A report published in October by the Compliance Advisory Ombudsman (CAO), the independent accountability mechanism for the International Finance Corporation (IFC) – the World Bank’s private sector arm – found significant misalignment between IFC’s current practices and its greenhouse gas (GHG) emissions measurement, alternatives analysis, mitigation and disclosure requirements. The report also detailed severe inadequacies in IFC’s climate change policies, noting IFC’s shortcomings are “limiting its effectiveness in contributing to the mitigation of GHG emissions and to efforts to limit global warming.”

The report followed a request by US-based civil society organisation (CSO) Bank Climate Advocates (BCA) and others, after the IFC failed to act on a September 2023 CSO letter urging it to “adhere to its board adopted policies…including those applicable to GHG emissions and climate change” (see Observer Autumn 2023). A December 2023 BCA analysis of 350 IFC investments between 2012-2023 revealed IFC-financed projects accounted for well over 168 million tons of GHG emissions per year that could have been avoided had IFC adhered to its own policies.

There have been long-standing concerns about the negative climate impacts of IFC’s investments, especially via its financial intermediary investments (see Observer Winter 2023, Winter 2020). “The CAO report substantiates BCA’s findings that IFC is systematically failing to meet its own climate change requirements. Considering the climate crisis, IFC must start adhering to its policies now, and take swift action to bring them into alignment with the Paris Agreement’s 1.5°C objective as its human rights and multiple other legal obligations require,” noted Jason Weiner, BCA Executive and Legal Director.

The IFC is expected to review its Performance Standards, i.e. its environmental and social safeguards, beginning in 2025.