lines of accountability.
We have seen, for example, in relation to the commitment to provide 0.7% and now 0.5% of GNI that there is a structure in place—there is a senior officials group that meets, there is a lot of planning, and there is certainly a lot of timetabling to make that happen.
At the time of our evidence gathering, we hadn’t seen that happening. There is a high-level national security implementation group, which looks at this, but up to that point, it had not led to the officials who talked to us having a clear accountability outside FCDO—let me put it that way. Certainly, we were not hearing time-bound milestones outside FCDO.
Q4 Mrs Latham: A bit siloed.
Dr Barton: A bit siloed, although we know that they were in discussions with each other. There definitely have been training sessions and so on, but at that senior level it is not really joined up.
Q5 Mr Sharma: You recommended that the Government should increase the capacity and capability of their staff, but in response, they say they plan to make use of the capacity they already have. Are you satisfied with that?
Dr Barton: Thank you for giving me another chance to say a bit more on that point. As I mentioned earlier, without the capacity, this ambitious commitment is not going to result in real change. Catherine could comment more specifically on what it means in-country if you don’t have enough capacity to deliver. I want to stress that we know that the Department has a lot on, not least at the moment. We are not suggesting a complete reprioritisation, but more people need to have this expertise.
There is a quite small number of climate and environment experts—I do not think it has really increased a great deal since our 2019 review, and from what we could determine there are about 60. The Department is now recruiting and it should consider whether it can recruit in some of that expertise as part of its overall recruitment effort and whether it can use the existing resource. For example, quite a large number of people were involved in the preparation for COP26 who developed relevant expertise which would help feed into ensuring Paris alignment in programmes.
Then, of course, there could be an ambitious learning and development offer, which is referred to in the Government response, but I do not know to what extent it has been implemented as yet. Those are my immediate thoughts. I do not know whether it would be okay to ask my colleague to comment.
Catherine Cameron: Thank you, Tamsyn. We found in the review that FCDO capacity is already overstretched at the central level and in their country offices. In the overseas network, we identified a number of gaps in the consultation we did across six different offices. For example, in Nigeria we heard that where posts had been cut, they had to ask another Department, BEIS, for assistance on one of the more complex tools, on shadow carbon pricing. Of course, Nigeria is very interested in gas as a transitional fuel, so this is a very live issue.
Elsewhere in the world, we heard from the Bangladesh country office and the Indonesia country office that they would welcome a much more portfolio-wide approach being taken to Paris alignment, rather than a bottom-up approach that is led by tools that essentially just screen out bads, rather than taking a portfolio-wide approach that is looking for aligning with the Paris agreement as far as possible.
We had quite helpful feedback from many of the country offices a year-plus ago now who are already feeling the pinch. As Tamsyn mentioned in our earlier review, in 2019, looking at the UK ICF approach to low carbon development, we knew then that they were already feeling the pinch on capacity and capability and we understood from the Department that they were looking at ways to enhance and expand on that. We very much look forward to hearing from them what they have been able to do in the last three years to achieve that.
Q6 Mr Sharma: You touched on this, but I will give you another opportunity to expand on it: how could the Government increase the capacity and capability of their existing staff?
Dr Barton: In terms of increasing their capacity and capability, it has to be about learning and development. I mentioned recruitment simply because that is happening in any case at the moment but was not at the time of our review.
We did hear about ambitions for an impressive, comprehensive learning and development offer, but we will need to hear in the next session to what extent that has been implemented since that time. At the time, certainly beyond FCDO, there were teachings, if you like, but they hadn’t reached a very high level: senior people were not so aware. It hadn’t resulted in people implementing differently—other than BEIS, which was already heavily involved in the work on these tools and, as you have heard, sometimes in helping FCDO to implement them. There is an existing capacity in FCDO. I would say that in other Departments, apart from BEIS, that capacity is limited, so the training is going to be all the more important. I hope that that’s going to be prioritised now.
Q7 Mr Sharma: You found that the Government’s progress towards operationalising their commitment has been slow. What are the reasons for this?
Dr Barton: I think we should acknowledge that the commitment that the Government have taken on is pretty challenging in the first place. It is not something that can be done in a day, and it’s not something for which there’s already a clear road map and lots of good practice to draw on. It’s relatively new territory, although we have certainly seen in recent years some bilaterals, such as the Nordic donors, and the multilaterals thinking harder about how to implement the Paris commitments. It is difficult.
Having said that, it did seem an unconscionably long time from the commitment in June 2019, which was made by the Prime Minister at that time, Theresa May, until April 2021, which, as I mentioned, was the first concrete, comprehensive response. There had already been discussions about the fossil fuel policy, which is one of the tools, and that was being implemented in the context of the multilaterals. But they were slow to get to the point of having these tools that were mandatory for use across the programmes, with some exceptions, I should say—but I will come to that.
Why was it slow? To be fair to the Government, they noted that there was a pandemic, which put considerable strain on them, both in the ways of working and in terms of the response through international means. Apart from that, during the pandemic there was the merger, which inevitably had complicated decision making and involved practical considerations that take time to deal with, such as merging IT systems or whatever it might be. Additionally, of course, there had to be major reprioritisations because of the falls in GNI, meaning a reduced target for aid. All of those things had landed on the Department, which itself said that these were factors in its not being able to move faster to implement this commitment.
Q8 Mr Sharma: You found that the work on the commitment had accelerated more recently. What are the reasons for that increase in pace, and how can the Government maintain it?
Dr Barton: When we wrote the report and gathered our evidence, it was relatively recent; we were looking at this in the middle of the year and we published in October. Clearly, there was a big acceleration in FCDO following the announcement of the mandatory use of the tools, which was in April, and we could see that there was a lot of explanation going on—lots of discussions with the overseas network on how these could be implemented. The commitment was made initially in the context of the UK’s co-leadership of COP26. As there was an increasing focus on COP, certainly in FCDO and other Departments there was a huge increase of focus on that context. I think that really helped accelerate awareness. The question for us is whether that momentum is going to be maintained.
