How does the BII’s strategy align with the FCDO’s development agenda?

One of the FCDO’s five core priorities is to build strategic partnerships – with a focus area on climate change and the environment, and another on development.

As the Blended Finance Taskforce, we partnered with BII in the latter half of 2022 – ahead of COP27, on developing a Transition Finance Framework for Africa (see here). Transition finance is a critical new frontier of our efforts to solve the climate crisis. There is increasing alignment on what ‘green’ investments look like – and criteria are quickly becoming clear on what does/does not constitute green finance. However, between ‘green’ and ‘not green’ is a challenging space that finance providers have not yet tackled. If we are to shift our entire economies towards the low carbon industries of the future, we are going to need to understand what ‘good transitions’ look like.

This is particularly important in two types of jurisdictions: (1) high emitters with carbon-intensive grids and industrial bases, (2) Less-Developed Countries (LDCs), where a significant amount of industrialisation is yet to happen. Africa comprises a number of countries that meet one of those two criteria, which is why a clear understanding of transition finance is crucial on the continent. This is both a climate change and a development imperative.

Recognising this challenge, and the gap in concrete guidance that exists today on the topic, BII took the initiative to gather leading financial institutions operating across the continent. Over the course of several months, it listened to their challenges and hurdles when it comes to supporting transitioning companies and economies. With that knowledge, it spearheaded the development of a concrete, actionable framework that allowed these institutions to clearly categorise what constitutes ‘transition finance’.

The aim of this guidance is for institutions to internalise it into their own processes, helping them to make sound investment decisions that will not lock us into a high-carbon future, but enable a low carbon alternative instead. Gathering a like-minded group and building a sense of community, which BII had the ability to do in light of its strong and trusted relationships, was a crucial part of making this happen – given the hesitancy in these organisations around making a false step when it comes to green investments (given the increase in attention on claims of greenwashing).     

Through this work, BII both strengthened its understanding of the challenges that finance providers are facing in Africa and positioned itself as a trusted thought leader for these organisations on the interrelated topics of climate change and development. These are the types of strong partnerships that are needed if the UK is to support in the delivery of our global goals to safeguard people and planet – reflected in the FCDO’s focus on development and climate change.