Written evidence submitted by WWF

September 2018

SUMMARY:

1. Climate change and international development are deeply connected, climate change undermines efforts towards poverty reduction and undermines our chances of attaining the Sustainable Development Goals (SDGs).
2. The UK needs to act if it is to retain its leadership on climate change and international development, this includes: long term climate finance, policy coherence and domestic leadership.
3. All ODA and foreign investment should be spent on climate compatible development, and in line with the Paris Climate Change Agreement and the Sustainable Development Goals. No funding should go towards fossil fuels.
4. The links between climate change and the natural environment need to be better understood in DFID and other departments spending ODA. Policy, programming and ODA spend that targets the intersection between environment, climate change and development is recommended. 
5. DFID should review its Economic Development Strategy to take greater account of the role of the natural environment in underpinning sustainable economic development and place greater emphasis on climate change adaptation and mitigation. 
6. DFID should use its influence with Multilateral Development Banks (MDBs) as well as other donors and financial institutions to champion real and transformational shifts in their portfolios which often still include funding to coal and other fossil fuels. DFID should champion scaled up investment in renewables.
7. The UK has been one of the leaders on international climate finance, however, there needs to be greater transparency on how climate finance is spent and the impact it is having.

QU: WHAT ROLE CAN INTERNATIONAL DEVELOPMENT PLAY IN COMBATING CLIMATE CHANGE?

8. Climate change and international development are deeply connected, climate change undermines efforts towards poverty reduction for example:
• Climate change impacts the poorest and most vulnerable first and hardest, despite these groups being least responsible for causing it,
• Climate change exacerbates inequality, the poorest groups are least able to adapt and respond to climate impacts,
• Climate change and gender are inter-connected with women and girls often worst affected by climate change impacts, 
• Low carbon development models will help to mitigate future damage from climate change,
• Climate change intersects with many other development issues for example, agriculture, economic development, water, food, health, migration, security and conflict.
9. The international development sector has significant contributions to make in terms of adapting to climate change impacts and mitigating further climate change. The UK’s climate finance is of course vital, and has a key role in supporting developing countries to pursue low-carbon development pathways and to adapt to the impacts of climate change. However, climate change should be front and centre in all development interventions and funding, not just climate finance. This is vital in ensuring that ODA does not undermine or offset efforts address climate change elsewhere. ODA spend and foreign investments should be screened against climate change criteria. For example, investing in clean renewable energy rather than fossil fuels should be the standard for all donors and government backed foreign investments.
10. ODA should not fund fossil fuels: Achieving sustainability requires economic transformation. ODA funding should be channelled into supporting countries to transform their economies away from dependence on extractives and fossil fuels; this should also be the case for CDC and other UK government supported foreign investments. ODA needs to be coherent with other UK climate change policies and should not be providing funding to grow fossil fuel industries, including natural gas. Fossil Fuel investments will become stranded assets in future, and thus represent poor value for money for the UK taxpayer, and a poor investment for the recipient countries.  DFID’s current approach – outlined in its Economic Development Strategy (EDS) does not currently rule out DFID (and ODA more broadly) funding to fossil fuel industries, we recommend that this should be explicit in future strategies. In short policy coherence is key and all ODA and foreign investment should be spent in ways that are compatible with the Paris Climate Change Agreement and the Sustainable Development Goals.
11. Ask DFID about any funding for fossil fuels: We advise the IDC to ask DFID whether fossil fuel investments currently feature in any UK ODA funding either via multilateral agencies or directly; and (if so), to what amount, where and what are the plans for phasing out all fossil fuel investments – including via CDC and government supported foreign investment. 
12. The model of economic development championed by DFID in its Economic Development Strategy (EDS) does not pay sufficient attention to ensuring that economic development is environmentally sustainable and climate compatible. DFID should revisit its economic development strategy to build a much greater emphasis on environmental sustainability and climate change, and pay particular attention to risks from expansion of agriculture and infrastructure that are currently heavily emphasised in the EDS.
13. Climate compatible economic development: It is positive that DFID in their EDS state that they “will promote a ‘climate smart’ approach across our economic development work - including through sustainable energy and the effective economic management of natural resources and the environment.” However, much of the climate change content focuses on insurance – whereas adaptation, resilience and mitigation would be more appropriate themes. DFID should be explicit that it is championing and investing in a model of development that is consistent with a 1.5°C warming scenario.
14. Avoiding stranded assets: DFID (and indeed all donors) should encourage countries to avoid investing in stranded assets. “Stranded assets are those that would be unprofitable under certain scenarios, which include the enforcement of a fair price on carbon and water, or improved regulation of labour standards in emerging economies.”[1] For example, there is financial and economic risk from investments that are high carbon and cannot be burned if the world is to stay below a 1.5°C rise of global warming. High Carbon assets, such as fossil-based power stations, are one example of ‘stranded assets’ others include investments that fail to take account of environmental risks to the rate of return on investment, for example the availability of water for certain agricultural investments, which present an economic risk to investors and economies.
15. DFID should deepen their understanding of the climate – environment interface, this also applies to BEIS, DEFRA, FCO and any department responsible for spending ODA. Climate change impacts play out first through changes to natural systems and natural resources, for example too much water causing flooding or too little water leading to drought, with knock on impacts on livelihoods, migration, nutrition and health. Well managed natural resources can increase resilience to climate change, and natural systems can be deployed as a ‘first line of defence’ against climate change impacts e.g. coastal mangrove forests can protect inland communities’ protection from the impacts of storms and tidal surges. Ecosystems are most resilient when they are intact, healthy and naturally diverse with their original plants and animals; and can help buffer some climate change impacts and help build the resilience of poor communities. While DFID have an admirable focus on climate change, and this is something we strongly welcome, the interplay between climate change and natural systems does not form a core part of DFID’s climate change strategy. DFID invested £30 million into the research programme ESPA – a 9-year UK research programme to explore the links between the environment and human wellbeing[2]. ESPA findings should be used to inform DFID’s approach to climate change.
16. Environments that are already degraded or damaged are less resilient to the impacts of climate change. Good management of natural systems can be an effective way of adapting to climate change. We therefore recommend that DFID embed an understanding of environmental sustainability into its priority on resilience. For example, going ‘beyond’ climate change to integrate into resilience programming and policy and understanding of the role of integrated water management, wetland management, sustainable forestry and reforestation, sustainable land management, natural coastal protection etc. Many of these interventions could offer co-benefits for livelihoods, climate change adaptation, climate change mitigation, reliance and nature.
17. Climate change as a political economy problem. Although we encourage development actors to see climate change through the lens of the environment climate change is not, in essence an “environment problem”. Rather it is a political economy problem. The impacts of climate change play out through changes in the environment that in turn impacts people and economies. However, climate change is the result of how our economies are structured and fuelled. And responding to climate change requires political and economic solutions – which the development community can help drive. Climate change should therefore be considered across DFID’s strategy and priorities, not just from the perspective of the Climate and Environment Team.
18. A “Universal” approach – the Sustainable Development Goals (SDGs) demand that we think about development in a different way. The SDGs are a universal framework that applies to all countries – rich and poor, north and south. The goals recognise that we live in an interconnected world and all countries need to “develop” towards a future that is safe, sustainable, fair and poverty free. International development actors therefore have a role to play in championing resource efficient, low carbon, sustainable development in all countries and highlighting the connections between consumption in “rich” countries and impacts on people and environments around the world. Looking at issues of consumption and resource efficiency from a global perspective would be a new, but welcomed, approach for DFID.

