International Agreements Committee

Tuesday 15th September 2026

(began 1 week, 6 days ago)

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None Portrait Speaker 1
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Thank you very much, Lord chair. My Lords, it's a great honor for us to be here. It's not the day to day business for us to appear in the House of Lords in London, so it's a big honour for us. And bear with us if we're a little bit nervous or intimidated. We try to answer your questions as faithfully and diligently as possible. Thank you very much for for this this possibility as well to appear and clarify.

I've seen the organisation for the past ten years roughly. So just around the time of the UK withdrawal, I joined. So I have a little bit of history. It's unusual for the chef de cabinet to be a kind of insider. Normally these executive positions are brought with the then director general and leave again, and this time we wanted someone who knows the organisation a little bit from the inside out. I was in the field in different positions and in headquarters, so maybe we can give you a little bit of a perspective.

What has changed? I think it was a wake up call and like other decisions for countries to withdraw, there's not only the UK, there have been others before in the 90s , with the US a major member state leaving the huge budget implications. The UK decision was very rationally explained. There was not so much the political as in other cases, or almost like a low hanging fruit. And some of the. And the financial reasons or political reasons.

It was very well assessed. And there was a pillar assessment done where there was. And then clear recommendations and conclusions in terms of alignment with UK priorities in terms of our results, reporting, our results based management, and not so much to see the impact and the value for money. I think essentially we've seen since then and I've experienced it firsthand, is what was never really put in doubt. Even the UK assessment then, back then, which was quite critical, was the relevance of the mandate, you know, to bring industrial development to developing countries, emerging economies, to build processing capacities, value addition, to foster trade, agribusiness, bring energy solutions to to developing countries, emerging economies.

The mandate is such you need those technical mandate was never questioned, but the efficiency of the organisation. And this is where we've worked very hard in the last few years, especially when this current administration came in four years ago, led by a German former minister who, in a sense, to be open, it was quite un skeptical, even said what he he came with quite a private sector kind of sense of how UN organizations should be run.

He undertook two restructurings of the Secretariat generally referred to a little bit in the houses kind of shock therapies. We really, with the advice of business consultancies abroad, looked at all our different business areas and how our back office functions work, how our financial management works, how our procurement, our HR, our talent management. There's a number of recommendations coming out of this where we really restructured and reformed, cut a whole layer of hierarchy without letting anyone go.

It was just not replacing retirees and effectively strengthening, like doing this administrative reforms and putting emphasis on some new priority areas from zero hunger, food security to energy. And I think our colleagues here can give you a little bit more insights into some of the project work to sustainable supply chains. We became a more efficient implementer. So in a nutshell, within these four years, we've tripled our funds mobilisation. So what's coming into the organisation from partners like the UK, which become our second largest donor? So very impressive.

And there are very good reasons why they see the win win. I think in this to many others who are joining and Stripling in this context, where you see all around us, the end is quite under scrutiny and downsizing and cutting jobs. We are almost against the trend. And perhaps if you allow later on, we can get into some of the specifics of why this is the case. And in this period as well, we have doubled our technical delivery.

So our our our implementation on the ground. So this has always been a phenomenon with Unido, especially one of the observations in the review back then was that for all these years, even when you had twice as much staff in the 90s when the US was still a member, you have always done the same kind of technical cooperation. Implementation yearly, around 180, 190 million. It never changed during Covid. Before Covid, after Covid, we had this figure of no matter the staff, this delivery figure had never changed.

We have doubled it in the last four years now. So this year, first time we will get to 400 million delivery. And this is only possible because of changing certain structures and how we decentralize our procurement, how we use our field network, how we use partners, implementing partners to get projects on the ground much faster. So don't want to be too long, but there's a few steps in this kind of making the organisation more efficient and more delivery partner, which which has changed.

And I think what was fair, maybe the last point on this is in the UK case, you had a very good thorough assessment done, very rational explanation of what are the shortcomings. We were put on our feet to change. And then the government decided to give us the kind of test case project and said, you talk about these reforms and efficiency and technical cooperation, optimization and talent management and financial management, what we want to see, and we give you a very large which in our terms of an organization that had done a lot of pilot projects, around 2 million, 3 million in different technical areas.

