1. This piece of written evidence focuses on the contributions of British International Investment (BII), the UK’s development finance institution (DFI), to International Climate Finance.

2. This submission focuses on the aspects of the Terms of Reference that relate directly to BII’s work in climate finance. It contains information on the work of a DFI, BII’s approach to investing in climate, and a snapshot of BII’s investments and activities in climate and their development impact.

Introduction to the work of a DFI

3. Businesses in developing countries are often underserved by commercial banks and therefore struggle to access the finance they need to grow. Development Finance Institutions (DFIs) invest in private sector businesses, banks and projects in developing countries to overcome this challenge, and bring about positive economic, social and environmental change. BII’s investments seek to maximise impact while preserving capital – taking an impact-led but commercially rigorous approach to all investments.

4. By investing in businesses in developing countries, DFIs provide the financial means for those businesses to meet their growth ambitions including in activities that support the transition towards net zero and/or promote the climate resilience of sectors, businesses and local communities. When businesses grow, they create jobs that support livelihoods; generate tax receipts that support the development of critical public services; and stimulate broader economic growth that reduces poverty. In addition, by demonstrating the viability of investing in developing countries, DFIs aim to crowd in private investment.

5. BII is a publicly owned organisation – the UK Government is the 100 per cent shareholder – and reinvests the profits made from successful investments into new impactful investments. In 2024, businesses in BII’s portfolio provided direct jobs for 1,024,290 people and mobilised circa $1.59 billion of private capital, helping scale businesses that deliver essential services, strengthen climate resilience, and create economic opportunities in markets where they are most needed.

BII’s role in delivering the UK’s international climate finance commitments

6. Since 2020, BII has strengthened its climate smart approach to investing, aligning all its investment activity with the goals of the Paris Agreement. Today, BII actively invests to help partner countries achieve their climate goals, including for the clean energy transition and for improving the climate resilience of sectors, businesses and communities.

7. BII’s development impact objectives and broad investment priorities are set out in five-year strategies which are developed and agreed with the FCDO. In the current 2022-2026 Technical Strategy, BII set an organisational-wide target for 30 per cent of all new investments to be international climate finance. BII adopts a rigorous approach to assessing, reporting and tracking climate finance. Each investment is assessed according to the internationally-recognised Common Principles for Climate Change Mitigation and Adaptation Finance Tracking by multilateral development banks and the International Development Finance Club (see more information here).

8. BII’s strategy shift has resulted in significant growth in the pace of BII’s climate finance investing across the review period, with 42 per cent of new commitments between 2022 and 2024 qualifying as climate finance. BII has invested a cumulative $2.9 billion of climate finance from 2020 to 2024, mobilising $1.6 billion in the same period. The share of climate finance assets in BII’s portfolio has grown from 15.4 per cent in 2020 to 26.5 per cent in 2024.

9. The aggregate impact of these investments is significant. In 2024, 56 per cent of power generated by our investees was from renewable sources. In 2023, BII’s direct renewable energy investments avoided 1,519,000 tCO2e emissions on an attributed basis, an almost 54 per cent increase over 2022.

10. Over the past 5 years, BII has played an increasingly catalytic role, contributing towards accelerating the decarbonisation of some of the highest emitting countries in Asia and Africa. Similarly, BII has innovated to deepen the local financial sector to mobilise new sources of capital for an inclusive net zero and climate resilient transition in the countries where it invests. These are both evidenced by investments across BII’s portfolio, as well as independent evaluations. BII is also driving change across the DFI ecosystem, for example shaping an approach to Transition Finance for Africa and launching the continent’s first Transition Finance Facility. By combining grant funded technical assistance with investments, BII has shown how it can deliver market-level impact, for example to increase affordable finance for the resilience of climate vulnerable smallholder farmers in Pakistan (see more below on BII’s investment in Habib Bank Limited).

BII’s alignment with the Paris Climate Agreement

11. As BII implements its 2022–2026 Technical Strategy, all activities are guided by a set of core policies that apply consistently across all new investments. Over the past five years, BII has developed portfolio- and transaction-level strategies and tools to align investments with the goals of the Paris Agreement. In 2020, BII published its Climate Change Strategy, which commits to a 1.5-degree aligned transition to net zero by 2050, in line with UK and global targets. BII’s Paris alignment approach has three objectives: i) net zero by 2050; ii) supporting a ‘just transition’; iii) strengthening adaptation and resilience.

