Investments by UK growth finance physique have ‘harmed society and environment’
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he UK’s growth finance establishment is utilizing taxpayers’ cash for some “questionable investments” together with in fossil fuels and a beauty surgical procedure agency in India, MPs have warned.
Some investments should not have a deal with tackling poverty, are at odds with the Government’s insurance policies or have even “harmed society and the environment”, in response to the Commons committee tasked with scrutinising UK support spending.
The International Development Committee criticised the Foreign, Commonwealth and Development Office’s (FCDO) “hands-off” strategy to overseeing British International Investment’s (BII) exercise.
It is unacceptable that BII is de facto exempt from the UK’s local weather commitments on aligning all new UK support with the Paris Agreement by the top of 2023
The FCDO is the only shareholder of BII, which invests within the non-public sector within the growing world with the goal of making jobs and growing financial alternative, and thereby decreasing poverty.
But the Committee mentioned BII holds some legacy investments that battle with the Government’s local weather targets, together with within the growth of fuel infrastructure in Mozambique.
Nearly 10% of BII’s portfolio by worth was uncovered to fossil fuels in 2021, and there’s no clear timeline for BII to exit these investments, MPs mentioned of their report.
BII additionally stays invested in Chinese companies, regardless of Beijing being deemed as an “epoch-defining challenge” within the built-in evaluation of international and defence coverage.
The Committee additionally raised considerations that the physique’s investments aren’t all the time benefiting the world’s poorest individuals.
It concentrated 28% – the biggest share – of its international portfolio by worth in India, a middle-income nation, in 2021, and never all of its investments there have clear growth hyperlinks or assist the poorest, in response to the report.
This has additionally been the case when BII has invested by means of monetary intermediaries, together with the place cash went to a beauty surgical procedure clinic in India and to a wine restaurant chain in south-east Asia.
Also noting alleged cases of fraud and investments which have rewarded middleman brokers in tax havens, the cross-party panel urged BII to exert higher management over middleman funds and cease subcontracting “its legal, ethical and development responsibilities”.
Committee chairwoman Sarah Champion mentioned: “Evidence to this inquiry has raised the concern that there is not enough oversight from ministers on BII’s investments.
The BII says it’s desperate to get out of dodgy subsidiary investments like a cosmetic surgery firm in India, but the fact that UK taxpayers’ money found its way there in the first place shows how poor control has been
“It is not exerting sufficient control or transparency to ensure value for UK taxpayers’ money, or that outcomes match its remit or UK development goals and strategy.
“We certainly don’t need more business-as-usual investment in fossil fuels or through tax havens. The BII says it’s desperate to get out of dodgy subsidiary investments like a cosmetic surgery firm in India, but the fact that UK taxpayers’ money found its way there in the first place shows how poor control has been.”
She mentioned that cuts to the help finances imply that “pressure is on to target development assistance towards the poorest and most marginalised groups”.
The Committee known as for the FCDO to extend its oversight of BII and take a non-voting seat on its board.
Bond, the UK community for worldwide growth organisations, mentioned BII’s governance should be “radically reformed”.
Policy and advocacy director Gideon Rabinowitz mentioned: “It is unacceptable that BII is de facto exempt from the UK’s climate commitments on aligning all new UK aid with the Paris Agreement by the end of 2023 and has no clear timeline to exit fossil fuel investments.
Without stricter oversight of exactly where BII’s investments are going, the UK is losing all credibility in claiming to tackle climate change and poverty
“BII should be a trailblazer in development finance leading the way and role-modeling sustainable, transparent, accountable investment with a clear development impact. When climate change is felt in all corners of the world, there should be no ifs or buts about ceasing financing carbon-intensive ventures.
“Coherence of BII’s investments with the Government’s own commitments on fossil fuels, climate, sustainable development goals, or poverty reduction will never be possible with the Government’s current hands-off approach.”
Graham Gordon, head of coverage at Cafod – the official support company for the Catholic Church of England and Wales, mentioned: “An opaque organisation such as BII should not receive any further aid money from the UK Government until it sorts out its serious failings, and should immediately pull out of fossil fuel investments.
“Without stricter oversight of exactly where BII’s investments are going, the UK is losing all credibility in claiming to tackle climate change and poverty.”
Oxfam’s well being coverage supervisor Anna Marriott mentioned: “The FCDO’s ‘hands-off’ approach to BII has resulted in some horrific human rights abuses, from patients being overcharged, exploited or denied emergency healthcare to shocking cases of people actually imprisoned in UK-funded private hospitals because they were too poor to pay their eyewatering bills.
“The select committee is right to call for greater oversight and accountability, but the gravity of BII’s failures in both health and education requires immediate Government action to halt all future direct and indirect BII investments in these critical sectors and to fully investigate any harm caused.”
The FCDO works intently with BII’s board to make sure the funding’s portfolio is in keeping with our targets, together with decreasing poverty and supporting a simply and honest inexperienced transition
A spokesperson for BII mentioned: “We are pleased the Committee recognises the substantial contribution that development finance makes.
“BII is one part of the overall government toolkit. Our investments alleviate poverty by creating jobs and generating positive economic, social and environmental outcomes. Recent investments include a project to provide electricity for the first time to 9 million people in Burundi.
“We constantly strive to enhance our investment approach. We welcome the Committee’s detailed recommendations and will consider them alongside FCDO.”
A Foreign Office spokesman mentioned: “The FCDO works closely with BII’s board to ensure the investment’s portfolio is in line with our objectives, including reducing poverty and supporting a just and fair green transition.
“Under its governance arrangements the FCDO regularly holds meetings with BII’s board, executive management and shareholders, and continuously engages with BII at a working level.
“This allows us to hold BII to account on its decision making and raise concerns where necessary.”