Washington, D.C., March 27, 2019 —IFC, a member of the World Bank Group, has launched its updated Corporate Governance Methodology in response to the growing trend for investors to pay closer attention to the way companies manage environmental, social, and governance matters.
Investors are concerned about how companies are addressing long-term value creation and working to build a better ESG framework to serve all stakeholders. The Methodology is designed to provide guidance to companies on such a framework.
The Methodology can also be used by educators and trainers to develop materials and curricula, and by policymakers to improve legislation and regulation related to corporate governance.
“Corporate Governance underpins better environmental and social risk management in companies. Integrating environmental and social factors within company corporate governance frameworks will ensure better accountability for sustainable private sector activities,” said Ethiopis Tafara, VP & General Counsel, Legal, Compliance and ESG Sustainability.
The core tool of the Methodology is IFC’s Corporate Governance Progression Matrix, which companies can use to improve their respective governance framework including board oversight of environmental and social issues. It emphasizes the importance of continuing progress—rather than static minimum standards—in the corporate governance and sustainability practices of a company.
The Matrix focuses on six parameters of assessment: commitment to corporate governance; the structure and functioning of the board of directors; the control environment; disclosure and transparency; treatment of minority shareholders; and governance of stakeholder engagement, which includes civil society and communities affected by a company’s operations. The increased scrutiny expected by the revised Matrix for board level engagement of environmental and social issues seeks to ensure accountability for sustainable private sector activities.
As a major investor in emerging markets, IFC is applying this Methodology to its own due diligence and investments. Beyond its own investments, IFC seeks to raise standards across the emerging markets private sector and its ESG advisory services teams work with regulators and stock exchanges, to help them apply higher disclosure standards to corporate listings, reporting requirements, and other disclosure obligations to grow sustainable financial markets.
The updated Corporate Governance Methodology was launched during a session of the 13 th Annual Development Finance Institutions Corporate Governance conference hosted by IFC this week. During this conference in 2011, IFC and other DFIs launched the Corporate Governance Development Framework, which provides the current 35 signatory institutions with a common platform for evaluating and improving governance practices of their investee companies.
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 FY18, we delivered $23.3 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visi t www.ifc.org
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