12. BII’s Pathways to Paris alignment report outlines how BII is implementing its approach, detailing other supporting policies including BII’s fossil fuel policy, published in 2020, which aligns with the UK Government’s approach and excludes any new investment in the vast majority of fossil fuel subsectors. The report also outlines BII’s approach to phasing out misaligned legacy assets and supporting investees’ transition with investment capital and technical assistance. Since 2020, the share of fossil fuel assets in BII’s portfolio has steadily decreased from 12.6 per cent to 6 per cent in 2024.

13. BII’s Climate Change Strategy follows the four Task Force on Climate Related Financial Disclosures (TCFD) pillars – the leading international framework for integrating climate change opportunities and risks into the management systems of financial institutions and businesses (now transferred to IFRS). In 2022, BII’s Board endorsed its Net Zero Transition Strategy[1] to steer investments towards its goal of a net-zero portfolio, aligned with TCFD’s recommended transition plan principles.

Learning

14. BII is committed to understanding the impact of its investments and sharing insights from its portfolio. BII’s investment approach is informed by an evaluation and learning programme, with both internal reviews and evaluations produced alongside a multi-year programme of independent evaluations run jointly by the FCDO and BII. Recent relevant publications include:

• An FCDO commissioned review, Analysis of mobilisation in three BII renewable energy investments, published in 2024. The review explores BII’s role in mobilising capital and creating demonstration effects in the renewable energy sector in India, Egypt and South Africa.

• A full independent portfolio and evidence review of the impact of BII’s infrastructure portfolio (BII high-level response), published in 2022. This found that BII helps fill critical infrastructure gaps in emerging and frontier markets by bringing in private capital where it would not otherwise flow and delivering tangible improvements in areas such as clean energy, connectivity and economic resilience.
• A final synthesis report was published in 2025, highlighting that BII has strengthened its impact by significantly increasing climate-finance-aligned investments (61 per cent of BII’s infrastructure portfolio between 2019-2024) and by sharpening its focus on high-need, frontier markets through improved impact-driven investment decisions.
• This is complemented by a series of evaluations and in-depth case studies, such as a BII‑commissioned evaluation of BII’s investment to Fourth Partner Energy (FPEL) in India published in 2025. This found that switching FPEL’s client businesses to cheaper renewable power increased their output while cutting carbon. The study estimates $344 million in extra annual value for client firms and 3.23 million tonnes of CO₂ avoided each year.
• Another in-depth study, published in 2024, assessed the impact of a rural hydroelectric power plant, Virunga Energies, on households in the Democratic Republic of the Congo. This found that first-time access to reliable clean electricity led to meaningful improvements in household wellbeing, with connected communities experiencing significant gains in living standards.

Transparency

15. As a development institution focused on learning and improvement, BII is committed to operating transparently:

• International Climate Finance (ICF) reporting: BII contributes annually to UK ICF reporting, providing reporting against KPI 6 ‘tonnes of greenhouse gas emissions reduced or avoided’; KPI 7 ‘installed capacity of clean energy’; and KPI 12 ‘volume of private finance mobilised for climate change purposes’. HMG’s calculation of BII’s ICF contribution is based on ODA inflows to BII, rather than investment outflows (the OECD DAC institutional method). This results in BII’s UK ICF contribution being lower than BII’s actual annual climate finance investment outflows figure, which is published in BII’s annual report and accounts. In 2025, the UK International Climate Finance results featured BII’s investment in Planet Solar, a 50-megawatt solar project and Sierra Leone’s first large-scale solar independent power producer. With only 23 per cent of the population having access to electricity, the project is expected to increase national power supply by approximately 30 per cent.

• Task Force on Climate-related Financial Disclosures (TCFD): As outlined above, BII implements TCFD recommendations and discloses climate risks and opportunities. Since 2019, BII has published in its annual accounts,  a progress report on the implementation of the TCFD recommendations as well as data on the recommended TCFD cross-industry metrics. Disclosures for 2024 included climate finance-qualifying assets, fossil fuel exposure, Scope 3 financed emissions, emissions avoided through investments, climate risk assessments (transition and physical), and operational GHG emissions.

• Partnership for Carbon Accounting Financials (PCAF) standard: To support its goal of a net zero portfolio by 2050, BII calculates and tracks its overall portfolio’s financed emissions using the Partnership for Carbon Accounting Financials (PCAF) standard. BII publishes its progress in its annual accounts and it is regularly monitored by BII’s management.