Q9 Theo Clarke: This is a question for Catherine. You found that there were “gaps and inconsistencies” in how other Departments approach aligning ODA spend with the Paris agreement. Which Departments were doing well on this?
Catherine Cameron: In our report, we notably identified that BEIS has done a lot of work and has been quite central to much of the detailed, technical work supporting the FCDO. However, outside of that island of excellence, if you like, it has been quite hard to see how the other Departments are able to pick up on this wider work.
Q10 Theo Clarke: We heard about this challenge of silos in Departments from Tamsyn earlier. Who do you think should be playing that co-ordinating role between the different Departments?
Catherine Cameron: I think it comes back to one of our key recommendations about the need to have a clear reporting line to achieve Paris alignment, so that the tools are not something that apply only to the FCDO, but across all Departments. If this were fully integrated into the forthcoming international development strategy, with a clear road map and clear milestones, then this would automatically fall through and cascade down and out across all of the Departments, hence our recommendation to try to ensure that this is given the priority it requires given the scale and urgency of the problem.
As Tamsyn references, it has been almost three years now, so the FCDO has had time to at least put its house into order in terms of putting these four tools in place. We would like to see the Department go much further in establishing the top-down, portfolio-wide approach; a clear road map; integrating this into the international development strategy; and establishing clear reporting lines to ensure that this becomes everybody’s business rather than, as you allude to, a more siloed issue.
Q11 Theo Clarke: Indeed. You also noted that the Government’s approach involves screening out programmes that were non-Paris compliant rather than positively selecting programmes. What do you think are the benefits of having a positive selection tool instead?
Catherine Cameron: In our report we suggested that having a positive, portfolio-wide approach would be much more beneficial than screening out bad programmes, in the way that people used to screen out tobacco, for example.
Taking a much more positive, top-down approach is something we heard from the staff working in country who said that they would welcome this. For example, Bangladesh, Pakistan and Indonesia are facing very different challenges, whether that be trying to manage a transition to lower emission fuels or dealing with the impact that climate is having on those economies and the need to adapt, but across all of those countries, the request was that they would like a portfolio-wide approach to achieving Paris alignment rather than a sort of negative, bottom-up approach.
It is really a request to tip the whole thing to make it much more top-down, system-wide and portfolio-led rather than beginning at the bottom and working up, which is the approach that is currently in place. As Tamsyn has alluded, we have high hopes for the forthcoming international development strategy, to see if it can be integrated into that.
Theo Clarke: Tamsyn, would you like to add anything?
Dr Barton: Not on that point, I don’t think.
Q12 Chris Law: We are moving swiftly along. Tamsyn, you found that the UK’s influence in efforts on Paris alignment in a multilateral system has been effective. Can you provide some examples of where the UK influence has actually made a difference, and what could the Government do to further build on those successes?
Dr Barton: Thank you for that, because actually implementing this commitment through the multilaterals is one of the most important ways in which the UK can make a difference. It has a much bigger systemic impact given the scale. If you take an organisation like the World Bank, it is huge, therefore the impact would be that much greater.
Perhaps the No. 1 lesson for success is that the UK was really insistent on working towards target dates and road map-style milestones—a definite journey of progress. We would like them to be as insistent when they look at themselves as they were with the multilaterals. It certainly did lead to a lot of change.
Obviously, the UK had to work with others in the context of the multilateral development banks, which is where we saw the real difference being made. They worked with like-minded shareholders and management and did not limit their working to other donor countries, if you like.
That led, for example, to the implementation of the fossil fuel policy through those multilateral channels, which was very challenging. Clearly, the UK can’t just say to the World Bank or the Asian Development Bank, “Right, PrOF rule 5, you’re only allowed to do this”, because they are only one shareholder. It takes a longer influencing effort, but it was not only the result of that effort within the context of those boards.
Certainly, what we saw during 2021 in the run‑up to COP26 was that there was a huge influencing effort across the board, and—credit to the degree of diplomatic effort across the board—that has really made a difference in implementation at ground level. You see a difference in attitude from client countries of the World Bank, the Asian Development Bank and so on, not only from the management or the donor countries, as to what is required.
However, I would not underestimate the countries. The risk with Paris alignment is that it might sound like something that is being imposed—northern conditionality, you know. “We did all right out of the fossil fuel pathway, but you cannot,” is something that the UK is trying to avoid, but nevertheless there are pitfalls. The way that it approaches changes in the multilateral system was meant to balance that and look for positive ways to support countries that have worked out what their contribution to tackling climate change is going to be, and to make sure there are resources to support that through multilateral channels as well as bilateral ones.
Q13 Chris Law: Have you seen any specific examples you would want to share with us of what the UK is doing, even if it is a partnership on a country level rather than multilaterally across a whole broad philosophy? Are there partnership projects you have seen where it has happened effectively?
Dr Barton: I could choose any number of climate finance projects, but I do not think that would capture well enough the effort here, which is to ensure that all aid is aligned with Paris. What was toughest for the multilateral banks was where countries were identifying programmes that would involve higher‑emission pathways and saying, “We want help with this, and it is urgent. Don’t slow down our development.”
What we have seen with the fossil fuel policies adopted by the banks with the UK and other like‑minded countries, changing their direction, is that for a start, coal is off the agenda. That used to be, albeit rarely, something that would not be off the agenda. It is a little bit complicated depending on which multilateral you look at, but broadly it is off the agenda, and fossil fuels are only to be considered in specific circumstances, depending on the degree of development of the country and how it fits with their pathway that they have identified up to 2050. There are a number of specific examples where they have decided not to finance fossil fuel projects. That is what it is about.
