Greening Equity Investments in Financial Institutions
One of the key goals of the Paris Agreement is to ensure that financial flows are consistent with a pathway toward low emissions and climate resilient development.
In 2020, IFC launched the Green Equity Approach (GEA) to help our financial institution (FI) clients continue to do business in a changing world. Under the approach, IFC has worked with FI clients where we have equity or equity-like exposures to increase their climate lending and reduce their exposure to coal-related projects in line with the Paris Agreement goals.
This year (2023) IFC, is taking the next step toward alignment with Paris Agreement ambitions by introducing an update to the GEA under which IFC will start requiring a commitment from FI clients to not originate and finance any new coal projects.
Based on a careful assessment of our client’s business needs; client countries' national development plans and Nationally Determined Contributions (NDCs); existing World Bank Group and IFC policies related to energy and coal; and the risks and opportunities presented by climate change for financial institutions, IFC believes that the green equity approach is an ambitious and balanced framework to limit risks for our clients, while helping them grow their business and contribute to the world’s development goals.
