A dialogue with Lars Thunell, International Finance Corporation, Executive Vice President and CEO

World Bank-IMF annual meetings 2007

23 October 2007 | Minutes

IFC head Lars Thunell spent the first part of this brief meeting bigging up the IFC’s contribution to global and environmental sustainability. Examples of note included: striving to double the IFC’s financial engagement in micro-finance initiatives; carrying out experiments to economically empower women entrepreneurs in Uganda; creating opportunities in agribusiness and manufacturing; and improving access to electricity and health. He also said the IFC has been focussing closely on climate change, and that this is now one of their four pillars. Thirty seven per cent of IFC lending is to IDA countries and their goal is to reach 50 per cent on a project level.

Thunell pointed out that the IFC’s annual report now encompasses results on development environment and donors all in one report. They even had outsiders help to evaluate their development impact. He then asserted that the IEG report stated that their strategy was in line with the IFC’s development goals and that good financial performance and development impacts go hand in hand. This is in contradiction to analysis of the IEG report by NGO Bank Information Center.

In an intrepid move, Thunell spent a week in the Amazon earlier this year trying to understand the issues and make partnerships with NGOs. They have hired a civil society specialist in order to do this.

Questions from the floor related to forests, fossil fuel lending, renewable energy and development impact reporting:

  • A Greenpeace representative referred to correspondence regarding the IFC’s involvement with a logging company in the Democratic Republic of Congo (see Update 57). How can the IFC reconcile the World Bank Group’s claim not to promote industrial logging with the support they are proving to this company? Greenpeace also asked about the IFC’s role in the Forest Carbon Partnership Facility (see Update 57) and the paradox of its support for palm oil development in South East Asia given that the WBG has identified palm oil development as one of the major drivers of deforestation.
  • Thunell responded that they are not financing the lumber activities of the company in question. He also stated that the Bank is providing new funds for forestry activities. Rachel Kyte from IFC added that they were holding a roundtable on palm oil with traders, plantation owners and others and had factored this into their due diligence.
  • A representative from US NGO Environmental Defense Fund expressed concerns about the IFC’s involvement in the Camisea Liquid Natural Gas plant in Peru, the biggest investment in Peru’s history, and the inappropriate implementation of the IFC’s performance standards in this project. Thunell stated that the region is critical for biodiversity and that IFC involvement in the project would help to protect that. “Many of these projects would happen anyway and would be worse without our involvement. We can add value”. IFC-staff also expressed the need to make carbon-based power, including oil and gas ‘efficient’, partly by providing new technology for emerging markets.
  • Bank Information Center asked if the IFC’s investments in fossil fuels have been factored into its climate change strategy, given the recent increase in oil and gas investments. Thunell responded that 27 per cent of the IFC’s portfolio was in alternative energy and 25 per cent in energy efficiency. He also said that the IFC are “helping a Chinese Bank to carry out energy efficient financing” and have come to an agreement with China Exim Bank. By way of follow up a representative from Bretton Woods Project asked what percentage of the IFC’s energy portfolio consisted of ‘new renewables’ – wind, solar and mini-hydro. Thunell passed the buck to Rachad Kaldany who was unable to answer the question directly. After a bit of prompting from the floor he conceded that the IFC provided $103 million for “new renewables”, but failed to clarify what this formed as a percentage of IFC’s total energy lending.
  • On development impacts, civil society asked about the benefits of large-scale investments by the IFC, particularly in mining and extractives and for details of development impacts at a project level and aggregate project level data.