We received £80 million back then, and which has since been increased to 140 million because it was done very well. And I think and maybe our colleagues will also elaborate on this, this partnership has really worked quite well in practical terms, in terms of how fast we deliver, how agile I think our systems are, but also in terms of the results. And the biggest point, I think, at least that our director general always stresses is we've opened the organization up since then, since that assessment, especially to private business.

This is something I think, which is quite unique for Unido in this whole UN space that we often talk about it, private sector consultations, sector involvement, but the real business opportunities with our projects to get a foot in the door in markets that maybe traditionally UK or other countries had not really worked in. And we kind of we are the partner to bring technology, know how companies to, to some of our, our partner countries. And I think this particular UK project example was a very good test case to see.

It's actually not just aid or charity in its on its own, but it's a good business case as well. We can sell at home and that's generally the trend we see a little bit around us. When you ask about why we tripled funds mobilization, and we have a few cases where member states come to us, even very critical governments that are really critical of the UN and how the UN works. They pull out funds of other organizations, especially in Vienna.

We see it around us the Atomic Energy Agency, the Office on Drugs and Crime and say, we want this money to go to Unido. We had a recent example on an energy efficiency project, and we of course we are. We are happy about this trend, but always ask, why is it. And this is because we can justify to our taxpayers much more clearly that there is a clear business interest. If we work with Unido, we get into very interesting markets in Africa and Latin America, in Asia, which this partnership allows.

So I think maybe in a nutshell, there's a number of reforms to administrative reorganizations that were not easy and painful and that we have overcome. We are growing. We have really tripled our our mobilization. We've doubled our technical cooperation, delivery. We are on a very good financial footing. But there's much more to be done in terms of business and innovation. And I think there's a lot of areas perhaps we can touch on that we want to do together with the United Kingdom as well, to move to the future now.

Thank you, thank you.
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None Portrait Speaker 2
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Well, first, allow me to just say as well, it is an absolute honour for me to be here. And thank you so much for that question. Indeed. I mean, if we look at the investments that are flowing into the energy sector, there's only a handful of countries that are benefiting from that. Right. And and unfortunately, least developed countries, small island states as well, there's still a dire need for more investments to flow there.

So there's a number of things that are happening. And I always like to relate it to global trends, how Unido is influencing global trends. So for example, we host annual and bi annual fora where we discuss financial flows as well to support the energy sector, because this is this is not going to happen overnight. We need also a redirection of the financial flows. But at the same time, what we are championing is at the national level, what we call industrial transformation investment plans or investment platforms.

So in that sense, what we try to do is to identify the opportunities for development. You know, I come from a developing countries and energy is not just about providing lighting. It's the comfort, it's the industrial development. And that's what Unido uniquely brings here because we bring together the fact that energy is a backbone, but industry is the engine that's going to transform this into development opportunities. And that's very much the narrative that now, under the leadership of our director general, we're trying to bring to developing countries.

So to give you an example, we're working with West Africa. So through the presidency of Sierra Leone on developing economic corridors that will help Africa also in the beneficiation of minerals. And so moving away from just looking at energy, as, you know, an energy access dimension to energy as a transformational opportunity for industrial development.
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None Portrait Speaker 1
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Because so much. Lord and Lord, if I may react to this, it's a very important exercise that you're referring to in the wider UN context. This UN exercise, current secretary general, has kicked off, which is calling all of us to reform and in a way, perhaps also because of the UK decision back in 2012 and others, we kind of had to do a lot of the work already. We were put on our feet before the US policies kicked in and and some of the challenges come become apparent now.

So this is why, in a way, we preempted some of the shocks. Now, what our role is in this current reform process is mainly on the. And this is a very useful exercise for all of us, is to be very specific about who is good at what. You know, the review of mandates and what we see. And I've seen it enough when I was working in the field and in UN country teams, that sometimes there's a bit of a blurred area of what's the comparative advantage of which agency, what is the difference between US and Undp or FAO, or between some of the.

