Washington, D.C. August 22, 2002
– The International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, today announced the creation of three new environmental funds to enhance the role of the private sector in addressing environmental and social issues in the emerging markets.
The announcement comes in advance of the World Summit on Sustainable Development in Johannesburg and represents part of a two-year “sustainability” push by the multilateral bank to increase the positive environmental and social impact of its investments.
“We are very excited about these facilities because they represent the cutting-edge of finance for sustainable development in the emerging markets,” said Gavin Murray, director of IFC’s Environment and Social Development Department. “This will give us the increased flexibility and capital to help our clients identify business opportunities that support sustainable development.”
The funds will be used for emerging market investments that blend hybrids of private and public financing, particularly projects that are innovative or have high developmental impact. They will support enhanced environmental and social performance through demonstration of best practices and building local capacity. Project preparation assistance and seed capital will be available for innovative projects.
Funding for the facilities is expected to total $55 million over the next five years. IFC will contribute $10 million of its own funds and donor governments will contribute the balance. The government of the Netherlands has provided initial funding for the facilities.
“This is a very clear signal to our clients and potential clients,” Mr. Murray said. “If you believe that issues of energy, water, biodiversity, and climate change can benefit from market-based solutions and you need a partner in the emerging markets, IFC is here. Among the development banks, we aim to be the market leader in sustainability.”
IFC has a $15 billion portfolio of investments in 140 emerging market countries. The multilateral bank makes loans and provides equity in sectors ranging from infrastructure and manufacturing to financial services and information technology. In recent years, IFC has expanded its portfolio to include investments in renewable energy, energy efficiency, and biodiversity-related projects. Earlier this year, IFC announced the establishment of a $40 million facility that will purchase greenhouse gas emission reductions for the benefit of the government of the Netherlands.
The three new facilities will fund a range of investments from traditional sectors and business models to “near to market” technologies and projects that require partial subsidies to be financially viable.
The Environmental Opportunities Facility
will fund project development funding and provide flexible investment financing for innovative projects addressing local environmental issues. Such projects would produce goods or services that reduce pollution or improve the use of scarce resources such as water and energy. The facility aims to overcome the barriers to these investments and move projects towards commercial viability. It will give IFC the ability to 'push the market' towards adopting new business models and technologies that address the most immediate environmental problems of those living in developing countries, especially the poor.
The Sustainable Financial Markets Facility
will address environmentally and socially responsible lending and investment through IFC's financial intermediaries and in the emerging markets financial sector at large. The aim is to increase the positive impact of IFC's intermediated financing, enhance the competitiveness of the local financial services industry through better risk management and new products and services, and promote more environmentally and socially responsible inward investment. The facility's programs will include professional training and technical assistance in environmental risk management, environmental finance, and socially responsible investment. The facility will also enable IFC to address strategic needs by, for example, providing an emerging markets platform for finance-specific codes of best practice and voluntary reporting and certification schemes, and by building local capacity for necessary infrastructure such as consulting, investment research and eco-rating services.
The Corporate Citizenship Facility
will allow IFC to work with its project sponsors and other emerging market businesses to demonstrate the business benefits of a progressive approach to corporate citizenship whilst delivering more public goods. It will demonstrate that the development of good practice in areas such as community development, environmental stewardship and labor practices can create value for the private sector and will disseminate findings and recommendations widely . The Facility will also provide knowledge and resources to leverage change at a sector level to enhance benefits for industry and civil society, where this lies outside the remit or capacity of any individual sponsor.
IFC's mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through the close of the last fiscal year on June 30, 2002, IFC committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC’s committed portfolio at the end of FY02 was $15.1 billion for our own account and $6.5 billion held for participants in loan syndications.
For more information or to arrange an interview, please contact:
Corporate Citizenship:
Mark Eckstein
Tel +44 131 313 6162
Sustainable Financial Markets:
Dan Siddy
Tel: (1-202) 458-9899
Environmental Opportunities
:
Alexandre Leite
Tel: (1-202) 473-2559
Jeffrey Liebert
Tel: (1-202) 458-7885
Environment and Social Development Department
International Finance Corporation
2121 Pennsylvania Avenue, NW, Washington, DC 20433
http://www.ifc.org/enviro
