IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION CRITICAL FUNCTIONS BUILDING A BETTER FUTURE IFC ANNUAL REPORT 2023 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION CRITICAL FUNCTIONS CONTENTS On the cover: By investing in a growth fund for promising technology startups, IFC brings job 2 Letter from the IFC Board opportunities and hope for a better future to Ukraine. 4 Letter from Ajay Banga, World Bank Group President Below: An IFC investment is helping African financial technology firm M-KOPA expand financial 6 Letter from Makhtar Diop, IFC Managing Director services to delivery drivers and other underbanked consumers in East Africa, allowing them to 9 Our Management Team purchase productive assets such as smartphones and home solar-energy systems. 10 FY23 Financing and Impact Highlights RESULTS 12 World Bank Group 2023 Summary Results 14 IFC 2023 Year in Review 18 Climate Highlights STRATEGY IN ACTION 20 Building a Better Future 22 Innovation 34 Inclusion 40 Thought Leadership and Capacity Building CRITICAL FUNCTIONS 44 Measuring Up 47 Sustainability 50 Accountability and Oversight 52 Diversity, Equity, and Inclusion Additional information is available on IFC’s website: www.ifc.org/AnnualReport. IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES IFC — a member of the World Bank Group — is the largest Letter from the IFC Board Letter from Ajay Banga, World Bank Group President Letter from Makhtar Diop, IFC Managing Director ABOUT IFC global development institution focused on the private sector in emerging markets and developing economies. We work in more than 100 countries, using our capital, mobilization Our Management Team capacity, expertise, and influence to create jobs and raise FY23 Financing and Impact Highlights living standards, especially for the poor and vulnerable. RESULTS STRATEGY IN ACTION In fiscal year 2023, IFC committed a record $43.7 billion to CRITICAL FUNCTIONS private companies and financial institutions in developing countries, leveraging the power of the private sector to improve people’s lives as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org. IFC ANNUAL REPORT 2023 1 IFC 2023 ANNUAL REPORT IFC BOARD LEADERSHIP PERSPECTIVES LETTER FROM THE IFC BOARD Letter from the IFC Board Letter from Ajay Banga, World Bank Group President Letter from Makhtar Diop, IFC Managing Director Over the past year, the World Bank Group Executive Governors at the Development Committee Climate action remains a crucial global priority. Directors have engaged with World Bank Group commended the World Bank Group for identifying The Executive Directors welcome the efforts the Our Management Team leadership about persisting global crises and the measures to increase financial capacity by roughly $50 World Bank Group has made as the world’s largest urgent need for approaches to restore progress billion over the next 10 years and discussed priorities multilateral provider of climate finance for developing FY23 Financing and Impact Highlights toward the Sustainable Development Goals. More to further strengthen the institution for the next phase countries by mobilizing more public and private RESULTS than 574 million people are projected to be living in of the Roadmap process ahead of the October 2023 finance. The Executive Directors are encouraged that, extreme poverty by 2030, most of them in Africa. Annual Meetings in Marrakech. in addition to work combining country diagnostics, STRATEGY IN ACTION More broadly, nearly half the world — over 3 billion policy advice, financing, and scalable mechanisms to CRITICAL FUNCTIONS people — lives on less than $6.85 per day. Spillover The important work of the Evolution comes as the mobilize funding, the World Bank is on track to align effects from the COVID-19 pandemic, Russia’s invasion World Bank Group continues to respond at record 100 percent of new operations with the goals of the of Ukraine, and extreme climate events are among pace, scale, and impact to help countries address Paris Agreement from July 1, 2023. For IFC and MIGA, the major issues on which the Executive Directors led compounding crises and increasingly complex 85 percent of new operations will be aligned starting World Bank Group interventions to support countries, development challenges. In April 2022, the World Bank July 1, 2023, and 100 percent from July 1, 2025. including a focus on opportunities for women and Group outlined the Global Crisis Response Framework, young people. From July 2022 to June 2023, support which focused on responding to food insecurity, The world witnessed devastating natural disasters this from the World Bank Group for developing countries protecting people and preserving jobs, boosting year that caused tragic losses of life and widespread totaled $122.9 billion, including $38.6 billion from resilience, and strengthening policies, institutions, destruction. The earthquakes in Türkiye are among IBRD, $34.2 billion from IDA, $43.7 billion (including and investments to build back better. Between April the most recent events to which the World Bank mobilization) from IFC, and $6.4 billion in guarantees 2022 and June 2023, the World Bank Group provided Group has responded. The Executive Directors from MIGA. unprecedented crisis financing of $171.6 billion, continue to recognize the hardships encountered in including $53.1 billion from IBRD, $51.8 billion from IDA, fragile and conflict-affected situations around the At the Annual Meetings in October 2022, Development $57.6 billion from IFC, and $9.1 billion in guarantees world, including the challenges and complexities of Committee members asked the World Bank Group to from MIGA. migration, as discussed in this year’s World Development review its vision, mission, and operating and financial Report. The Executive Directors commend the ongoing models to enhance the institution’s capacity to In addition to its impact on food security, Russia’s and coordinated efforts by the World Bank, IFC, respond to global challenges. In response, the World invasion of Ukraine has exacerbated trends in energy and MIGA to swiftly address fragility and disasters, Bank Group created the Evolution Roadmap, with access, international trade, and other major sectors. including by leveraging the IDA Private Sector Window the aim of better addressing the scale of challenges Recognizing the invasion’s potentially long-term and Contingency Emergency Response Components facing the world today. The Roadmap provides a basis consequences, the Board approved several operations in operations. The Board also recently approved the for World Bank Group management and the Board to help restore and improve access to essential health establishment of an IDA Crisis Facility, which will to discuss priorities for the institution’s evolution and care, provide financial protection for the Ukrainian boost support for the world’s poorest countries in begin to implement collective reform. people, and repair Ukraine’s energy infrastructure. tackling urgent development challenges, particularly To date, the World Bank Group has mobilized over food security and climate change. Led by the Boards of Executive Directors in partnership $37.5 billion in emergency financing for Ukraine, with management, the Evolution Roadmap gained including IBRD and IDA loans, IBRD loans guaranteed momentum this year. At the 2023 Spring Meetings, by partners, donor grants, short and long-term IFC financing, and MIGA guarantees. IFC ANNUAL REPORT 2023 2 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES Letter from the IFC Board Letter from Ajay Banga, World Bank Group President Letter from Makhtar Diop, IFC Managing Director In addition to the many operations and country engagements the Board discussed and Our Management Team approved this year, Executive Directors also FY23 Financing and Impact Highlights visited operations in several client countries. In February and May 2023, Board members traveled RESULTS to Belize, Guatemala, Panama, the Republic of Congo, and São Tomé and Príncipe. During these STRATEGY IN ACTION missions, the Executive Directors engaged with CRITICAL FUNCTIONS key government entities, the private sector, civil society, and donor stakeholders and met with World Bank Group staff and the people who have benefited from these operations. As the World Bank Group’s leadership and Boards of Directors prepare for the October 2023 Annual Meetings in Marrakech, the Executive Directors and management are moving forward on the Evolution Roadmap. The Executive Directors extend their sincere gratitude to David Malpass for his strong and steadfast leadership of the World Bank Group through a historically challenging period. His commitment PHOTO OF IFC EXECUTIVE DIRECTORS to the mission, diversity and inclusion, debt transparency and sustainability, and country- Seated (left to right): Standing (left to right): level development outcomes have seen the Erivaldo Gomes Brazil, Cecilia Nahon Argentina, Wempi Saputra Indonesia, Parameswaran Iyer institution deliver record commitments for Ayanda Dlodlo South Africa, Dominique Favre India, Mansour Alshamali Kuwait, Michael Krake development. The Board warmly welcomes his Switzerland, Junhong Chang China — Co-Dean, Koen Germany, Katharine Rechico Canada, Roman Marshavin successor, Ajay Banga, as the 14th President of the World Bank Group. Finally, the Executive Davidse The Netherlands — Dean, Khalid Bawazier Saudi Russian Federation, Velavan Gnanendran United Kingdom, Directors extend their thanks to all staff for Arabia, Adriana Kugler United States, Matteo Bugamelli Il-Young Park Korea, Hayrettin Demircan Türkiye, their tireless dedication and hard work in these Italy, Ernesto Acevedo Mexico, Takashi Miyahara Japan, Naveed Baloch Pakistan, Abdoul Salam Bello Niger, challenging times. Thanks to them, the World Lene Lind Norway Arnaud Buissé France Bank Group continues to make a difference in the lives of many who deserve a life in dignity. Absent: Floribert Ngaruko Burundi IFC ANNUAL REPORT 2023 3 IFC 2023 ANNUAL REPORT LETTER FROM AJAY BANGA LEADERSHIP PERSPECTIVES President of the World Bank Group Letter from the IFC Board Letter from Ajay Banga, World Bank Group President Letter from Makhtar Diop, IFC Managing Director Deeply intertwined challenges — poverty, This urgency motivates us to write a new playbook that will drive impactful development and lead to a better quality of life for people everywhere. Our Management Team Pandemics and climate change don’t respect lines on a map. If we fail to FY23 Financing and Impact Highlights pandemics, climate change, debt, conflict, work together to address these crises, we all lose. Our approach must be inclusive of everyone, including women, young people, and others too often RESULTS food insecurity, and fragility — are eroding left behind. It must be resilient to shocks, including climate and biodiversity catastrophes, pandemics, and fragility. And it must be sustainable — through STRATEGY IN ACTION decades of hard-won development progress; economic growth, human development, fiscal and debt management, food security, and access to clean air, water, and affordable energy. CRITICAL FUNCTIONS the world is looking to us for solutions. To help countries achieve these goals and address their most urgent development needs, we offer innovative solutions that can be implemented at scale to maximize Fortunately, the World Bank is built to take impact. Through our knowledge and research, we help countries make informed, impactful decisions. Central to these efforts are our partnerships and convening on difficult challenges. To truly make a power, which further extend our reach as we work to realize our shared vision. difference, we will need a greater appetite Under the umbrella of our Evolution Roadmap, we are working to become a better Bank. We will become more efficient and do more in less time — incentivizing output, not input. Keeping focus on how many girls for risk, meaningful private sector financing, are in school, how many jobs are created, how many tons of carbon dioxide emissions are avoided, and how many private sector dollars are mobilized. and a sense of urgency. We are digging deep to boost our lending capacity, finding ways to leverage callable capital, and creating new mechanisms like hybrid capital that could unlock untold resources to deliver results. We want to expand and evolve concessional financing to help more low-income countries achieve their development goals, while thinking creatively about how to encourage cooperation across borders and tackle shared challenges. As we face a new era in development, we remain committed to creating a world free of poverty on a livable planet. Ajay Banga President of the World Bank Group and Chairman of the Board of Executive Directors IFC ANNUAL REPORT 2023 4 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES Letter from the IFC Board Letter from Ajay Banga, World Bank Group President Letter from Makhtar Diop, IFC Managing Director Our Management Team WE OFFER INNOVATIVE FY23 Financing and Impact Highlights RESULTS SOLUTIONS THAT CAN BE STRATEGY IN ACTION CRITICAL FUNCTIONS IMPLEMENTED AT SCALE TO MAXIMIZE IMPACT. THROUGH OUR KNOWLEDGE AND RESEARCH, WE HELP COUNTRIES MAKE INFORMED, IMPACTFUL DECISIONS. Photo: World Bank Group President Ajay Banga visits Jamaica’s Kirkvine Community Council Greenhouses, June 2023. IFC ANNUAL REPORT 2023 5 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES Letter from the IFC Board Letter from Ajay Banga, LETTER FROM MAKHTAR DIOP World Bank Group President IFC MANAGING DIRECTOR Letter from Makhtar Diop, IFC Managing Director Our Management Team FY23 Financing and Impact Highlights This year brought a continued wave of RESULTS STRATEGY IN ACTION challenges with global growth slowing CRITICAL FUNCTIONS sharply, extreme poverty increasing, the climate crisis intensifying, and new conflicts emerging. As these overlapping crises continued to intensify, IFC responded with scale and speed. Most importantly, we recognized that business as usual wouldn’t do, and we raised our ambition to meet the moment. IFC ANNUAL REPORT 2023 6 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES And in FY23, we delivered. We made over $43 billion Letter from the IFC Board in total investment commitments — the largest volume in our history. We set a record for climate Letter from Ajay Banga, commitments, which surpassed $14 billion. We World Bank Group President exceeded our gender targets. And we mobilized over $15 billion from external partners — another record. Letter from Makhtar Diop, IFC Managing Director To ensure the most vulnerable have access to food, These are impressive numbers, but what they really we launched a $6 billion Global Food Security Platform Our Management Team represent is jobs created, women entrepreneurs and have worked to stabilize volatile food markets and getting access to financial services, greenhouse provide much-needed finance to companies along the FY23 Financing and Impact Highlights gas emissions being slashed, and much more. Our food supply chain. achievements this year also speak to how we are RESULTS