CARE International UK submission to the International Development Commitment: Inquiry into the UK’s International Climate Finance

About CARE International UK:

CARE International UK is part of the global CARE confederation, working with women, girls and marginalised communities in some of the world’s most climate-vulnerable countries. CARE supports locally-led, gender-responsive climate action that strengthens resilience, reduces poverty, and addresses the structural inequalities that drive vulnerability to climate change.

Questions:

-          What impacts will the reduction of Official Development Assistance have on the UK’s ability to deliver its ICF commitments?

The current Labour Government – in its 2024 manifesto – pledged to restore the ‘strong, global leadership needed to tackle the climate crisis’, with the former Foreign Secretary, David Lammy, recognising the need to ‘unlock global finance on a far, far, larger scale’. With the US withdrawal from the Paris Agreement representing a loss of around $11 billion in climate finance per year, UK leadership – alongside other allies – is welcome. However, continued reliance on a reduced ODA budget to fund ICF directly undermines this ambition. ICF currently accounts for around 24% of the total ODA budget, forcing climate finance to compete with other essential development and humanitarian priorities.

Evidence shows that this approach is neither sufficient, nor sustainable. The Climate Finance Shadow Report (CARE/Oxfam, 2025) finds that while developed countries reported nearly $116 billion in climate finance in 2022, the true grant-equivalent value of public climate finance was only $28-35 billion, due to the widespread use of loans and accounting practices that overstate real support. With further ODA cuts planned across donor countries, climate finance is projected to fall to as little as $73-79 billion in 2025, at a time when L/LMIC countries need $1-1.5 trillion annually in public, grant-equivalent climate finance.

To rebuild trust with the Global South and act as a credible global leader on climate, the UK must ensure its ICF4 commitment is a ‘fair share’ proportion that delivers upon the New Collective Quantitative Goal (NCQG) agreed at COP29. This finance should prioritise grants and non-debt inducing mechanisms, ensure that adaptation finance makes up 50%, and significantly scales up support for loss and damage.

Delivering this ambition requires new and additional finance. This could and should be raised through progressive measures which do not unfairly cost UK households. It is estimated that the UK could raise around £23.1bn a year for climate action through taxation measures focused on the wealthiest and largest polluters – which are widely supported by the British public. This would mean the UK could, if it chose to, raise a significant amount of new finance needed to commit its fair share, without diverting limited ODA away from other essential development and humanitarian priorities.

Recommendations

• The UK must ensure the UK’s ICF commitment represents the UK’s fair share in delivering the New Collective Quantitative Goal (NCQG) as agreed at COP29, by:
• prioritising grants and non-debt inducing mechanisms;
• ensuring adaptation finance makes up 50%;
• significantly scaling up support for loss and damage.
• Where the UK chooses to count climate finance as ODA, it should be protected or ringfenced to prevent further erosion of long-term climate action.
• Where the UK is able and committed to raising new and additional climate finance outside ODA (as Luxembourg has done), it should seek to do so through progressive taxation measures that do not disproportionately harm UK households. The UK should clearly demonstrate how UK ICF commitments are additional to existing development and humanitarian spending, to rebuild trust internationally.

-          What are the trade-offs associated with decisions to divert aid from ICF to other priorities, such as humanitarian crises?

CARE International UK is concerned that changes to the accounting methodology for ICF to offset reductions in humanitarian ODA, and its increased use for short-term humanitarian responses, are undermining long-term climate adaptation and prevention outcomes. The Independent Commission for Aid (ICAI) found that by reclassifying existing ODA as ICF, the UK Government ‘moved the goalpost’ (ICAI Rapid ICF Review, 2024). While supporting humanitarian response is essential, diverting ICF from long-term adaptation to short-term crises significantly weakens future resilience, increases the likelihood of repeated, more severe disasters, and undermines development goals.

Using ICF funding for short term (12 months or less) ‘uplifts’ to existing humanitarian funding will not achieve the long-term climate resilience building goals that the ICF was set up to deliver. This trade-off risks trapping climate-vulnerable communities in a cycle of repeated shock, loss, and rebuilding, where funding responds to crises after they occur rather than preventing them. Over time, this undermines livelihoods, asset accumulation, and adaptive capacity, keeping households in persistent poverty and increasing long-term humanitarian dependency. 

Climate resilience is a long-term endeavour, which needs to be built into the objectives and indicators of these programmes from the outset (requiring the right expertise). Short-term timelines need to be revised in favour of long term, predictable, multi-year funding which is flexible enough to respond to the changing context, inherent uncertainty, and scale of the climate crisis. 

Preventative adaptation investment reduces the scale and frequency of future humanitarian response, whereas diverting ICF to response increases long-term costs for both affected communities and donors. Evidence shows that creating this trade-off is also not good value for money, given the high cost of inaction if long-term climate programming is reduced/reprioritised.  A study conducted by the World Resources Institute analysed 320 climate adaptation initiatives across a dozen countries, highlighting the substantial and diverse advantages of such investments. The findings indicate that each dollar invested can generate more than $10.50 in benefits, with typical annual returns ranging between 20% and 27%. 

Recommendations

• Put in safeguards on ICF as part of humanitarian response: Use of ICF as part of humanitarian response must be done with the right intentions/purpose, the right expertise, and with transparency, rather than just re-labelling 30% of humanitarian spend in the most climate vulnerable countries, and should demonstrably contribute to long-term resilience and adaptation outcomes. This means establishing clear guidance and accountability around ICF-funded humanitarian response for UK Embassies and partners – including clear programme objectives and delivery of ICF key performance indicators that respond to building resilience and adaptation to climate hazards, and/or investment in participatory anticipatory action. This necessitates a review of programme timelines to deliver this, and inclusion of climate expertise in programme design and delivery of humanitarian interventions.

-          How are the UK’s ICF programmes selected and, are they effective in meeting the long-term needs and priorities of low-income and climate-vulnerable countries?

-          To what extent does the UK ensure that programmes are rooted in local participation, management and, decision making?

-          What difference has ICF from the UK had on your community’s ability to address the problem of climate change? How might such finance be made more effective?

UK ICF has demonstrated its effectiveness when programmes are long-term, locally-led and gender-responsive.

In Bangladesh – one of the world’s most climate-affected and -vulnerable countries – ICF funding to the CARE UK-led consortium NABAPALLAB (Nature-Based Adaptation towards Prosperous and Adept lives and Livelihoods in Bangladesh) project has supported over 300,000 people to adapt to the impacts of climate change, at least half of them women and girls. Over 12,000 people have benefitted from climate resilient homes, latrines, cyclone shelters and over 5,000 hectares of land is now under sustainable management practices that protect Ecologically Critical Areas (ECAs).

The Sundarbans are the world’s largest mangrove forest and a natural buffer against climate impacts such as storms and rising sea levels; and mangroves are also among the planet’s most powerful carbon sinks. NABAPALLAB shows how adaptation finance can support communities on the frontline of the climate crisis to lead the way on effective, gender responsive adaptation.

This shows what is possible when finance is channelled to communities on the frontlines. But such programmes remain too limited in scale. For the UK’s ICF programmes to be effective in meeting the long-term needs and priorities of low-income and climate vulnerable countries, people living on the frontlines of the climate crisis must be involved from the outset. Locally-led must mean that women’s groups, natural resource management (NRM) committees, civil society, and local authorities shape priorities, design and delivery.

To be truly effective, ICF projects must also have gender equality at their heart. The climate crisis and global response are inherently sexist. When extreme weather disasters strike, women and children are 14 times more likely to die than men, mostly due to limited access to information, limited mobility, decision-making, and resources, and an estimated 4 out of 5 people displaced by the impacts of climate change are women and girls according to UN research. And yet, only 0.01% of global climate finance currently supports projects that simultaneously advance climate action and women’s empowerment according to the World Economic Forum.

Women and girls contribute the least to climate change but are the most affected by its impacts, particularly those who experience multiple forms of marginalisation due to disability, age, ethnicity and other factors. Worsening droughts, floods, fires and storms exacerbate the unequal relations between women and men, increasing gender-based violence, impacting livelihoods and pulling girls out of school. Recent research published by the FCDO, DFAT and What Works to Prevent Violence programme showed the importance of addressing gender-based violence through climate programming, to ensure all community members can engage, and impacts are not undermined by losing community trust, buy-in and participation.

Given their position on the frontlines of the climate crisis, women are also uniquely situated to be agents of change — to help find ways to mitigate the causes of global warming and adapt to its impacts on the ground. According to the OECD and grounded experience, climate and environment programmes that support women’s leadership and decision-making are more effective, though research and data in this regard remains under-invested in.

However, the UK is not currently going far enough to integrate gender equality into climate finance. CARE’s research found that less than 1% of UK bilateral climate finance targets gender equality specifically, with only 0.2% reaching the hands of women’s rights organisations. We welcome the Labour Government’s commitment to supporting the GAAGA feminist fund for climate change at COP29. The next iteration of ICF must scale-up these approaches and investments in women’s leadership in climate action, and build the evidence and political will to deliver it.

FCDO’s launch of the gender, disability and social inclusion (GEDSI) marker, alongside new guidance and commitments that all new ICF programmes are ‘GEDSI empowering’, is a positive step. However, it lacks targets, timelines and clear reporting frameworks – which requires meaningful investment, to ensure these efforts embed accountability and translate into real gains and value for money. Furthermore, as more ICF money is channelled through multi-laterals (e.g. through the Green Climate Fund, Global Climate Facility), it is imperative that the UK plays a role in encouraging and holding these institutions to account on increasing gender-responsiveness.

Launching a flagship FCDO programme on gender-just climate action would allow the UK to pave the way in addressing or removing longstanding barriers to accessing financial and other forms of technical assistance, as well as decision-making spaces, amongst those on the frontlines of delivering change at the local level, including women-led and women’s rights organisations. Such a programme would represent a ‘triple win’ in terms of the FCDO’s priorities, in supporting economic growth (through addressing barriers women and girls face in the green economy), action on the climate crisis, and gender equality.

Establishing such a programme should be done in partnership within the existing eco-system of feminist funds and intermediaries working at the gender and climate nexus, with experience of taking inclusive and intersectional approaches. These intermediaries have spent years developing trusting relationships with grassroots and community-based organizations, and are able to provide accessible, flexible, unrestricted, and longer-term funds. An FCDO flagship programme within this eco-system would allow the UK Government to ensure it could have a much more consistent approach to improving WROs access to climate finance.

Recommendations

         Increase the amount of climate finance that targets gender equality specifically

(currently 1%) – for example, investing in programmes that tackle the links between gender-based violence and climate change.

         Work with multilateral and development finance institutions through which the UK channels grant-based climate finance to scale up and improve the integration of gender equality and inclusion, and strengthen and embed accountability mechanisms.

         Actively design programmes that support the leadership of women’s rights and feminist organisations, seeking them out as partners and meaningfully engaging with them to design programmes and policy. 

         Remove the barriers that organisations focused on and led by marginalised groups face in accessing climate finance, across bilateral and multilateral mechanisms, including through consultation on identifying these barriers, which include complex procedures, language barriers and annual budget requirements, drawing on feminist funding principles.

         Fund existing mechanisms that directly support community-level, girl, youth,

disability and women-led climate action, such as feminist networks and women’s funds, for example the Global Alliance for Green and Gender Action (GAGGA).

         Increase the quality of funding through longer-term, multi-year commitments and flexible grant-based funding, with mechanisms for financial support to reach local communities including direct support for locally led projects led by women and girls and marginalised groups.

         Operationalise the principles of locally led adaptation and resilience-building – for example, climate adaptation in which Indigenous peoples, local communities, community-based organisations, citizen groups, local government and local private sector entities at the lowest administrative structure are included as decision-makers in the interventions that affect them.

-          Is the UK using the right and most effective financial instruments to deliver ICF?

-          What opportunities and risks do alternative funding instruments, such as private or blended finance, pose for the UK’s ICF?

CARE International UK is concerned about the UK’s increasing reliance on loans, blended finance and private sector mobilisation to fill the climate finance funding gap.

Globally, around 65% of climate finance is delivered as loans, often on non-concessional terms. The Climate Finance Shadow Report 2025 (Oxfam/CARE) finds that for every $5 received in climate loans, countries may repay up to $7, worsening debt burdens. This is particularly concerning given that 93% of the most climate-impacted countries are in or at risk of debt distress. The skew toward mobilising private sector financing at the expense of grant-based finance – an increased focus since the 2025 ODA cuts – risks skewing incentives and neglecting those worst hit by, and least enabled to address, the effects of climate change.

Private finance is also not well suited to adaptation, loss and damage and to supporting community and locally-led initiatives, because there is limited profit incentive in these areas. A recent report by Mercy Corps found that private finance will likely not fill the gap, especially for adaptation and loss and damage. Even optimistic modelling shows only ~15% of adaptation needs can be met in developing countries by private capital by 2035. And in the least developed countries, this drops to ~5%. Private finance is also not currently held to the same level of accountability and scrutiny that public funding is, especially in regard to ensuring safeguards and gender equality outcomes.

In the spirit of climate justice, we strongly believe that countries who have done the least to cause the climate crisis and who are already heavily in debt, deserve grant-based public finance, which is gender-responsive, accessible to women’s rights organisations and ensures adaptation and loss and damage are sufficiently funded.

Recommendations

• Mobilisation of private sector funds should have a transparent target, based on the realities of where such investments can add value. However, ICF should prioritise grant-based funding to reach those where the majority of need exists, where finance finance cannot.
• Additional safeguards and accountability checks should be applied to funding mobilised through the private sector, including extending the use of the FCDO ICF GEDSI marker.