QU: WHAT WILL THE CONSEQUENCES BE IF THE INTERNATIONAL DEVELOPMENT COMMUNITY FAILS TO TAKE ACTION?

19. Failing to take action on climate change will put any prospect of ending poverty far out of reach. Climate change is already impacting people around the world, exacerbating poverty and undermining development efforts.
20. The level of climate change impacts depends on the level of warming that we experience, with impacts becoming increasingly dangerous as climate change takes hold. We are already “locked in” to a certain level of warming, meaning that adaptation and funding to support it is essential. Action must be swift and far reaching if we are to keep to 1.5°C as outlined in the Paris Agreement, and if we are to keep climate impacts to a minimum.
21. The SDGs and climate change are closely interlinked. If action on climate change is not swift and far reaching then it will be impossible to achieve the SDGs. SDG 13 refers directly to climate change but there are links to each of the 17 goals, and failing to tackle climate change undermines delivery across the framework. On the other hand, the SDGs can themselves drive positive climate action through, for example, goals and targets on clean energy, deforestation, sustainable economies, sustainable consumption and production. The goals refocus our economies on being more sustainable and using cleaner energy, so if the SDGs are implemented in full by all countries and stakeholders then major steps towards a 1.5°C future would have been made.

QU: HOW CAN THE UK PLAY AN ACTIVE ROLE IN LEADING THE WORLD ON THIS ISSUE?