reshaping IFC. We have made several changes to how In tackling global challenges — from food security to STRATEGY IN ACTION we work that cut bureaucracy and empower frontline climate change — we must bridge the gap for private staff to take more risks and respond to emerging CRITICAL FUNCTIONS investors to access emerging markets and developing needs faster. The result? Bold interventions that economies by mitigating the risks of pioneering disrupt crises and drive impact. investments. That’s why we deployed a record level of blended concessional finance to de-risk high- Across the world, we are deploying our full arsenal of impact investments, and we continue to launch new tools to achieve scale: setting standards, developing facilities to address emerging needs in middle-income innovative financial solutions, using public-private countries. IFC now has over 30 different mobilization partnerships to build sustainable infrastructure, and vehicles, including MCCP One Planet, the world’s first mobilizing capital. We are supporting the ingenuity of portfolio of emerging market loans aligned with the entrepreneurs who form the backbone of economies Paris Agreement. around the world — helping small businesses from Photo above: Ildys Karazhieva, in the Chuy region of Kyrgyz Cameroon to the Kyrgyz Republic get access to Republic, has relied on micro loans from Elet-Capital to The World Bank Evolution Roadmap calls on us to support her business raising chickens. IFC’s loan to Elet- financing. We are focusing on the massive untapped do more to address intertwined global challenges. Capital is under IFC’s Base of the Pyramid program, which potential of female entrepreneurs in our efforts to This year we continued retooling IFC to help unlock helps financial services providers deliver funding to help address a more than $5 trillion financing gap for micro, innovation and deliver more sustainable private sector MSMEs, informal enterprises, and low-income households. small, and medium enterprises (MSMEs). solutions that lift people up. I am especially heartened by our team, who are behind the projects and initiatives detailed in this report. With talent, passion, and purpose on our side, I am confident that a more virtuous cycle — one that ends poverty, protects the planet, and creates inclusive growth — is within reach. Makhtar Diop Managing Director IFC ANNUAL REPORT 2023 7 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES Letter from the IFC Board Letter from Ajay Banga, WE ARE CONTINUING World Bank Group President Letter from Makhtar Diop, TO RETOOL IFC TO HELP IFC Managing Director Our Management Team UNLOCK INNOVATION FY23 Financing and Impact Highlights RESULTS AND DELIVER MORE STRATEGY IN ACTION SUSTAINABLE PRIVATE CRITICAL FUNCTIONS SECTOR SOLUTIONS THAT LIFT PEOPLE UP. Photo: Ngo Thi Xuyen harvests peppercorns on a farm in Vietnam. An IFC partnership with McCormick & Co. is helping build a more sustainable, traceable, certified, and quality-compliant pepper supply chain through capacity development and the empowerment of women farmers. IFC ANNUAL REPORT 2023 8 IFC 2023 OUR ANNUAL REPORT LEADERSHIP PERSPECTIVES Letter from the IFC Board Letter from Ajay Banga, World Bank Group President Letter from Makhtar Diop, MANAGEMENT TEAM IFC Managing Director Makhtar Diop Our Management Team Managing Director FY23 Financing and Impact Highlights RESULTS STRATEGY IN ACTION IFC’s leadership develops corporate strategies CRITICAL FUNCTIONS and policies and oversees the effective deployment of our resources. Our main focus is on maximizing development impact and meeting client needs. IFC’s Management Elena Bourganskaia Hela Cheikhrouhou Federico Galizia John Gandolfo Mohamed Gouled Team brings together years of development Vice President, Regional Vice President, Vice President, Vice President and Vice President, Corporate Support Middle East, Central Asia, Risk and Finance Treasurer Industries experience, a broad array of expertise, and Türkiye, Afghanistan, and Pakistan complementary cultural perspectives. Susan M. Lund Alfonso Garcia Mora Mary-Jean Moyo Ramit Nagpal Emmanuel Nyirinkindi Vice President, Regional Vice President, Chief of Staff Vice President and Vice President, Economics and Private Europe, Latin America General Counsel Cross-Cutting Solutions Sector Development and the Caribbean Sérgio Pimenta Riccardo Puliti Regional Vice President, Regional Vice President, Africa Asia and the Pacific IFC ANNUAL REPORT 2023 9 IFC 2023 ANNUAL REPORT IFC FY23: REACHING NEW HEIGHTS LEADERSHIP PERSPECTIVES 43.7B Letter from the IFC Board $ Letter from Ajay Banga, World Bank Group President Letter from Makhtar Diop, IFC Managing Director Our Management Team FY23 Financing and Impact Highlights RESULTS STRATEGY IN ACTION CRITICAL FUNCTIONS in total investment commitments CLIMATE TRADE AND SUPPLY CHAIN $14.4B in climate financing $12.0 B in short-term finance 68% was committed in IDA and fragile and conflict-affected economies IFC ANNUAL REPORT 2023 10 IFC 2023 ANNUAL REPORT HIGHLIGHTS OF ANTICIPATED IMPACT FROM FY23 PROJECTS LEADERSHIP PERSPECTIVES Letter from the IFC Board Letter from Ajay Banga, World Bank Group President Letter from Makhtar Diop, IFC Managing Director Our Management Team FY23 Financing and Impact Highlights RESULTS STRATEGY IN ACTION CRITICAL FUNCTIONS 11.5M TONS GHG emissions reduction of 2.2–3.1M Estimated number of direct, 2.2M Number of additional outstanding CO2 equivalent each year indirect, and induced jobs created 1 MSME loans, of which 1.4 million are to women $11.2B Volume of additional 496K Additional farmers reached 34.5M Number of additional direct trade finance supported fixed/mobile internet connections 1. Employment estimates are computed for individual projects using IFC’s economic impact estimation framework. The framework comprises sector-specific models and a variety of assumptions across countries and sectors. For financial intermediaries, the estimate includes on-lending of IFC funds only. Client banks’ portfolios grow more than the IFC funding alone, partly because IFC’s contribution catalyzes additional funding and partly because the growth is contractually agreed with IFC. This additional expansion, which is hard to attribute precisely, could represent the creation of several million jobs. IFC ANNUAL REPORT 2023 11 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS WORLD BANK GROUP World Bank Group 2023 Summary Results Global Commitments 2023 SUMMARY RESULTS The Institutions of the World Bank Group World Bank Group Financing $128.3B for Partner Countries GLOBAL IFC 2023 Year in Review Financial Highlights COMMITMENTS Operational Highlights In fiscal 2023, the World Bank Group FY23 Long-Term Commitments provided much-needed financing; conducted data collection, in-depth FY23 Portfolio Exposure analysis, and research; and partnered IFC’s Largest Country Exposures with governments, the private sector, and FY23 Long-Term Commitments by other institutions to support countries’ Environmental and Social Category development and address global challenges. (BILLION) FY23 Advisory Services Program Expenditures in loans, grants, equity investments, and guarantees Climate Highlights to partner countries and private businesses STRATEGY IN ACTION CRITICAL FUNCTIONS Total includes multiregional and global operations. Regional breakdowns reflect World Bank country classifications. EAST ASIA AND EUROPE AND LATIN AMERICA AND MIDDLE EAST AND SOUTH SUB-SAHARAN THE PACIFIC CENTRAL ASIA THE CARIBBEAN NORTH AFRICA ASIA AFRICA $13.0B (BILLION) $36.2B (BILLION) $18.2B (BILLION) $6.8B (BILLION) $15.4B (BILLION) $38.6B (BILLION) IFC ANNUAL REPORT 2023 12 IFC 2023 The Institutions of World Bank Group Financing for Partner Countries ANNUAL REPORT the World Bank Group By fiscal year, millions of dollars LEADERSHIP PERSPECTIVES The World Bank Group is one of the world’s RESULTS 2023 2022 2021 2020 2019 largest sources of financing and knowledge World Bank Group 2023 for developing countries. It consists of World Bank Group Summary Results five institutions that share a commitment Commitments 1 128,341 104,370 98,830 83,547 68,105 Global Commitments to reducing poverty, increasing shared Disbursements 2 91,391 67,041 60,596 54,367 49,395 The Institutions of the prosperity, and promoting sustainable IBRD World Bank Group growth and development. Commitments 3 38,572 33,072 30,523 27,976 23,191 World Bank Group Financing Disbursements 25,504 28,168 23,691 20,238 20,182 for Partner Countries International Bank for Reconstruction IDA IFC 2023 Year in Review and Development (IBRD) Commitments 3, 4 34,245 37,727 36,028 30,365 21,932 Lends to governments of middle-income and Disbursements 4 27,718 21,214 22,921 21,179 17,549 Financial Highlights creditworthy low-income countries. Operational Highlights IFC International Development Association (IDA) Commitments 5 27,704 22,229 20,669 17,604 14,684 FY23 Long-Term Commitments Provides financing on highly concessional terms to Disbursements 18,689 13,198 11,438 10,518 9,074 FY23 Portfolio Exposure governments of the poorest countries. MIGA IFC’s Largest Country Exposures International Finance Corporation (IFC) Gross issuance 6,446 4,935 5,199 3,961 5,548 FY23 Long-Term Commitments by Environmental and Provides loans, guarantees, equity, advisory services, Recipient-Executed Disbursing Account and project development services and mobilizes capital Social Category Commitments 21,374 6,407 6,411 3,641 2,749 from other sources to grow private sector investment FY23 Advisory Services in developing countries. Disbursements 19,480 4,461 2,546 2,433 2,590 Program Expenditures Multilateral Investment 1. Includes IBRD, IDA, IFC, Recipient-Executed Disbursing Account (REDA) commitments, and MIGA gross issuance. REDA commitments Climate Highlights include all recipient-executed grants. Guarantee Agency (MIGA) 2. Includes IBRD, IDA, IFC, and REDA disbursements. STRATEGY IN ACTION Provides political risk insurance and credit 3. Amounts are net of full terminations and cancellations relating to commitments approved in the same fiscal year. CRITICAL FUNCTIONS enhancement to investors and lenders to facilitate 4. Commitments and disbursements exclude IDA-IFC-MIGA Private Sector Window (PSW) activities. foreign direct investment in emerging economies. 5. Includes long-term commitments for IFC’s own account and short-term finance commitments. Does not include funds mobilized from other investors. International Centre for Settlement of Investment Disputes (ICSID) Provides international facilities for conciliation, mediation, and arbitration of investment disputes. IFC ANNUAL REPORT 2023 13 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS IFC 2023 World Bank Group 2023 Summary Results Global Commitments YEAR IN REVIEW The Institutions of the World Bank Group World Bank Group Financing for Partner Countries IFC operations are guided by our Board-approved IFC 3.0 strategy and the IFC 2023 Year in Review IFC Strategy and Business Outlook Update FY23–25. Financial Highlights Operational Highlights FY23 Long-Term Commitments Financial Highlights FY23 Portfolio Exposure Dollars in millions, as of and for the years ended June 30 IFC’s Largest Country Exposures 2023 2022 2021 2020 2019 FY23 Long-Term Commitments by Net income (loss) $ 672 $ (464) $ 4,209 $(1,672) $ 93 Environmental and Grants to IDA – – 213 – – Social Category Income (loss) before grants to IDA 672 (464) 4,422 (1,672) 93 FY23 Advisory Services Total assets $ 110,547 $99,010 $ 105,264 $95,800 $99,257 Program Expenditures Investments 51,502 44,093 44,991 41,138 43,462 Climate Highlights Key Financial Ratios Overall liquidity ratio 104% 111% 114% 96% 104% STRATEGY IN ACTION Debt-to-equity ratio 1.6 1.6 2.1 2.2 2.2 CRITICAL FUNCTIONS Capital available ($ in billions) 34.8 32.5 30.7 28.2 27.8 Capital required ($ in billions) 21.1 20.1 20.5 20.3 21.8 Capital utilization ratio 1 60.7% 62.0% 66.6% 72.1% 78.4% Total reserve against losses on loans to total disbursed portfolio 3.7% 4.4% 4.9% 6.3% 4.7% 1. Starting in FY22, IFC began using Capital Utilization Ratio (CUR), defined as (Capital Required divided by Capital Available), as a measurement of capital adequacy under IFC’s updated capital adequacy framework. The CUR replaces the previous Deployable Strategic Capital (DSC) ratio. CUR and DSC ratio have a one-to-one mapping expressed as (CUR = 90% – DSC ratio). IFC ANNUAL REPORT 2023 14 IFC 2023 ANNUAL REPORT Operational Highlights Dollars in millions, for the years ended June 30 LEADERSHIP PERSPECTIVES 2023 2022 2021 2020 2019 RESULTS World Bank Group 2023 Investment Commitments 1 $43,728 $33,592 $ 31,803 $28,616 $25,520 Summary Results Global Commitments Long-Term Investment Commitments FOR IFC’S OWN ACCOUNT $16,677 $ 12,569 $ 12,474 $ 11,135 $ 8,920 The Institutions of the Number of projects 325 296 313 282 269 World Bank Group Number of countries 78 68 71 67 65 World Bank Group Financing MOBILIZATION 2 $15,029 $ 10,596 $ 10,831 $ 10,826 $ 10,206 for Partner Countries Syndicated loans $ 5,492 $ 3,475 $ 3,647 $ 4,989 $ 5,824 IFC initiatives & other $ 5,810 $ 3,311 $ 3,693 $ 3,370 $ 2,857 IFC 2023 Year in Review Asset Management Company (AMC) Funds $ 14 $ 248 $ 244 $ 50 $ 388 Financial Highlights Advisory Mobilization3 $ 3,712 $ 3,562 $ 3,246 $ 2,417 $ 1,137 Operational Highlights TOTAL LONG-TERM INVESTMENT COMMITMENTS $31,705 $23,166 $23,305 $21,961 $19,126 FY23 Long-Term Commitments Short-Term Investment Commitments FY23 Portfolio Exposure For IFC’s own account 4 $11,027 $ 9,659 $ 8,195 $ 6,469 $ 5,764 1. Investment Commitments include Long-Term Investment IFC’s Largest Country Exposures Mobilization $ 996 $ 767 $ 303 $ 186 $ 630 Commitments and Short-Term Investment Commitments. 2. Defined as “core mobilization” — non-IFC financing or risk TOTAL SHORT-TERM INVESTMENT COMMITMENTS $12,023 $ 10,426 $ 8,498 $ 6,655 $ 6,394 FY23 Long-Term Commitments by sharing arranged on commercial terms due to the active and Environmental and direct involvement of IFC for the benefit of a client. Excludes Investment Disbursements $1,128 million of unfunded risk transfers that are accounted for Social Category under IFC’s own account. For IFC’s account $18,689 $13,198 $11,438 $10,518 $ 9,074 FY23 Advisory Services 3. Advisory Mobilization includes third-party private financing Syndicated loans $ 2,443 $ 2,589 $ 1,309 $ 2,231 $ 2,510 that has been mobilized for public-private partnerships, as a Program Expenditures TOTAL INVESTMENT DISBURSEMENTS $21,132 $15,787 $12,747 $12,749 $11,584 result of IFC’s role as lead transaction advisor. It also includes Corporate Finance Services, for projects in which IFC has provided Climate Highlights Portfolio Exposure 5 transaction advisory services to help private sector clients expand into new markets, diversify and restructure operations, or bring in STRATEGY IN ACTION Number of firms 1,928 1,848 1,822 1,880 1,930 new equity investors. For IFC’s account $70,069 $ 63,763 $ 64,092 $ 58,650 $ 58,847 4. Short-Term Finance includes Global Trade Finance Program (GTFP) CRITICAL FUNCTIONS Syndicated loans $15,312 $ 15,235 $ 15,658 $ 16,161 $ 15,787 and Global Trade Supplier Finance Program (GTSF). 