UK accused of relying on ‘questionable accounting’ to meet key climate finance target

The UK has only succeeded in meeting a key international climate finance target through “questionable accounting”, new research claims – as climate-vulnerable countries look to pile new pressure on rich countries to stump up more cash at the upcoming Cop31 climate conference.

As part of its obligations under the Paris Agreement, the UK pledged to give at least £11.6 billion in international “climate finance” between 2021 and 2026.

Now, a new analysis from specialist climate publication Carbon Brief – shared exclusively with The Independent – reveals that around £2.1bn of the funds the UK counted towards this goal did not come from new spending. Instead, the government relabelled existing funding for development banks, private-sector investment and aid for Afghanistan, Sudan and other war-torn nations as “climate finance”.

Without these changes, the UK would have fallen nearly £1bn short of its target, the analysis states.

The new findings, based on numerous FOI requests, come weeks after a separate report from the International Development Committee similarly found the UK to be “cutting corners” on its climate spending, just as a record-breaking “super” El Niño weather event is starting to intensify extreme weather and humanitarian crises around the world.

Carbon Brief says that the previous Conservative government pledged, in 2019, to provide £11.6bn between the financial years 2021-22 and 2025-26. In order to retain the target while cutting aid, the Conservative government decided in 2023 to loosen the criteria for what it defined as “climate” spending. This enabled the UK to remain committed to the £11.6bn goal, without spending more on new climate projects, by simply relabelling existing funds.

Carbon Brief says that current Labour government has opted to maintain this approach, while also pledging a significant cut to the amount of foreign aid being directed towards international climate finance, as part of its broader programme of aid cuts from 0.5 to 0.3 per cent of Gross National Income (GNI).

It suggests three major components to this. The first is counting a share of “core” funding for multilateral development banks (MDBs) – like the World Bank – as climate finance. Another is to automatically count 30 per cent of humanitarian aid as climate finance if it is going to a country deemed most vulnerable to climate change - including Afghanistan, Sudan and the Democratic Republic of the Congo. A third measure has been to count more UK government-backed private sector investments from British International Investments as climate finance.

The chair of parliament’s International Development Committee, Sarah Champion said of the findings: “If questionable accounting has been used to get around a £1bn shortfall on our climate finance spend between 2021-22 and 2025-26, this only underlines my concerns that the government has been cutting corners to maintain headline climate-spending commitments, rather than working to deliver genuine climate and nature outcomes.”

A UK government spokesperson said: "It would be incorrect to report that we will not hit our International Climate Finance target. We are proud to have both hit, and exceeded, our target – and will continue to work hard on protecting climate and nature.

“Climate change and nature loss pose a real and significant threat to global security and prosperity. That is why the UK is leading action on climate and nature, and prioritising climate finance in its aid budget.”

Catherine Pettengell, the executive director of Climate Action Network UK – which represents more than 40 civil society groups working in climate action – said that there is still time for change and give a signal to nations around the world: "This [Labour] government has a chance to correct the mistakes made by previous governments ahead of Cop31.

“To do so, the UK must increase international climate finance, reverse the 2023 changes to climate finance accounting, and layout a pathway to return overseas aid to 0.7 per cent GNI to fulfil Labour's manifesto commitment.”

This article has been produced as part of The Independent’s Rethinking Global Aid project