Q14 Chris Law: You recommended that the Government should ensure that Paris alignment is embedded at the heart of the upcoming international development strategy. Of course, we are all waiting to see how that is going to be. Are there any specific commitments or actions you would like to see included in the strategy? You have mentioned road maps and milestones where you can measure where it is going. Is that front and centre, or are there other things you would like to see as well?
Dr Barton: That is front and centre. Obviously, we welcome general statements about the extent to which alignment with Paris is at the heart of the Government’s plans for all its aid, but we would not be reassured that our recommendations were getting traction unless we saw those very specific time‑bound commitments.
We recognise that it is not straightforward to have a date and say, “By this point, it is Paris-aligned.” It is an elusive goal. If you like, it is more of a journey, but nevertheless, if you do not see any milestones on that journey— For example, at the moment, we have seen that there are quite a lot of exemptions from applying the tools, depending on the level of development of the country or the sector. In some sectors, like health or education, tough rules on carbon pricing are not for immediate priority. We can understand that—there should be prioritisation—but are we going to be happy with health and education never having any change in how they implement their programmes? That is what we would like to see above all, I think, and we will be reassured if we see it.
Q15 Chris Law: Thank you. Lastly—this is an open question—given that there has been a fall in GDP, and 0.7% being reduced to 0.5% has had a huge impact both here and overseas, in your view, does the FCDO have the funding it needs to achieve its existing commitments on Paris alignment?
Dr Barton: I would say that it is not necessary to have a specific amount of funding to fulfil the goal, because the goal was just to make sure that all aid is aligned with Paris. It would probably be easier for the Government if it had a lot less funding, because it would not be so complicated to implement it.
I think I would draw you back to this issue of whether they have sufficient expertise—do they have the administrative funding, if you like, as opposed to the programme funding—or whether they can, through programme funding, find that expertise. Without the expertise, we would be worried, which is why we have put the emphasis on capacity.
Q16 Chris Law: Have you seen any drop in expertise as a result of changes—cuts—that have happened over the past 18 months?
Dr Barton: We have not been able to establish the clear numbers—I should say that—so I cannot say for certain that we can tell whether we have, say, 63 or 65 climate and environment advisers. It is a matter of record that something like 200 people have left the Department since the merger, which included many experts, but we now see new blood, if you like, being recruited to replace them.
I cannot say that we have clearly seen a drop-off during the period of this report. It was more, as my colleague said, that they were already stretched in 2019. You referenced correctly that the total amount of aid was reduced to 0.7%, and then there was the reduction to 0.5%, but climate finance has doubled. It has gone up from £5.3 billion to £11.6 billion over several years, so that takes up even more of the total proportion, which requires an adjustment in how expertise is trained and deployed, because there is a lot of expertise that might not be used. I mentioned all those climate attachés who were involved in the run-up to COP. They might, unfortunately, all have to be redeployed to current priorities, unless their expertise is used.
Q17 Chair: Thank you very much. We appreciate the succinctness of your answers and how full they were. We have the Minister coming in next. What is the one question that we should be asking him?
Dr Barton: At the risk of repeating ourselves, it would be very good to know whether they will have time-bound milestones and a road map in the international development strategy, and the extent to which those would implicate other Departments and FCDO. That would be the top ask. If I could have another one—
Chair: Go on.
Dr Barton: It would be to ask which developing country they would work with to ensure best practice on Paris alignment and whether that is expanded to others. There is learning from what the UK and its partners have done. They answered very fully on the good work at the OECD DAC with other donors, but that will be very important, because without developing country partners, there will not be the buy-in. We expect a lot from developing countries as a result of the commitments made at COP26.
Chair: You can see us scribbling down your suggestions. Thank you very much. Thank you both so much for your time today and for what you have put into this work and your ongoing work of scrutinising where the Government are spending their own money. It is deeply appreciated.
Witnesses: Lord Goldsmith and Vel Gnanendran gave evidence.
Q18 Chair: We will now start our second session. Thank you very much, Minister, for coming to this and for allowing us to start a little early. We are expecting votes. It is our intention, if we are called to vote, to come back if we are still within the time slot that you have allocated to us. Sorry for the disruption if that happens, and please bear with us.
We are very fortunate to have you here, Lord Goldsmith. The job title I have for you—they change so fast in your Department—is Minister for the Pacific and the International Environment. Is that it?
Lord Goldsmith: Yes.
Q19 Chair: Will you introduce your colleague, please?
Lord Goldsmith: This is Vel. Don’t ask me to pronounce his last name. I work very closely with Vel, but I won’t mangle his last name. Vel is, it is probably fair to say, my main point of contact in the FCDO, in the CED—actually, I will ask Vel to introduce himself, but it is, effectively, overseas, for most of the FCDO bit of my portfolio.
Vel Gnanendran: I am Vel Gnanendran, the climate and environment director in the FCDO. I cover strategy programming policy on climate and environment issues.
Q20 Chair: So you are the perfect man to have before us on this review of ICAI’s report. I would like to start with the first question. Minister, I will direct them to you, but Vel, please do come in when appropriate.
ICAI has said that the Government have been slow to implement their commitment to align ODA with the Paris agreement. What is your assessment of that?
Lord Goldsmith: I think that at the time of the report, to which this is a follow-up session, that may have been—we certainly hadn’t done the job. However, I think it is also fair to say that since the report was published—halfway through last year, more or less—there has been a huge amount of progress.
For all four strands of work that were identified, both in your report, but also by the Government when we introduced the policy, our view is that we have put them into practice. We have a system that we think works, and although the different approaches by the different ODA Departments in Government are not identical, we think we have a clear idea of what the shared outcome is.
Now, the priority is to take things further, both in the influence that we exert over the multilateral development banks, for example—we saw quite a lot of progress in that, in the commitments made, at least at COP, which we will probably come back to—and in continuing to improve the dialogue between the different Departments. Vel, do you want to add anything to what I’ve just said?