• Investment-level disclosures: In 2025, Publish What You Fund recognised BII as the world’s most transparent bilateral development finance institution and fifth overall non-sovereign institution in its DFI Transparency Index 2025. This ranking takes into account BII’s climate-related financial disclosures, detailed in its Transparency and Disclosure Policy 2025 and published for each investment on its investment database (where relevant). A full list of climate-related disclosures is available on page 7 of the policy.

• BII assesses climate-related risks for every new investment it makes and its approach to assessing, reporting and tracking climate finance sets out its rationale for how it measures climate finance for each investment.

BII’s Climate Finance Toolkit

16. BII deploys a range of financial instruments to deliver climate finance including equity, debt, guarantees, grants and blended finance structures. Across its portfolio, BII adopts a flexible, partnership-driven approach, enabling tailored solutions and maximising impact.

• Platform approach: A recent Overseas Development Institute (ODI) report highlights how development finance institutions like BII can multiply their potential impact by establishing platforms that create investment opportunities and mobilise private investment in areas where suitable private enterprises are absent. BII has pioneered this model, establishing companies such as Ayana, today a leading renewable energy company in India, and Gridworks, which invests in power transmission and distribution in Africa.
• Ayana. Established in 2018 by BII to develop large-scale renewable energy projects in India. By the time of BII’s exit from Ayana in 2025, it had achieved significant scale with over 4.1GW of renewable energy capacity under development and operating. Ayana is also committed to creating positive social impact, launching a first of its kind vocational skills programme for those living in townships around the solar park (read more about BII’s journey with Ayana here).
• Gridworks. Established in 2019 by BII as a dedicated platform the development of Africa’s electricity networks. Supports projects like Moyi Power in the Democratic Republic of Congo, which will bring reliable clean power to circa 250,000 people after five years of operation, primarily through solar solutions, to towns that are currently without an electricity grid. Over the full 22‑year operating period, the project is expected to reach more than one million people – a significant contribution in a country where access to electricity remains around 19 per cent nationally and circa 1 per cent in rural areas.[2]

• Blended finance approach: BII uses blended finance instruments, combining concessional and commercial capital to de-risk early-stage climate solutions. Established in 2021, BII’s Kinetic Climate Innovation Facility has a highly catalytic, climate-focused investment mandate, enabling BII to scale up technologies or business models that help communities deal with the impact of climate change and have the potential for transformational impact in its markets. Through the Climate Innovation Facility, BII deploys tools such as credit enhancement to attract investors into adaptation-focused funds, and project development loans to cover early-stage costs for climate resilient infrastructure (learn more here). Key examples include:

• SunCulture. A Kenyan company providing affordable solar irrigation pumps to smallholder farmers – helping them improve yields and reduce reliance on diesel pumps and unpredictable rainfall. To overcome high upfront costs, BII structured financing to pre-finance carbon credits, enabling SunCulture to cut pump prices by 17–25 per cent, avoid emissions, and boost revenue. This initiative was delivered in partnership with Shell Foundation, which collaborated with BII and SunCulture to pilot innovative carbon financing models. Since BII’s investment, SunCulture has distributed over 18,000 discounted units to farmers across Kenya, with many reporting doubled crop yields (learn more here).
• Partnership with BlueOrchard. BII also uses blended finance to mobilise large-scale private capital for climate action. In 2025, BII partnered with BlueOrchard as an anchor investor to help launch a new climate resilience fund. The fund, specifically designed to unlock insurance capital, will expand access to climate finance for SMEs in emerging markets, increasing the availability of long-term funding for climate-resilient growth. It is expected to mobilise more than $200 million of investment from insurers and other institutional investors.

