As more public finance is channelled to the private sector in the name of development, there’s a growing need to answer a simple but critical question: are these investments genuinely adding value, or are they just substituting what the market could do on its own?

This is where additionality comes in: the idea that Official Development Assistance (ODA) should only be used when it delivers something that private capital cannot. It’s a cornerstone of development finance institution (DFI) legitimacy, and now a formal requirement under the Organisation for Economic Cooperation and Development’s Development Assistance Committee (OECD-DAC) revised rules on private sector instruments (PSIs). But are donors and their DFIs meeting the mark when it comes to transparency on additionality?

Our latest report Making Additionality Count explores how well donors and their bilateral DFIs are disclosing the additionality of their PSI investments using the new OECD-DAC reporting requirements. While the new requirements are still in a transition phase, with full implementation due by 2026, early findings show a mixed picture, and plenty of room for improvement.

Why additionality disclosure matters

With aid budgets under pressure and growing reliance on private sector investments, transparency on additionality has never been more important. Public finance should only be used where it brings something the market can’t – whether that’s reaching riskier markets, mobilising private capital, or driving better development outcomes.

But as donors increasingly channel ODA through DFIs, there’s a risk this principle is being lost. Our research shows that many DFIs still fall short on transparency – using vague, inconsistent or incomplete justifications for how their investments are additional.

Without clear disclosure, we can’t know whether public money is crowding in private finance or simply replacing it. Nor can we assess if these investments are truly contributing to development. This undermines accountability, credibility, and public trust.

As the OECD-DAC transition period ends in 2026, donors and DFIs have a critical window to step up. Strong, consistent additionality reporting isn’t just a compliance issue – it’s essential to ensuring that scarce aid is directed where it delivers clear, demonstrable value.

How are DFIs reporting their additionality?

Our report reviews 2023 data on additionality in the OECD’s Creditor Reporting System (CRS). It assesses which donors and their DFIs are reporting the required fields, how eight DFIs are applying additionality type labels, and examines the quality of narrative justifications from four DFIs with the most comprehensive disclosure. Although the data remains partial, several concerning patterns are already emerging:

1. Inconsistent compliance

Only a handful of DFIs (OeEB, Swedfund, Norfund and FinDev) disclosed all required additionality fields in 2023. Others, like IFU, SIFEM and BII, provided partial data, while some (including BIO and Finnfund) didn’t disclose additionality fields at all.

What needs to happen: Donors and their DFIs should use the transition period to strengthen internal systems, train staff, and prepare for full compliance by 2026.

2. Formulaic classifications

Even among those DFIs disclosing additionality types, application is inconsistent. Several DFIs use blanket labels across all investments. For instance, Swedfund consistently tagged all investments as targeting ‘underserved geographies’. Meanwhile, BII used its own coding system altogether, making comparisons difficult.

What needs to happen: Donors and their DFIs should ensure classifications are applied case-by-case, avoid blanket labelling, and align with DAC codes.

3. Over-reliance on financial additionality

DFIs often rely on financial additionality categories like ‘investment terms unavailable on the market’ or ‘underserved geographies’, while value additionality (such as knowledge transfer or improved business models) is much less reported. This risks underplaying the broader development contributions of public finance.

What needs to happen: Donors and their DFIs should critically assess their classification patterns and ensure financial claims are investment-specific, with equal attention to value additionality.

4. Variable quality of additionality statements

We reviewed additionality disclosures both in the CRS and on DFI project webpages. We found significant variation in the quality, detail and alignment between platforms. Some CRS entries were incomplete or cut off mid-sentence. Others offered more detailed justifications on their webpages than in the OECD data, or vice versa.

What needs to happen: Donors and their DFIs should improve the quality of their narrative justifications by linking statements clearly to the investment context, ensure that all CRS fields are complete and coherent, and standardise disclosures across CRS and public-facing platforms to enhance usability and public trust.

More than a reporting requirement

The 2026 deadline is more than a compliance milestone. It’s a test of whether donors and their DFIs can show, clearly and credibly, that ODA is delivering what private finance alone cannot. Without strong additionality reporting, the case for using ODA to support the private sector weakens.

Ultimately, this is an issue that is vital to effective governance of these institutions, development effectiveness and coordination, and ultimately to ensure that DAC donors are using the right mix of development tools to tackle today’s global challenges.

Our DFI Transparency Index also assesses whether DFIs report on additionality, where it features as one of the indicators. The next iteration of the Index will be published in June, providing a broader look at transparency trends across the DFI landscape.