Vel Gnanendran: I would just mention one aspect of the Paris alignment approach: the fossil fuels, which are a key pillar. We announced, first of all, the end of coal in January 2020, which was three months after the green finance strategy, and then the extension of that policy to all other fossil fuels later in the year. That is just to make the point that the different pillars of Paris alignment were rolled out differently over different times. Some were earlier and some were later.
Q21 Chair: I am giving you fair warning that we will be coming back to fossil fuels—that probably won’t surprise you. Do you think that COP sped up your adoption and implementation, or was it sort of on the line anyway?
Lord Goldsmith: I think it did speed things up. COP was a whole-Government endeavour. We had regular moments where all the Departments came together, either under the chairmanship of the Prime Minister or Alok Sharma. It was a big deal for the UK Government; it was the biggest international event we’d ever organised and there was a lot riding on it.
I think you could also say that it was probably the biggest test of what we meant by “Global Britain” since Brexit, notwithstanding the unforeseen things like covid. I think that the value of that was that it sort of forced an education on all Departments of Government about the importance of the issue, but also about what the other Departments were doing. I think it was a good thing, from that point of view, in having a more joined-up approach across Government.
It was very clear that we had to get as much of our own house in order as possible, given that so much of what we were trying to do at COP was to persuade and cajole other countries, financial institutions, philanthropists, and so on, to step up. The obvious comeback for countries that were a bit reluctant would be to point to our own record, so we needed to do as much as we could. Yes, I think, in truth, it probably did have a positive impact. It didn’t make us do things that we weren’t going to do, but it possibly did accelerate things a bit.
Q22 Chair: Lord Goldsmith, I think it is fair to say that you have been a champion around climate change, so it sounds as though COP helped to amplify your voice across Government. Do you think that that commitment is sustainable, and is there a particular country that you would look at how the UK has spent ODA that can be seen as an example of what we ought to be replicating all around the world?
Lord Goldsmith: On the first point, you will read the same papers as I do. There is always a lot of chatter from some people. There is even a group of people in Parliament who are sceptical of net zero. However, it is very much the case that the overwhelming majority of parliamentarians across the board are committed to this agenda. I don’t think there is any question about that. The structures are such that there is an inevitability, now, about the shift or transition to a cleaner economy; the question is just about how fast we go. I don’t think there is any doubt that we’re heading in that direction. That is true here; it’s true elsewhere as well.
The bit that requires constant reminding and pushing is the role of the natural environment in tackling climate change. We have come a long way in the last two or three years on this issue. We have made the financial commitment to spend £3 billion of our £11.6 billion ICF commitment on nature-based solutions. Again, that is not just an FCDO challenge; it is a BEIS challenge and a DEFRA challenge. Although we don’t have a huge pipeline to build on, because it is a relatively new commitment, there are already some really exciting, innovative programmes in the pipeline that we are supporting or are going to be supporting shortly.
There are a lot of things that made this COP different to previous COPs. However, in my view, the biggest thing was having taken nature from the very margins of the discussion and put it at the heart of our response to climate change. I don’t see that changing going forward. It is inconceivable that there would be a climate convention where nature did not feature very heavily, and that is a very good thing.
Q23 Chair: You have previously cited Costa Rica as a good example of nature-based solutions. Would that still be your lead example?
Lord Goldsmith: Very much so, although it is not the only example. Costa Rica went from being one of the poorest countries in the region early in the last century to becoming one of the most affluent towards the end of the century. It managed to do so in a way that really incorporates nature as a thread running through its entire approach to politics, economics and business.
The example of Costa Rica is often given in other countries where Ministers are trying to move their countries in the same direction. The Environment Minister in Ecuador, who has been in position for just a few months, and who is very ambitious and committed to these issues, persuaded the Government that he joined to follow the Costa Rican example. The example he gave to the presidential candidate—who is now the President—was that a pound of tuna in Costa Rica is worth about £500, while a pound of tuna in Ecuador is worth just a few pounds. That is because Costa Rica has developed an entire economic approach that values nature alive, sustainably, more than just a piece of a meat on a plate. Costa Rica has certainly inspired me, but it has also inspired countries around the world. I would say it is probably the most impressive example.
If you look at the plans in the pipeline in places such as Colombia or Ecuador, as I mentioned, there is a real momentum. At COP, those countries, plus Panama, had a big impact when they made announcements about marine protection. In my discussions with other countries around the world, I could see that the boldness of their vision and commitment to protect half a million square kilometres of ocean, and to do so with the support of the fishing communities, lifted ambition in other countries as well. I feel indebted to those countries for having brought some real ambition to COP.
Of course, there are other countries, such as Gabon. The difference with Gabon is that while it has protected or maintained 89% forest cover and is rapidly expanding sustainable forestry as a key and core part of its economy, it is very much dependent on the Government of today. My concern is that until you create a dynamic where nature is fundamentally worth more alive than dead to the lives of people across the country, you cannot really describe that kind of success as sustainable. That is the challenge.
Q24 Chris Law: I am listening, and you are giving me some cautious optimism. I spent two weeks at COP and I felt dreadful by the end of it—it was all cliffhanger announcements. You have given a bold vision, which is great, but I want to know about a road map. ICAI has already expressed concerns about the lack of a road map, and it has been covered in the press that there seems to be a lack of momentum since COP26. Can you describe to me what the road map is that you are planning on—if you have one planned—what the milestones are going to be and how you are going to have policy coherence, not just in FCDO but across all Departments of Government so there is the same approach to aligning with the Paris climate goals?
Lord Goldsmith: I think that is completely critical. All the stuff that was delivered at COP, on nature or otherwise, are just words on paper. Until we have those commitments being honoured in full, that is all they will remain. Our presidency continues right up until the moment that we hand the baton over to Egypt; our job this year is to give meaning to those commitments that were made—I will come back to that in a second—but also to make use of this new ratchet mechanism that was negotiated. All the signatories to the agreement committed to doing what they can to raise ambition within their own NDCs this year. That is a new thing; it was not reported or remarked on that much, but it is a really significant thing. It means that we have a mandate this year to try and push those countries to raise their ambition—and that is what we will do.