5. Portfolio exposure is defined as the sum of the (i) committed TOTAL PORTFOLIO EXPOSURE $85,381 $ 78,998 $ 79,750 $ 74,811 $ 74,635 exposure for IFC’s debt investments, (ii) fair market value of IFC’s equity investments, and (iii) total undisbursed equity Advisory Services commitments. Advisory Services program expenditures $ 260.2 $ 250.6 $ 244.0 $ 274.4 $ 295.1 6. All references in this report to percentages of advisory program Share of program in IDA countries6 54% 51% 54% 57% 59% expenditures in IDA countries and fragile and conflict-affected areas exclude global projects. IFC ANNUAL REPORT 2023 15 IFC 2023 ANNUAL REPORT Fy23 Long-Term Commitments Fy23 Portfolio Exposure 4 Dollar amounts in millions, for IFC’s own account as of June 30, 2023 Dollar amounts in millions, for IFC’s own account as of June 30, 2023 LEADERSHIP PERSPECTIVES TOTAL $16,677 100% TOTAL $70,069 100% RESULTS World Bank Group 2023 By Industry By Industry Summary Results Financial Markets $ 8,602 51.58% Financial Markets $26,986 39% Global Commitments Infrastructure $ 2,447 14.67% Infrastructure $10,146 14% Manufacturing $ 1,519 9.11% Funds $ 6,929 10% The Institutions of the Agribusiness & Forestry $ 1,100 6.60% Manufacturing $ 5,240 7% World Bank Group Funds $ 990 5.94% Tourism, Retail & Property $ 4,210 6% World Bank Group Financing Tourism, Retail & Property $ 765 4.59% Agribusiness & Forestry $ 4,075 6% for Partner Countries Telecommunications & Information Technology $ 747 4.48% Health & Education $ 3,901 6% Health & Education $ 505 3.03% Telecommunications & Information Technology $ 3,778 5% IFC 2023 Year in Review Natural Resources 1 $ 2 0.01% Trade Finance $ 3,544 5% Financial Highlights Natural Resources 1 $ 1,260 2% Operational Highlights By Region Latin America and the Caribbean $ 3,885 23.29% By Region 5 FY23 Long-Term Commitments Africa $ 3,755 22.52% Africa $15,042 21% FY23 Portfolio Exposure East Asia and the Pacific $ 2,439 14.63% Latin America and the Caribbean $14,688 21% IFC’s Largest Country Exposures Europe $ 2,190 13.13% East Asia and the Pacific $12,910 18% South Asia $ 2,130 12.77% South Asia $ 9,005 13% FY23 Long-Term Commitments by Central Asia and Türkiye $ 1,784 10.70% Europe $ 5,615 8% Environmental and Middle East $ 413 2.48% Central Asia and Türkiye $ 5,387 8% Social Category Global $ 81 0.49% Global $ 5,111 7% FY23 Advisory Services Middle East $ 2,312 3% Program Expenditures By Product Climate Highlights Loans 2 $ 14,135 84.76% By Product Equity 3 $ 1,761 10.56% Loans 2 $49,713 71% STRATEGY IN ACTION Guarantees $ 704 4.22% Equity 3 $14,760 21% CRITICAL FUNCTIONS Risk-management products $ 76 0.46% Guarantees $ 5,145 7% Risk-management products $ 451 1% 1. Includes IFC’s activities in oil, gas, and mining. 2. Includes loan-type, quasi-loan products. 4. Portfolio exposure is defined as the sum of the (i) committed 3. Includes equity-type, quasi-equity products. exposure for IFC’s debt investments, (ii) fair market value of IFC’s equity investments, and (iii) total undisbursed equity commitments. 5. Excludes individual country shares of regional and global projects. IFC ANNUAL REPORT 2023 16 IFC 2023 ANNUAL REPORT IFC’s Largest Country Fy23 Advisory Services LEADERSHIP PERSPECTIVES Exposures6 Program Expenditures As of June 30, 2023 (Based on IFC’s account) Dollar amounts in millions RESULTS World Bank Group 2023 GLOBAL COUNTRY RANK PORTFOLIO EXPOSURE7 % OF GLOBAL PORTFOLIO TOTAL $260.2 100% ($ MILLIONS) Summary Results 1 India $ 7,284 10.40% By Region Global Commitments 2 Brazil $ 5,600 7.99% Africa $ 98.5 38% The Institutions of the 3 Türkiye $ 4,650 6.64% East Asia and the Pacific $ 34.2 13% World Bank Group 4 China $ 3,711 5.30% Global $ 31.7 12% 5 South Africa $ 3,234 4.62% Latin America and the Caribbean $ 26.7 10% World Bank Group Financing 6 Colombia $ 2,348 3.35% South Asia $ 22.6 9% for Partner Countries 7 Vietnam $ 2,187 3.12% Europe $ 21.2 8% IFC 2023 Year in Review 8 Indonesia $ 2,171 3.10% Middle East $ 13.1 5% Financial Highlights 9 Nigeria $ 2,021 2.88% Central Asia and Türkiye $ 12.3 5% 10 Romania $ 1,729 2.47% Operational Highlights 6. Excludes individual country shares of regional and global projects. By Business Area FY23 Long-Term Commitments 7. Portfolio exposure is defined as the sum of the (i) committed exposure for IFC’s debt investments, (ii) Advisory in IFC Industries $171.8 66% FY23 Portfolio Exposure fair market value of IFC’s equity investments, and (iii) total undisbursed equity commitments. Financial Institutions Group 69.5 27% Transaction Advisory 42.8 16% IFC’s Largest Country Exposures Manufacturing, Agribusiness & Services 37.3 14% FY23 Long-Term Commitments by Environmental and Fy23 Long-Term Commitments by Infrastructure & Natural Resources Disruptive Technologies & Funds 17.1 5.2 7% 2% Social Category FY23 Advisory Services Environmental and Social Category Creating Markets Regional Advisory Other Advisory, including Environment, Social & Governance $ 54.7 $ 33.7 21% 13% Program Expenditures COMMITMENTS NUMBER OF CATEGORY Climate Highlights ($ MILLIONS) NEW PROJECTS A $ 1,154 9 STRATEGY IN ACTION B $ 5,683 106 CRITICAL FUNCTIONS C $ 142 29 FI 8 $ 6 0 FI-1 $ 572 5 FI-2 $ 7,122 126 FI-3 $ 1,998 50 TOTAL $16,677 325 8. FI category applies to new volume commitments on previously existing projects. Visit www.ifc.org/escategories for information on category definitions. IFC ANNUAL REPORT 2023 17 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES CLIMATE HIGHLIGHTS RESULTS Efforts to combat climate change will not succeed As of July 1, 2023, 85 percent of all new investments will World Bank Group 2023 without massive increases in private capital flows be consistent with the goals of the Paris Agreement, Summary Results to emerging markets and developing economies, increasing to 100 percent by July 1, 2025. This means which represent more than 60 percent of global that we will now factor climate change mitigation and Global Commitments decarbonization investment needs. adaptation into all investment decisions. For example, The Institutions of the if we are financing a new manufacturing facility, our World Bank Group In FY23, IFC committed a record $14.4 billion in climate teams will engage with the client to identify possible World Bank Group Financing finance, mobilizing $6.8 billion of additional capital low-carbon and commercially viable solutions. We will for Partner Countries alongside our own investment of $7.6 billion to also assess measures that could be taken to reduce help client countries address the climate crisis. This possible climate risks expected in that location — for IFC 2023 Year in Review represented a record 46 percent of the total of long- instance by installing drainage systems to protect Financial Highlights term investments for our own account. Our work from intense rainfall or mitigating impacts of extreme Operational Highlights accelerates an inclusive transition by catalyzing green heat events on employees and equipment. growth, supporting private companies to decarbonize FY23 Long-Term Commitments and manage risks, and supports societies adapting to a We mobilize every tool at our disposal to increase BLUE ECONOMY FY23 Portfolio Exposure warmer planet. As a result, we help create markets our impact — from co-investment platforms and IFC’s Largest Country Exposures and jobs so that countries continue to reduce poverty advice for clients to blended finance and public- PROJECT: Companhia de Saneamento Básico and improve living standards while increasing private partnerships. Our role also goes beyond our de Estado de São Paulo (SABESP) FY23 Long-Term Commitments by resilience and shifting to a low-carbon world. investments. We contribute to the World Bank Group’s Reducing the discharge of untreated effluent Environmental and Country Climate and Development reports, which in Brazil’s Pinheiros River. Social Category diagnose how each country’s development goals IFC FINANCING: $150 million FY23 Advisory Services can also help reduce carbon emissions and increase Program Expenditures Climate Highlights resilience. And we play an important standard-setting role in a range of markets. In FY23, we launched the 66,000 TONS annually of methane emissions reduction, STRATEGY IN ACTION Biodiversity Finance Reference Guide, a practical guide equivalent to 5.5M tons annually of GHG over a for investors interested in commercial transactions 20-year time frame CRITICAL FUNCTIONS that address the loss of nature and biodiversity, and Guidelines for Blue Finance, to unlock the potential of the ocean economy. Photo: Community programs in the São Paulo neighborhood Vila das Pratas teach children about climate and clean water. More than 7,000 homes in the region now have basic sanitation thanks to the Pinheiros River clean-up. IFC ANNUAL REPORT 2023 18 IFC 2023 ANNUAL REPORT CAPITAL MARKETS LEADERSHIP PERSPECTIVES GREEN HOUSING AND THE BUILT ENVIRONMENT PROJECT: Cyfrowy Polsat S.A. RESULTS Poland’s first corporate sustainability-linked World Bank Group 2023 PROGRAM: EDGE bond to support company’s shift into renewable Summary Results Contributing to more than 60 million green- energy and green hydrogen. certified square meters in buildings worldwide and IFC FINANCING: $99 million equivalent in Polish zloty Global Commitments resulting in 1.3 million tons in annual GHG savings. The Institutions of the World Bank Group SUSTAINABLE FORESTRY 15 M square meters of green buildings $5.4 B invested by IFC in labeled sustainable bonds World Bank Group Financing PROJECT: Suzano S.A., Brazil in FY23 for Partner Countries Brazil’s first fossil-fuel-free pulp mill. certified in FY23 IFC FINANCING AND MOBILIZATION: $1.5 billion IFC 2023 Year in Review 180 MW REDUCING EMISSIONS IN ENERGY TRANSITION Financial Highlights KEY INDUSTRIAL SECTORS Operational Highlights PROJECT: AMEA Power, Egypt of surplus renewable energy fed into the PROJECT: Sococim, Senegal FY23 Long-Term Commitments grid and 3,000 jobs created A windfarm and a solar park that together will bring Low-carbon cement production. electricity to 1 million Egyptians at the lowest prices FY23 Portfolio Exposure IFC FINANCING AND MOBILIZATION: €242 million in Africa (2 US cents/kilowatt hour for solar and 3 US cents/kilowatt hour for wind). IFC’s Largest Country Exposures FY23 Long-Term Commitments by MOBILITY 300,000 TONS IFC FINANCING AND MOBILIZATION: $770 million Environmental and Social Category FY23 Advisory Services PROJECT: Green Vehicle Fleet for ALD Automotive Affordable electric vehicle (EV) and hybrid leases in seven countries where the EV market annually of GHG emissions reduction by 2030 1.7M TONS annually of GHG emissions reduction is in its infancy. Program Expenditures IFC FINANCING: $400 million NEW TECHNOLOGY INNOVATION Climate Highlights STRATEGY IN ACTION CRITICAL FUNCTIONS 15,000 hybrid and electric vehicles added PROJECT: BOSTON METAL Commercialization of steel-production process free of CO2 emissions and extraction of high- GREEN BONDS PROJECT: DCM JKB Green Bond to the leasing market Jordan’s first green bond. value metals from mining waste. IFC FINANCING: $50 million, including blended finance IFC EQUITY INVESTMENT: $20 million co-investments ZERO carbon steel-production technology 285 Emerging market financial institutions across 70+ countries trained on labeled sustainable bonds by IFC, resulting in the issuance of over $10B in labeled bonds IFC ANNUAL REPORT 2023 19 IFC 2023 STRATEGY IN ACTION ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS BUILDING STRATEGY IN ACTION Building a Better Future Innovation Ukraine: Investing in Entrepreneurs Jamaica: The Power of Public-Private Partnerships Trade Finance: Mitigating Risk and Maximizing Financing Driving Adoption of A BETTER FUTURE Electric Vehicles in India Working within the World Bank Group, IFC is the largest global Uzbekistan: Energizing Reforms development finance institution focused on mobilizing private sector Game-Changing Technology for Senegal’s Smallholder Farmers solutions to achieve a world free of poverty on a livable planet. At a Supporting Startups in time of unprecedented global challenges, we are raising our private Challenging Markets capital mobilization, investment, and advisory services to new levels, Innovating to Boost Energy Access harnessing the potential of the private sector to deliver meaningful in Democratic Republic of Congo impact for the people and places that need it most. Inclusion Private Sector Solutions for Refugees and Host Communities In our work, we focus on solutions that are innovative, inclusive, and Gender Bonds: Breaking Down Barriers equip leaders with knowledge and skills to address development Pakistan: Support at a Critical Time challenges. The summaries that follow highlight some of our most Affordable Housing: Filling the Gap impactful work in FY23. Thought Leadership and Capacity Building IFC and WTO: Trade Finance in Africa IFC and IEA: Scaling Up Investment in Clean Energy Capital Markets: Training the Next Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 20 IFC 2023 Photo: Mamounata Velegda is one of Burkina Faso’s most ANNUAL REPORT successful women entrepreneurs. She owns a flourishing cereal, nuts, and rice-processing factory in Ouagadougou. LEADERSHIP PERSPECTIVES With support from IFC client Coris Bank International, she has developed a thriving business and created employment RESULTS opportunities for over 300 individuals and empowered numerous women across the country with starter kits STRATEGY IN ACTION for their retail businesses. Her latest venture involves an investment of 5 billion CFA to establish a cutting-edge Building a Better Future rice-processing facility, aiming to position Burkina Faso Innovation as a leading regional rice producer. Ukraine: Investing in Entrepreneurs Jamaica: The Power of Public-Private Partnerships Trade Finance: Mitigating Risk and Maximizing Financing Driving Adoption of Electric Vehicles in India Uzbekistan: Energizing Reforms Game-Changing Technology for Senegal’s Smallholder Farmers Supporting Startups in Challenging Markets Innovating to Boost Energy Access in Democratic Republic of Congo Inclusion Private Sector Solutions for Refugees and Host Communities Gender Bonds: Breaking Down Barriers Pakistan: Support at a Critical Time Affordable Housing: Filling the Gap Thought Leadership and Capacity Building IFC and WTO: Trade Finance in Africa IFC and IEA: Scaling Up Investment in Clean Energy Capital Markets: Training the Next Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 21 IFC 2023 STRATEGY IN ACTION ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION INNOVATION Building a Better Future Innovation Ukraine: Investing in Entrepreneurs Jamaica: The Power of Public-Private Partnerships Trade Finance: Mitigating Risk Simplifying our internal business processes this year allowed us and Maximizing Financing to do more than ever — moving faster, working more flexibly, Driving Adoption of and taking on more risks. Electric Vehicles in India Uzbekistan: Energizing Reforms In today’s challenging global conditions, we must open our