IFC's Green Bonds Process

Use of Proceeds & Project Evaluation

Projects eligible for green bond financing are selected from IFC’s climate-related loan portfolio (equity investments and guarantees are ineligible for funding via green bonds).

IFC’s climate-related investment portfolio comprises projects that meet IFC Definitions and Metrics for Climate-Related Activities. All projects comply with IFC’s Performance Standards for environmental and social issues and IFC’s Corporate Governance Framework.

In some cases, the climate-related component of a project supported by green bonds may be a part of a larger investment. In such cases the climate portfolio only accounts for the project’s share of climate financing.

IFC’s project selection criteria have been reviewed by the Center for International Climate and Environmental Research at the University of Oslo (CICERO), which provided a Second Opinion on IFC's framework and guidance for assessing and selecting eligible projects for green bond investments.  IFC also participates in the Joint Report on Multilateral Development Banks' Climate Finance, using harmonized criteria for climate-related eligibility.


IFC’s green bond financed projects may include the following investments:
  • Investments in equipment, systems and services which result in a reduced use of energy per unit of product or service generated, such as waste heat recovery, cogeneration, building insulation, energy loss reduction in transmission and distribution;
  • Investments in equipment, systems and services which enable the productive use of energy from renewable resources such as wind, hydro, solar and geothermal production;
  • Investments to improve industrial processes, services and products that enhance the conversion efficiency of manufacturing inputs (energy, water, raw materials) to saleable outputs, including reduction of impact at source;
  • Investments in manufacturing of components used in energy efficiency, renewable energy or cleaner production, such as solar photovoltaics, manufacture of turbines, building insulation materials;
  • Investments in sustainable forestry; and
  • Lending to financial intermediaries with the requirement that the IFC’s investments be on-lent to specific climate projects that fit the IFC’s green bond eligibility criteria.


Due Diligence

In addition to meeting the green bond eligibility criteria, any project financed through green bond proceeds follows IFC’s investment process. All projects financed by IFC undergo a rigorous due diligence process which includes disclosure and consultation requirements and integrity due diligence.

 IFC's Environmental and Social Performance Standards define IFC clients' responsibilities for managing their environmental and social risks. Together, the eight Performance Standards establish standards that the client is to meet throughout the life of an investment by IFC, including:

  • Assessment and Management of Environmental and Social Risks and Impacts
  • Labor and Working Conditions
  • Resource Efficiency and Pollution Prevention
  • Community Health, Safety, and Security
  • Land Acquisition and Involuntary Resettlement
  • Biodiversity Conservation and Sustainable Management of Living Natural Resources
  • Indigenous Peoples
  • Cultural Heritage

All projects also undergo early screening to identify potential environmental or social impacts. If necessary, policies and concrete actions are put in place to mitigate any such impacts in accordance with IFC Environmental, Health, and Safety Guidelines.


Management of Proceeds

All proceeds from IFC green bonds are set aside in a designated account for investing exclusively in renewable energy, energy efficiency, and other climate-related projects in developing countries.

The proceeds are credited to a separate “Green Cash Account” and disbursed to green bond eligible projects. Disbursements are often made over a period of time, depending on a project’s amortization schedule. As green bond proceeds are disbursed, corresponding amounts are adjusted from the Green Cash Account accordingly on a regular basis.



IFC follows best practices and the Green Bond Principles, a voluntary set of guidelines for transparency and disclosure.

On an annual basis, IFC publishes the list of projects that have received funding from green bond proceeds.  Subject to confidentiality approvals, the list of projects include: a brief description of the project, the amount disbursed, the expected environmental impact and links to relevant public documents about the project. IFC publishes Socially Responsible Bonds newsletters on an annual basis which provides investors highlights of projects, news and updates. The most recent newsletter can be accessed here.

In addition to Green Bond reporting, IFC’s climate-related portfolio – from which green bond-eligible projects are selected – is reported through several channels. IFC reports climate-related investment figures through its Annual Report which undergoes an independent assurance report. As mentioned previously, IFC also participates in the Joint Report on Multilateral Development Banks' Climate Finance which utilizes harmonized definition criteria.



IFC supervises all its investments – including green bond investments. The supervision process comprises regular reports by the investee company on project activities and performance and is monitored by IFC throughout the lifetime of the investment.

Projects eligible under the Green Bond Program comply with IFC’s Sustainability Framework, Corporate Governance Framework, and other policies and procedures addressing project integrity. Compliance is assessed at the individual project level.

The Sustainability Framework consists of:

  1. The Policy on Environmental and Social Sustainability, which defines IFC's commitments to environmental and social sustainability.
  2. The Performance Standards, which define clients' responsibilities for managing their environmental and social risks.
  3. The Access to Information Policy, which articulates IFC's commitment to transparency.


Portfolio Management

Compliance is assessed at the individual project level and through independent reviews of about a quarter of all projects. Project level reviews are undertaken by the portfolio teams in environment, social aspects, financial management, and procurement ensure that adequate controls and management capacity are in place at the project level.



The World Bank Group’s Independent Evaluation Group (IEG) assesses the performance of about one out of four projects, measuring outcomes against original objectives, sustainability of results and institutional development impact.  IEG conducts not only project-level evaluations, based on the review of self-evaluation reports prepared by Bank Group staff and supplemented by independent assessments, but also reviews of literature, analytical work, and project documentation, portfolio reviews, country case studies, structured interviews and surveys of staff and stakeholders, and impact evaluations. In addition, IEG has evaluated the World Bank Group’s experience in climate change on a sector-wide basis and IFC continues to implement IEG’s recommendations to scale impact.



The Office of the Compliance Advisor/Ombudsman (CAO) oversees investigations of IFC’s social and environmental due diligence at the project-level.  Investigations aim to enhance project outcomes and strengthen adherence to relevant standards which is the independent recourse mechanism for IFC. CAO's mission is to address complaints by people affected by IFC/MIGA projects and to enhance the social and environmental accountability of both institutions' CAO's Compliance function.

IFC follows procedures specific to its Green Bond program including selecting and reporting on eligible projects, maintaining the separate Green Cash Account and reviewing portfolio implementation progress to provide updated information for impact reporting purposes.


DISCLAIMER: The above examples of Eligible Projects are for illustrative purposes only and no assurance can be provided that disbursements for projects with these specific characteristic will be made by IFC during the term of the Notes.  This summary has been prepared by IFC (International Finance Corporation) for information purposes only, and IFC or the World Bank Group make no representation, warranty, or assurance of any kind, express or implied, as to the accuracy or completeness of any of the information contained herein. This summary includes references to and information relating to IFC securities. Any such information is provided only for general informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy any IFC securities. The securities mentioned herein may not be eligible for sale in certain jurisdictions or to certain persons.