The International Finance Corporation or IFC is launching a multi-year overhaul of its sustainability framework to strengthen environmental and social standards and adapt to global challenges
The update presents a chance to create a tailored E&S policy framework for the World Bank Group’s private sector financial products, addressing emerging risks and global challenges.
With this, the IFC is promoting stakeholder engagement for its final sustainability framework, providing a rare opportunity for fund managers and ESG officers in emerging markets.
The sustainability framework influencing $4.5 trillion in emerging market financial flows is set to be updated by 2028 to align with global ESG expectations and risks.
The IFC is also working closely with MIGA and exploring greater harmonization with the World Bank’s safeguards. Importantly, the new framework is expected to address climate change, just transition, and emerging ESG risks that did not feature in the 2012 version.
The update will be implemented in two phases: Phase I, a dialogue phase (2025-2026), focusing on stakeholder engagement and feedback on themes like climate risk, financial intermediaries, human rights, and Indigenous rights.
The updated framework, embedded in the Equator Principles, is used by over 120 global financial institutions and serves as a reference point for private equity ESG policies.
The IFC framework serves as a reference point for private equity ESG policies, used by blended finance vehicles and impact investors, and for ESG risk assessment in emerging markets.
The revised framework may introduce new expectations regarding nature, climate-related financial disclosures, Indigenous rights, grievance mechanisms, and supply chain risks.
It must be noted that the 2012-updated framework comprises three key elements: Performance Standards on Environmental and Social Sustainability, Sustainability Policy, and Access to Information Policy (AIP).
The IFC’s Performance Standards are widely adopted globally as the gold standard for ESG due diligence in emerging markets, shaping financial institutions’ risk management strategies.
