Paris Alignment at IFC

The World Bank Group (WBG) has made a commitment to align all its financing operations with the goals of the Paris Agreement in its Climate Change Action Plan 2021-2025.

Paris Alignment of the Bank Group’s new financing flows is the most comprehensive institutional undertaking by the Bank Group to reconcile development and climate goals. All Bank Group financed operations will have to support the deployment of lower-carbon options as applicable, whenever technically and economically feasible; prevent carbon lock-in; and ensure material climate risks have been assessed and reduced to an acceptable level through the design of a project.

The World Bank Group’s commitment is part of a broader Multilateral Development Bank (MDB) vision to align all financial flows with the objectives of the Paris Agreement. This vision is reflected in the MDB joint declaration on Paris Alignment, supported by the Bank Group and eight other MDBs. The Bank Group’s Paris Alignment approach recognizes that countries have differentiated circumstances in implementing the Paris Agreement. As such, our Paris Alignment assessments will be operation-, context-, and time-specific, and for a given set of development objectives.

The World Bank Group will use an integrated vetting approach for every project, – screening, managing, and reducing climate risks.

IFC and Paris Alignment

IFC is on track to align 85% of new financial flows starting July 1, 2023, and 100% starting July 1, 2025. IFC’s Paris Alignment commitment is in line with the Joint Multilateral Development Bank (MDB) Methodological Principles for assessing Paris Alignment developed together with other MDBs.

IFC’s Paris Alignment assessments are conducted in the context of the Bank Group’s twin goals of ending extreme poverty and promoting shared prosperity. The assessments will take into account each country’s pathway towards low greenhouse gas emissions and climate-resilient development and determine whether an activity advances, hinders, or is “neutral” when it comes to achieving progress towards the goals of the Paris Agreement. An IFC investment is considered aligned when:

  • On climate mitigation, it actively contributes to decarbonization pathways (e.g., renewable energy) or supports activities that do no harm (e.g., water supply systems that are not emissions intensive); and
  • On climate adaptation and resilience, it manages physical climate change risks effectively, with measures such as drought-resistant crops or setting up early warning systems.