IDC inquiry response from Fauna & Flora

January 2026

Fauna & Flora’s Response to IDC Call for Evidence
on International Climate Finance

Key messages:

What impacts will the reduction of Official Development Assistance (ODA) 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?

  1. Humanitarian crises are and will continue to be accelerated by climate change. The UK should be maximising its investment of ODA funding into treating the causes, to minimise the symptoms. Notwithstanding the UK context of planning to spend only ~0.3%GDP on ODA, tackling the climate change and nature crises have rightly remained priorities, and this should be reflected in the total committed by the UK to ICF4. 
  2. Further, given the vital role of protecting and restoring healthy ecosystems in both mitigating and adapting to climate change; and maintaining and strengthening the ecosystem services that underpin food and water security, supply chain and economic stability – with direct links to conflict mitigation, migration trends and health – spending on nature must remain a priority for ICF4. To this end, a robust nature-based earmark within ICF4 is important. A dedicated nature-based earmark also provides long-term certainty which helps both government and its grantees plan and effectively deliver sustained, positive outcomes for nature, climate, and people.
  3. In terms of absolute ICF commitments, and recognising the critical and underserved role of nature in climate action (mitigation, adaptation and resilience), we advocate for a new nature earmark in ICF4 of greater or equal value to the current ICF3 commitment (i.e., >£3bn/30%+ of total ICF), with an equivalent forests earmark, (>£1.5bn), per the original methodology.
  4. The above point addresses trade-offs within the spectrum of aid spend.  However, overall reduction of ODA, ostensibly driven by increased focus on defence, negatively impacts the UK’s ability to tackle drivers of climate-related insecurity, with the significant risk of exacerbating rather than easing concerns around national security.

How transparent is the UK Government about its ICF commitments?

What processes are in place to oversee the UK’s ICF expenditure and impact?

  1. It is important for the UK Government to strengthen reporting and transparency on climate finance: both for building confidence among the UK public that taxpayers’ money is well-spent, but also for building trust with countries and organisations in the Global South.
  2. With the accounting changes introduced under ICF3, it is currently too difficult to understand how much climate and nature ODA is being spent in which countries and on what specific programmes of climate and nature work. ICF4 must therefore be accompanied by a significant improvement in data transparency and accountability.
  3. In particular, the use of a coefficient approach, whereby a fixed percentage of spending is automatically counted as climate or nature finance regardless of programme design or outcomes, should be minimised. Instead, it must be clear where money is spent on programmes designed with nature-based solutions as one of the primary outcomes, and programmes designed for other purposes but which have nature-relevance. This would offer greater accountability to UK taxpayers, who want to see government action on climate and nature.
  4. Specific examples for improved transparency include:

-          Publish an itemised list of all UK ICF spend (including spend under the nature and forests ringfences) by programme and spend each calendar and financial year, within six months of the respective year close

-          The public data should indicate the type of financial instrument (grant/concessional loan/non-concessional loan/equity/other), type of support (mitigation/adaptation/crosscutting), spending ringfence eligibility (nature (forest)/nature (other)/none) and related coefficients (where relevant), as well as nature and forest spend values.

-          Publish, on an annual basis as part of the ICF results reporting process, an itemised list of all the projects contributing to total current reported ICF results.

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?

  1. There are positive examples within the UK ODA programming in terms of supporting greater local participation, management, and decision making. The Biodiversity Challenge Funds (BCFs) have strong links to poverty and climate outcomes and exemplify an integrated approach to environmental, social, and economic objectives.
  2. The Darwin Initiative (managed by Defra, one of the programmes within the BCFs) is increasingly supporting Global South organisations directly (a set of interlinked funds designed to help local actors on a development pathway), and is supportive of adaptative management during implementation, providing the necessary flexibility and oversight to enable implementing organisations to adapt to evolving contexts and maximise their impact. Internal and independent evaluations demonstrate this programme’s huge value for money and legacy of impact. Through ICF4 the UK must ensure that this type of support remains available for livelihood development that focuses on climate-resilient and nature-friendly practices.
  3. Generally, UK ICF programming would benefit from an increased focus on strengthening attributes that support local participation, management and decision making, particularly by Indigenous Peoples and local communities (IP & LCs).  For example, proposal development timeframes and resources typically limit options for authentic participatory, co-creation processes with local partners.  ICF impact would be well-served by permitting consolidation of design details through deeper co-creation processes during project inception periods, and increased support for appropriate adaptive management and flexibility during implementation. 
  4. With recognition of the importance of programmes rooted in local management and decision making, it is also vital to recognise the need for, and to enable increased investment in, capacity strengthening of local institutions.  Whilst some institutions are advanced in this journey, many have high capacity for impact but low capacity to manage ODA.  Support for the work of organisations who accompany local partners to develop these management capabilities, and support their development as leaders in delivery, is key.  The Principles of Inclusive Nature Action[1], which include Defra as one of the developing partners, provide an excellent framework, which we encourage the UK government to consider as a core reference point and set of guiding principles to further strengthen local participation, management and decision making in ICF programmes.

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?

