IFC started an investment program focused on climate change funds in 2007. Since the inception of this program, IFC has invested $154 million in 8 funds targeting climate friendly businesses in a variety of sectors. IFC has reviewed a number of climate change funds and has been very selective in its investment choices, taking into consideration multiple criteria including the fund manager and its track record, the fund strategy and the targeted deal flow, as well as the fit of the fund within IFC’s regional strategies and the value IFC investment can bring. Since this is a relatively new focus of private equity, IFC developed its own selection methodology and rigorous process to identify funds for consideration. As new funds continue to emerge, IFC is regularly reviewing new ones for potential investment and will continue to develop a robust private equity funds investment program targeting climate friendly businesses.
IFC defines climate change funds as private equity funds investing in climate-friendly companies, whose activities contribute to a low carbon economy. Target companies include a range of businesses from production to manufacturing of products and the provision of services such as:
water conservation, production and distribution
energy efficiency in buildings and industry
manufacturing of energy efficient products
Most climate change funds in today’s market include clean energy, cleantech, sustainable agriculture and forestry, biodiversity and water (production, management and treatment). To date, IFC has not yet invested in climate-friendly venture capital funds but would consider funds targeting early stage ventures as part of its investment strategy, normally if less than 30% of their total investments.
For IFC, a fund must target at least 80% of its investments in emerging markets (excluding the Gulf Cooperation Council countries) and target at least 70% of its investments in climate-friendly businesses.
For more information on IFC's work in Private Equity, please see our Financial Markets pages.