The International Finance Corporation (IFC), member of the World Bank Group, is a global development institution that offers investment, advisory, and asset-management services to encourage private-sector development in over 100 developing countries. Founded in 1965, the financial services it provides include investing in companies through loans, equity investments, debt securities, and guarantees, and mobilizing capital from other lenders and investors through loan participations and parallel loans. In the 2022 fiscal year, IFC committed $32.8 billion to private companies and financial institutions.
IFC commits to gender equality and women’s empowerment. The DFI has a policy on environmental and social sustainability in which it describes clients due diligence process, monitoring, and supervision of environmental and social Performance Standards (PSs). Furthermore, the policy outlines clear success criteria and escalation points about non-compliance with the policy and the PSs. In terms of its approach towards impact management, IFC acknowledges that its financing activities have both positive and negative impacts. The DFI publicly commits to gender equality and women’s empowerment.
IFC discloses carbon-intensive client companies as its priorities to engage with on climate change. In addition, the DFI discloses the aggregate amount of its climate financing which is aligned with the internationally adopted frameworks. IFC also aims to increase its direct climate financing to 35% of total commitments over five years. It also tracks progress against this target. By applying its PS 6, IFC is commited to minimise its negative biodiversity impacts. It discloses a process to identify biodiversity-related risks in its financing activities and lists its biodiversity priority sectors and related financing criteria. The DFI requires clients to have an adaptive management plan in relation to biodiversity.
IFC requires clients to perform environmental and social due diligence and describes the process of reviewing clients’ third-party risks, including identifying human rights risks and impacts. Furthermore, the DFI also has an independent accountability mechanism accessible to all stakeholders to raise human rights concerns. IFC discloses the proportion of women in its total direct operations workforce for each employee category. In terms of financial inclusivity, IFC discloses the amount of finance devoted to women-owned businesses and low-developing countries. In addition, the financial institution has a policy commitment to prohibit bribery and corruption.
In terms of senior leadership accountability, IFC could clarify if the responsibility for sustainability issues lies with the board committee on development effectiveness (CODE) and if it links the remuneration of its executive or management teams to sustainability performance criteria. In terms of female representation, women are underrepresented on the board of directors where only six out of twenty-five board members are women. To enhance its performance on gender equality, IFC could reach at least 40% female representation in senior leadership positions and disclose how it addresses any gender pay gap. Although the DFI discloses the 2021 environmental & social risks commentary, IFC could disclose an overview of its engagement activities over the assessment period, across its financing activities.
While IFC discloses a net-zero target for its direct investments and interim emissions reduction targets for real sector operations, it has an opportunity to set a net-zero target covering all financing activities. Furthermore, the DFI discloses a methodology for Paris Agreement alignment but could provide further details on how it engages with companies on the topic. In addition, IFC discloses a strategy to phase out coal in its equity portfolio. However, it has an opportunity to describe its approach to fossil fuels that spans across the fossil fuel value chain and all its financing activities, including the amount or share of finance it directs towards fossil fuels.
IFC has a publicly available policy statement committing it to respect human rights. However, it has an opportunity to use stronger language to turn the statement into a formal commitment. In addition, the DFI provides detailed environment, health and safety guidelines for avoiding accidents at the workplace but has an opportunity to provide an explicit commitment to respect the health and safety of workers. Furthermore, there is no evidence of IFC’s proportion of the total direct operations workforce for each employee category by age group. The DFI has the opportunity to disclose the amount of finance directed towards small- and medium-sized enterprises.
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Net income: USD 4.2 billion; Total assets: USD 105.26 billion