Game-Changing Technology for minds to new ways of doing business. We are supporting Senegal’s Smallholder Farmers innovative business models that drive the development Supporting Startups in outcomes governments desire but cannot achieve with Challenging Markets their own resources. Innovating to Boost Energy Access in Democratic Republic of Congo Breaking new ground means working with new clients and Inclusion partners, engaging early in the process, experimenting with Private Sector Solutions for Refugees new tools and approaches, and sometimes mitigating risks and Host Communities with blended finance. But these are risks that must be taken. Gender Bonds: Breaking Down Barriers They allow us to find opportunities amid the challenges, Pakistan: Support at a Critical Time proving the business case time and again for others to follow. Affordable Housing: Filling the Gap Thought Leadership and Capacity Building IFC and WTO: Trade Finance in Africa IFC and IEA: Scaling Up Investment in Clean Energy Photo: Ukraine’s tech firms are a pillar of the economy — and a Capital Markets: Training the Next key focus of IFC’s commitment Generation of Leaders to keeping the economy going. CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 22 IFC 2023 UKRAINE: ANNUAL REPORT LEADERSHIP PERSPECTIVES INVESTING IN RESULTS STRATEGY IN ACTION ENTREPRENEURS Building a Better Future Keeping Ukraine’s economy moving amid the impact of Russia’s invasion Innovation Ukraine: Investing in Entrepreneurs requires a concerted international effort. This effort must go well beyond the military aid dominating the headlines. Businesses need to continue Ketevan to provide goods and services, and people need to earn a living. IFC is Liparteliani Jamaica: The Power of Investment Officer, helping to sustain Ukraine’s private sector, including through a targeted Public-Private Partnerships IFC, Paris investment to help the country’s strong technology sector retain its Trade Finance: Mitigating Risk momentum and keep 285,000 specialized workers employed. and Maximizing Financing “It was probably the point when I fully Driving Adoption of The World Bank Group is deeply committed to financing large-scale Electric Vehicles in India relief and recovery efforts in Ukraine, combining public sector support internalized IFC’s mission and why we Uzbekistan: Energizing Reforms through the World Bank’s multi-donor coordination PEACE project exist, and the power the World Bank Group for the government with IFC’s Economic Resilience Action Program. has to be a game changer.” Game-Changing Technology for Senegal’s Smallholder Farmers IFC’s $2 billion support package includes trade finance, help for reconstructing the critical energy sector, financing for agribusinesses Ketevan Liparteliani led IFC’s team investing in Supporting Startups in Horizon Capital Growth Fund IV for Ukraine. and women-owned enterprises, and more. Challenging Markets Working tirelessly in the months after Russia’s Innovating to Boost Energy Access IFC has signaled its commitment to Ukraine’s private sector through invasion of Ukraine, she organized a group in Democratic Republic of Congo of other development finance institutions to its $60 million investment in Horizon Capital Growth Fund IV. IFC is Inclusion the largest investor in the fund, which is supporting the tech industry participate alongside IFC, just in time for an initial and accelerating the growth of private equity markets in Ukraine and closing in London in September 2022. Private Sector Solutions for Refugees and Host Communities Moldova. It aims to support visionary entrepreneurs “who dare to be bold,” according to founding partner and CEO Lenna Koszarny. Ukraine’s President Volodymyr Zelensky Gender Bonds: Breaking Down Barriers attended the ceremony via video link, showing Pakistan: Support at a Critical Time Ukraine’s private sector is the backbone of the country’s economy, appreciation for all the investor group’s Affordable Housing: Filling the Gap providing goods, services, and jobs. The tech sector in particular has efforts. He also attended a follow-up event shown remarkable resilience during the last year. It was the country’s in Kyiv in April 2023, where the IFC-backed Thought Leadership and only export industry to expand in 2022, a time when overall GDP shrank Horizon Capital Fund announced it had raised Capacity Building by nearly 30 percent. But the ongoing instability is a major deterrent to even more money than expected to invest in IFC and WTO: Trade Finance in Africa growing Ukrainian tech firms — supporting Ukraine’s growth, making continued access to growth capital essential IFC and IEA: Scaling Up Investment for leading companies. IFC’s investment in Horizon Capital Fund helped job opportunities at a critical time. in Clean Energy it exceed its $250 million target in a high-risk environment, mobilizing Capital Markets: Training the Next approximately $80 million from other development finance institutions. Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 23 IFC 2023 JAMAICA: ANNUAL REPORT LEADERSHIP PERSPECTIVES THE POWER OF RESULTS STRATEGY IN ACTION PUBLIC-PRIVATE PARTNERSHIPS Building a Better Future Following a deep recession in the wake of the “We are looking at one stretch of road, for example, Innovation COVID-19 pandemic, Jamaica’s economy is on that should just take 20 minutes to travel, but Ukraine: Investing in Entrepreneurs the upswing. The leaders of the island nation during peak hours you can sit in traffic for up to Jamaica: The Power of have a vision to spur future growth with critical two hours,” says Michelle Ottey, IFC lead on PPP Public-Private Partnerships infrastructure such as roads and reliable and Transaction Advisory in the Caribbean. “Consider Trade Finance: Mitigating Risk affordable internet, and they are turning to IFC to how challenging this is for business, for visitors, and and Maximizing Financing help realize their ambition of attracting $1.5 billion for everyday life along that northern corridor.” of new private investment in infrastructure The Honorable Driving Adoption of Electric Vehicles in India Uzbekistan: Energizing Reforms through public-private partnerships (PPPs). The approximately $600 million project will help reduce travel time, improve safety, support tourism, Nigel PPPs are a proven tool for enhancing limited public and open access to new areas for development. Clarke, DPhil., MP Game-Changing Technology for resources with significant new injections of private Jamaica’s Minister of Senegal’s Smallholder Farmers Finance and the capital, expertise, and innovation. IFC is well-placed Similarly, Jamaica’s digital highways need an Public Service Supporting Startups in to provide guidance — having advised on and closed upgrade. The government plans to install a national Challenging Markets more than 160 PPP projects globally since 2014. broadband network to improve internet reliability Innovating to Boost Energy Access and bring costs down, as currently the monthly in Democratic Republic of Congo Jamaica’s north coast is home to pristine beaches online subscription price represents more than “As a transaction advisor with a development Inclusion sought after by travelers across the world, but 10 percent of Jamaica’s GDP per capita each month. traffic congestion has become so bad that tourists, For this project too, the government has mandated bias, IFC, the private sector arm of the World Private Sector Solutions for Refugees Bank, has unparalleled global expertise. commercial deliveries, and residents frequently IFC to advise on bringing in private investors. and Host Communities get stuck in gridlock. IFC is now the government’s The opportunities are ripe to partner with Gender Bonds: Breaking Down Barriers lead adviser in organizing a competitive tender to “The work we are doing has an impact that can them to bring to market, possibly, highway, Pakistan: Support at a Critical Time attract a private operator that will finance, expand, potentially change the Jamaican economy’s broadband, healthcare, water, sanitation, and and operate three important road segments on the profile,” says Ottey. “Road networks are Affordable Housing: Filling the Gap other infrastructure projects.” island’s north coast. important to everyday citizens and tourism. The Thought Leadership and national broadband network would support the Capacity Building government’s digital transformation initiatives. IFC and WTO: Trade Finance in Africa Now is the time to help Jamaica bring in more IFC and IEA: Scaling Up Investment private investment to make these projects a reality.” in Clean Energy Capital Markets: Training the Next Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 24 IFC 2023 TRADE FINANCE: ANNUAL REPORT LEADERSHIP PERSPECTIVES MITIGATING RISK AND RESULTS STRATEGY IN ACTION MAXIMIZING FINANCING Building a Better Future When commerce stalls, economies suffer. But through financial innovation, Innovation IFC is greasing the wheels of trade in emerging markets to reignite Ukraine: Investing in Entrepreneurs economic growth. Jamaica: The Power of Public-Private Partnerships Our landmark $50 million guarantee agreement with BNP Paribas, France’s Trade Finance: Mitigating Risk largest bank, exemplifies this approach. By backing $1 billion of BNP Paribas’ and Maximizing Financing trade finance portfolio, IFC provided a crucial risk buffer so the bank could rapidly expand lending to importers and exporters across developing regions. Driving Adoption of Electric Vehicles in India Trade finance oils the machinery of international commerce by mitigating Uzbekistan: Energizing Reforms payment risks inherent to cross-border transactions. But uncertain Game-Changing Technology for conditions have hindered trade financing flows, constraining growth in Senegal’s Smallholder Farmers emerging economies. Supporting Startups in Challenging Markets That’s why IFC leveraged its AAA credit rating to guarantee BNP Paribas’ trade Innovating to Boost Energy Access finance risks, freeing up capital for new lending. This synthetic risk transfer in Democratic Republic of Congo structure, widely used in advanced markets, extends a vital financing tool to economies with limited short-term credit access. With risk coverage from Inclusion IFC, BNP Paribas can now finance billions in new trade annually, allowing Private Sector Solutions for Refugees businesses to thrive and catalyzing multiplier effects across markets. and Host Communities Gender Bonds: Breaking Down Barriers In this way, trade finance is central to turning the wheels of global commerce. Pakistan: Support at a Critical Time By innovating to expand trade finance through partnerships like ours with BNP Paribas, IFC is supporting prosperity worldwide. Our guarantee agreement Affordable Housing: Filling the Gap frees up capital to facilitate trade flows, keeping the engine of emerging Thought Leadership and economies running through uncertain terrain. Capacity Building IFC and WTO: Trade Finance in Africa Photo: Bangladesh’s garment sector employs more than 3 million women. A partnership between IFC and Levi Strauss & Co. helps factories identify and implement cleaner and IFC and IEA: Scaling Up Investment more resource-efficient production options. in Clean Energy Capital Markets: Training the Next Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 25 IFC 2023 DRIVING ADOPTION OF ANNUAL REPORT LEADERSHIP PERSPECTIVES ELECTRIC RESULTS STRATEGY IN ACTION VEHICLES IN Building a Better Future INDIA Innovation Ukraine: Investing in Entrepreneurs With transport standing as the fastest-growing Jamaica: The Power of contributor to climate change, it is no longer a Public-Private Partnerships question of whether electric vehicles (EVs) should Trade Finance: Mitigating Risk be adopted at scale, but rather how quickly. In India, and Maximizing Financing IFC is investing in a leading EV manufacturer that is Driving Adoption of helping drive the local transport sector’s move away Electric Vehicles in India from fossil fuels. Uzbekistan: Energizing Reforms Our $73 million-equivalent rupee stake in Mahindra Game-Changing Technology for Last Mile Mobility Limited — a subsidiary of Mahindra Senegal’s Smallholder Farmers & Mahindra — will help the firm scale up its production Supporting Startups in of electric three wheelers and small trucks while also Challenging Markets enabling the development and manufacturing of Innovating to Boost Energy Access new products. EVs enable vibration- and noise-free in Democratic Republic of Congo operations and are also more affordable options for Inclusion India’s microentrepreneurs. The business will further generate employment for women, driving equality and Private Sector Solutions for Refugees inclusion while bolstering India’s climate action agenda. and Host Communities Gender Bonds: Breaking Down Barriers By supporting this leading market player, IFC hopes to Pakistan: Support at a Critical Time encourage other large automotive manufacturers to follow suit. The goals: drive EV adoption across India, Affordable Housing: Filling the Gap the world’s largest three-wheeler market, and help the Thought Leadership and Indian government deliver on its climate target. Capacity Building IFC and WTO: Trade Finance in Africa IFC and IEA: Scaling Up Investment Photos: Devkanya Pandey drives her Mahindra in Clean Energy electric auto in the city of Indore, Madhya Pradesh. Capital Markets: Training the Next Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 26 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION IFC’s Strategy: Building a Better Future Innovation Scaling up Electric Vehicles Ukraine: Investing in Entrepreneurs Electrification of transport is essential to the transition to a low-carbon economy. IFC has now invested nearly $3 billion in the e-mobility value chain, helping scale Jamaica: The Power of Electric vehicles (EVs) bring many benefits in developing countries — lower up the industry and increase its impact by working across the sector’s entire value Public-Private Partnerships emissions, improved last-mile connectivity in remote places, reduced dependency chain in all regions of the world, focusing on large, globally replicable investment Trade Finance: Mitigating Risk on imported fuel, and better air quality. But despite these advantages, they remain a opportunities. Our focus includes: and Maximizing Financing relative rarity in developing countries. Driving Adoption of Electric Vehicles in India Uzbekistan: Energizing Reforms POLICY AND REGULATION: Encouraging increased private sector participation Game-Changing Technology for Senegal’s Smallholder Farmers Supporting Startups in Challenging Markets INVESTMENTS: MINING MATERIALS & CHARGERS E-BUSES COMMERCIAL PERSONAL ASSET TECHNOLOGY REUSE & Innovating to Boost Energy Access FINANCING GROWTH COMPONENTS & SWAPPING FLEETS MOBILITY FINANCING SERVICES RECYCLING in Democratic Republic of Congo ACROSS THE VALUE CHAIN INFRASTRUCTURE & LEASING Inclusion Private Sector Solutions for Refugees and Host Communities Gender Bonds: Breaking Down Barriers Pakistan: Support at a Critical Time Affordable