The nature side is a big part of what was delivered at COP, but it lacks the formality of carbon commitments, because it does not exist within the NDCs. One of the things that we will be trying to do is to get as many countries as possible to incorporate the nature commitments that they made into the new revised NDCs, giving them a layer of formality that they currently lack. We are creating what will hopefully become an annual moment where countries that signed up to the Glasgow leaders’ declaration on forests reconvene to demonstrate the progress that they have made. That is a work in progress on our part, so we have not created it formally yet, but it is something that we are doing. We are working very closely with countries, such as Costa Rica but also the United States and others, who share our commitment on this issue.
We had some big commitments made by the 12 biggest commodity buyers, including COFCO in China—it was a really big moment when they signed up. We know that the commitment by the commodity buyers was the decisive reason why some of the more reluctant forest countries signed up to the Glasgow leaders’ declaration. There were some that signed only in the last day, and that was after the commodity buyers had made their commitment. Given that 80% of deforestation is caused by agricultural commodities, the fear among some of those countries was that if the commodity buyers were going to align with nature, climate change and the Paris goals, they were going to have to as well otherwise they would lose their customers. We now have to give meaning to that commitment. A big part of what we will be doing this year is trying to extract a clear pathway or road map from those commodity buyers, showing how they intend to do what they intend to do, and by when. That would be in such a way that they can be held to account by not only us but other Governments, NGOs and all those young people who gathered at COP—something that we can see, measure and judge. At the moment that is lacking. That is an important part of what we will do this year.
I will make this my final point for now. We persuaded a number of big financial institutions with assets of around $8 trillion or $9 trillion.
Vel Gnanendran: It is $8 trillion.
Lord Goldsmith: So I am exaggerating—$8 trillion. We persuaded them to align their portfolios not just with the Paris goals but with our deforestation ambitions—ending deforestation by the end of the decade. There, too, a lot of them signed up quite nervously—they do not know how they are going to do it. There is a big piece of work that needs to be done this year with the most progressive and front-running institutions to design a formula that can be applied and used by all those other financial institutions. There also needs to be transparency and accountability, so that we can hold them to account if they break their promises. I know $8 trillion sounds like a lot—it is a lot—but there are many more trillions out there that are not currently aligned with nature or the Paris goals. In addition to making the process more accountable, we also want to ramp that up massively, so that we align as much of the global economy as possible to nature and net zero. There is a lot to do this year, but those are the main priorities.
I will make one last point: there are some specific moments this year that we can use to build on the momentum. Next week we have UNEA in Nairobi; there will be lots of informal things happening around the sidelines, but one of the important outcomes that is realistically there for the taking, if the world gets its act together, is an agreement for a new global treaty on plastic pollution. Most of UNEA’s members have now signed up to that. Someone may correct me, but I think the majority now have, so it is looking very much within reach.
We have big ocean moments coming up in Palau and Portugal, where I am hoping some really big initiatives that the UK is very much at the forefront of will be announced—we are not there yet—around illegal fishing and marine protection, such as 30by30. We have the biodiversity beyond national jurisdiction discussions that are happening at UNCLOS. That will require a lot of heavy lifting and I am, to be honest, less optimistic about that, but we must do everything we can to get that agreement over the line.
We also have the CBD hosted by China, where the UK is taking as active a role as we possibly can. I have been speaking regularly to the Chinese ambassador here and conveying messages back to China and trying to encourage as much ambition as possible.
Sorry, that was a very long-winded answer, but it was quite a good question.
Q25 Chris Law: It was a very comprehensive answer. I just want to ask about timelines. We have a year of the COP presidency, and we are already a third of the way through. At the end of that year, are there definite things that you must have achieved by then to avoid failing, or are there things that need to be carried on? Do you have timelines in place?
Lord Goldsmith: We don’t have something that it is so precise that I could print it off and give it to you, but we know, for example, that we have secured commitments of around $20 billion for forests. Within that, there is a $2 billion commitment for indigenous people and another commitment for the Congo basin. We have been having private roundtables with other donors who are part of those commitments to agree a way forward. There is no sense at all that the donors who have made these commitments are pulling back. There is a seriousness there which leaves me in no doubt that we will be spending that money in as co-ordinated and aligned a manner as possible.
However, in the run-up to the CBD in China, we also know that we are going to need to come up with perhaps not the same amount of money but very large sums of finance. Otherwise we will not get those nature-rich but economically poor countries to make the commitments we are hoping they will make around nature protection. We have a lot of fundraising to do this year as well. Again, we do not have an internal number or target, because we do not yet really have any idea how much we will be able to raise.
However, early discussions with donor countries fill me with optimism, and I think we will be able to come up with something very significant in the run-up to CBD, and the Chinese are quite keen for us to do so, which is useful.
Q26 Chris Law: I am conscious of the time, so I am going to move on. I want to ask about the FCDO’s capability and capacity to match your plans to deliver on your commitment. How do you plan to build capacity and capability?
Lord Goldsmith: There was one thing that people like me and, privately, no doubt Vel was concerned about after COP. Having done this extraordinarily intense process, with masses of heavy lifting across Government, and having built an infrastructure both to support Alok Sharma in his role and, within the Foreign Office, our climate diplomacy unit and our climate and environment attachés around the world, my fear was that there would be people within the system who thought, “Tick. Job done. We can now stand people down and reallocate them elsewhere.”
As a consequence of some really very good work by people like Vel, we have managed to protect all the key components of that human infrastructure. With all the skills that we have had since the run-up—not around the logistics of organising a conference but in terms of country-to-country discussions and the knowledge that has been built up and the expertise around the programming part of all this—we are now in a pretty good place to be able to continue this work for a year. I don’t know whether you want to fill in some gaps, Vel.
