IFC has been at the leading edge of catalyzing private capital for development. Through our IFC 3.0, or Creating Markets approach, we use a wide toolkit of approaches to generate investable opportunities, from policy reforms to project development. We work together with the World Bank to create the greatest impact. And we crowd in the much-needed private capital.
Our innovative platforms make it easier for investors—ranging from commercial banks to insurance companies and sovereign wealth funds—to join us in accelerating development in challenging markets. Here are a few examples of our work:
- In the Philippines, IFC invested in the first few green bond issuances for a total of $450 million. Since then, the total cumulative green and social bonds issued in this market amounts to over $3.85 billion. This scaling up would not have been possible without IFC laying the groundwork by working with regulators, setting standards, and supporting issuers on the structuring of green bonds.
- By the time EDGE was launched in Colombia, green building certification was less than one percent of new build each year. By 2019 it had penetrated 7% of all new building, due to a confluence of banking and government incentives. In 2020, over 15% of new build was EDGE certified.
Scale Climate Investments
IFC’s target is for 35 percent of its financing to have climate co-benefits, on average, over FY21-25. It has mainstreamed investing in clean energy, sustainable cities, climate-smart agriculture, green buildings, and green finance.
Beyond its own investments, IFC also serves as a catalyst for green growth in emerging markets.
The Sustainable Banking Network (SBN), which is hosted by IFC, is a collective of financial regulators and industry associations from over 40 countries that promote financing for climate-smart projects.
In addition to EDGE, which has created an international standard for green buildings, IFC has also sought to create international standards for green investment. It took the lead in creating the Operating Principles for Impact Management, a framework for investors to ensure their investments have a measurable social and environmental impact. Standardization and transparency has helped create markets for green construction that is increasingly in demand by tenants and city planners.
Through the World Bank’s Scaling Solar and Scaling Wind initiatives, IFC is helping lower-income countries create markets and attract investment for smaller-scale renewable energy projects that provide affordable, sustainable electricity to remote, underserved populations.
IFC’s green bond program unlocks private capital for low-carbon projects. In fiscal year 2020, IFC issued $1.2 billion through 24 green bonds in nine currencies. These proceeds went to fund projects in wind energy, biomass, green banking, solar energy, green buildings, transport, and agribusiness and forestry. IFC has also issued $10.4 billion in green bonds over the past decade.
IFC has now expanded from being an issuer in green bonds to being an anchor investor, providing advisory services to help clients develop and track green bonds that they issue. For example:
- IFC committed $256 million in the Amundi Planet Emerging Green One Fund in 2018 to provide emerging market clients with wider access to investors in climate-smart projects.
- IFC partnered with HSBC Global Asset Management to form the Real Economy Green Investment Opportunity (REGIO) Fund, to promote green bonds in emerging markets and to give companies and municipalities increased access to climate finance. REGIO, which helps real sector companies issue green bonds, has already raised nearly $500 million, proving that even in a time of a global pandemic and unprecedented capital outflows, investors are keenly aware of the threat of climate change – and are investing in solutions.
IFC is one of the world’s largest financiers of climate-smart projects in emerging markets. Since fiscal year 2005, IFC has provided more than $28 billion in long-term finance for climate-related projects in emerging markets, as well as mobilized $22.3 billion from other investors.
In fiscal year 2020, IFC provided $3.3 billion dollars in long-term finance for climate projects, a total of 30% of IFC’s total commitments, in addition to $3.5 billion mobilized from other investors. These investments were spread across 111 transactions.