The U.S. International Development Finance Corporation (DFC) is America’s development finance institution and was established in 2019 through the passage of the Better Utilization of Investments Leading to Development Act which strengthened and modernized American development finance. DFC's investments focus on impactful global development, advancing U.S. foreign policy, and generating returns for American taxpayers.
DFC has an Environmental and Social (ES) Policy and Procedure, which includes a monitoring system on ES topics for its financing activities as well as an escalation framework in case of non-compliance with the requirements.
DFC discloses time-bound targets for its climate solutions as it is committed to increasing climate-focused investment to 33 percent of new investments beginning in 2023. Moreover, it provides evidence of the financing criteria it uses to ensure the protection of nature and biodiversity for priority sectors such as timber and agriculture.
DFC publishes the amount of finance it directs towards DFC projects for US minority and women-owned businesses, and it reports on the investment activities devoted to supporting small-medium enterprises. Moreover, it has a grievance mechanism accessible to all workers, external individuals, and communities to raise human rights and bribery and corruption complaints. Furthermore, the DFI provides some examples of the specific conclusions and measures taken to mitigate the health and safety issues of workers.
While the DFI discloses the responsibilities of the board, it is unclear that the end responsibility for sustainability issues lies with this body. Moreover, there is no evidence that it links the remuneration of its executive or management teams to sustainability performance criteria. Although DFC supports the national strategy on gender equity and equality, it could disclose a public commitment to gender equality and women’s empowerment. In terms of female representation in leadership positions, women are underrepresented on the board of directors where three out of eight board members are women. Furthermore, the DFI has an opportunity to disclose the proportion of women in senior leadership roles as well as how it addresses any gender pay gaps. Moreover, it could publish how its ES monitoring is applied in practice.
The DFI has an opportunity to disclose a net-zero target and an interim reduction target for all its financing activities. Furthermore, it has an opportunity to disclose the key sectors and companies it has identified as priorities to engage with on climate change, specifically on the alignment with the Paris Agreement. Although DFC discloses its climate solutions investments, it does not specify the related aggregate amount and they are aligned with internationally recognised frameworks. Additionally, it could demonstrate progress against its targets on climate-focused investments. There is no evidence that it is committed to minimising the negative impacts it has on nature and biodiversity.
DFC has the opportunity to disclose a commitment to respect human rights which covers all its activities. Moreover, it could describe a comprehensive process for identifying its human rights risks and impacts across all its activities, especially its financing activities. Furthermore, it can improve its performance on diversity and inclusion by disclosing the proportion of its total direct operations workforce for each employee category by age group and gender. It also has an opportunity to provide the amount of financing devoted to low, and lower-middle-income countries. To conclude, DFC complies with internationally recognized worker rights but does not provide a publicly available policy statement committing it to respect the health and safety of workers.