This week at the UN Climate Change Conference in United Arab Emirates (COP28) the UK government is set to announce ways it is stepping up support to the world’s poorest countries at the forefront of the climate crisis, including providing funding for a new loss and damage fund.
What Rishi Sunak will surely not publicly announce is that UK government is changing the way it accounts for its international climate finance (ICF) contributions, which means it is quietly cutting its overall funding by £1.6 billion, which our new analysis shows. These ‘creative changes’ are little more than further aid cuts by stealth and more broken promises to children living on the frontline of the climate crisis.
Four years ago, the UK government made a promise to provide £11.6 billion in international climate finance to developing countries between 2021 and 2025. There was also a promise to maintain the nature of its support from past commitments. It would continue to all be official development assistance (ODA), it would be additional to overall ODA funding in 2009, and be “dedicated ring-fenced funding that is distinguishable from non-climate ODA”.
However, with the continued cut to the UK aid budget since 2021, from 0.7% to 0.5% of gross national income (GNI), and significant proportions being spent by the Home Office, it became clear to the government that they couldn’t meet this promise.
In July this year a leaked briefing by the Foreign Commonwealth and Development Office (FCDO) proposed dropping the £11.6 billion pledge. This proposal sparked a strong negative reaction both within parliament and externally. The solution the government came up with to still claim to meet the £11.6 billion promise was to move the goalposts in what they counted as international climate finance. Our analysis under shows that reporting changes in three ways will result in £1.6 billion extra being counted as ICF, effectively meaning the UK will now only spend £10 billion to meet the target.
Method Change 1 - Counting core funding to multilateral development banks (£920 million saved)
The UK government has never counted a proportion of its core funding to multilateral development banks as international climate finance, but now will starting from this financial year. Figure 1 estimates that this will lead to additional £920 million of ODA being repurposed as climate finance.
Figure 1 – Attributing MDB core funding as ICF would allow an extra £920 million of ODA to be counted as ICF
Source: Core contributions of ICF to MDBs from UK government international development statistics and FCDO reporting to the international aid transparency initiative (IATI). Proportion of MDBs’ portfolio as ICF based on their respective annual reports for 2021 and 2022.
Notes: IDA 21 funding in 2025-26 estimated based on the UK providing the same contribution as IDA20. Proportions of MDBs portfolio as ICF for 2022 has been used as the estimate levels for 2023 to 2025.
Method Change 2 – Counting 30% of total humanitarian assistance to countries most vulnerable to climate change as climate finance (£542 million saved)
The UK has only counted a very small proportion of its humanitarian assistance as climate finance, as the major focus was on emergency crisis response. However, it will now count 30% of total humanitarian assistance to countries most vulnerable to climate change as climate finance, irrespective of whether the support has a specific climate change component to it. This is set to see an estimated £542 million of ODA now repurposed as climate finance (Figure 2).
Figure 2 – around £542 million more humanitarian assistance will be included as international climate finance after the method change.
Source: 2019 and 2020 data from UK 5th Biennial review to the UNFCCC. Levels of humanitarian assistance for 2021 and 2022 based on UK government international development statistics. Country list taken from the bottom 10% in the overall NGain Index ranking.
Notes: The UK’s reporting to UNFCC does not include a specific amount from humanitarian assistance. The benchmark figure of 3% was obtained cross referencing spending from other sources and using a word search within the biennial report. Humanitarian levels for 2023 to 2024 financial year based on the Government’s commitments to spend £3 billion over three years within the International Development Strategy, with 2025 assumed at the same level. The proportion of humanitarian assistance to the country group is based on their average total proportion from 2019 to 2022.
Method Change 3 – Counting more funding as climate finance through British International Investment (£159 million saved)
At present the UK government estimates a proportion of the funding it gives to British International Investment (BII) as climate finance. As it thinks BII will now invest more on climate than previously thought, it will increase this proportion above 30%. FCDO’s latest 5-year funding plan for BII highlights two years where climate finance is estimated at 30%. If this was raised to 41% like the other years, this would add an extra £159 million to UK’s climate finance, without providing additional funding.
In addition, new rules on what counts as ODA recently agreed at the OECD mean that the UK could further increase ODA and climate finance through BII in the coming years.
Technically still meeting the target, but clearly breaking the spirit of the promise
In the wild west of international climate finance reporting everything goes, so the method changes by the UK government are not breaking any technical rules and they will claim they are keeping their promise. However, there can be no doubt it has effectively broken the spirit of its promise to developing countries in the following ways.
This funding is not additional – by any reasonable metric, the UK’s current approach not only fails to meet the UK’s low bar promise of being additional to ODA levels in 2009, but it is also significantly below the generally held benchmark that international climate finance should be additional to ODA spending of 0.7% GNI.
The funding isn’t all dedicated and ringfenced – With the move to estimate proportions of more development and humanitarian spending as climate finance, it is difficult to square this to the promise of the £11.6 being “dedicated ring-fenced funding that is distinguishable from non-climate ODA”.
Ultimately, it is about the optics of this move with developing countries and the risk of a continued breakdown in trust. If the Government’s new White Paper on International Development signalled a more positive approach in its words, its actions on this on and last week’s UN tax convention vote continue to speak much louder in a negative and damaging way. It is imperative there is a course correction in its actions, most notably in urgently returning ODA spending to 0.7% of GNI to enable meeting the spirit of its climate finance promise.
Share this blog