Vel Gnanendran: As well as capacity, we are also conscious that we need to build capability, and that was mentioned in the ICAI report. Perhaps I could say two things. First, we obviously built a lot of knowledge of climate issues in that network over time, and we will formalise that training offer to the whole network. Secondly, as ICAI mentioned in the report, some of this stuff is highly specialised, so we will also be providing draw-down technical assistance to our network so that they can do carbon pricing in highly sophisticated and complex environments. That is work in progress, but it is very much responding to that recommendation about building the capability of our network.
Q27 Theo Clarke: You also said in your response that you are developing a “broader learning and development offer” on Paris alignment. What will that entail?
Vel Gnanendran: There are three parts, really. One is that we have been running a series of teachings where, essentially, our technical experts in HQ are doing teachings to the global network. That is a rolling programme that is available to all our network and to other Departments. We are now looking to formalise some of that through what we are calling a faculty, which is a work in progress. It is a formal training offer that is available to everybody rather than something very reliant on the central climate directorate.
The third aspect, as I mentioned, is how we provide technical assistance on the highly specialised tasks. For example, if a post needs to interpret the climate science in order to understand how that will impact some of their development programming, they might need extra technical experts to help them with that. We are just working through how we can provide that highly technical support on a demand basis to posts.
Q28 Theo Clarke: How is the FCDO sharing best practice on Paris alignment with other Government Departments?
Vel Gnanendran: Through those teachings, primarily. We would not claim that we have best practice. BEIS, for example, is the lead on international climate and has a lot of expertise on that issue. In fact, it sets the carbon price. We all work together in terms of understanding how best to implement the Paris alignment commitment.
Q29 Theo Clarke: Minister, within Government, who is ultimately responsible for ensuring that ODA is being aligned with the Paris agreement?
Lord Goldsmith: Each Department has its own responsibilities. BEIS is responsible for what happens in BEIS, and the Foreign Office likewise. I have a role—perhaps not as dictatorial, powerful and all-encompassing as I would like it to be—in keeping an eye on the progress and being involved in the discussion. Nevertheless, it is the case that each Department has to take responsibility for its own alignment.
Can I add one sentence, as an offer in case you want to go further down that route? The Paris alignment commitment is what you are obviously very familiar with. Alongside that, there was a nature-proofing commitment—as sort of “do no harm” approach—across ODA, and we are exploring how we might be able to take that further, with a view to having a more nature-positive approach.
One of the things I would like us to do, but I do not yet know how realistic it is, is to deliver in time for the CBD COP in China a commitment from at least some of the major donor countries that they, too, will be aligning their ODA with nature, much more so than is the case today—it is $140 billion a year in ODA. To align that with nature would provide a major boost. There is a lot of work involved in that. I cannot tell you that we have had a great breakthrough with any of the donor countries yet, but we have not met with any hostility to the concept, so it is realistic and within reach.
Q30 Theo Clarke: You said that each Department is responsible for its own ODA commitments. Can I ask, what mechanisms are in place to ensure that each Government Department is accountable for spending ODA on that?
Lord Goldsmith: I do not know what the answer is. It is unfair to ask you to answer for BEIS, Vel, but I am going to.
Vel Gnanendran: The main mechanism we have used thus far is a series of cross-Government climate fora where we meet at different levels. For example, with my BEIS counterpart, I co-chair an international sub-group of the IRIG—the integrated review implementation group—and we have considered the overall approach to Paris alignment, the level of ambition and how that should be rolled out through Departments. That is a cross-Whitehall forum at director level. That feeds into each director-general level meeting, and that all feeds into a Cabinet sub-Committee, the Climate Action Implementation Committee, which the Minister sometimes attends but is chaired by Alok Sharma, the COP President. That kind of structure of meetings is how we co-ordinate climate action across Government. Paris alignment has been featured in that previously and will continue to be, as appropriate.
Q31 Theo Clarke: Finally, Minister, do we have any sense yet of how much this will be a critical part of the Foreign Secretary’s upcoming international development strategy? Is it being considered?
Lord Goldsmith: It is. The integrated review was clear that biodiversity and climate change are a top international priority. The new strategy is designed to align very closely with the integrated review. That will be clearly reflected in the review. That includes commitments we have made around fossil fuels, commitments we have made around Paris alignment, but also commitments we have made around nature. So this will be reinforced by the process and not in any way undermined by it.
Q32 Mr Sharma: Stakeholders told ICAI that the exemptions for fossil fuel projects, such as in relation to gas, are too broad. What is your view of that assessment?
Lord Goldsmith: There are two things: one is the Paris alignment and the other is the commitment that was made in March last year, which was our commitment not to use public money to support fossil fuel projects, which goes further. The second commitment goes further, I think, than the commitments that were made when we made the commitment to be Paris-aligned with our ODA. I think the definition or the parameters for the exemptions were also narrowed. And that is the policy that has governed our spending ever since.
There are exemptions—for example, the humanitarian one. If there is a particular crisis, there are all kinds of criteria around ODA spend that do not apply. There may be moments, but they are decided on a case-by-case basis. An investment might be made in order to provide clean gas cooking for people at the very bottom of the economic ladder who otherwise would be relying on highly polluting alternatives. So exemptions are possible, but they are agreed or assessed on a case-by-case basis. If there are examples of investments that we want to make or grants that we want to provide that are in any way in a grey area, it would come to the Ministers. Based on everything I have seen—I think I have seen all the key stuff—I am not uncomfortable with any exemptions that have been made since that policy was brought in. I think it is probably the case that the criteria have been refined since the Paris alignment commitment was made, and I think the exemptions are probably about right. Vel, is there anything you want to add to that?
Vel Gnanendran: There was a consultation period with the policy, so, as the Minister is saying, we refined the exemptions after that consultation period.