So the first job that we had to do in this whole review process, and being part of various working groups in New York level, is to be very honest about who is good at what and fleshing out what the different mandates and value additions are of each agency, which I think has helped us and has brought us to something which they call expertise on demand, where at least at the country level, when you look at how the UN is organized there, I mean, it should technically lead to a much more programmatic approach where not everyone is doing the same thing, but there's better coordination of who is good at what.

And one particular thing, which is important for us in the next steps of our own reform, is also, to be very honest, of what are the structures internally that we don't we are duplicating from other agencies. Why can we not use the procurement services of agencies that are much better at this? For instance, whether it's the UN or whether it's the WFP innovation Unit, we have agencies and and this consultation with others, at least to be around the table with them, has allowed us to define.

And this will be the next steps of our reform process to really see, do we need to inflate our own human resources and the way we deal with contracts and consultants, contracts and payrolls. And there's a number of services that maybe other partners are better at and faster at which we are quite honest. Objective view on this. What could be outsourced and maybe reduced in our own Secretariat that others are better at. So this is one part of at least this UN reform.

There's a lot of talking for now, and it's a bit of a UN phenomenon that we we have working groups and a lot of reports and , and assessments on the mandates and other phenomena. But the next step is usually missing. Like how do you change? And at least in our organization, we're very clear about what we are good at, what industrial development means, how we are aligned with SDG nine and a few things. This programmatically we are clear, but the most interesting part of this whole UN reform is more the services, the back office functions.

Where can we learn from now we have a WFP work team working with us on procurement, on field decentralization. Their field offices are much more operational than ours, for instance. And why is it like that? They do much more decentralized procurement than us. Why do they have many more staff in the field than us? We are very headquarter centered, so for us, it's almost like an honest reflection to see this hadn't happened so much like to have everyone around the table and share from different agencies.

What what are you good at and what, how could we subcontract you rather than any other outside, perhaps consultancy firms, etc. to help us with some of these back office functions? And so I think this is, for us at least, the most interesting part of the reform process. And we see how it will carry on with the next Secretary general coming in. But I think we should all be honest if what the duplications are among us and we're doing often the same thing who's who is good at what and what are the back office functions where we really can have one agency that is good at HR, at procurement and financial management, while we are bringing the technical work that we have, the engineers, the economists, the policy researchers, but we might not be the best HR specialists, for instance.

And this is a good discussion, at least for us, that's coming out of this UN 80, where I think we will reduce some of our core back office functions to use other UN agencies for this indication.
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None Portrait Speaker 2
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Sure. I'm happy to start. Thank you so much for the question, Lord. So there's a number of things in which we've been working with the UK. So firstly, on the global stage, we've been working on a topic which is setting standards for carbon accounting in steel and cement, which is essentially quite an important dimension because by leveraging expertise of the UK, but also industry knowledge, in this case steel and cement industry, we are working together on influencing global standards and carbon accounting, which are essential for global trade.

At the same time, you know, we do have a lot of pragmatic on the ground examples where we're working on almost marrying the innovation ecosystems between the UK and Brazil. So so again, in relation to steel and cement decarbonisation, you know, we're working with Brazil on setting out their roadmap for industrial decarbonisation, identifying their investment needs, but also their innovation needs, and then linking that to the innovation ecosystem here in the UK, bringing universities, SMEs as well to support, you know, Brazil in their decarbonisation pathway.

A third example, perhaps, is particularly through the A to D facility, the accelerator to demonstrate facility. So this is a global facility. Usually we commission global calls and it's very much an on demand facility. And there, you know, we are really supporting some of the first and groundbreaking projects in developing countries. So to give you an example, Namibia. So basically really helping Namibia to start their first hydrogen production programme.

I mean, hydrogen might seem like a hype and some cases, but in fact, through the support that we've had, you know, from the UK, we actually are making it happen in Namibia. Other examples as well include bio gasification in the tea industry in Kenya. So these are all pragmatic examples in which again, we're bringing, you know, UK technology, UK know how to be implemented in developing countries for a productive use, but happy to provide more examples if needed.