• Partnership-focused approach: BII works in partnership, recognising that combining different strengths – from capital to local knowledge – helps finance climate projects and reach communities and businesses that the market might otherwise overlook. Key examples include:
• Etana Energy. BII partnered with GuarantCo to provide guarantee financing to Etana Energy, a first of its kind renewable energy trading business. It is an innovative deal designed to unlock new renewable energy capacity by providing independent power producers with the revenue certainty they need to break ground on new renewable energy projects. The deal is expected to unlock an estimated $500 million for renewable projects in South Africa, providing a boost to the country’s green energy transition, creating jobs and avoiding 1.2 million tonnes of carbon emissions.
• BII’s partnerships also focus on increasing access to climate finance for small and medium-sized businesses, which are critical for green growth but often struggle to access funding. In June 2024, BII and Symbiotics launched a second Green Basket Bond, so that local lenders across Africa and Asia could provide affordable finance for small-scale green projects in sectors such as renewables, energy efficiency, clean transport, green buildings and climate smart agriculture, alongside technical assistance to build lenders’ green lending capabilities. The result will be more climate finance flowing, faster, to the enterprises and places that need it most, supporting jobs, cleaner technologies and greener growth in climate vulnerable markets.

Snapshot of BII’s impact in driving a just and resilient transition to net zero

17. BII investments help partner countries – including those that are low-income and climate-vulnerable – advance their net zero and climate resilient development pathways by financing the full spectrum of commercially viable renewable energy projects – from utility-scale renewable energy to solar mini-grids – and supporting innovative businesses in sectors such as climate technology. BII’s Infrastructure Evaluation Final Synthesis report found that 63 per cent of BII’s disbursed capital went to countries that are most vulnerable, and least able to manage, the effects of climate change. BII’s capital has also helped less climate-vulnerable but high-emitting economies accelerate their transition to net zero. These include India, South Africa, and Egypt which are all among the highest emitters in Asia and Africa due to a continued reliance on electricity generated by fossil fuels.[3] Examples of BII’s impact include:

• Expanding access to electricity for rural communities: In 2016, BII became the first DFI in two decades to invest in Nord-Kivu, DRC through Virunga Energies, which supplies clean power to communities living in and around the UNESCO-listed Virunga National Park. The investment expanded the grid and developed new renewable generation capacity, creating nearly 26,000 new connections and improved access to power for underserved communities. Today, Virunga operates 30MW of hydroelectric plants and a transmission network, serving 20 villages, towns, and the city of Goma. In 2025, it completed construction on an additional 14MW plant. It also installed public street lighting free of charge in connected areas to help reduce insecurity in the region. By the end of 2024, over 36,000 households were connected to the mini-grid benefiting more than 170,000 people. A 2024 independent study commissioned (outlined above under Learning) found that communities connected to Virunga’s mini-grid saw faster asset growth, with first-time electricity users rising from the 79th to 86th wealth percentile.

• Providing “hardest‑to‑reach” communities with clean energy: In 2025, BII invested in Acumen's Hardest‑to‑Reach Initiative, financing off‑grid solar companies in 17 frontier African economies so households and micro‑businesses could access affordable, reliable power. The programme is expected to improve energy access for over 50 million people and avoid more than three million CO₂e, while also advancing gender equality through its 2X Challenge‑qualified design to increase opportunities for women customers and employees in the off-grid solar sector.

• The Africa APPG’s report on Africa’s Just Energy Transition highlights further examples of BII’s role in expanding clean energy access. It cites BII investee Globeleq’s Cuamba Solar plant in Mozambique, which uses unique battery storage technology to deliver clean, reliable power to around 22,000 Mozambican families in the Niassa region, where only 21 per cent previously had electricity.

• Boosting the climate resilience of smallholder farmers in underserved areas: BII invested in Babban Gona, a Nigerian agri-tech AI platform providing smallholder farmers with high-quality agricultural inputs, financial credit, training on climate-smart practices, and support for harvest, storage and access to markets. While Northern Nigeria produces over 50 per cent of the country’s maize, smallholder farmers face persistent challenges that limit their productivity and income. With BII’s support, Babban Gona expects to improve yields, incomes and climate resilience for around 140,000 smallholder farmers in Northern Nigeria by 2029.

Balancing mitigation, adaptation and resilience

18. BII’s investments largely focus on mitigation, particularly through supporting the net zero transition. The Infrastructure Evaluation Final Synthesis report recognises investing in adaptation is more challenging than mitigation because its benefits are long-term and difficult to measure, and most interventions – especially in infrastructure – are led by the public sector with limited private sector involvement. Other key barriers include limited climate data and risk analytics, unclear definitions of adaptation and resilience, and financial mismatches in investment size, scale, and timelines.