Q33 Mr Sharma: ICAI expressed concern that the FCDO does not have any criteria for assessing whether gas-supporting programmes have a credible plan for reducing emissions. Why is this, and do you have any plans to introduce one?
Lord Goldsmith: I am not sure that is right, actually. The criteria that have been set for any kind of fossil fuel investment are public. That is there; it was made and reaffirmed early last year. I am not necessarily sure how to answer that. I can describe the exemptions that are in place, but I think you are probably aware of them. I think they probably make sense. We mentioned the humanitarian one. I am going to miss some out because I cannot see them here, but you have the humanitarian exemptions; you have the decommissioning one. There might be times when we want to invest in decommissioning fossil fuel infrastructure. That would count as a fossil fuel investment, but it is clearly not, in the normal sense of the term. There would be examples where the most critically vulnerable or unstable countries are requiring their energy needs to be met urgently and where you might make the case for providing support that involved gas, for example. But it is no longer the default in any way at all.
A decision to invest in fossil fuels of any sort would be a very active decision. It would be a decision based on the particular criteria or the particular circumstances on the ground, whereas before this policy came in, it was the opposite: the default was to invest in fossil fuels, and every now and again a renewable energy project would come along and you would invest in that. So we have really turned it on its head, and I think it works—or at least I haven’t seen any exceptions to that. I feel like we are in the right place on this.
Vel Gnanendran: On the fossil fuel policy, one of the criteria is that if we were to apply the exemption that allows support for gas, that must be consistent with the country’s emissions trajectory and its NDC—nationally determined contribution—to reduce emissions. So that is one of the criteria. If that NDC is not there, there is a whole set of other criteria that apply and that try to reinforce the idea that any support for gas under the gas exemption would be to support a decarbonisation trajectory.
Q34 Mr Sharma: ICAI said that the CDC—now BII—is mostly reliant on its own efforts to achieve Paris alignment. What role, if any, does the FCDO play in ensuring that ODA spent through BII is Paris-compliant?
Lord Goldsmith: The commitment has been made, and BII is there to support the vision as set out in the integrated review and as will be set out in the IDS coming up. The fossil fuel commitment that we made as a Government applies to BII, and the BII therefore is aligned with the Foreign Office in its spending. The same exemptions that might apply within the FCDO apply within BII. I cannot think of any areas where they are not aligned on fossil fuel policy. Obviously, the Foreign Office and the Foreign Secretary set the direction of BII. It has some operational independence, of course, as the CDC did, but it operates within the framework that is set by the Foreign Office and the Government.
Q35 Mr Sharma: We are concerned that BII continues to invest in fossil fuels. Is there a risk that this undermines your efforts to align aid with the Paris agreement?
Lord Goldsmith: If BII were to make investments that are not consistent with the policy we set out on fossil fuels, that would be worth taking up with BII from within the FCDO, but I don’t think that is possible now with the policy that has been set. There will, of course, be legacy programmes and investments from the former CDC, but I think it is true to say—unless there are examples you are aware of that I am not—that the policies are now aligned. Where it invests in fossil fuels, it will be in a manner that is consistent with exemptions that have been laid out. They would therefore not be the default; they would be absolutely the exception.
Q36 Mr Sharma: What discussions have you had with BII about its continued investment in fossil fuels?
Lord Goldsmith: I personally have not spoken to BII on this issue since it became BII, which was a few months ago, but I had many discussions with CDC—very much the same beast—quite often on this issue. When we were formulating our policy on fossil fuels, I did a lot of consultation on CDC to try to help move it into a position where it was comfortable with that policy.
Q37 Chair: Minister, can I interrupt you on that point? The BII is not the same beast as the CDC, because there is a new chair.
Lord Goldsmith: That is true.
Chair: We met her and the senior team a couple of weeks ago and pushed quite hard to try to get an end date for investment in fossil fuels. I am paraphrasing, but she would not commit to one and did not see an end. I wonder what you can do. You said that FCDO sets the framework. How do you actually monitor that BII is following that framework? You said that there may be some exemptions. Why would there be exemptions if it is following your framework? What will you do in terms of sanctions and bringing them on board?
Lord Goldsmith: The exemptions that would apply for them are the same as would apply for us.
Q38 Chair: They are broad exemptions, and there has been criticism because they have been so broad.
Lord Goldsmith: They are less broad now than they were, as a consequence of the policy that was brought in last year. I think it is quite a clear policy. There has been wriggle room that has been allowed, because there are unforeseen circumstances where things need to happen and where you can make the case. But it is not possible now within our ODA budget, I don’t think, for projects that you might find remarkable to happen without Ministers being aware of them. That is not to say that a Minister at some point might not sign something off that is in that grey area, but they would be accountable for doing so.
The direction of travel is very clear. We want to move away from using public money to support fossil fuels, but we are committed to tackling humanitarian crises. Where there is a conflict between those two issues, that conflict has to be resolved. That is why you need a bit of flexibility and wriggle room. The policy is clear, and the direction of travel is very clear. As you will remember, this was precipitated and accelerated as a consequence of decisions that were made, which rightly came in for a lot of criticism—not least the export finance investment in Mozambique. I think that was probably the thing that triggered the discussion.
Q39 Chair: What is actually being done to monitor where they are investing public money?
Lord Goldsmith: I will defer to Vel, if that’s all right.
Vel Gnanendran: On the particular issue of fossil fuel investments, we have a quarterly moment with CDC. It is done by a different team—the team that own the BII relationship. We go through their investment pipeline. With any discussion on a fossil fuel investment, we check compliance with our policy. That is done on a quarterly basis.
Q40 Mr Sharma: This is my last question to you. The Government recently cancelled a contract for solar panels over concerns that parts were manufactured in forced labour camps in China. How will you ensure that any of BII’s investments in solar panels are not connected to forced labour?