And I guess Jason can.
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None Portrait Speaker 1
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Do you remember? Maybe I start and then my colleagues can compliment as well. This is a question that all of our member states are asking us and that our director general, you almost echoing him because whenever we travel, we go we see this a bit what Baroness Verma said and Lord Boateng as well. He wants to see concrete actions. What have we done? Not just talked about it, what have we done and how are we different? It's first of all, there's a large network of other partners that we work with.

So recently we had a very similar discussion with Japan gives us 200 million, for instance, for UK Ukraine's recovery. It's a big project we've just started. They are very clear that they did a very clear analysis that this is very interesting growth markets where organizations like us, you know, with the context with the government, the local network and office experts working on the ground. We have a strong network with the municipalities, with mayors, etc. they can use our network to get a foot in the door for companies and different areas that are interesting to their economy, from 3D printing to there's a whole array of companies that are interested in venturing into that market.

And, and we have this throughout Italy is giving us a substantial amount of money. They're just. Third under the UK, the UK second largest donor for us and the Japan the first. And then in terms of voluntary contributions, they have a very strong interest in the coffee value chain, for instance. And that's where companies like Illy and Lavazza come to us and say, we are very interested in the sustainability of your supply chains. We need to show this to consumers.

It's with your Unido kind of blue flag. If you want your objective certification, that this is fair, that it's corresponding to certain environmental standards, that this is really helping us businesses like Illy or Lavazza to sell more coffee, because that's what the consumers want to see. And I think in the UK case, there's also very particular examples of markets of countries that traditionally companies did not have a foot in the door where they feel like bilateral channels might not be enough, but that we can bring more value addition with our network, with our expertise and like, of, of, of our workforce, different talents in the house.

We can, we can help them settle in some of these markets. But maybe you have another more practical example in the A to D context.
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None Portrait Speaker 1
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is more the political element for us. I think it's the interest will be and this for our colleagues. Perhaps the compliment is if you're already one of the biggest contributors, financially speaking, you want to have a say in the governing bodies as well. It's almost you're already the largest contributor, but not formally a stakeholder. So when it comes to the UN, organization still has its specificity, its constitution, its budget committees, it's in our case, Industrial Development Board.

It's like our advisory board. They pass resolutions on all sorts of policy issues from women empowerment and gender and food security. And and it's very important to have UK's voice heard in terms of the principles and values that you also bring along. And I think it's just simply to have more due diligence in the whole oversight of our how the money is spent. It's much better to be part of the system, to be part of these policy making organs, and to merely be a contributor and not have any control, basically, over how the governance of the organization is run.

I think it's simply mainly in terms of accountability. And with that, perhaps also to further enlighten on this point as well, if if the membership fee as such is such a small share compared to the overall volume of voluntary contributions, and if they found a formula to do this within existing resources, it's almost a no brainer in a way to become a member as well. Have a say, a stake in the organisation, hold us accountable. The DG, myself, the management team and our board meetings to us exactly what you said.

We want to see the impact. We want to see the project examples. We want to see what we're getting for our money. It's much more difficult to do it from the outside, basically as if you're not part of the governance structure.
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None Portrait Speaker 1
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to kick us off. Thank you. It's very valid point. Thank you very much. I spent many years in the field in very rural areas to see, and this is really from a personal experience, the difference that makes working on with Unido on very specific issues, because it's tangible work we can prove at the end of a project implementation how many jobs were created, how income has changed, how communities have changed. When I spent years in West Africa, in war zone, sometimes post-conflict countries, we would work with young entrepreneurs with ex-combatants, getting them into jobs and providing vocational training to give up arms and go into vocational training programs.

I worked in Chad in the middle of nowhere, where there has never been any electricity access. We built solar powered mini grids in that example, in Madagascar, we worked on on small hydropower systems and the. To see the use of this energy access for irrigation systems, for health clinics, for food processing units, you had a direct basically a result of, of, of what our technical solution was or our project was. So I always found this part of the work very tangible and practical and clear.

