The historic climate agreement in Paris in December 2015 helped turn climate change into more than just a buzzword. Heads of state and CEOs vowed to buy more clean energy, and leaders of global financial institutions pledged to invest hundreds of billions of investment over the next 15 years in clean energy and energy efficiency. COP21 forged a united front towards making the world’s countries and companies alike greener and more efficient.
The momentum of COP21 has opened doors for IFC to help its clients capture these opportunities and avoid the risks that climate change will bring. In an effort to accelerate private sector investment and mobilize private sector capital, and as part of the World Bank Group Climate Action Plan, IFC released its Climate Implementation Plan. This document serves as a roadmap to IFC’s primary strategic goals for meeting the Bank Group’s overall target of scaling up investments and maximizing impact by year 2020.
The IFC Climate Implementation Plan builds on its renewed dedication to shift from “business as usual” towards more innovative and impactful investments to help emerging countries grow via a low-carbon path. The Plan rests on four main objectives:
On the ground implementation of the plan will be closely coordinated amongst IFC industry and regional departments, with key support from the Climate Business team and Cross Cutting Advisory Solutions. IFC will work closely with the World Bank in areas where public sector intervention is critical for laying the groundwork to leverage private sector investments.
“The road ahead is challenging, but the IFC Climate Implementation Plan outlines new business opportunities, investment vehicles, financial products, and advisory assistance that will help the private sector not only invest intelligently, but also adapt to the impacts of climate change and ultimately grow their businesses,” said Christian Grossmann, IFC Director for Climate Change.
The new plan also points to IFC’s renewed efforts to mitigate risks in new markets through de-risking tools. One such instrument is blended finance. Moving forward, IFC will leverage funds by international entities such as the Green Climate Fund, Climate Investment Funds, and the Global Environmental Facility. New and additional project risk can be mitigated through the use of blended finance, allowing IFC to target first-of-a-kind projects with high development impact, strong potential to create a demonstration effect, and limited commercial track record.
IFC is prepared to move into new climate markets, create new investment vehicles, and increase internal tools and support. But achieving the ambitious goals will require IFC to adopt new ways of thinking, tolerance for different risks, and a prioritization of climate as a development goal.