  1. Programmes counted under ICF3 have played a key role in supporting Fauna & Flora and our local partners to drive nature protection and restoration in many geographies in the Global South – supporting mitigation of climate change; and building resilience to its impacts by improving ecosystem health and functioning, with the associated benefits for people and wildlife.  For example, ICF has enabled protection and restoration of mangroves in Myanmar and Indonesia, as vital carbon sinks and coastal defence systems; land rights recognition and the protection of forests by communities in Indonesia; advanced sustainable watershed management in Kenya. The Darwin Initiative (embedded in the Biodiversity Challenge Funds) is particularly impactful and catalytic in this regard. See also comments below about the value of grant-based approaches.
  2. Maximising funding to protect and restore ecosystems is vital; including, but not limited to, higher carbon stock ecosystems such as forests (including ‘blue forests’) and peatlands.  However, increasing the share of finance, including of finance for nature-based objectives, for adaptation to climate change and for building resilience to climate shocks is also much needed – recognising that many approaches, designed well and with intention, can deliver holistically i.e., supporting both mitigation and adaptation outcomes.  In the nature-based context, we strongly recommend support for integrated ecosystem-based and locally led approaches to adaptation, drawing on the Ecosystem-based Adaptation (EBA) Framework[2] and Principles for Locally Led Adaptation[3].

How has the UK’s 2026-2030 ICF commitment been decided? Is it adequate to comply with the obligations of the Paris Climate Agreement and support its objectives?

  1. While compliance with the obligations of the Paris Climate Agreement (PCA) and support for its objectives is key, we also highlight the importance of the UK’s obligations under the Global Biodiversity Framework (GBF) and the UNCCD – which are synergistic.  It is key that these global commitments are translated into functional synergies and drive ICF into holistic projects and programmes that deliver impact across the PCA and GBF. Such programming, with integrated design and delivery, would maximise the impact of the UK’s ODA investments.
  2. As highlighted above, the next round of International Climate Finance (ICF4) should continue to have a sub-pledge for nature-based solutions – exceeding or matching the £3bn of ICF3 committed to nature. ICF4 should also ensure that at least half of such a nature sub-pledge is again earmarked for forests, emulating the successful forests earmarks within all three previous ICF rounds. These approaches represent value for money, tackling both climate and nature priorities, while supporting sustainable development.
  3. We also call for UK ODA – ICF and non-ICF – to include ocean programming as a priority.  Protection and restoration of marine and coastal ecosystems, and sustainable development of the ocean economy, are underserved themes to date. These ecosystems are vital to action on climate change and biodiversity loss, and highly material to multiple dimensions of national and global security.
  4. The UK’s ICF programming should prioritise the direct protection and restoration of nature, including via supporting management of existing, and expansion of, Protected Areas.  We highlight here the diversity of approaches that can be taken to scaling Protected Areas, and the importance of tailoring approach to context, particularly recognising the importance of Free, Prior and Informed Consent (FPIC), and consideration of Other Effective Conservation Measures (OECMs) to bring new areas under effective and inclusive management for conservation.

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?

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?

  1. We recognise the value of leveraging private finance through aid investments, and the potential of blended funding instruments.  We also recognise that non-grant finance does not suit all the work that is needed to tackle climate change and biodiversity loss, particularly in the nature space.  We support that ICF should be catalytic in general, and a proportion should specifically aim to leverage private finance.  However, grant finance is critical to do the vital work that does not attract private finance and is the limiting factor in many attempts to build blended finance approached.  We advocate that bilateral ICF (and especially nature-focussed ICF) be 100% grant finance, with reduced allocations to multilaterals which do not primarily deliver grant finance.
  2. A share of finance within the ICF4’s nature earmark should include grant funding to support the development of high integrity market-based mechanisms for nature protection and restoration, including incubation of projects innovating and preparing to participate in nature-based carbon and biodiversity markets.  It should also include support for capacity strengthening of Global South market actors to participate equitably and hold markets to account.

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?

  1. As noted above, availability of grant finance is a highly (and increasingly) limited resource, and a limiting factor in efforts to leverage private finance into climate action, including nature-based.  In this context, we propose that bilateral ICF (and especially the portion of ICF4 earmarked for nature) be 100% grant finance, with reduced allocations to multilaterals which do not primarily deliver grant finance. 

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

  1. Climate impacts are increasingly rapidly and being felt globally – however, they disproportionately impact Global South countries.  Increasing the share of finance, including of nature-based finance, for climate change adaptation and building resilience to climate shocks is much needed. This might include supporting innovation in inclusive resilience building approaches that support the most vulnerable to cope with climate shocks, for example innovations in the insurance sector.
  2. We strongly recommend support for integrated ecosystem-based and locally led approaches to adaptation, drawing on the Ecosystem-based Adaptation (EBA) Framework[4] and Principles for Locally Led Adaptation[5] – funding should be targeted to support national and sub-national policy integration, capacity development, implementation and scaling of proven approaches, as well as encouraging partnership with private sector actors to increase participation in resilience building.  We also recognise that many approaches, designed well and with intention, can deliver holistically i.e., support both mitigation and adaptation outcomes. 
  3. Alongside adaptation and mitigation, the UK should show leadership through meaningful commitments on loss and damage.

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[1] See https://www.iied.org/principles-for-inclusive-nature-action

[2] See https://iucn.org/sites/default/files/2022-07/feba_eba_qualification_and_quality_criteria_final_en.pdf

[3] See https://www.wri.org/initiatives/locally-led-adaptation/principles-locally-led-adaptation

[4] See https://iucn.org/sites/default/files/2022-07/feba_eba_qualification_and_quality_criteria_final_en.pdf

[5] See https://www.wri.org/initiatives/locally-led-adaptation/principles-locally-led-adaptation