International Finance Cooperation

Standalone climate strategy and integration of climate in overarching strategy

This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

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Paris alignmentReasoning
Some progressIFC has a comprehensive Climate Implementation Plan that addresses both mitigation and adaptation. The overarching strategy provides relatively little detail on climate action.
Climate strategyOverarching strategy
Climate Implementation Plan that addresses both mitigation and adaptation comprehensively.IFC 3.0 strategy makes little reference to climate change. The Strategy & Business Outlook reiterates commitments on greenhouse gas (GHG) accounting and carbon pricing.

Explanation

Overarching strategy

The IFC Strategy & Business Outlook Update FY20-FY22 states that in FY18 36% of its long-term finance commitments were in the climate area. It appears to integrate climate moderately well, with reiterations of commitments in the fields of greenhouse gas (GHG) accounting and carbon pricing.

In 2016, IFC published its strategy IFC 3.0, which rests on two pillars: (i) a more deliberate approach to market creation, especially in IDA and FCS and through upstream engagement; and (ii) mobilizing new sources of funds to support private sector solutions. There seems to be no reference to the Paris Agreement or climate change goals overall. This information has been obtained from the IFC Strategy and Business Outlook Update FY20 – FY22. Clarification from IFC on the primary source for the IFC 3.0 strategy would be welcome.

IFC’s website, which refers to the IFC 3.0 strategy, emphasises its alignment with the Sustainable Development Goals, however it doesn’t mention the Paris Agreement despite the fact that climate is a key component to achieve the development goals.

The IFC corporate scorecard includes measures such as the share of climate related financing.

Climate Strategy

As part of the World Bank Group (WBG) Climate Change Action Plan the IFC published its own Climate Implementation Plan, in 2016, valid until 2020. The plan included a target to commit 28% of IFCs annual financing to climate investment, leverage $13bn of private investment in climate sectors, address both mitigation and resilience, and account for climate risks. It focused primarily on investment in renewable energy, industrial energy efficiency, urban infrastructure and agribusinesses. Furthermore, new markets shall be explored, such as digital solutions.

As the private sector arm of the WBG, IFC’s Climate Implementation Plan is centred around market opportunities, implying an imbalance toward mitigation sectors with clear cash flows, whereas resilience aspects play a subordinated role.

In parallel to the revision of the WBG Climate Change Action Plan, IFC is currently updating its Climate Implementation Plan for the period 2020 – 2025. The assessment will be updated upon its publication.

Recommendation: For Paris aligned, IFC should considerably increase its target for climate finance in its updated implementation plan. IFC also needs to commit to the do-no-harm to Paris agreement principle in its overarching strategy. As the private sector arm of the WBG, the plan should also aim for more awareness of resilience needs in the private sector and their integration into business models.


 

Last Update: November 2020

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