To: The International Development Committee
Subject: Written Evidence Submission – Inquiry into the UK’s International Climate Finance (ICF)
1. Executive Summary
This submission addresses the critical challenges facing the UK’s International Climate Finance (ICF) portfolio as it approaches the end of the 2021–2026 cycles. While the £11.6 billion commitment remains a flagship policy, its delivery is increasingly reliant on accounting reclassifications and back loading expenditure into the final two years. This evidence highlights that the reduction of Official Development Assistance (ODA) and the diversion of funds to domestic refugee costs have compromised the UK's ability to provide "new and additional" finance. As the UK looks toward the 2026–2030 period, it must prioritize transparency, restore the balance between loans and grants, and ensure that climate-vulnerable communities are the primary beneficiaries of systemic change.
2. Introduction
My name is Yusufu Koryama Banya, and I am submitting this evidence to share professional insights into the effectiveness and transparency of the UK’s climate finance mechanisms. My reason for submitting is a concern that the current fiscal pressures on the UK’s aid budget are leading to "diluted" climate action that favors accounting targets over real-world impact. This submission aims to assist the Committee in evaluating how the UK can maintain its global leadership in climate action despite reduced resources and shifting international priorities.
3. Impact of ODA Reductions and Funding Trade-offs
The reduction of ODA has created a "zero-sum" environment where climate finance is often protected at the expense of other vital humanitarian and development sectors.
The "Back loading" Risk: To meet the £11.6 billion target, approximately 55% of the total spend has been pushed into the final two years (2024–2026). This creates an immense delivery burden in 2025–26, risking lower-quality spending as departments rush to meet deadlines.
Competing Humanitarian Demands: Significant portions of the ODA budget nearly 30% in 2022 were diverted to domestic refugee costs. This forced the government to make "trade-offs," reclassifying existing humanitarian aid as "climate finance" to bridge the gap without increasing total cash flows.
4. Transparency and Oversight
The UK’s transparency regarding ICF has come under intense scrutiny, particularly following the 2024 Independent Commission for Aid Impact (ICAI) review.
Accounting Methodology: By reclassifying roughly £1.7 billion of existing aid as ICF, the UK has "moved the goalposts." For example, counting 100% of core contributions to Multilateral Development Banks (MDBs) as ICF helps meet numerical targets but does not provide new money to the countries in need.
Cross-Departmental Coordination: While FCDO, DESNZ, DSIT, and Defra coordinate through the ICF Strategy Board, there is a lack of integrated monitoring. This results in "siloed" evaluations where the impact on low-income countries is measured through inconsistent departmental KPIs.
5. Selection, Effectiveness, and Financial Instruments
The effectiveness of ICF is fundamentally linked to how the money is delivered specifically the balance between grants and debt-creating instruments.
The Loan Problem: More than two-thirds of global ICF now takes the form of loans. For climate-vulnerable countries already in debt distress, receiving climate "aid" in the form of loans is often inappropriate.
Local Participation: Currently, too much ICF is funneled through large multilateral funds, which can distance the funding from local management. To be effective, the 2026–2030 commitment must ensure that programmes are rooted in local community participation and gender-responsive design.
Innovative Mechanisms: The UK should lead on debt-for-climate swaps and the inclusion of Climate Resilient Debt Clauses (CRDCs), which allow countries to pause debt repayments immediately after a climate disaster, occurs.
6. Recommendations for 2026–2030
As the UK renews its commitment, the Government should: