ActionAid UK submission to the International Development Committee Inquiry on International Climate Finance

Submitted on 19/01/2026

About ActionAid UK

ActionAid is a global federation working with more than 41 million people living in 71 countries. We want to see a just, fair and sustainable world, in which everybody enjoys the right to a life of dignity, and freedom from poverty and oppression. We work to achieve social justice and gender equality and to eradicate poverty, including by shifting power to local organisations and movements. We focus on women and girls because the denial of their rights is a grave injustice and one of the underlying causes of poverty worldwide. Our human rights-based approach aims to ensure that people are drivers of their own change and are able to claim the rights they are entitled to. By working directly with communities, women’s movements, activists, groups and networks, social movements, and other allies, we aim to tackle the structural causes and consequences of poverty and injustice.

• What impacts will the reduction of Official Development Assistance have on the UK’s ability to deliver its ICF commitments?
• What are the trade-offs associated with decisions to divert aid from ICF to other priorities, such as humanitarian crises?
• How does the UK’s ICF commitments and delivery compare with other countries in a similar situation?

Reductions in Official Development Assistance (ODA) significantly undermine the UK’s ability to deliver its International Climate Finance (ICF) commitments in a meaningful, equitable and credible way, and intensify harmful trade-offs between climate action and other urgent humanitarian and development priorities. Because ICF is drawn from the wider ODA budget, successive ODA cuts have shrunk the overall resource envelope available for climate finance, increasing pressure to meet headline ICF targets through reclassification of existing ODA rather than genuinely additional funding.

ActionAid’s experience shows that this trade-off is particularly damaging for women and girls. Climate impacts exacerbate existing gender inequalities by increasing unpaid care and domestic work, undermining women’s livelihoods, heightening risks of gender-based violence, and limiting girls’ access to education. Underinvestment in gender-responsive climate adaptation and resilience increases vulnerability to future shocks, drives recurring humanitarian need, and entrenches cycles of crisis. Moreover, ActionAid's experience has found that funding cuts to climate often hit gender programming first, which undermines long-term impact and hinders the delivery of inclusive, gender-just climate action in the most affected regions.

Diverting ODA away from ICF also weakens integrated approaches that link climate action with sexual and reproductive health and rights, protection and women’s economic justice – all of which are essential for realising women’s and girls’ rights and building resilience in climate-vulnerable contexts. ActionAid UK’s research shows that siloed funding streams, and responding to climate, humanitarian and development priorities in isolation undermines preparedness, long-term sustainability and recovery – with detrimental impacts for women and girls in the ‘Global South’. Without adequate and sustained ODA, the UK risks investing only in short-term adaptation efforts, while neglecting long-term drivers of resilience, such as land rights, social protection and care infrastructure, which can leave communities more at risk to climate shocks.

Moreover, constrained ODA budgets encourage greater reliance on private finance in the form of loans. This forces ‘Global South’ countries into deeper debt to respond to a crisis they did not cause, undermining resilience by diverting national budgets away from essential public services, such as education, health and social protection, which disproportionately impacts women and girls. Private finance also tends to prioritise profitable mitigation projects over adaption and loss and damage, and creates risks of land grabs, displacement, and human rights abuses.

Overall, these trade-offs limit the UK’s ability to deliver ICF that is additional, predictable and gender-transformative, while increasing future humanitarian costs and undermining the UK’s international commitments to climate justice and gender equality.

• How transparent is the UK Government about its ICF commitments?
• What processes are in place to oversee the UK’s ICF expenditure and impact?

While the UK Government publishes regular data on its ICF commitments, significant transparency challenges remain, particularly regarding clarity of reporting, instrument mix, additionality, gender responsiveness, and accessibility of information to civil society.

The UK Government has made positive steps in publishing annual ICF results, including total spend and broad sectoral breakdowns (e.g. mitigation vs adaptation). This provides a baseline level of transparency to track headline figures over time. However, these figures alone are insufficient without clear supporting detail on what is counted and how it is counted.

Transparency is constrained by insufficient clarity around additionality – whether reported ICF is genuinely new and additional to other UK public spending, or whether it is re-labelled ODA. ActionAid UK has raised concerns that UK ICF reporting can include reclassification of existing spending, which risks reducing the net increase in climate finance from public budgets. The lack of transparency around what is new and additional creates challenges for holding the UK Government to account on its climate finance obligations.

Given the disproportionate impacts of climate change on women and girls, transparency on gender reporting in ICF is essential. While the UK Government publishes some information on gender markers, reporting on gender-responsive climate finance lacks consistent, disaggregated data on the extent to which climate finance actually advances gender equality, reduces women’s unpaid care burdens, and funds women-led organisations directly. This impedes tracking progress on gender-responsive climate action and limits accountability for feminist climate goals.

While the UK Government makes ICF data publicly available, the accessibility and usability of that data for a broader range of stakeholders – including civil society and local actors – is uneven. Data is often published in formats that are difficult to analyse and lacks detailed project-level information, reducing the ability of external stakeholders to scrutinise UK ICF commitments.

To strengthen transparency, the UK Government should adopt clearer reporting on instrument types, explicit additionality proofs, comprehensive gender-disaggregated data, and accessible, project-level reporting. This would improve accountability, support feminist climate action and increase the UK’s credibility on the international stage.

• 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?

Evidence from ActionAid UK’s Women-Led Alternatives to Climate Change (WLACC) project demonstrates that UK climate finance can be highly effective when programmes are selected and designed to prioritise locally led, gender-responsive and participatory approaches. Implemented in Cambodia between 2022 and 2025 with UK Aid Match funding, WLACC shows that climate finance delivers more sustainable outcomes when communities lead in decision-making, planning and accountability, rather than being treated solely as delivery partners.

The project established Women Champion Networks which allowed women to exercise meaningful leadership in climate resilience and local governance. Through these networks, Women Champions led advocacy using Charters of Demand to systematically capture and present community priorities to government authorities, facilitated commune public forums that enabled sustained dialogue with decision-makers, and influenced concrete decisions within community investment plans. These included commitments to infrastructure improvements, early warning systems, disaster management committees, emergency response mechanisms and social protection measures. Women Champions also shared knowledge widely through training, awareness raising and peer support, strengthening community-wide capacity for disaster risk reduction and climate change adaptation. As a result, all 18 communes engaged in the networks committed to integrating women-led, community-identified priorities into their climate investment plans.

UK ICF support through WLACC also significantly strengthened communities’ ability to address climate change by combining advocacy, institutional strengthening and climate-resilient livelihoods in a gender-responsive way. Over 400 farming households were trained in agroecology and sustainable fishing practices, with 96% of surveyed farmers actively practicing climate-resilient livelihoods by the end of the project. Knowledge transfer had strong multiplier effects, with 39% of women cascading training more than ten times and a further 45% between five and ten times within their communities. In addition, 95% of Women Champions reported that their networks are now trusted and supported by both communities and sub-national governments, and four in five women directly engaged with government entities on disaster risk reduction, climate change and gender equality. The project also supported the networks to explore social enterprises as a pathway to longer-term financial sustainability.

However, while some UK ICF programmes support participatory approaches, programme selection and funding modalities do not yet consistently align with the long-term needs and priorities of climate-vulnerable communities. In addition to successful outcomes, ActionAid UK’s experience with WLACC highlights limitations in current ICF delivery models. Despite strong local ownership and demonstrable impact, the project’s three-year timeframe and rigid funding structure constrained sustainability, limited responsiveness to emerging climate risks, and risked undermining longer-term institutional gains.

The effectiveness of the UK’s ICF programmes in meeting the long-term needs of climate-vulnerable countries depends significantly on who is funded and how. To truly support locally led climate action, the UK should prioritise funding national and local actors directly, or working through INGOs with a proven track record of equitable, partnership-based models, rather than relying primarily on UN systems, or larger multilaterals, which often come with high overheads and limited flexibility.

To be more effective, UK ICF should prioritise longer-term, flexible and grant-based financing, including direct and core support to local networks and women-led organisations. This would enable communities to sustain institutional capacity and adapt to evolving climate risks. Evidence from WLACC indicates that when UK climate finance is designed around community-identified priorities and genuine local decision-making, it can deliver inclusive, durable and climate-just outcomes.

• What lessons should the UK Government learn from the delivery of ICF between 2021-22 and 2025-26, including the effectiveness of multi-year commitments?

ActionAid UK’s evidence from research, policy analysis and programme evidence highlights several key lessons from the delivery of ICF between 2021–22 and 2025–26. It points to the need for future UK ICF to be predictable, flexible, grant-based, gender-responsive and additional to ODA to deliver climate-just and effective results.

While the UK’s £11.6 billion multi-year ICF commitment provided an important signal of intent and had the potential to support long-term planning, its effectiveness was undermined by reductions to ODA. ActionAid’s experience shows that funding uncertainty and delays limit the ability of local actors to plan and deliver sustained, locally led adaptation and resilience programmes. Multi-year commitments can therefore only deliver meaningful impact when they are protected from wider ODA cuts and provide genuine predictability.

Experience from this period also shows that the quality of finance is as important as the headline figures. Increased reliance on loans, private finance mobilisation and development finance institutions to meet ICF targets reduces the accessibility and effectiveness of climate finance for climate-vulnerable countries. These instruments are particularly poorly suited to adaptation and to supporting women-led and grassroots organisations, where grant-based, publicly delivered finance is more effective at meeting needs.

ActionAid UK’s programme experience demonstrates that communities facing climate shocks need long-term, grant-based support to strengthen resilience, recover from losses and protect livelihoods, particularly for women and marginalised groups. However, despite growing climate impacts, adaptation finance has remained insufficient and unpredictable, while loss and damage has lacked a dedicated and clearly defined UK funding stream. The UK must urgently scale up its public climate finance commitments, and ensure adaptation and loss and damage are adequately funded.

ICF delivery during this period often failed to apply meaningful gender analysis or to fund women-led organisations directly, undermining both effectiveness and sustainability. The UK must be held accountable for how much core funding reaches women’s rights organisations and for ensuring that intermediaries do not dilute funding or decision-making power from those most affected by the climate crisis. In addition, delivering ICF from within a reduced ODA budget has created damaging trade-offs with the deprioritisation of areas such as health, education and social protection – all of which disproportionately impact women and girls. Climate finance must be gender-responsive, new and additional if it is to support climate action without undermining humanitarian response, long-term development and gender equality.

• 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?

The UK’s increasing reliance on private finance mobilisation is undermining the delivery of climate justice. A decisive shift towards grant-based, public, gender-responsive and locally led finance is urgently required if the UK is to meet its international commitments relating to climate and gender equality.

Reductions in the UK’s ODA budget, alongside a shift away from public grants towards private loans, has directly weakened the UK’s ability to deliver both the quantity and quality of climate finance needed. Despite policy commitments to gender equality, UK climate finance does not consistently apply gendered analysis and rarely provides direct funding to women-led and grassroots organisations. Moreover, concerns around transparency, accountability and additionality include uncertainty over how much private finance is genuinely mobilised and whether it is additional to existing ODA commitments.

The growing role of private finance in UK climate action is deeply problematic where profit-driven models override climate justice, human rights and gender equality. Delivering climate finance as loans rather than grants entrenches many ‘Global South’ countries – already facing debt distress – in vicious debt cycles, limiting their capacity to respond to, adapt to and prepare for climate shocks. The UK Government must stop treating private finance mobilisation as a substitute for public commitments and require mandatory gender-responsive human rights and environmental due diligence for all UK-based companies – including financial institutions – and their supply chains. This includes by introducing a mandatory Business, Human Rights and Environment Act.

Public climate finance can and should be raised through progressive ‘polluter pays’ taxation, including a surtax on the global profits of fossil fuel companies and other polluting industries, with revenues channelled directly into international climate funds. Such mechanisms would shift the financial burden away from climate-vulnerable communities and onto corporate polluters, while simultaneously acting as a deterrent to emissions and supporting a just transition.

• Is the UK’s use of loans, that represented more than two-thirds of the global ICF commitment in 2022, appropriate and, what is its impact on low-income and climate-vulnerable countries?
• How can the UK utilise innovative mechanisms, such as debt relief, as alternative routes to fulfilling its ICF commitments?

The UK’s heavy reliance on loans as a delivery mechanism for ICF – which accounted for more than two-thirds of global climate finance commitments in 2022 – is neither appropriate nor effective for delivering climate justice, and disproportionately harms women and marginalised communities in the ‘Global South’. The UK should urgently shift away from loan-based private finance and instead prioritise grant-based finance alongside debt relief, ensuring climate finance is gender-responsive, locally led and aligned with principles of climate justice.

Loans are particularly inappropriate for adaptation and loss and damage, which do not generate revenue and require predictable, long-term, grant-based funding. Loan-based finance discourages investment in women-led and community-led solutions, as governments face pressure to prioritise revenue-generating projects over programmes that most effectively support women, marginalised groups and climate resilience at the local level.

Loan-based climate finance exacerbates debt distress and undermines climate justice by shifting the costs of climate action onto those least responsible for the crisis. ActionAid’s research demonstrates that many climate-vulnerable countries are already facing severe debt burdens, with rising debt servicing costs diverting public resources away from essential services such as health, education and social protection – disproportionately impacting women and girls. In fragile and conflict-affected contexts, additional debt further increases vulnerability and instability, undermining the objectives of ODA.

Debt relief represents a vital gender-responsive mechanism to mitigate the harms of loan-based climate finance, but it must be delivered in addition to – not counted towards – the UK’s ICF or ODA commitments. Properly designed debt relief can free up fiscal space for ‘Global South’ governments to invest in women-centred adaptation, loss and damage responses, social protection and locally led climate solutions. However, ActionAid UK’s position is clear that cancelling or restructuring debt should not be a substitute for the UK’s responsibility to provide new and additional climate finance.

• How should the UK’s ICF be spread between, mitigation, adaptation and loss and damage spend to respond to climate change most efficiently?

The most efficient and equitable use of UK ICF is one that rebalances spending away from mitigation-heavy approaches and towards adaptation and loss and damage, delivered through grant-based, gender-responsive and locally led mechanisms. Such an approach maximises impact, addresses the gendered impacts of climate change, and aligns the UK’s climate finance with its international obligations.

Current and historic imbalances – where mitigation dominates spending – do not align with climate justice principles, gender equality commitments, or the urgent needs of those facing the worst impacts of climate change. Women and girls – particularly those living in the ‘Global South’ – are disproportionately affected by climate impacts, and suffer disproportionately when funding is diverted from adaptation and loss and damage.

Adaptation should receive at least 50% of UK ICF, delivered primarily as grant-based, publicly funded and locally led finance. ActionAid UK’s research and programme evidence demonstrates that not only are women often on the frontlines of climate impacts due to their roles in food production, water collection, caregiving and informal labour, they are also key to building adaptation and resilience when adequately resourced. Adaptation and loss and damage finance are also vital for conflict prevention and peacebuilding, particularly in fragile and crisis-affected contexts where climate shocks deepen existing inequalities and drive displacement, food insecurity, and resource-based tensions. Without predictable funding for locally led adaptation and recovery, the risks of instability and prolonged humanitarian need will only grow. Efficient climate finance must therefore prioritise gender-responsive adaptation, including agroecology, access to water, disaster preparedness and social protection, and ensure direct funding reaches women-led and grassroots organisations.

Loss and damage finance must be recognised as a distinct and growing pillar of UK ICF, rather than absorbed into mitigation or adaptation budgets. Many communities – particularly women, girls and marginalised groups – are already experiencing irreversible climate impacts, including displacement, loss of livelihoods and increased exposure to violence and exploitation following climate shocks. Loss and damage finance is essential to address these realities and must be new, additional and grant-based, reflecting the responsibility of high-income, high-emitting countries such as the UK. Without dedicated loss and damage finance, women and girls are forced to absorb climate losses through increased unpaid care work, reduced access to education, increased exposure to violence and heightened economic insecurity.

Internationally, adaptation continues to receive only a fraction of total global climate finance. Similarly, the Fund for Responding to Loss and Damage remains woefully underfunded. While there was agreement at COP30 to triple adaptation finance by 2035, this must now be met with actual public finance commitments from those historically responsible for the climate crisis, such as the UK. The UK should commit to substantially increasing grant-based adaptation finance and make ambitious financial commitments to the Fund for Responding to Loss and Damage.

As well as making ambitious public funding commitments, the UK Government must ensure that all ICF is gender-responsive by design, with mandatory gender analysis, gender-responsive budgeting and reporting, and objectives to support women’s rights, reduce unpaid care burdens and strengthen women’s leadership in climate action.