Washington, D.C., March 4, 2019 —IFC, a member of the World Bank Group, is helping accelerate the growth of the $33 billion global green-loan market by offering an IFC Green Loan product to create new options for businesses in developing countries to obtain green financing.
In a first for a global development institution, IFC has begun offering its investment clients the option of structuring loans in accordance with the Green Loan Principles . The principles, which are modeled on the Green Bond Principles, specify how loan proceeds should be used and how projects should be selected in order to qualify for green-loan status. This can help businesses attract additional financing and enhance their reputation among shareholders, clients, and communities.
“The growth of the green lending market is crucial to help emerging markets shift to a low-carbon development and mitigate the adverse impacts of climate change,” said Alzbeta Klein, Director of IFC’s Climate Business Department. “By offering our clients a green-loan label, IFC seeks to play a catalytic role in growing green loans across emerging markets.”
Among international development banks, IFC is a leading provider of climate-related financing. In the fiscal year that ended in June 2018, it committed $8.4 billion in such financing to businesses in emerging markets—including a record $4.5 billion mobilized from other investors. This financing accounted for a record 36 percent of IFC’s overall investments for the year.
In accordance with the Green Loan Principles, IFC clients would be required to establish a management system to track, manage, and report on the use of proceeds of a loan for dedicated green projects and have it verified by a third party. IFC will support its clients’ efforts to meet these requirements. The principles allow for self-certification by a borrower in some cases.
The Green Loan Principles, developed by the Loan Market Association (LMA), the Asia Pacific Loan Market Association (APLMA), and the Loan Syndications and Trading Association (LSTA), were adopted in March 2018 and extended in December 2018. They are voluntary guidelines that seek to provide clarity and consistency on what constitutes a green loan. Developing countries currently account for just $1.6 billion of the estimated $33 billion in outstanding green loans. But the market is expected to grow rapidly, outpacing the growth of the green-bond market in the near term.
About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In fiscal year 2018, we delivered more than $23 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org
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