Housing: Filling the Gap Thought Leadership and Capacity Building IFC and WTO: Trade Finance in Africa IFC and IEA: Scaling Up Investment in Clean Energy Capital Markets: Training the Next Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 27 IFC 2023 UZBEKISTAN: ANNUAL REPORT LEADERSHIP PERSPECTIVES ENERGIZING RESULTS STRATEGY IN ACTION REFORMS Building a Better Future Bekzat Oishynov Innovation Across Central Asia, frequent power shortages the region’s largest wind project. The mammoth Investment Officer, plunge millions into darkness and disruption. But in 500-megawatt Zarafshan wind farm will power IFC, Almaty Ukraine: Investing in Entrepreneurs Uzbekistan, rays of light are emerging to chart a 500,000 homes annually and prevent over 1 million Jamaica: The Power of new energy future — not just for the country tons of GHG emissions each year. Public-Private Partnerships “It wasn’t an easy job. But that’s what we’re but the entire region. Trade Finance: Mitigating Risk Uzbekistan is charting a new path for the Central here for: making landmark projects like this and Maximizing Financing With the flick of a switch, Uzbekistan illuminated Asia region — one powered by private expertise and one happen, so they become success stories Driving Adoption of its inaugural solar power plant, Nur Navoi. Built investment in renewable energy. And with each new for their countries.” Electric Vehicles in India through a first-of-its-kind public-private partnership, solar panel and wind turbine, Uzbekistan is bringing Uzbekistan: Energizing Reforms the shimmering sea of panels now powers 31,000 much-needed light and power to the region. Bekzat Oishynov spent over 18 months arranging homes with affordable, sustainable energy. IFC’s financing for Uzbekistan’s inaugural wind Game-Changing Technology for Senegal’s Smallholder Farmers power project — the $580 million Zarafshan power “When we started the solar project, we were plant that is due to be operational in 2025, displacing Supporting Startups in testing the waters,” said Bahrom Umarbekov Challenging Markets more than 1 million tons of GHG emissions a year. of Uzbekistan’s Ministry of Energy. Today, There were many ups and downs along the way as Innovating to Boost Energy Access Nur Navoi is a symbol of Uzbekistan’s energy he managed relationships with various stakeholders: in Democratic Republic of Congo transition and a model for the region. the sponsor, the government, and six different Inclusion lenders. Environmental safeguards were especially Through an innovative competitive bidding process, important, including the utilization of advanced Private Sector Solutions for Refugees and Host Communities Uzbekistan tapped Abu Dhabi’s Masdar Clean Energy technology to ensure the safety of birds from the to construct Nur Navoi. IFC advised on the landmark wind turbines. Gender Bonds: Breaking Down Barriers deal, then helped finance the project alongside the Pakistan: Support at a Critical Time Canada-IFC Blended Climate Finance Program. The challenging work paid off in the end: Zarafshan Affordable Housing: Filling the Gap was honored by three leading industry publications, Encouraged by Nur Navoi’s success, Uzbekistan is named Central Asia Deal of the Year by Project Thought Leadership and doubling down on renewables, aiming to double its Finance International, Asia-Pacific Renewables Deal of Capacity Building clean energy share by 2025. It has already attracted the Year by IJGlobal, and Central Asia Deal of the Year IFC and WTO: Trade Finance in Africa $580 million in investments, including from IFC, for by The Asset Triple A. IFC and IEA: Scaling Up Investment in Clean Energy Capital Markets: Training the Next Photo: Uzbekistan’s Nur Navoi Solar field. Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 28 IFC 2023 GAME–CHANGING TECHNOLOGY FOR ANNUAL REPORT LEADERSHIP PERSPECTIVES SENEGAL’S RESULTS STRATEGY IN ACTION SMALLHOLDER Across Africa, smallholder farmers, particularly women, lack access to quality Building a Better Future FARMERS agricultural inputs, including high-yield seeds and fertilizers. They are shut out from traditional forms of banking and have limited access to formalized Innovation financing. In Senegal, where agriculture contributes 15 percent of the overall Ukraine: Investing in Entrepreneurs GDP and employs 77 percent of the workforce, lending to farmers and farmer Jamaica: The Power of groups stands at just 1.2 percent of banking sector lending. Financial institutions, Public-Private Partnerships wary of perceived high risks, are hesitant to lend to farmers — posing an acute challenge to farmers’ ability to feed a growing population. Trade Finance: Mitigating Risk and Maximizing Financing IFC’s Africa Agriculture Accelerator Program (AAAP), aimed at demonstrating Driving Adoption of the financial viability of smallholder financing through the combined use of Electric Vehicles in India Photo: Through agCelerant, these technology, insurance, agent monitoring, and field extension services, is helping Uzbekistan: Energizing Reforms smallholder farmers in Senegal are address those barriers. With support from the Private Sector Window of the benefitting from IFC’s investment Global Agriculture and Food Security Program (GAFSP), IFC partnered with Game-Changing Technology for in rice production. Senegal’s Smallholder Farmers agCelerant and the Bank of Africa as part of an AAAP pilot to help smallholder Supporting Startups in farmers and small businesses in Senegal’s rice value chain get access to finance Challenging Markets more easily to grow their operations. The risk-sharing facility supports Bank of Africa-Senegal’s lending to thousands of smallholder rice farmers and small rice- Innovating to Boost Energy Access in Democratic Republic of Congo producing businesses, helping them access insurance, inputs, and equipment. Inclusion Bank of Africa is leveraging the support of agCelerant, an agritech company that Private Sector Solutions for Refugees offers data-driven solutions and training to ensure farmers receive the financial and Host Communities and technical support they need to increase their productivity. Using satellite Gender Bonds: Breaking Down Barriers imagery and other technologies, agCelerant controls the delivery of inputs such Pakistan: Support at a Critical Time as fertilizers and agrochemicals, insurance coverage, and farm services. Affordable Housing: Filling the Gap Improving food security and reducing import dependence, particularly for rice, Thought Leadership and is a key strategic priority for Senegal’s government. Rice, a critical commodity, Capacity Building is largely imported and despite favorable conditions for cultivation, the country IFC and WTO: Trade Finance in Africa produces less than 40 percent of the rice it consumes. IFC and IEA: Scaling Up Investment The project is part of IFC’s Global Food Security Platform, a $6 billion financing in Clean Energy facility designed to support vulnerable communities, boost the flow of vital Capital Markets: Training the Next commodities to emerging markets, and help reduce food insecurity. Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 29 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION Building a Better Future Innovation Ukraine: Investing in Entrepreneurs Jamaica: The Power of Photo: IFC’s Startup Catalyst Program is investing in Public-Private Partnerships tech-enabled ventures like Toters, a delivery service connecting local merchants with more than 500,000 Trade Finance: Mitigating Risk customers in Lebanon and Iraq. Toters delivers food, and Maximizing Financing grocery, and convenience products on-demand from more than 4,000 partner SMEs. Toters represents IFC’s Driving Adoption of first venture capital investment in Lebanon and Iraq. Electric Vehicles in India Uzbekistan: Energizing Reforms SUPPORTING STARTUPS Game-Changing Technology for Senegal’s Smallholder Farmers Supporting Startups in IN CHALLENGING Since its launch in 2016, the initiative has supported more than 2,800 entrepreneurs in 24 countries through Challenging Markets Innovating to Boost Energy Access MARKETS 19 funds. Companies supported by Startup Catalyst have raised $4.5 billion in follow-on funding — 86 times the amount of IFC’s original investments. in Democratic Republic of Congo Inclusion One example is Egyptian client accelerator Private Sector Solutions for Refugees Flat6Labs, which provided early backing to Chefaa, and Host Communities a local women-led online pharmacy. It has since raised more than $3.6 million in funding to expand Gender Bonds: Breaking Down Barriers Risk-taking entrepreneurs build thriving new IFC helps fill this gap with an integrated investment partnerships with 1,000 pharmacies, offering services Pakistan: Support at a Critical Time companies that create jobs, foster innovation, and and advisory package called IFC Startup Catalyst that to 7.5 million users who benefit from automatic refills Affordable Housing: Filling the Gap drive competitiveness. But the road can be rough. covers the full range of promising new companies’ of prescriptions, dosage reminders, and the ability to The support they need is often lacking in emerging needs. Under our innovative business model, we help consult an Arabic-speaking pharmacist at any time. Thought Leadership and Capacity Building markets and developing economies — and almost build nascent startup ecosystems by investing in nonexistent in lower-income countries. both earliest-stage support vehicles like incubators, IFC and WTO: Trade Finance in Africa accelerators, and seed funds, as well as venture IFC and IEA: Scaling Up Investment capital funds that then take equity stakes of between in Clean Energy $50,000 and $500,000 in emerging startups. Capital Markets: Training the Next Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 30 IFC 2023 ANNUAL REPORT The Entrepreneurial Ecosystem IFC Startup Catalyst works across the startup spectrum, building key components of the growth environment: LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION Building a Better Future INCUBATORS foster early-stage companies VENTURE CAPITAL Innovation through their first developmental ACCELERATORS SEED CAPITAL FUNDS Ukraine: Investing in Entrepreneurs phases until they have the help startups step up their rate provide the next stage of financial, human, and physical growth, taking partial ownership FUNDS investment for startups and Jamaica: The Power of resources to run on their own. in companies that participate in invest in exchange for a preliminary small businesses with long-term Public-Private Partnerships intensive, time-limited programs. equity stake or share in profits; growth potential, often providing their support is often seen as a Trade Finance: Mitigating Risk technical or managerial expertise key first step in helping startups and Maximizing Financing as well as investment. become established businesses. Driving Adoption of Electric Vehicles in India Uzbekistan: Energizing Reforms Game-Changing Technology for Senegal’s Smallholder Farmers Complementary IFC Initiatives Supporting Startups in Challenging Markets Africa/MCAT VC Platform She Wins Africa Innovating to Boost Energy Access To help build the digital economy in Africa, the Middle East, To support women entrepreneurs across sub-Saharan in Democratic Republic of Congo Central Asia, and Pakistan, IFC launched a new $225 million Africa, IFC launched She Wins Africa in 2023. The platform in 2022 to strengthen venture capital ecosystems program is designed to unlock the potential of hundreds Inclusion and invest in early-stage companies addressing development of women-owned startups by offering them advice, Private Sector Solutions for Refugees challenges through technological innovations in climate, training, mentorship, and improved access to finance. and Host Communities healthcare, education, agriculture, e-commerce, and other She Wins Africa builds upon the success of IFC’s She Gender Bonds: Breaking Down Barriers sectors. The platform is supported by the blended finance Wins Arabia program of 2021, which to date has provided facility of the International Development Association’s Private training to more than 80 women entrepreneurs and Pakistan: Support at a Critical Time Sector Window to reach investors in low-income and fragile support to more than 30 funds and accelerators. Affordable Housing: Filling the Gap and conflict-affected countries. Thought Leadership and VivaTech/IFC Partnership Capacity Building Photo: Now being replicated in Africa, IFC’s Innovation accelerator VivaTech and IFC have teamed up to She Wins Arabia initiative helps women-led IFC and WTO: Trade Finance in Africa host the AfricaTech Awards. The initiative aims to recognize startups across the Middle East and North Africa get the advice, mentorship, and and support innovative Africa-focused companies with IFC and IEA: Scaling Up Investment disruptive solutions in the climate tech, health tech, and financing they need to grow. in Clean Energy fintech sectors. The AfricaTech Awards, now in their second Capital Markets: Training the Next year, are part of IFC’s strategy to strengthen tech ecosystems Generation of Leaders in emerging markets and help innovative startups scale. CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 31 IFC 2023 INNOVATING TO ANNUAL REPORT LEADERSHIP PERSPECTIVES BOOST ENERGY RESULTS STRATEGY IN ACTION ACCESS IN DEMOCRATIC Building a Better Future REPUBLIC OF CONGO Much of Africa remains unconnected to power transmission lines, holding back development and leaving about 600 million Innovation people without electricity. Mini-grids, decentralized systems Ukraine: Investing in Entrepreneurs that generate and supply power to communities independently from national transmission grids, offer a beacon of hope. Jamaica: The Power of Public-Private Partnerships Mini-grids are an affordable, sustainable way to expand Trade Finance: Mitigating Risk electricity access. They are especially suitable for remote areas, and Maximizing Financing such as in the Democratic Republic of Congo, one of the world’s Driving Adoption of least electrified countries, with 70 million people living without Electric Vehicles in India access to power. IFC is helping communities tap into the Uzbekistan: Energizing Reforms promise of this technology by investing $10 million in Nuru, a pioneer of distributed energy solutions in the country. Game-Changing Technology for Senegal’s Smallholder Farmers Part of a more than $40 million package involving several other Supporting Startups in investors, the financing will allow Nuru (the Swahili word for Challenging Markets “light”) to begin work immediately on new solar projects in Innovating to Boost Energy Access provincial capitals Goma, Kindu, and Bunia, serving about 28,000 in Democratic Republic of Congo households and businesses. Inclusion Private Sector Solutions for Refugees The firm’s utility-scale “metro-grids” use cutting-edge and Host Communities technology and service, designed to provide reliable, round-the- clock renewable energy to communities in Eastern DRC. Once Gender Bonds: Breaking Down Barriers completed, the installation at Bunia will be the largest off-grid Pakistan: Support at a Critical Time solar hybrid project of its kind in sub-Saharan Africa. IFC’s Affordable Housing: Filling the Gap investment is supported by blended finance from the Finland- Thought Leadership and IFC Climate Change Program to help de-risk the transaction. Capacity Building Photos: IFC client Nuru, one of Africa’s pioneering renewable energy- IFC and WTO: Trade Finance in Africa powered minigrid companies, is revolutionizing safety in Goma, in the IFC and IEA: Scaling Up Investment Democratic Republic of Congo. In the past, the lack of exterior lighting and streetlights posed a threat to residents. But the installation of 394 new in Clean Energy streetlights has dramatically improved security. The neighborhood now Capital Markets: Training the Next shows a 39 percent increase in residents feeling safe while walking alone Generation of Leaders at night and increased job opportunities. CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 32 IFC 2023 Upstream: Unlocking Opportunities ANNUAL REPORT for New Investment LEADERSHIP PERSPECTIVES RESULTS One of the biggest barriers to sustainable private sector investment in emerging markets and developing economies STRATEGY IN ACTION is the shortage of well-prepared, commercially viable Building a Better Future investment opportunities. Innovation To address this gap, IFC has significantly increased its focus Ukraine: Investing in Entrepreneurs on early-stage market and project preparation work. These Jamaica: The Power of proactive and hands-on efforts, referred to as “Upstream,” help Public-Private Partnerships remove investment barriers and create opportunities to attract Trade Finance: Mitigating Risk private capital where it is needed most. And these efforts are and Maximizing Financing bearing fruit — IFC’s pipeline of Upstream-supported projects Driving Adoption of for the next five years now exceeds $30 billion, taking on key Electric Vehicles in India challenges in climate, water supply, digitalization, healthcare, and other areas. Uzbekistan: Energizing Reforms Game-Changing Technology for Upstream work over the past four years helped pave the way Senegal’s Smallholder Farmers for IFC’s investment in Nuru, assisting the firm with financial Supporting Startups in models, feasibility studies, and identification of new partners. Challenging Markets Similar Upstream efforts have supported 47 other investee Innovating to Boost Energy Access companies this year, resulting in the dramatic growth of IFC’s in Democratic Republic of Congo annual Upstream-enabled investments from $1.1 billion in FY20 Inclusion to $4.4 billion in FY23. Private Sector Solutions for Refugees While not all Upstream efforts will convert into IFC and Host Communities investments, those that don’t may serve as drivers of Gender Bonds: Breaking Down Barriers investment for others. It is experimental, resource-intensive Pakistan: Support at a Critical Time work that takes patience and tolerance for risk — but opens the doors to new investments that change lives. Affordable Housing: Filling the Gap Thought Leadership and Capacity Building IFC and WTO: Trade Finance in Africa IFC and IEA: Scaling Up Investment in Clean Energy Capital Markets: Training the Next Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 33 IFC 2023 STRATEGY IN ACTION ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION Building a Better Future Innovation INCLUSION Ukraine: Investing in Entrepreneurs Jamaica: The Power of Public-Private Partnerships Trade Finance: Mitigating Risk and Maximizing Financing Driving Adoption of Electric Vehicles in India Across everything we do, IFC works to support inclusive Uzbekistan: Energizing Reforms business models that improve livelihoods and create Game-Changing Technology for opportunities for the people who need them most. Senegal’s Smallholder Farmers Supporting Startups in This means opening doors to business opportunities for Challenging Markets women entrepreneurs and job creation for those at the Innovating to Boost Energy Access base of the economic pyramid, such as refugees. More in Democratic Republic of Congo broadly, it also means widening the private sector’s role Inclusion in countries that receive little investment or face other Private Sector Solutions for Refugees and Host Communities major challenges. However it is defined, inclusive business models are needed for growth to be sustainable and Gender Bonds: Breaking Down Barriers effective in reducing poverty. Pakistan: Support at a Critical Time Affordable Housing: Filling the Gap Photo: In Kenya, joint IFC and UNHCR work helped attract private Thought Leadership and businesses, including this bakery, to the Kakuma Kalobeyei refugee- Capacity Building hosting area, creating job opportunities and enhancing access to services for refugees and host communities. IFC and WTO: Trade Finance in Africa IFC and IEA: Scaling Up Investment in Clean Energy Capital Markets: Training the Next Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 34 IFC 2023 PRIVATE SECTOR SOLUTIONS FOR ANNUAL REPORT LEADERSHIP PERSPECTIVES REFUGEES AND RESULTS STRATEGY IN ACTION HOST COMMUNITIES Building a Better Future Innovation The number of people around the world who have sector stakeholders in refugee-hosting areas. It Ukraine: Investing in Entrepreneurs been forcibly displaced from their homes reached taps into private sector expertise, financing, and Jamaica: The Power of 110 million in 2023 — a record high. An estimated three innovation to improve the quality of life for those Public-Private Partnerships out of four of these people are hosted in low- and forcibly displaced and their hosts. Through job middle-income countries, often by communities creation, affordable and inclusive services, financing Trade Finance: Mitigating Risk and Maximizing Financing facing similar socioeconomic challenges. infrastructure, and providing capital for small and medium enterprises, significant progress can be made Driving Adoption of This grim statistic calls for innovative approaches to in fostering economic growth and empowerment. Electric Vehicles in India address a crisis that shows no signs of abating. In Uzbekistan: Energizing Reforms 2018, the United Nations General Assembly affirmed Since 2016, IFC and UNHCR have been working Game-Changing Technology for a Global Compact on Refugees, a historic framework together on project implementation in countries Senegal’s Smallholder Farmers calling for greater support for people forced to flee, as including Brazil, Colombia, Ethiopia, Iraq, Jordan, Supporting Startups in well as the communities that host them. It envisages Kenya, Lebanon, and Uganda. Challenging Markets a more significant role for the private sector to help Innovating to Boost Energy Access create an enabling environment for refugees to IFC’s new formal partnership with UNHCR will build in Democratic Republic of Congo become more self-reliant so they can build their own on the experience of this work and allow them to futures and contribute to their host communities. have a more significant impact in supporting local Inclusion economies and markets, in alignment with the spirit of Private Sector Solutions for Refugees In response to this call to action, in December the Global Compact on Refugees. and Host Communities 2022, IFC and UNHCR (the UN Refugee Agency) Gender Bonds: Breaking Down Barriers established a Joint Initiative to create opportunities Pakistan: Support at a Critical Time for refugees and their host communities. The Joint Initiative provides operational support to Affordable Housing: Filling the Gap IFC and UNHCR teams and promotes knowledge Thought Leadership and sharing to facilitate the engagement of private Capacity Building IFC and WTO: Trade Finance in Africa IFC and IEA: Scaling Up Investment Photo: IFC and Colombian microfinance bank, Bancamía, in Clean Energy launched a pilot program to help Venezuelans in Colombia integrate into social and economic life. Venezuelan migrant Capital Markets: Training the Next María José Noguera Martínez took out a Bancamia micro Generation of Leaders loan to start her business. CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 35 IFC 2023 regions. With this support, entrepreneurs across the ANNUAL REPORT country were able to secure the funding needed to expand their businesses, hire more local artisans, and LEADERSHIP PERSPECTIVES contribute to their local economies. RESULTS STRATEGY IN ACTION In Indonesia, IFC embarked on a landmark social and green bond deal with PT Bank BTPN Tbk (BTPN), Building a Better Future worth up to $500 million. This investment was not just Innovation about green growth; it was also about empowering Ukraine: Investing in Entrepreneurs women business owners. The financing gap for MSMEs in Indonesia, exacerbated by COVID-19, was Jamaica: The Power of a significant hurdle for entrepreneurs, with women Public-Private Partnerships among the hardest hit. However, with half of the social Trade Finance: Mitigating Risk bond proceeds now earmarked for WSMEs, thousands and Maximizing Financing of entrepreneurs will be able to secure the necessary Driving Adoption of funding to grow a greener, more inclusive economy. Electric Vehicles in India Uzbekistan: Energizing Reforms These initiatives are part of IFC’s Banking on Women Game-Changing Technology for (BoW) business, which has been providing financial Senegal’s Smallholder Farmers and business solutions to women-led SMEs through GENDER BONDS: In the heart of Brazil, a small business owner had a financial institution partners. Since 2012, IFC’s BoW Supporting Startups in Challenging Markets vision, but like many women entrepreneurs in her business has mobilized and invested more than Innovating to Boost Energy Access BREAKING region, she faced significant barriers in accessing the necessary capital. Meanwhile, thousands of miles $4.2 billion in financial institutions, specifically to finance women-led SMEs through 251 investment and DOWN in Democratic Republic of Congo away in Indonesia, another woman shared a similar advisory services in 76 countries. Inclusion dream and faced similar challenges. Private Sector Solutions for Refugees and Host Communities BARRIERS In 2023, these women and thousands of female Looking ahead, we remain committed to leveraging our capital, expertise, and influence Gender Bonds: Breaking Down Barriers entrepreneurs like them saw their dreams begin to create markets and opportunities for women to take shape, thanks to an innovative partnership entrepreneurs. By doing so, we aim to build a Pakistan: Support at a Critical Time between IFC and two commercial banks. better future where everyone, regardless of Affordable Housing: Filling the Gap gender, has an equal opportunity to succeed. Thought Leadership and In Brazil, IFC partnered with Itaú Unibanco, Capacity Building subscribing to a $200 million gender bond. This From Brazil to Bali and everywhere in between, marked the first gender bond issued by a private bank women entrepreneurs find themselves connected IFC and WTO: Trade Finance in Africa Photo: Brazilian entrepreneur Júlia Morais started her business, Flor de Maio, to provide in Brazil, and it was a game changer for thousands by shared experience. IFC’s continuing support for IFC and IEA: Scaling Up Investment natural and holistic healthcare products to of women. The bond supported Itaú Unibanco’s social bonds is transforming women’s entrepreneurial in Clean Energy women in her community. She was able to lending program to women-owned small and medium experience from hardship to opportunity. grow her business, thanks in part to a loan Capital Markets: Training the Next from Itaú Unibanco. enterprises (WSMEs), particularly those in underserved Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 36 IFC 2023 Northwest hospitals monitor and improve their PAKISTAN: ANNUAL REPORT quality of care, strengthen corporate planning, and LEADERSHIP PERSPECTIVES SUPPORT AT A improve internal processes and corporate governance. Approximately 25 percent of patients come from RESULTS STRATEGY IN ACTION CRITICAL TIME nearby Afghanistan. Building a Better Future In a year when Pakistan faced a crippling combination IFC’s investment in the hospital is supported by a co-investment from the blended finance facility of James Morley Innovation of catastrophic floods, an economic downturn in part the International Development Association’s Private Senior Investment due to the global energy crisis, and political instability, Sector Window. The blended concessional finance Ukraine: Investing in Entrepreneurs Officer, IFC, Singapore IFC more than doubled its annual investments in co-investment is addressing a gap in the availability Jamaica: The Power of the country to nearly $1.5 billion, a new record and of the long-term financing that the project needs to Public-Private Partnerships testament to our role as a countercyclical investor. deliver the anticipated impact. “There is a huge need for improved Trade Finance: Mitigating Risk healthcare in this city of more than and Maximizing Financing This unprecedented level of IFC support came as the Our global focus on addressing the impacts of climate 2 million people with a large Afghan Driving Adoption of country is confronting its worst economic crisis in change is also evident in Pakistan, a country that is refugee population, but no other Electric Vehicles in India decades. Amid Pakistan’s declining foreign reserves, responsible for only 0.3 percent of global emissions companies need hard currency to do business in hospitals of this quality.” Uzbekistan: Energizing Reforms but is disproportionately affected by extreme weather industrial and manufacturing sectors. But commercial events such as floods and cyclones. We are looking to Game-Changing Technology for Amid the global COVID-19 pandemic, James banks’ ability to lend to the private sector has been scale up support for sustainable and climate-resilient Senegal’s Smallholder Farmers Morley began working on IFC’s $11 million low amid the broader uncertainty. infrastructure while also supporting micro, small, Supporting Startups in investment in the expansion of two private Challenging Markets and medium enterprises and strengthening capital hospitals serving low-income patients in IFC has provided a lifeline with short-term finance, markets. In addition to financial support, IFC provides Innovating to Boost Energy Access Peshawar, Pakistan. For the first two years, which rose by more than 80 percent this fiscal year. advice on partnerships between the government and in Democratic Republic of Congo travel was impossible. As time went on, a IFC’s investments included the launch of a pioneering private sector to improve the country’s water supply, deep macroeconomic crisis began to emerge Inclusion supply chain risk-sharing facility to increase our hospitals, and airports. Through this support, a first- in Pakistan, decreasing the Pakistani rupee’s capacity to support clients in key sectors such as of-its-kind framework has