What we are missing a bit since then. And the assessment then is that we did this on a piloting case. So we had small projects. But what you said as well, it's a drop on the stone. Like it's a small project. We are missing the scale. And this is really something which which the point you made earlier, public money cannot do it alone. This is really with the projects we were doing then the average project of 2 million now becomes 200 million because of private sector being involved.

And you cannot imagine the impact and the scale of that. We are we are reaching now. We're happy to provide you perhaps with some more examples, but it's a completely different ball game that we've reached now. And at least from a personal perspective, I find very satisfying and not as abstract as maybe other players or organisations that produce more reports and papers and strategies and action plans and ambitious programmes, agendas, but not really missing this tangible work.

So at least in this short amount of time that we have just to get this point across.
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None Portrait Speaker 1
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this is like. But I touched a little bit on the being part of the governance structure, our policy making organs, having a say. But there's much more beyond the project implementation. When you look at the partnership we've had before and we've still kept those ties. I mean, I myself spent my whole education years in the UK. We have a very strong partnership with Oxford University, Elizabeth House on industrial policy research. We want to get business consultancy firms on the whole business innovation side of things.

UK has so much to offer if you're looking at the next steps of our reform, I mean that has led us to a good financial footing. We want to have a better RBM system now, a better communications team. We want to change our IT infrastructure with all of these topics. We are in touch with UK counterparts and would like to get them involved, you know, to help us further reform and strengthen the governance of this organisation.

And this is always tricky when you're not a member of the organisation. Other member states will not allow even for subcontracts, for procurement, for any of this to happen if you're not a member. So there's a kind of case beyond pure technical cooperation. It's one arm, but we are also have a strong normative function and research industrial policy, where UK is a prime example of innovation and know how research that we also need for ourselves. So I think this is a little bit what we're trying to do.

And with regards to what comes next, I might not be around. So I'm not also not sure, but at least from his perspective, as someone I work with together every day who's been very un skeptical and had his doubts of very private sector oriented person. But what we've done in a few years time is still very promising, and I see how we are solicited in the whole UN system now. Before, we were always looked at as a bit of an anomaly, and you're very technical and you're not really part of the rest of the family.

Now, there's a lot of other UN agencies approaching us to, to learn and have more partnerships on, on the whole business innovation side of things. So I think at least this would carry on this trend. And this is exactly very good argument for UK to be part to maybe ensure the sustainability of this trend, politically speaking, technically speaking, and having your know how with us for many more years to come. I think it was we are better off with you together than alone.

Thank you
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None Portrait Speaker 2
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Thank you, thank you. I'd like to turn to the question, especially on energy. And in this case, what we see is on the ground why things are not scaling, because demand for energy in rural communities is still low. And this is where the industries are, the ones that are going to provide the anchor load to make the business case. Because at the end of the day, we do need to demonstrate that there's a business case for energy.

Now, what we are doing to ensure that there's scaling as well of finance, is to help in preparing countries for bigger financial flows in terms of concessional funding, and also helping in preparing the private sector capital coming in, because we cannot continue to work only with development finance, we need the private sector to come in, and we need also concessional financing. And that's what, you know, the alignment that we're trying to bring to make sure that we bring scale.

On the other side, I would say, you know, you build institutions and there's like plenty of also people behind the institutions. And one thing that as well the director general has been keen on is preparing leadership within the organization. So, you know, investing in training a lot of like leaders within the organization to help carry as well the legacy that he brings. So, I mean, we guarantee you that there's quite a lot of, you know, enthusiasm and motivation as well to keep flying the flag of this organization, which is very much at the center of a lot of what international collaboration at the moment focuses on in terms of industry, trade and energy as well.
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Lord McDonald of Salford Portrait Lord McDonald of Salford
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Thank you, Lord chair, and thank you, Committee, for the chance to be able to to talk through with this. And I appreciate the contribution from colleagues in Unido and the session before. So I think to the to the core question, you know, why why are we looking to rejoin now? I think I think that really comes down to the fact that the the context that we're operating in now is very different to the context that we were in back in 2012.