Lord Goldsmith: I cannot give you a comprehensive or robust answer to that, because I have not had any personal involvement with BII in relation to its investments and such things, so I will have to get back to you on the policy that they must follow in relation to things such as forced labour. I don’t want to mislead the Committee, but I imagine the policies that they follow, and the safeguards that are in place, would be exactly the same as those used within the broader FCDO.
Q41 Chair: Minister, you would expect that, as did we. We pushed them on this, and they were adamant that they were unable to shift from investing in Chinese solar panels because there was not an alternative market. One could maybe argue that a good use of British taxpayers’ money is creating an alternative market, particularly for developing nations, so if you could look into that, this Committee would be very grateful. If you were able to report back on that, we would appreciate it.
Lord Goldsmith: I will certainly follow up on that, and I will follow up with you.
Chair: That is appreciated. Thank you very much.
Q42 Mrs Latham: My apologies for not being here at the beginning, but I had to nip out. Vel, the Government told us that it had developed a new climate finance tag for information about climate-related aid spending appearing on the Development Tracker website. In what ways do you think this will improve transparency, and how does it differ from how information has previously been presented?
Vel Gnanendran: All climate spending is tagged on our systems, so that means we can understand the climate portfolio that we have and where we are making climate investments, and we can see whether they are in agriculture, energy or infrastructure. That tagging system is there. We are refining that so that we can now split it into adaptation and nature, because we have added lots of new commitments into our climate finance. That information is then carried through into DevTracker, so that the public can see what we can see, effectively. By definition, it means that you can now see what our nature investments are. Actually, I am not sure that has gone live yet, but you will be able to see what our nature investments are, what our adaptation investments are and what our mitigation investments are.
Q43 Mrs Latham: When does it go live for people to check?
Vel Gnanendran: I will need to check that.
Mrs Latham: Do you think it will be soon?
Vel Gnanendran: Yes. It may already be live, to be honest. I would need to check that.
Q44 Mrs Latham: Minister, can you tell us when the international development strategy is going to be published?
Lord Goldsmith: I am afraid I cannot say more than spring.
Mrs Latham: When does spring start?
Lord Goldsmith: I am afraid I cannot give you a date. I have asked the question myself, but the answer is always spring. Hopefully, I will not have to provide answers after the spring.
Mr Sharma: Which spring?
Lord Goldsmith: That is a very good point, but it is imminent.
Q45 Mrs Latham: How will you use the strategy to strengthen the Government’s position and work on the Paris alignment?
Lord Goldsmith: The strategy will reinforce the commitment we have made. I am not sure the strategy will necessarily be shifting our approach in relation to Paris alignment. I think we have quite clear goals, quite clear commitments and a quite clear trajectory. Likewise, in terms of nature alignment, the strategy will probably be relatively high-level. It will point in a direction of travel, but I don’t think that the path we are on towards achieving nature-proofed ODA will be influenced in any major way by the strategy.
I think there are plenty of areas where the strategy will have an influence. What it might do, in terms of our programming, is identify key geographical priorities and so on, and there will be a focus on things like the importance of investing in smaller and developing states, not just as part of our climate agenda but security and other issues as well. However, I don’t see it necessarily having an impact on our Paris alignment approach: I think it will simply reinforce the commitments that have been made.
Q46 Mrs Latham: This is not in the script, but while you are before us, can you tell us when we will have the ban on trophy hunting? That will impact on livelihoods in many developing countries.
Lord Goldsmith: As you know, the Animal Welfare (Kept Animals) Bill is in the course of its passage at the moment. The Animal Welfare (Sentience) Bill has gone through; the Animal Welfare (Sentencing) Bill has gone through; and the Animals Abroad Bill is the one that would include the ban on trophy hunting imports. Although we don’t have a date on that, it is likely to be a very early contender within the next Session, so this half of this year.
Q47 Mrs Latham: When I have had discussions with you before, you thought it was going to be earlier than that.
Lord Goldsmith: It is possible, but I think now, because of where we are at and because of the delays that have happened, there are concerns that it cannot happen until the beginning of next Session, as opposed to the end of this Session.
Mrs Latham: After the Queen’s Speech, so June, really?
Lord Goldsmith: Around that time, yes.
Mrs Latham: But it will come.
Lord Goldsmith: It will come; there is no question about that.
Q48 Mrs Latham: That is a really important thing for nature.
Lord Goldsmith: I agree. Obviously, that Bill goes beyond trophy hunting: there is a whole bunch of other issues there, which you are very familiar with. There has been a lot of talk around some of those issues recently in the newspapers, around pushback on things like fur and foie gras, but the Government policy remains the same, and I will certainly do what I can to ensure that remains the case—as will you, no doubt.
Chair: Are there any other questions from colleagues on any random topic they would like?
Q49 Chris Law: Just a little bit on foie gras and fur, because it has been in the press yesterday. Why has there been pushback on that, and what are you hoping to achieve on it?
Lord Goldsmith: Individually, it has not been pushed back. The package—the Bill—includes a number of different measures. Some of the reports that have been carried in the press come from briefings from anonymous sources; for some of them, there are some more obvious fingerprints.
Not everyone agrees that we should be banning the import of fur and foie gras. There are some people who believe that this is a matter of choice. My view is that it is not a matter of choice any more than bear baiting, badger baiting, dog fighting, cockfighting or any of these other issues are a matter of choice. The same argument could apply to permitting people to beat their dogs to death: it is not a matter of individual choice. There will be some people who take a different view, which is completely legitimate, and we may have to have that debate, but my very strong view is this is something that the majority of people would expect of the Government. I think there is an overwhelming appetite in Parliament, across the political divide, for us to continue to raise animal welfare standards, and I think that should be reflected in Government policy. As I say, it remains Government policy that we will continue with the proposals as they have been reported.
Chair: Minister, thank you very much for your time, and for being generous when our questions veered a little bit. I hope you understand our commitment to all these topics: as you rightly say, they do all interlink.