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More than a tenth of the UK’s foreign aid for climate-related projects since 2010 has been channelled through consultants, a new survey by Carbon Brief reveals.
To arrive at those figures, Carbon Brief analysed more than 25,000 transactions indexed in the government’s Development Tracker of projects contributing to the UK’s International Climate Fund (ICF).
While most of the UK’s weather budget is spent on primary foreign bodies, such as the World Bank and UN agencies, much of it has been entrusted to the personal sector.
At least £2. 11 billion has been transferred to dozens of watchdog consultancies, including KPMG, PwC and Adam Smith International, which have recommendations on everything from building hydroelectric dams in Nepal to agricultural diversification in Ethiopia.
Almost all of these consultancies are based in the UK and other northern countries. Experts tell Carbon Brief that there is opposition among some emerging countries to climate aid being channelled first through foreign experts and not directly through local actors.
It also comes at a time when politicians and academics are taking a closer look at the enormous role that beloved personal experts play in public life.
The UK has pledged to provide “climate finance” to emerging countries so that they can tackle climate change. The government distributes this cash primarily through the ICF, which is a component of the foreign aid budget.
Most of the UK’s climate finance is spent on a combination of UN agencies, progress banks, foreign NGOs, control consultancies, foreign governments and local charities.
These organizations have the task, through the ministries, of executing projects, conducting research and distributing the budget in emerging countries.
Although much of the cash went directly to projects, all of those organizations are experiencing cuts along the way to pay for staff and other expenses. The spending decisions they make directly benefit other people vulnerable to climate and low-carbon infrastructure financing. .
Data on all UK government cash transfers to those entities can be found in the “transactions” segment of the allocations page on the government’s Development Tracker website. This includes everything from accommodation prices for humanitarian workers to gigantic contributions to UN funds.
In June 2023, Carbon Brief extracted transaction information from a task labeled ICF on the government’s Development Tracker website.
(This includes all projects that involve a climate-related financial component, although many projects also cover other issues, such as education and health. As a result, the figures are higher than the previous Carbon Brief report on climate-specific portions of those funds. )
A total of £19. 12 billion ‘disbursed’ or ‘made available’ to grantee agencies, governments and other entities between 2010 and 2023. In addition, a much smaller sum of £832. 96 million is classified as ‘expense’, which covers cash spent on goods and services.
From the budget disbursed, data is missing for £4. 86 billion transactions, where the ‘recipient organisation’ is indexed as ‘N/A’ or similar.
The government channelled £2. 52 billion of its ICF budget (13% of the total) through private companies. Most of that money, £2. 11 billion, was spent through organisations that Carbon Brief called consultancies.
This represents 11% of the total (or 15%, if anonymous transactions are excluded).
Generally speaking, control consulting firms are corporations that provide advice on how to manage other organizations more effectively. They range from small specialized corporations to the “big four” accounting firms, which are multinational companies and cover a wide diversity of activities.
The percentage of total spending allocated to these corporations for climate-related projects, adding up the largest beneficiaries, is shown in the table below.
The UK government has increased its spending on experts and made it less difficult for public sector bodies to recruit them in recent years. At the same time, their role in public life is under scrutiny. Academics, politicians, and civil servants have criticized the “outsourcing” of day-to-day jobs to expensive personal contractors.
In 2020, UK Treasury Secretary Theodore Agnew warned that a growing reliance on experts is “infantilising public administration”. A 2016 National Audit Office report found that hiring outside specialists charges the government twice as much as an equivalent staff member.
Responding to those considerations in her speech at this week’s Labour Party convention, shadow chancellor Rachel Reeves promised to “halve” council spending if she wins the next election.
The Conservative government has slashed its overall foreign aid spending in years, adding to the pressures of the Covid-19 pandemic.
Data drawn from the Carbon Brief shows that while advisory spending within the climate-related budget has also declined year-on-year since 2019, the share of that budget allocated to recommendations has remained constant. In fact, a survey conducted through Climate Home News in 2018 revealed a similar proportion directed at those organizations.
The table below shows the 54 consultancies that have secured investment from the UK government to carry out climate-related projects since 2011.
Almost all of those consultancies are based in developed countries (49 in total) and 33 of them are in the UK (some consulting firms have giant regional branches in emerging countries, but have been grouped together for this analysis).
(The Carbon Brief also mentioned an additional 76 experts indexed in “expenses” who earned lower sums, totalling £8. 04 million, to carry out “technical and consultancy work. “)
The largest recipient of advice since 2011 has been Adam Smith International (ASI), a “global consulting firm”, which earned a total of £333. 21 million. An ASI spokesperson told Carbon Brief that the organisation “does not recognise” the figure derived from UK government reports.