And, and, and before that. And, and also our relationship with Unido has changed significantly since then, partly as a result of all of the different levels of programme engagement and delivery that we've been involved in over the last five years. So we're in a different place in terms of relationship. We're in a different place in terms of the context and what we're trying to achieve. So the, the the overall context obviously being one where we know that industrial development and particularly clean green industrial development is, is absolutely critical to developing countries own economic prospects and their own economic development.

And so this industrial development is taking place. The question is, you know, can it take place in a way which is sustainable, which is green, which supports the decarbonisation efforts that are also needed to to meet wider, wider climate goals? Then then the the question about whether it can take place in a way in which the UK can contribute and gain and be part of the growth potential that comes from this. I mean, this is a very big industrial economic transition being seen, you know, across the world.

And the question is whether the UK will be able to gain from the growth and commercial benefits from it. So there's a there's a number of reasons why we believe that having a UK strong position within Unido is necessary. At the moment. I said that the context should change in terms of our relationship. So back in 2012, UK didn't have any programmes working through Unido and had a had a fairly sort of thin relationship with the organisation.

Since then, we've worked very closely with Unido through Cop26 and work with India in terms of green public procurement on Industrial Decarbonisation initiative, which is a big, big initiative to to increase demand signals for clean steel and concrete. We've been involved in some major programs like the Accelerate to Demonstrate programme, which is around £125 million. And, and, and this has we've also been working on individual kind of case studies.

We can talk through some of the details. For example, our work with Brazil developing their industrial decarbonisation activities, which is really, really moving to scale as well. So the depth of our relationship is larger. And so the value in us rejoining is larger in terms of needing to have an influence in the organisation, being able to open access to British business to wider programmes that Unido is involved in , and what genuine reforms have taken place. I think we've heard from Unido team about the reforms.

They've been involved in, the reforms that are current director general has been involved in leading. But it is a smaller, more efficient organisation than it was when the multilateral aid review took place back in 2011, which, as you say, did identify some real reasons for leaving at the time. It's it's more efficient, it's more transparent and more open. They have an independent evaluation unit. They regularly publish information about about the effectiveness of their programmes.

They have a greater, much greater level of disclosure than, than we saw in the past. And I mean, some of those are examples of why we need to move, but I'm sure we want to explore more in further questions. That's
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Lord Boateng Portrait Lord Boateng
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Mr.. Tombs, Japan, Italy and Germany, the countries who you've mentioned, who remained within Unido, have always been strong proponents of an industrial policy, and indeed their economies have thrived as a result of it. While our for many, many years, over all administrations of industrial policy, skepticism has been in the doldrums. So there's a lesson there for us and a lesson which Unido can share with the developing world.

But the problem that we face at this time on this committee is that we have spent as a country, historically billions and billions of dollars on development aid and assistance with insufficient impact for the poorest of the poor in the developing world. We are now spending much less. And indeed, we've cut our development budget. We are now being asked to pay a subscription to the media, given limited funds that must be at the expense of something else that we could be spending in relation to projects.

So the question I have for you specifically in relation to green finance and climate finance, is how is our membership of Unido going to assist in addressing the issue? And I declare my interest as Chair of Water and Sanitation for Urban populations, water and sanitation for urban for the urban poor. How is that going to assist people on the ground facing climate and water and sanitation emergencies , when less than 3% of global climate finance goes to water supply and sanitation? When the overall share of water and waste management in and hygiene relates to only 0.3% of total global climate finance.

This is girls not being able to go to school because they don't have decent toilet facilities in their schools whilst they are menstruating. They're not safe so they don't go to school. These are practical experiences of people on the ground. Now, how The ground. Now, how is Unido and our membership of it going to enable countries, the most marginalised and deprived countries suffering from climate change, who don't get their share of global climate finance? How is it going to make that situation better? Because if it isn't, it's very hard .

Persuade our
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None Portrait Speaker 1
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likely to be . Going
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None Portrait Speaker 1
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issues.
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This debate has concluded
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