- IFC CEO Philippe le Houerou
- CSOs: Public Lead Aid network Myanmar, Oxfam, Philippines Climate Change CAO complaint, Bretton Woods Project, SOMO, BIC-Europe, Mongolia CSO representative
Session Summary: This Q&A session focused on IFC’s commitments with regards to climate after the publication of the IPCC report.
Opening remarks – What is the IFC doing on climate:
In 2008 20 percent of IFC projects focused on climate while in 2018 this number raised to 36 percent, six percent more than the 30 percent target announced at the Annual Meetings in Peru. Since May the IFC has introduced systematic carbon pricing (40-80 per tonne), although in IDA this pricing will go on lower range. By 2030 the goal is an upper range of $100 p/tonne. The IFC has focused on energy efficiency with programmes across 140 countries.
Regarding Financial Intermediaries the IFC work was highly problematic. Now across all financial intermediary lending 95 percent of investments is targeted, addressing a key CSO concern, and focused on SMEs, which generate 90 percent of jobs. This is reached with two approaches: first, no coal exposure and second, investing in Banks that have coal to ‘green investment’.
With regards to transparency, the IFC agreed that it could do a pilot with likeminded banks or use sustainable bank network which engages regulators. To lead it is necessary to engage and drive process forward.
Public Lead Aid network Myanmar representative: (Regarding FI) 2003 IFIs was seen as too risk adverse, there was no IFC lending; Now there is quite a large presence, but risk aversion continues. What can be done to boost local private sector? In addition, MNCs are taking opportunities from IFC perhaps shutting out local actors.
Le Houerou: IFC is focused on both. It is true that international partners have more capacity, as they are better able to meet standards. This is particularly true of complex projects – rather than ‘learning by doing’. Ex: two-year work with hotel project to ensure standards. Standards are designed to allow IFC to support upward movement. He acknowledges that difficult choices arise, this is quite difficult on the ground.
Oxfam representative: Welcomed the new blog and announcement regarding IFC’s new policy towards working with commercial banks, investment funds, and other financial institutions to shed coal from their investment portfolios. The IFC will try to green banks. Is there a ceiling in the amount of coal exposure? Will all clients, including existing clients, be required to reveal exposure?
Le Houerou: Still working on new parameters. No details to share now.
Philippines Climate Change CAO complaint representative: CEO has made many statements including commitments to exit investments, focus on improved transparency. Since then four new coal power plants online. Request once more that IFC to divest from FIs that don’t comply with WB commitment.
IFC regional representative: The IFC is doing only Green Bond in the region. As for RCBC, most plants predate IFC investment – now also increasingly focused on renewables.
BWP: About fragile and conflict-affected situations
Le Houerou: New strategy – changing the way the institution works, realising that approach must change to be much more proactive. Examples: scaling solar project, 4c Kw/hr; also Ethiopia: scaling health, agro-business, work on local capital markets.
BWP: India – Powerplant project – justify the investment. MB Power Project
Le Houerou: In IFC investment banks very low percent are invested in coal, however the IFC understands that Philippines has high concentration – 40% of energy produced by coal
SOMO: (about CAO discussions) Expects review to also address IFC’s role in the complaint process. If there is one thing that you could change about IFC role, what would you do?
Le Houerou: Everything now goes to the Board, although the reform has not taken place. Review will be conducted by the Board.
BIC-Europe: Recognises the big and positive steps taken. Will the IFC follow the Bank on Oil and Gas?
Le Houerou: stated his believe in renewables but agreed on first doing coal. Gas is lesser of two evils; the transition is necessary. Disclosure is also required at sub-project level. Communities need access (knowledge) about CAO.
Mongolia cso representative: (regarding project design) To what extent are communities involved in project design? In Mongolia there is little opportunity to engage in design phase.
Le Houerou: Agrees that there should be more consultation. Does imply agreement, necessarily.
Oxfam: Also congratulated steps taken by IFC on FI. What would ‘scaling up’ health and education look like?
Le Houerou: No answer. (In reference to BIA) jury is still out. Throwing money at the problem is not enough. Need to try new things. Do not have ready-made solutions. He stated that he have seen public service fail to deliver – having grown up in Africa. Last year had a record year of $23 billion. That is nothing compared to $4 trillion ‘allegedly’ required – need to go from Billions to Trillions. Money is there, sitting on the side-lines, need to develop pipeline of bankable projects. 100 trillion under management in OECD countries.