Corporate report

Government response to ICAI recommendations on international climate finance: UK aid for halting deforestation and preventing irreversible biodiversity loss

Published 13 September 2021

FCDO, BEIS and Defra welcome the Independent Commission for Aid Impact’s (ICAI) thematic review and its recommendations. We welcome ICAI’s recognition that the UK has played a significant role in promoting global cooperation in tackling the drivers of deforestation and biodiversity loss and that through our programmes we have successfully targeted the most relevant drivers of deforestation and biodiversity loss. We are pleased that ICAI awarded a green/amber score and note that we remain committed to continuing to strengthen the strategic impact of UK Aid in these important areas.

Halting deforestation and preventing biodiversity loss are priorities for the UK, both at home and internationally, by supporting countries around the world to address these challenges and by reducing our own global footprint. In our recent Integrated Review of UK Security, Defence, Development and Foreign Policy we have said that tackling climate change and biodiversity loss is our number one international priority. As co-President of COP26 and as President of the G7 in 2021, we have put nature at the heart of our response to tackling climate change. The Leaders’ ‘Nature Compact’ set out the G7 ambition to halt and reverse biodiversity loss by 2030, highlighting nature’s role in tackling climate change and tackling deforestation through support for sustainable supply chains, and by participation in the COP26 Forest, Agriculture & Commodity Trade dialogue.

We have committed to double our International Climate Finance (ICF) to £11.6 billion over the next 5 years – and to invest at least £3 billion of that in protecting and restoring nature.

Recommendation 1: UK bilateral ODA support should have a tighter strategic focus to tackling deforestation and biodiversity loss, concentrating resources to increase impact

Accept

ICAI recognises that UK programmes tackle the most important drivers of deforestation and biodiversity loss in each national context. The Government intends to continue and increase our efforts to address these global challenges, scaling up our programming, prioritising where we can have the most impact and ensuring we use our aid to deliver good outcomes for people, climate and nature.

The Foreign Secretary has set new strategic priorities for ODA including tackling biodiversity loss and the climate emergency – recognising the critical importance of these for international development and UK strategic interests. Departments work closely together to ensure coherence of the UK’s climate finance including overseas where we are aligning our work through heads of mission.

Our programmes are one part of our wider strategy on climate change, deforestation and biodiversity. Our programmes aim to catalyse wider public and private sector policy reforms and investment and support our other international levers including diplomacy, partnerships and multilateral influencing, as well as complementing our domestic policy in the UK, for example through forthcoming due diligence legislation and work on green finance.

Recommendation 2: All programmes addressing deforestation and biodiversity loss should be monitored and evaluated against common, measurable indicators designed specifically for assessing deforestation and biodiversity impacts.

Partially accept

This Report acknowledges the challenges of consistently measuring forest and biodiversity results. We have developed some indicators relating to deforestation and biodiversity loss, including ICF Key Performance Indicators 8, 10 and 17, on hectares of avoided deforestation, value of ecosystem services generated or protected and hectares under sustainable land management practices. Extensive consultation with policy and programme teams fed into developing and refining these KPIs.

All of our programmes are monitored rigorously against indicators that are appropriate for specific interventions, and FCDO, BEIS and Defra share knowledge and learning on indicators. We are open to amending existing ICF KPIs or developing new indicators for programmes on biodiversity and deforestation, particularly in the context of the £3 billion nature spend target for the UK’s ICF. However, there is a trade-off between commonality and specificity in indicator design. Indicators monitoring deforestation and biodiversity across the portfolio need to be high level (e.g. assessing the risks to biodiversity), whereas specific indicators offer more insight into particular interventions. Additionally, programmes focussing on policy influence or delivering technical assistance use other measures of impact. For these reasons, we believe a more nuanced, rather than a purely ‘one size fits all’, approach is needed and so partially accept the recommendation.

Recommendation 3: Independent external evaluations of the bilateral programmes should be carried out regularly at programme, country and global levels and then used to shape strategic funding decisions.

Partially Accept

Many of our forests and biodiversity programmes have external evaluations already commissioned or in development. We do not commission external evaluations of every bilateral programme because we do not think that this represents the most effective approach or value for money. Instead, HMG takes into account a range of factors such as the programme risk, overall expenditure on the programme and the opportunities for cross-portfolio learning. Every programme is regularly reviewed, offering opportunities to assess programme delivery and make adjustments based on learning.