22. UK leadership: in many ways the UK have been leaders on climate change, both in terms of the UK’s progressive Climate Change Act, powering past coal initiative and in DFID’s work on climate change. However, this leadership position will be compromised if the UK fails to reduce its carbon emission in line with pledges made in the Paris Climate Agreement. The UK is the main location for new gas generation in Europe, according to Platt’s Power Station Tracker, and almost half the new gas power plants planned in Europe are in the UK[3]. Investments in renewables rather than gas are needed if the UK is to reach is targets. Legislating for net-zero emissions before 2050 and demonstrating that zero carbon development is possible would mean the UK can retain its leading edge.
23. Climate Finance: The UK has been one of the leaders on international climate finance, for example committing to “spend at least £5.8 billion on this effort between 2016 and 2021, through DFID, BEIS and Defra.”[4] Long term certainty over funding is important to developing countries if they are to plan and invest, funding commitments from the UK Government and other donors over a longer time horizon is therefore recommended. There also needs to be greater transparency on how climate finance is spent and the impact it is having and this should be in the public domain. 
24. Climate change and environment: A 2016 report by ODI “Environmental sustainability in DFID policies, plans and processes” demonstrates that since 2010 climate change has been the primary environmental challenge addressed in DFID policy. While the depth and detail on climate change is welcomed and DFID have shown real leadership on this issue, this has been at the expense of a broader understanding of the environmental context for development. We recommend that DFID should link its expertise on climate change to a broader understanding of how a sustainable natural environment can underpin development gains and build climate resilience.  For example, focusing on the intersections between climate change, water management, land use, forests, marine resources and the sustainable use of natural resources for current and future generations. DFID would be extremely well placed to develop genuine global leadership in these areas.
25. Forest funding: Deforestation is a major cause of climate change and forest conservation and restoration remains the only known large-scale, economically viable means of carbon capture and storage. Forests also provide a wide range of social, economic and livelihood benefits and contribute to human development and the SDGs in multiple ways.[5] The UK is a leading global advocate on forests, with innovative funding and programming on forests and livelihoods through DFID which we strongly recommend continues. In summary, we recommend that the UK maintain its leadership role, continues with funding for forests, and continues its commitment to sustainable supply chains.
26. Leadership with MDBs: DFID should use its influence with Multilateral Development Banks (MDBs) to champion real and transformational shifts in their portfolios which often still include funding to coal. DFID should champion scaled up investment in renewables with MDBs, other donors and International Financial Institutions (IFIs).
27. All UK Government partners should be championing climate compatible development: Where DFID works with private sector partners, and indeed civil society partners, they should also be subject to robust climate and environmental screening and safeguards

QU: DOES THE GOVERNMENT STRIKE THE RIGHT BALANCE BETWEEN ADAPTATION AND MITIGATION IN ITS ODA SPENDING?

28. 50% of funding for adaptation: WWF supports the 50/50 split of climate funding between mitigation and adaptation. There are also multiple opportunities to fund interventions that deliver for both these aspects of climate change, for example investing in nature based solutions such as conserving and restoring forests that benefit people and species, planting and protecting mangroves and wetlands and safeguarding coral reefs.  
29. New and additional sources of finance are needed to meet the scale of the climate change threat and to ensure that ODA budgets can also deliver on other key development priorities. Demand for climate finance far outstrips supply. Pursuing other innovative sources of finance for adaptation is essential if the need for climate finance is to be met, for example exploring options of raising climate finance through tax or levies, engagement with industry and the private sector.
30. Greater transparency in climate finance: it is difficult to track ICF spend, identify what it has been spent on and what the impact has been. Greater transparency in how climate funding is allocated, what it is “matched” against and a publicly available assessment of the impacts of ICF funding would mean greater accountability for public money, and enable others to learn from the UK’s significant experience in delivering climate finance. 

QU: DOES THE UK GIVE SUFFICIENT PRIORITY TO CLIMATE-RELATED ISSUES WITHIN ITS ODA PORTFOLIO?

31. DFID’s climate focus is welcome: We welcome the prioritisation and focus that DFID gives to climate change within its portfolio for example it features in DFID’s Single Departmental Plan. However, there is a lack of policy coherence across DFID’s portfolio, for example in its Economic Development Strategy climate change and climate compatible economic development was not a strong theme. Therefore, investments that DFID make to champion economic development may not always be consistent with its other DFID investments on climate change keeping to a 1.5°C warmer world.
32. Economic growth driving environmental degradation and causing climate change: The ultimate, underlying driver of environmental degradation is the unsustainable pattern of consumption and production that have accompanied economic growth to date. The environmental impacts of this are now very visible, with climate change the obvious example, but others include pollution, water shortages and land degradation - all consequences of an economic system that takes for granted and fails to value natural resources and natural systems. The economic model championed by DFID in its EDS is not consistent with an approach that recognises and prioritises climate change across the board.
33. Greater scrutiny of CDC: We recommend that the IDC assess CDC investments through a climate lens, for example ensuring that no funds go to fossil fuel investments and the CDC portfolio is in line with the Paris Agreement and the SDGs.
34. Climate and Environment: as previously stated we recommend that DFID’s climate change work be closer aligned to the sustainable use of natural resources and environmental impacts.
35. Safeguards: As with most development agencies, DFID has a system for screening and assessing the environmental impacts of its own programmes and projects, with its Smart Rules, however it is unclear how effectively these operate and how they impact on decision making. There is not enough evidence that DFID’s current programming is consistent with doing no harm from a climate or environmental perspective. We therefore recommend greater transparency around safeguards and screening of programmes.

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