Climate Finance

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Climate is a strategic pillar for IFC and the World Bank Group. A recent IFC study reports that there are $23 trillion worth of climate-smart investment opportunities in emerging markets. Financial institutions will need to provide the majority of the capital for these opportunities to enable us to transition the global economy, at the required speed, to keep us within a 2⁰C-warmer world.

IFC partners with financial institutions to deploy capital, mostly in the form of loans to businesses. These loans help businesses and other organizations to implement climate-friendly projects that reduce global greenhouse gas (GHG) emissions while supporting the bottom line.

As of March 2020, IFC's progress on assisting client financial institutions in expanding their climate portfolios is as follows: We have committed $7.5 billion from our own account and mobilized an additional $3.6 billion through our work with more than 200 partnering emerging-market financial institutions. These investments support partners in avoiding GHG emissions of 14.2 million tons per year. Through IFC’s advisory engagements, our client financial institutions have built climate finance portfolios of $26.2 billion, avoiding annual GHG emissions of 84.4 million tons. This is the equivalent of taking approximately 17 million cars off the road every year, or of erasing the annual emissions of a country the size of Greece or Morocco.

We estimate that financial institutions must grow the share of climate-friendly projects in their portfolios from an average of approximately 7 percent in 2016 to 30 percent by 2030. In dollar terms, that equates to an increase from approximately $1.5 to $13.4 trillion, a growth opportunity too big for banks to miss.

For our part, IFC has committed to growing our climate-friendly portfolio to an average 35 percent of our total portfolio between 2021 and 2025. To support this investment, we continually develop new products. Our two decades of experience includes providing climate finance via the following products:

  • Credit lines and senior loans (medium- to long-term financing)
  • Green bonds
  • Risk-sharing products and partial loan guarantees
  • Mezzanine financing and subordinated debt
  • Trade guarantees

Our client financial institutions often become climate-finance leaders in their local markets. We coach them in identifying climate-friendly investment opportunities and provide business-development support, including:

  • Product- and pipeline-development services
  • Marketing strategies
  • Tools to identify, quantify and evaluate climate-friendly product lines

Our Climate Definitions help clients and partners understand which projects can be labeled "climate-friendly." Financial institutions most frequently finance projects in the following categories:

  • Energy  low-carbon generation, energy efficiency, energy storage, smart grids, sustainable energy access
  • Transportation  energy-efficient components, fuels and logistics, public transport, infrastructure
  • Water  capture, treatment, conservation, wastewater treatment, access
  • Air and the Environment  carbon credits, trading and offsets
  • Green Buildings  low-carbon-strategy development, energy efficiency, sustainable materials
  • Manufacturing  green chemicals, supply chains, cleaner production
  • Agriculture and Forestry  land management, low-carbon and adaptation strategies, biomass
  • Recycling and Waste  recycling and waste-treatment services

These strategic initiatives show how IFC is expanding our impact:


Our Impact*

The impact of IFC's climate-finance clients:

  • $11.1BILLIONIFC INVESTMENT IN & MOBILIZATION OF CLIMATE FINANCE
  • 14.2MILLION TONSEXPECTED ANNUAL REDUCTION IN GHG EMISSIONS FROM INVESTMENT & MOBILIZATION
  • $26.2BILLIONCLIMATE PORTFOLIO GROWTH - IFC ADVISORY CLIENTS
  • 84.4 MILLIONANNUAL REDUCTION IN GHG EMISSIONS FROM CLIMATE FINANCE ADVISORY SERVICES

*Data as of March 2020