Overview: After analyzing over 200 direct investments by the International Finance Corporation (IFC) from 2020-2023, and approximately 300 over the last 10 years, Bank Climate Advocates (BCA) discovered that the IFC is systematically failing to adhere to the requirements of its own policies pertaining to greenhouse gas (GHG) emissions and mitigation before it approves financing for a project. The frequency and magnitude of these failures have greatly impacted global warming and continue to cause severe harm to communities all over the world, especially those who are differentially or disproportionately affected by changing climate.
Curing these failures, which is the 1st component of BCA's IFC campaign, is critical to the IFC coming into alignment with the Paris Agreement’s 1.5°C warming limitation objective. This is because full implementation of its existing policies is needed to avoid and minimize GHG emissions to the furthest extent feasible from the projects it funds, and to fill the gaps in its new Paris Methodology procedures. The 2nd component of BCA's IFC campaign - to help greatly improve IFC's policies - is needed for the IFC to achieve net zero emissions from its investment portfolio, stop financing fossil fuel projects, and further its alignment with the Paris Agreement.
On May 1, 2023, Bank Climate Advocates and 11 civil society organizations from around the world submitted a Request to IFC Management demanding immediate corrective action. The Request extensively documents the IFC's systematic failures from 2012 to the present to adhere to the requirements of its Board adopted policies applicable to GHG emissions quantification, impacts, mitigation, and alternatives analysis before project financing.
This internal IFC reform and corrective action must be accomplished as soon as possible for the IFC to play its part in assuring the 1.5°C warming goal is met, to meet its objectives of coming into alignment with the Paris Agreement and mitigating climate change, to prevent its projects from harming Affected Communities as its policies require, and to ensure it will and can
implement its policies and Paris Agreement Methodology as applied to both its direct and financial intermediary investments.
BCA's and 6 CSOs' July 31, 2023 World Bank Evolution Roadmap Climate Change Comments - IFC is the private sector arm of the World Bank
The IFC, a multilateral development bank governed and funded by the wealthy countries of the world, is the private sector arm of the World Bank. In 2022, the IFC’s total investment commitments reached a record USD 32.8 billion to private companies and financial institutions in low- and middle-income countries. With roughly 300 projects funded on average per year, many of which facially result in significant GHG emissions, the IFC’s direct imprint on climate change and its detrimental impacts on the global environment and communities is consequential.
As the largest global development institution focused on the private sector with investments in over 700 financial institutions, the IFC’s influence on global warming extends significantly beyond its own investments and even its substantial mobilization of capital from other investors and lenders. Because many multilateral and national development banks adopt or closely follow the IFC’s climate change financing policies, the IFC’s policies and how it implements them, have considerable influence over the climate change financing policies and practices of development financial institutions. Its policies also impact trillions of investment dollars flowing from the private banking sector, as 138 private banks have pledged to adhere to the Equator Principles, which adopt the IFC’s Performance Standards' requirements for GHG emissions analysis and mitigation prior to project financing. Bringing the IFC into alignment with the Paris Agreement, greatly improving its climate change financing policies, and ensuring it implements its policies will thus have a ripple effect on the entire financial sector’s global warming imprint.