ASI’s largest climate-related project, for which it earned £100. 14 million between 2012 and 2017, is the Nigeria Infrastructure Advisory Facility (NIAF).
The consultancy led a foreign consortium that implemented this program and provided recommendations to the Nigerian government. This included the design of climate-related projects, such as the deployment of solar mini-grids and white stoves for rural areas.
According to the ASI, “in the electric power sector, NIAF’s greatest achievement has been its role in the privatization process. “An ASI spokesperson told Carbon Brief that since the consultancy stopped managing the NIAF allocation in 2017, its “efforts to improve electricity supply” were saving Nigerian consumers more than £1 billion a year.
The company has faced controversy in the past and was accused by lawmakers on the International Development Committee in 2017 of showing a “serious lack of judgment,” following allegations that it had fabricated testimonials or pressured beneficiaries to provide positive feedback.
At the time, ASI published a lengthy document responding to the allegations and claiming to have acted in “good faith. “Since then, it has continued to secure climate-related funding, although its annual disbursements have declined, especially since 2016.
Consultancy IMC Worldwide, now renamed DT Global, is another major beneficiary of the UK’s climate-related funds, totalling £267. 16 million.
One of his most vital projects is accelerating investment and infrastructure in Nepal, for which he has earned £12. 88 million to advise the Nepalese government. Specifically, for this project, the aim of the consultancy is to overcome “delivery bottlenecks” and make large-scale investments in projects such as hydroelectric dams.
A portion of the expenses also went to the “big four” companies KPMG and PwC. For their operations in the UK and offices in emerging countries, those corporations earned £242. 37 million and £204. 37 million respectively.
Through various regional offices, KPMG secured £242. 37 million in budget from the UK ICF. Its largest allocation was the Resilience Building and Adaptation to Climate Extremes and Disasters task, which enabled KPMG East Africa to remit £117. 40 million between 2014 and 2019.
As part of this project, KPMG monitored grants for 15 projects, ranging from helping Ethiopian farmers diversify their businesses to preparing other vulnerable people in Senegalese cities for flooding. The consultant also monitored the progress of the project.
PwC secured £204. 37 million in funding, £33. 81 million for a task called the Private Sector Development Programme in the Democratic Republic of Congo between 2013 and 2022.
The consultancy implemented a component of the assignment called Essor, which aimed at “the country’s business environment” and “equitable and affordable access to renewable energy. “This included developing a bidding procedure for solar mini-grids and attracting external investors to the Democratic Republic of Congo. by identifying barriers to entry.
International climate finance is explicitly designed as a way for relatively wealthy developed countries to weather the action of emerging countries, given their greater responsibility for the cause of climate change and their ability to tackle it.
Therefore, the use of experts from the North to bring climate finance systems to light can be controversial.
Clare Shakya, a climate finance expert at the International Institute for Environment and Development (IIED), tells Carbon Brief that while consultancies tend not to be transparent about the fees they charge, she estimates they are around 20% of the value of the grant. . .
Saleemul Huq, director of the International Centre for Climate Change and Development (ICCCAD) in Bangladesh, tells Carbon Brief that the gigantic amount of ICF investment that most likely remains in evolved countries is “contrary to the spirit of supporting local capacity building. “. “». He adds:
“Financing local movements to address climate change, especially adaptation, is more productive by investing in local capacities and communities than in foreign experts. There is a long culture of sending foreign experts to emerging countries to help them tackle climate change, which has yielded no real benefit once the foreign experts have left the country.
Faten Aggad, an international relations expert and assistant professor at the University of Cape Town, tells Carbon Brief:
“Many foreign consultancies do not have experts on the ground and hire ad hoc experts, many of whom do not perceive the context in which they operate. “
According to Shakya, least developed countries (LDCs) and small island states, in particular, have been pushing for investment in long-term climate action rather than the project-based activities supported by experts. He adds:
“The poorest and most climate-affected countries obviously know that the prestige quo on climate finance does not benefit them. Short-term projects driven by external experts fail to provide the transition they want to low-carbon progress and greater climate resilience.
Some emerging countries are also under pressure from the need for climate finance directly to local communities. The LDC group, which represents 47 countries at the UN climate talks, called for 70% of climate finance to be allocated to “actions at the local level” through 2030. LDC President Madeleine Diouf Sarr told Carbon Brief:
“It is vital that climate finance is spent wisely and used effectively. Climate finance will have to respond and respond to the genuine desires and priorities of the countries it seeks to support, as they are known through those countries.
An ASI spokesperson told Carbon Brief that the consultancy “is committed to achieving optimal profitability in [its] projects,” with fees “structured in a competitive and responsible manner” and “transparency in [its] monetary transactions, adding profitability and expenses. “
They also state that the organization “places paramount importance on exploitation and capacity building in all our projects,” and that the “majority” of ASI’s budget is used to hire national experts and build partnerships with groups.