19. However, BII has undertaken several adaptation-focused investments (e.g. SunCulture outlined above) and broader activities to encourage investment in adaptation. Other investment examples include:

• Pioneering sustainable agriculture programmes for smallholder farmers: BII is invested in Grow Indigo, which helps smallholder farmers in India transition to regenerative agricultural practices by supporting them to adopt practices such as direct seeding of rice and no-tillage farming. The company then tracks the impact of these changes on soil carbon and emissions and sells carbon credits in the voluntary carbon market. Grow Indigo expects to reach 191,000 new farmers within two years, with longer term benefits including higher yields, incomes, health improvements from reduced exposure to water-borne disease and greater resilience to droughts and floods.

• Strengthening climate resilience in Pakistan through capital and technical assistance: Pakistan is globally among the countries most vulnerable to extreme weather[4], and relies heavily on fossil fuels for over 60 per cent of its energy. Pakistan’s agricultural sector is vital for its economic growth and food security but it faces a number of challenges including limited access to finance and climate change. BII investments support climate resilience in Pakistan in a number of ways:
• Zephyr Power. BII supports the clean energy transition in Pakistan through its investments in solar, hydro and wind projects. It has a portfolio of five separate wind farms in Sindh province (total capacity 260MW), including Zephyr Power in Gharo, Sindh province. In 2020, BII worked with Zephyr to launch a mangrove restoration project, strengthening the resilience of the wind farm to climate shocks, protecting local civil infrastructure from tidal flows, and supporting community livelihoods. Since restoration, local fishermen report increased fish, shrimp, and crab populations. BII partnered with environmental finance specialists Earth Security to develop a case study on this initiative.
• Habib Bank Limited (HBL). In 2025, BII partnered with Habib Bank Limited (HBL), Pakistan’s largest commercial bank, to support small holder farmers and agribusinesses in Pakistan by increasing access to finance and supporting their resilience to climate change. With BII’s support HBL plans to expand its agriculture portfolio, dedicating 50 per cent of the funds to smallholder farmers. The Bank will also promote climate adaptation initiatives such as solar-powered irrigation systems, to reduce emissions and bolster farmers’ resilience to environmental challenges.
• Kashf Foundation. BII is invested in Kashf, Pakistan’s leading microfinance institutions aiming to improve women’s economic empowerment, which now serves more than 750,000 clients and directs over 70 per cent of its loans to women‑owned micro‑enterprises. BII provides Kashf with climate adaptation and resilience technical assistance under its technical assistance facility, BII Plus,  to support its work helping households absorb and recover from climate‑related shocks, a core component of real‑world climate resilience.

• Leading efforts to scale investment in climate adaption and resilience: increasing investment in adaptation and resilience requires a strategic and coordinated approach. In 2020, BII worked with other development finance institutions to establish and lead the Adaptation and Resilience Collaborative (ARIC), a global initiative to scale private investment in climate adaptation and resilience across developing countries. BII is a founding signatory to the Investors Resilience Challenge, led by ARIC, that provides a framework to guide investors on assessing, measuring and managing the resilience of their investments as well as the impact of their adaptation finance investments. BII continually shares learnings from its portfolio to encourage more climate finance investment. Key highlights include:

• In 2024, BII and the Dutch Entrepreneurial Development Bank (FMO) jointly published the Climate Investment Playbook to encourage investors to step up their climate finance commitments. It includes key steps to guide investors in the identification, assessment and selection of companies offering climate solutions.
• In 2023, BII published the Climate Adaptation and Renewable Energy (CARE) for Water approach to enhance climate resilience in water systems by integrating climate adaptation and renewable energy to address water-related challenges. This provides a blueprint for how DFIs can collaborate through country platforms for more systemic impact. 
• BII’s Pathways to Paris alignment report outlines five key lessons that it has learned since the launch of its climate finance strategy, such as the importance of incentivising private sector investments in adaptation and resilience and that helping businesses prepare for the green economy is good for business growth (the full list is on p.25). BII has also contributed to thinking on how debt is an important tool for climate financing.[5]
• Building on these frameworks and guidance, BII increasingly uses Transition Finance as a key part of its investment strategy. This enables BII to provide funding to companies that need to modernise and reduce their carbon footprint but currently lack access to affordable capital to do so. In November 2025, BII and FirstRand launched a Transition Finance Facility – BII’s first – to help companies in energy‑ and materials‑intensive activities invest in cleaner technologies and processes. The facility pairs capital with technical assistance to build FirstRand’s transition framework, aiming to protect jobs, accelerate decarbonisation, and set a precedent other lenders can scale.

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