The report correctly states that there has been no portfolio-wide impact evaluation on programmes designed to halt deforestation and preventing biodiversity loss. HMG has produced several cross-cutting evaluations under the Climate Change Compass framework, which ended last year. We are considering options for future cross-cutting evaluation work, and will take into account the suggestions of this ICAI report.

Knowledge is regularly shared within programmes and across programme teams via organised events. HMG also routinely publishes evaluations. We are constantly working to make our learning and dissemination more systematic and will take the recommendations of the review into account. Many forests and biodiversity programmes are at an early stage, though build on existing learning e.g. the Territorios Forestales Sotenibles (TEFOS). .

Recommendation 4: UK bilateral programmes should be guided by social impact analysis and safeguarding measures, to maximise the benefits for and minimise negative impacts on local communities, women and vulnerable groups.

Accept

Assessments of risks to vulnerable groups are conducted for all our spending, and the review found that where programmes have been designed to work directly with local communities, there are good examples of best practice being followed. However, the review also found that not all programmes took sufficient measures to consult with communities during the design phase, or to identify and mitigate potential negative impacts of interventions. We acknowledge the need to do better.

At a strategic level, the creation of FCDO in 2020, and the development of a new International Development Strategy will help to ensure even greater consistency and coherence on issues such as safeguarding across all ODA-spending HMG departments.

As part of the G7 Climate and Environment Communique, the UK has committed to increasing both the effectiveness and accessibility of our climate finance, including for nature-based solutions (forests and biodiversity). This finance will reflect the needs and voices of marginalised groups, indigenous people, women and girls.

We recognise the crucial role played by indigenous people and local communities in the stewardship of forests and ecosystems. At COP26 the UK is convening strengthened action on this issue. It is no coincidence that an estimated 36% of remaining intact forests are within indigenous peoples’ lands. Where communities hold secure rights to forests, they provide better protection and management than even legally protected areas, and carbon storage can be increased.

Analysis of social impact is a fundamental part of our appraisal of new programmes, requiring a good understanding of local context. There can be challenges in ensuring consistent best practice is being applied across multi-partner and multi-project programmes. Programmes such as the Darwin Initiative include project selection criteria on social impacts (including gender) and we will work further with implementing partners to ensure that strong standards, including on consultation with affected groups, are being consistently applied. A number of HMG’s programmes work globally or nationally to influence policy or business behaviour rather than investing in specific communities. Nevertheless, they have introduced principles to enable more inclusive approaches to policy and business decision making creating the space for the voices of indigenous people, local communities and marginalised groups. For example, as highlighted in the review, fully inclusive national processes are central to FCDO’s Forest Governance, Markets and Climate programme.

Recommendation 5: Gender issues need greater prioritisation in policies and programming in order to ensure women benefit from investments in forestry and biodiversity.

Accept

Promoting gender equality and advancing women and girls around the world is a priority for the UK Government. The UK’s Gender Equality Act 2014 requires Ministers to have regard to the need to provide assistance in a way which reduces gender inequality before providing overseas development funding.

The UK is fully committed to implementing and facilitating the implementation of the Gender Action plan agreed at COP25, including increasing the gender-responsiveness of climate finance. The G7’s climate and environment communique commits the UK to addressing barriers to finance for climate and nature faced by women, marginalised people and under-represented groups, and increasing the gender responsiveness and inclusivity of finance.

In the 2021/22 to 2025/6 phase of the UK’s International Climate Finance, all departments are committed to improving their impact on gender equality. FCDO are currently updating the Strategic Vision for Gender Equality, learning from best practice, and this will help to inform future ICF programmes. For example, in order to drive up the performance of multilateral programmes on gender, we have introduced reporting on gender equality and women’s empowerment as one of the Payment by Results indicators under the current Global Environment Facility (GEF7, 2018-22) programme. This reporting is reviewed annually before the conditional contribution is paid. Also, the Partnerships for Forests programme proactively works with local partners to promote livelihoods for women in the production and marketing of sustainable forest products and produces gender and social impact case studies which can help inform other programmes.