To illustrate this, they note that the NIAF program in Nigeria increased the composition of its team from 60% to 80% Nigerian citizens in the ASI mandate, and saw some experts assume leadership positions in the Nigerian government.
A spokesperson for DT Global declined to percentage the main points of the project’s costs, but told Carbon Brief that its “general policy is to hire local experts and staff anywhere imaginable and to build local capacity as a vital component of programming. “
KPMG and PwC declined to comment on the findings of the Carbon Brief or the complaint by consultancies running climate finance projects. They also declined to provide percentage data on how much cash they keep as fees for those projects.
The UK government declined to comment on the use of experts to manage climate finance projects.
Carbon Brief’s research shows that maximum spending on climate-related foreign aid is channeled to multilateral institutions, such as UN agencies and progress banks. In total, they earned £6. 49 billion, or a third of total spending.
By far the largest recipient of UK disbursements is the International Bank for Reconstruction and Development, a branch of the World Bank that lends cash to emerging countries. He earned £1. 4 billion in total. This was followed by the Global Environment Facility (GEF). , UNICEF and the United Nations World Food Programme, which earned £1. 01 billion, £904. 24 million and £750. 05 million respectively.
Joe Thwaites, chief advocate for foreign climate finance at the Natural Resources Defense Council (NRDC), tells Carbon Brief that the UK is “better” than other rich countries when it comes to distributing cash through multilateral institutions.
According to him, this is a more popular option among emerging countries, as evidenced by the long campaign to create a new “loss and damage” fund, because they can have more influence over how cash is spent. Thwaites adds:
“When it comes to a multilateral fund, it’s less difficult to have a voice. . . Whereas if you’re in a bilateral relationship, there’s a wonderful force of inequality. “
Far less cash is sent to governments and public sector organisations – just £2. 49 billion in total. That’s less than the cash funneled through the personal sector.
About a quarter of this public sector money went to governments and agencies in developed countries. This can involve simply paying for anything from the UK Met Office, which helps forecast typhoons in the Philippines, to the German progression company GIZ, which helps with a water monitoring program. mission in South Africa.
That leaves just £1. 86 billion (or 13% of the UK’s climate-related spending since 2011) going to emerging-country governments.
A small number of emerging-country governments have earned gigantic sums of cash from ICF funds. For example, Ethiopia’s Ministry of Finance and Economic Development earned £509. 52 million and the government of Pakistan’s Khyber Pakhtunkhwa province earned £431. 24 million.
A number of NGOs have also secured grants from the UK government to carry out climate-related projects in emerging countries.
While around £327. 87 million was paid to domestic NGOs in the target countries, much more (£1. 87 billion) went to primary foreign NGOs, such as Population Service International (£116. 84 million), Norwegian Refugee Council (£97. 47 million) and Save. the. Children United Kingdom (£91. 68 million).
By far the biggest beneficiary was BRAC, a foreign NGO founded in Bangladesh, which earned £448. 07 million, largely as part of a partnership to provide basic services to the poorest people in Bangladesh, adding “increased access to climate-resilient services”. .
In June 2023, Carbon Brief pulled data from the “transactions” tabs of each ICF Development Tracker page to see which organizations have earned money from the UK government to implement those projects. Data were extracted via Tom Prater Import. io and Octoparse.
This research is basically based on “disbursement” data, explained by the government as “the amount that is given to a recipient country or agency. “In addition to 100 percent foreign climate finance (ICF) projects, this data also covers projects. covering a combination of ICF and other types of progression assistance, such as education and health.
The Development Tracker online page includes knowledge about the “type of organization” for each transaction. However, this knowledge was not included in around £4. 54 billion of transactions. Carbon Brief manually filled in missing entries where possible, the same categories used across the UK government and referring to the organisation’s profile pages on global progression data platform Devex as a guide.
Devex was also used through the Carbon Brief to identify the country in which the institutions were based and whether they could simply qualify as “consultants”. For some smaller consultancies or those that have closed, Carbon Brief has known them as UK government consultancies. Website of the House of Companies.
Some transactions may simply not be assigned an organization type or any other details. Examples include those indexed as “corrections” or “journal transactions,” which involve times when accounting corrections were made. In some cases, the organization’s call is “hidden. “
This research covers knowledge of indexed transactions for ICF projects overseen through the Foreign, Commonwealth and Development Office (FCDO), the Department for Energy Security and Net Zero (DESNZ) and the Department for Environment, Food and Rural Affairs (Defra). Most of the transactions indexed in BEIS and Defra provided data on the organizations involved.
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