been developed for airport Private Sector Solutions for Refugees value by 50 percent. Then the Taliban and Host Communities complex manufacturing and export-oriented products, outsourcing in the country. takeover of neighboring Afghanistan led as well as value chains of smaller businesses. Gender Bonds: Breaking Down Barriers to a flood of refugees, making conditions Photo: Northwest General Hospital and Research Center in even more challenging in the province. Pakistan: Support at a Critical Time IFC is also helping address Pakistan’s challenges Peshawar, Pakistan. Affordable Housing: Filling the Gap by providing long-term financing. In healthcare, But thanks to the team’s persistence, a our financing for a private hospital in the Khyber Thought Leadership and committed client, and IFC support that included Pakhtunkhwa province is helping improve access Capacity Building blended finance and Upstream/advisory, the to high-quality healthcare services, especially for IFC and WTO: Trade Finance in Africa client received the transformative IFC funding, low-income patients. There is only one doctor for increasing access to healthcare for thousands IFC and IEA: Scaling Up Investment every 3,000 people in the province, less than a third in Clean Energy of people in this frontier region of the country. of the national average and well below World Health Capital Markets: Training the Next Organization recommendations. The investment Generation of Leaders builds on earlier IFC advisory work that helped CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 37 IFC 2023 AFFORDABLE HOUSING: ANNUAL REPORT LEADERSHIP PERSPECTIVES FILLING THE GAP RESULTS STRATEGY IN ACTION The world faces a vast shortage of affordable housing. Building a Better Future Demand greatly outstrips supply, affecting more than a Innovation billion people. IFC is mobilizing its toolkit to tackle this crisis with new urgency. Ukraine: Investing in Entrepreneurs Jamaica: The Power of Consider Papua New Guinea, which struggles with a Public-Private Partnerships critical housing shortage in its capital, Port Moresby. An Trade Finance: Mitigating Risk estimated 56 percent of the city’s population will live in and Maximizing Financing informal settlements by 2030 unless the issue is addressed. Driving Adoption of High prices and a lack of supply are pushing people to live Electric Vehicles in India in unsafe conditions. Uzbekistan: Energizing Reforms IFC has signed an advisory agreement with the Game-Changing Technology for Senegal’s Smallholder Farmers government to address this shortage through structuring and implementing a public-private partnership that will Supporting Startups in help provide a variety of single-unit family dwellings Challenging Markets and affordable flats. IFC will assist the government Innovating to Boost Energy Access in running an open and competitive bidding process in Democratic Republic of Congo to identify a highly experienced private developer Inclusion to design, finance, build, and maintain the housing Private Sector Solutions for Refugees for a defined period. This affordable housing project and Host Communities will not only help address a housing shortage and problems associated with informal settlements, but Gender Bonds: Breaking Down Barriers will also provide a stock of climate-resilient homes Pakistan: Support at a Critical Time that incorporate green design specifications. Affordable Housing: Filling the Gap Thought Leadership and Capacity Building IFC and WTO: Trade Finance in Africa Photo: New affordable urban housing under construction in the Mandeni Municipality of IFC and IEA: Scaling Up Investment South Africa’s iLembe District of KwaZulu-Natal. in Clean Energy Capital Markets: Training the Next Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 38 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION Home ownership is one of the most important ways Building a Better Future for people to build wealth and transfer it to the next Innovation generation. In South Africa, IFC is helping put more people on that path, which, in addition to improved Ukraine: Investing in Entrepreneurs access to finance, sometimes requires resolving Jamaica: The Power of Public-Private Partnerships complex legal issues that stand in the way. Amina Khaled El Zayat Trade Finance: Mitigating Risk South Africa’s government has built more than Senior Operations Officer, and Maximizing Financing a million subsidized houses for its low-income IFC, Johannesburg Driving Adoption of populations in recent decades. But in many cases, Electric Vehicles in India when people received the houses, title deeds Uzbekistan: Energizing Reforms were not transferred, leaving occupants unable to “This story touched me on a personal legally sell or borrow against the property. This has level, as I was able to see very immediate Game-Changing Technology for Senegal’s Smallholder Farmers kept an estimated 242 billion rand (approximately and tangible results on the ground as a $12 billion) in assets out of the hands of the consequence of our work.” Supporting Startups in country’s poorest households. With the support Challenging Markets of the Swiss State Secretariat for Economic Affairs Amina Khaled El Zayat says the South Africa Innovating to Boost Energy Access (SECO), IFC advisory services has helped two Property Titling advisory project took her deeper in Democratic Republic of Congo municipalities near Durban locate the rightful into the grassroots than anything else in her 15- Inclusion owners, transfer full ownership to them, and year career at IFC. It helped the KwaDukuza and Private Sector Solutions for Refugees make sure the problem does not repeat itself. Mandeni municipalities near Durban locate the and Host Communities owners of low-income housing and put the title Gender Bonds: Breaking Down Barriers deeds into their hands. The lessons from this pilot project are now discussed at the policy level Pakistan: Support at a Critical Time to replicate its success on a larger scale. Affordable Housing: Filling the Gap Photos left: Sifunda Amos Nkosi Thought Leadership and (above left, accompanied by Capacity Building Thobeka Cele) and Nonhlanhla Msweli are among the low- IFC and WTO: Trade Finance in Africa income homeowners who have IFC and IEA: Scaling Up Investment now acquired titles to their in Clean Energy property thanks to the advisory services IFC and SECO are Capital Markets: Training the Next providing to municipalities in Generation of Leaders South Africa. CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 39 IFC 2023 STRATEGY IN ACTION ANNUAL REPORT THOUGHT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION LEADERSHIP Building a Better Future Innovation Ukraine: Investing in Entrepreneurs Jamaica: The Power of CAPACITY Public-Private Partnerships Trade Finance: Mitigating Risk and Maximizing Financing AND Driving Adoption of BUILDING Electric Vehicles in India Uzbekistan: Energizing Reforms Game-Changing Technology for Senegal’s Smallholder Farmers Supporting Startups in Challenging Markets Collaborating with partners to build expertise and share Innovating to Boost Energy Access in Democratic Republic of Congo knowledge is an essential part of IFC’s mission. Inclusion In addition to the hundreds of projects we carry out each year, Private Sector Solutions for Refugees we conduct regional and thematic research initiatives to provide and Host Communities evidence-driven recommendations on how the private sector can Gender Bonds: Breaking Down Barriers help address the most urgent challenges of development. These Pakistan: Support at a Critical Time efforts help set a broader agenda for business and finance in the Affordable Housing: Filling the Gap developing world, pointing the way to new solutions for a more Thought Leadership and sustainable and inclusive world. Capacity Building IFC and WTO: Trade Finance in Africa Through partnerships, we also work to build the capacity of IFC and IEA: Scaling Up Investment leaders in emerging and developing economies to develop their in Clean Energy skills and knowledge. Capital Markets: Training the Next Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 40 IFC 2023 Photo: IFC financing helps Kenyan financial technology firm M-KOPA expand its flexible IFC AND WTO: ANNUAL REPORT LEADERSHIP PERSPECTIVES credit model, giving customers access to everyday essential products by paying a small deposit followed by digital micropayments. TRADE FINANCE IN AFRICA RESULTS STRATEGY IN ACTION At the height of the COVID-19 pandemic, the trade the poorest and fragile and conflict-affected finance gap added to an array of disruptions in moving countries. In its first year, the initiative provided Building a Better Future critical goods and commodities across borders. seven banks with trade finance lines totaling Innovation Restoring and increasing access to trade finance to $75 million in countries such as Burkina Faso, Ukraine: Investing in Entrepreneurs boost trade flows is a critical policy priority to support Burundi, Guinea, and Mauritania. This included a economic growth prospects. $5 million facility for Interbank Burundi, supported Jamaica: The Power of Public-Private Partnerships by advisory services, and $10 million to bolster the In FY23, IFC and the World Trade Organization (WTO) growing trade finance business of Mauritania’s Trade Finance: Mitigating Risk joined forces to understand how to scale access to Banque Mauritanienne de l’Investissement. and Maximizing Financing trade finance in West Africa’s four largest economies — Driving Adoption of Côte d’Ivoire, Ghana, Nigeria, and Senegal — which face Electric Vehicles in India a trade finance shortage of up to $14 billion annually. Uzbekistan: Energizing Reforms Game-Changing Technology for The study, Trade Finance in West Africa, finds that Senegal’s Smallholder Farmers the high cost and limited scope of existing trade Supporting Startups in finance products in these economies severely limits Ngozi Challenging Markets their trade. By lowering the costs and increasing the Okonjo-Iweala availability of trade finance, these countries could WTO Director-General Innovating to Boost Energy Access boost their exports and imports by up to $26 billion in Democratic Republic of Congo annually. Additionally, providing greater access to Inclusion trade finance would bring major economic benefits “Our collaboration with IFC has helped Private Sector Solutions for Refugees and has become a key focus of IFC’s work across the us better understand what is happening and Host Communities continent. This has included joint capacity-building with trade finance in Africa, enabling Gender Bonds: Breaking Down Barriers workshops with WTO for banks, SMEs, industry IFC to help plug the trade finance gaps. associations, and government officials in Rwanda and Pakistan: Support at a Critical Time Côte d’Ivoire. Our landmark study showed that only Affordable Housing: Filling the Gap 25 percent of West Africa’s trade was Thought Leadership and Complementing that outreach is the African Trade supported by trade finance, at high cost, Capacity Building and Supply Chain Recovery Initiative, launched by marginalizing small traders and keeping IFC in 2022 with the support of the International them downstream in production.” IFC and WTO: Trade Finance in Africa Development Association’s Private Sector Window. IFC and IEA: Scaling Up Investment It provides funding and risk mitigation through local in Clean Energy financial institutions to importers and exporters Capital Markets: Training the Next of essential goods across Africa, especially in Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 41 IFC 2023 IFC AND IEA: ANNUAL REPORT LEADERSHIP PERSPECTIVES SCALING UP INVESTMENT RESULTS STRATEGY IN ACTION IN CLEAN ENERGY Building a Better Future Growth in emerging markets and developing economies will result in increasing Innovation energy demand that governments alone cannot fulfill — unless they cut other critical Ukraine: Investing in Entrepreneurs expenditures. A joint report by IFC and the International Energy Agency calls on the Jamaica: The Power of private sector to step up. Public-Private Partnerships Trade Finance: Mitigating Risk The report, Scaling Up Private Finance for Clean Energy in Emerging and Developing and Maximizing Financing Economies, finds that annual clean energy investments in emerging and developing economies will need to more than triple by the early 2030s and stay at those levels Driving Adoption of Electric Vehicles in India for another 20 years to meet rising energy needs and align with the climate goals set out in the Paris Agreement. Uzbekistan: Energizing Reforms Game-Changing Technology for It estimates that about 60 percent of this financing will have to come from the Senegal’s Smallholder Farmers private sector, amounting to about $1 trillion annually by the early 2030s, up from Supporting Startups in $135 billion today. Encouragingly, new climate-friendly energy solutions are being Challenging Markets introduced to the market, but they face risks of uneven development and deployment, Innovating to Boost Energy Access potentially leaving many countries behind. in Democratic Republic of Congo For the private sector to play its part, clean energy projects need to be developed Inclusion that match investors’ risk and return expectations. Currently, the cost of capital Private Sector Solutions for Refugees for a typical utility-scale solar project can be up to three times higher in emerging and Host Communities economies than in advanced ones, reflecting real and perceived risks at the country, Gender Bonds: Breaking Down Barriers sectoral, and project levels. The World Bank Group will be instrumental in de-risking Pakistan: Support at a Critical Time projects through blended finance and in improving project preparation to scale up opportunities. Affordable Housing: Filling the Gap Thought Leadership and The report stresses the importance of de-risking for projects that involve newer Capacity Building technologies that have yet to scale and are not yet cost-competitive in many IFC and WTO: Trade Finance in Africa markets, such as battery storage, offshore wind, renewable-powered desalination, or low-emissions hydrogen. Projects using more traditional technologies but located IFC and IEA: Scaling Up Investment in Clean Energy in riskier markets will also require de-risking. Capital Markets: Training the Next Photo: IFC-financed Cibuk 1 wind farm in the northern Serbian province of Vojvodina. Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 42 IFC 2023 With sufficient financing, companies create jobs — Successful capital market development requires CAPITAL MARKETS: ANNUAL REPORT providing the steady incomes that lift people out of robust skills in financial regulation, market LEADERSHIP PERSPECTIVES TRAINING poverty. Along with loans and equity investments, mature capital markets play a critical role in enabling intermediation, and policy planning. Over the past seven years, the IFC-sponsored Capital Markets RESULTS STRATEGY IN ACTION THE NEXT business owners to access long-term financing, allowing them to grow their operations and hire Program has addressed this need, educating mid- career professionals from ministries of finance, Building a Better Future GENERATION more people. central banks, stock exchanges, and capital market authorities. Since its inception in 2016, the program Innovation Ukraine: Investing in Entrepreneurs OF LEADERS But in many countries, capital markets remain underdeveloped because they lack a critical mass of has trained over 220 professionals across 58 countries. knowledgeable regulators who can carry out reforms to “The program has really been very beneficial to our Jamaica: The Power of modernize the financial sector and develop local capital countries by preparing participants to be the next crop Public-Private Partnerships markets. This is why IFC has teamed with the Milken of governors, ministers of finance, and other positions Trade Finance: Mitigating Risk Institute in the United States and Paris Europlace in our countries,” said Patrick Njoroge, governor of the and Maximizing Financing in France to train future leaders at the George Central Bank of Kenya. Driving Adoption of Washington University and Paris Dauphine University. Electric Vehicles in India “If such opportunities can be afforded to many people Uzbekistan: Energizing Reforms in developing countries, it can help to change Africa,” Game-Changing Technology for said program alum Vusani Khoza of the Central Bank Senegal’s Smallholder Farmers of Eswatini. Supporting Startups in Challenging Markets The students spend about eight months in Washington, D.C., or in Paris, first completing a Innovating to Boost Energy Access certificate program at the George Washington in Democratic Republic of Congo University or an executive master’s at Paris Dauphine, Inclusion with courses on financial markets fundamentals, Private Sector Solutions for Refugees corporate governance, regulatory regimes, and other and Host Communities topics. Then they intern at investment banks, asset Gender Bonds: Breaking Down Barriers management firms, or international organizations like the World Bank Group. Pakistan: Support at a Critical Time Affordable Housing: Filling the Gap Thought Leadership and Capacity Building IFC and WTO: Trade Finance in Africa IFC and IEA: Scaling Up Investment in Clean Energy Photo: May 2023 graduation ceremony for the ninth cohort of the IFC-sponsored Capital Capital Markets: Training the Next Markets program. Generation of Leaders CRITICAL FUNCTIONS IFC ANNUAL REPORT 2023 43 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS MEASURING UP: STRATEGY IN ACTION CRITICAL FUNCTIONS Measuring Up: Our Impact OUR IMPACT Sustainability Accountability and Oversight Diversity, Equity, and Inclusion Measuring the results of our work and evaluating our effectiveness are fundamental Since its introduction in FY18, the AIMM framework has delivered over 2,300 ex-ante to IFC’s approach to development. and 4,400 portfolio impact scores. The framework is being continuously refined and Auditor’s Report streamlined to meet business needs. Letter to the Board of Governors MEASURING THE IMPACT OF IFC OPERATIONS Stay Connected IFC’s impact assessment tool, the Anticipated Impact Measurement and Monitoring AIMM SCORES Credits (AIMM) system, enables IFC to better define, measure, rate, and monitor the In FY23, IFC committed 243 investment projects that received ex-ante AIMM scores. development impact of each investment project. The table below summarizes ratings over the past two years. Reporting Under the Task Force on Climate-related Financial Disclosures The ex-ante AIMM rating system, which assesses a project’s expected impact, is fully integrated into IFC’s investment approval processes and allows development impact Investment Ex-Ante AIMM Ratings for Compensation and Benefits considerations to be weighed against a range of strategic objectives, including Projects Committed in FY23 and FY22 Financial Commitments to volume, financial return, risk, and thematic priorities. SHARE OF PROJECTS IFC Trust Funds FY23 FY22 For projects in IFC’s portfolio, ex-ante AIMM scores are transitioned to a portfolio AIMM Rating Categories (243 PROJECTS) (225 PROJECTS) Funding AIMM score that is reviewed annually. AIMM portfolio monitoring assesses a project’s performance and the underlying risks to achieving expected development Excellent 14% 11% Financial Performance Summary impact using results data from assigned outcome indicators. By comparing changes Good 68% 61% in indicator results to both ex-ante targets and AIMM sector framework benchmarks, Satisfactory 18% 28% we are able to link the ex-ante AIMM score to its evolving portfolio AIMM score and Low 0% 0% measure the extent to which the expected development impact is realized. The FY23 AIMM portfolio comprises 1,130 active projects that have received ex-ante The AIMM system helps operationalize IFC’s strategy by providing a robust AIMM scores. The table that follows summarizes ratings over the past two years. operational framework that: • Improves our ability to identify and design projects that maximize our development impact; • Sets ambitious targets and incentives; • Strengthens our capacity to deliver an optimal mix of projects that generate both high development impact and solid financial returns; and • Provides an “end-to-end” approach to results measurement by linking ex-ante assessments with the learning and accountability function. IFC ANNUAL REPORT 2023 44 IFC 2023 In addition, IFC is a founding partner of the Harmonized Indicators for Private Investment Portfolio AIMM Ratings, ANNUAL REPORT Sector Operations (HIPSO). The 28 development finance institutions (DFIs) in the FY23 and FY22 HIPSO Whole Group work to develop metrics at the sector and sub-sector levels LEADERSHIP PERSPECTIVES RATING DISTRIBUTIONS that could be leveraged by the signatories to the Impact Principles and the broader FY23 FY22 impact investing community. In the past year, the HIPSO partnership revised metrics RESULTS for agribusiness, health, and education and drafted new indicators in increasingly AIMM Rating Categories (1,130 Projects) (1,034 Projects) STRATEGY IN ACTION Excellent 11% 8% topical areas like disruptive technologies and job quality. The HIPSO platform has a key role to play in ensuring best practices in metrics for monitoring development CRITICAL FUNCTIONS Good 54% 55% impact are made widely available to non-DFI partners. It is also designed to nurture Satisfactory 25% 27% a culture of sharing knowledge and learning, including sharing knowledge on Measuring Up: Our Impact Low 10% 10% impact management systems, theories of change and mapping evidence gaps, and Sustainability harmonizing data collection templates. Detailed AIMM scores by region and industry, as well as selected IFC client reach can Accountability and Oversight be found on IFC’s Annual Report website. Diversity, Equity, and Inclusion ALIGNING WITH THE SUSTAINABLE Auditor’s Report This is the fourth year IFC is publishing portfolio AIMM scores for investment DEVELOPMENT GOALS (SDGs) projects under supervision. Changes in portfolio AIMM scores inform investment managers of progress in delivering development outcomes for active investment IFC operations contribute to several SDGs through direct investments and advisory Letter to the Board of Governors services. Integral to IFC’s mandate and aligned with the World Bank Group’s goals are projects. The FY23 average portfolio AIMM score was 48. The average ex-ante Stay Connected AIMM score at approval for these same projects was 49, which suggests that at the SDGs 1 and 10: “No Poverty” and “Reduced Inequalities.” At the strategic sector level, portfolio level, overall, these projects are delivering on expected development impact IFC promotes projects in infrastructure, agriculture, financial inclusion, health, and Credits during implementation. education — aligned with SDGs 2, 3, 4, 6, 7, and 9. Reporting Under the Task Force on Ratings of Advisory Projects: Development effectiveness of advisory projects is Climate-related Financial Disclosures assessed at project completion. In FY23, 98 advisory projects qualified for ex-post Compensation and Benefits evaluations, and 61 percent of these projects were self-rated to be mostly successful or better. Financial Commitments to IFC Trust Funds The FY23 overall success rates for the advisory services portfolio is trending lower IFC also actively partners with private investors to mobilize new sources of relative to FY22, largely because of the effects of the COVID-19 pandemic and other finance — aligned with SDG 17. IFC continues to promote job creation and economic Funding growth, gender equality, cities development, environmental and social sustainability, externalities, particularly in Africa, Europe, and for global projects. Despite the and climate-change adaptation and mitigation — aligned with SDGs 8, 5, 11, 12, and 13, Financial Performance Summary decline of the overall IFC success rate, success rates for the advisory services portfolio increased in the Middle East, Central Asia, Türkiye, Afghanistan, and Pakistan Region. respectively. IFC’s clients’ contribution to the SDGs is highlighted on the IFC SDG Additional details can be found on IFC’s Annual Report website. Dashboard on IFC’s website. SETTING STANDARDS FOR IMPACT INVESTING Since their launch in 2019, the Operating Principles for Impact Management (Impact Principles) have become the market standard for impact investors. By adhering to these principles, impact investors can help ensure that their investments IFC, together with other DFIs who are HIPSO partners, has developed a common meet a high standard for social and environmental impact, which can translate into methodology to align DFI contributions with the SDGs, available for broader use more effective use of capital. Beginning with 58 founding signatories, the Impact by private impact investors and corporates. Additional information is available at: Principles have grown significantly, and the number of signatories has tripled to 177. https://indicators.ifipartnership.org/dashboard/. The signatories come from 39 countries and represent $516 billion in assets focused on impactful investments. IFC hosted the Secretariat for the Impact Principles until October 2022, when we transferred hosting responsibilities to the Global Impact Investing Network. IFC ANNUAL REPORT 2023 45 IFC 2023 • Impact of the legal reforms on the e-payment market in LESSONS FROM RESEARCH, ANALYTICS, AND ANNUAL REPORT Bangladesh: IFC undertook an analysis to assess the contribution of the SELF-EVALUATION PROGRAMS two e-payment regulations (the Bangladesh Payment and Settlement LEADERSHIP PERSPECTIVES Systems and the Bangladesh Electronic Fund Transfer Regulations in IFC uses a combination of research, data analytics, and self-evaluations to fill 2014), supported by the Bangladesh Investment Climate Fund (BICF), RESULTS knowledge gaps and provide real-time solutions to clients and operational staff. to the development of the e-payment market in Bangladesh. The These insights generate important lessons that inform new client engagements. STRATEGY IN ACTION IFC-supported reforms are part of a larger World Bank Group package. Notable examples from FY23 are detailed below: The analysis found that IFC-supported regulations directly contributed to CRITICAL FUNCTIONS the licensing of 13 commercial fintech companies and the development • Impact Evaluation on Africa Improved Foods Limited (AIF Project) in Rwanda: of a consumer protection framework required to enable the growth Measuring Up: Our Impact IFC completed a six-year-long impact evaluation of the AIF Project in FY23, using of e-payments. It also finds that regulation was a necessary but not a matched difference-in-difference quasi-experimental design to assess the Sustainability sufficient condition for market development. The analysis found impact on farmer livelihoods. Both IFC own-account and blended concessional that the number of transactions of all three e-payment instruments Accountability and Oversight finance from the Private Sector Window of the Global Agriculture and Food (payment cards, internet banking, and mobile financial services) have Security Program were used to finance the construction and operation of a 45,000 Diversity, Equity, and Inclusion grown significantly over time. The number of mobile financial services metric tons processing plant to produce fortified cereal bars for undernourished transactions was approximately 10 times larger than card-based Auditor’s Report children and lactating mothers to combat chronic malnutrition. The evaluation transactions and 100 times larger than internet banking transactions found positive impacts for the treatment group on maize production, poverty in 2021. The use of e-payment technologies grew exponentially during Letter to the Board of Governors rate, household livestock income, and household ownership of non-agricultural the COVID-19 pandemic. Bangladesh is a regional leader on mobile assets. These effects represent statistically significant positive differences from Stay Connected money but lags on mobile and internet banking. Yet, further growth those of the comparison group, with the treatment group having 1.5 to 2 times of e-payments is contingent on reforms around market competition, Credits higher increase in the production, sales, and revenue of planting maize as well as financial literacy, and awareness. agricultural revenue. The likelihood of living below the international poverty line Reporting Under the Task Force on of $2.15 a day decreased by 4.7 percentage points for treatment cohorts supplying • Climate Change Impact Management by Financial Institutions Climate-related Financial Disclosures to the project for more than three years. An earlier assessment of the AIF Project Survey: The survey sought to take stock of financial institutions’ capacity found that, during the forecast period of 2016 to 2031, the project was expected and readiness to manage climate-change-related risks and opportunities Compensation and Benefits to generate $758 million in net incremental benefits to the Rwandan economy, 70 and the key challenges they are facing in aligning with the objectives of Financial Commitments to percent ($532 million) of which is labor value added, mostly through reclaimed labor the Paris Agreement. One hundred seventy-seven financial institution IFC Trust Funds productivity on the consumer side from reduction in malnutrition and stunting. clients across 73 emerging markets and developing economies were asked to share their levels of preparedness in four areas, namely strategy Funding • The Impact of Shared Telecom Infrastructure on Digital Connectivity and and governance, risk, finance, and reporting and disclosure. The survey Inclusion: Published in collaboration with the Toulouse School of Economics, this Financial Performance Summary results indicated that awareness of climate risks is widespread but working paper, using data from 150 countries spanning over 12 years, found that scarcity of data to inform decisions, inadequate regulation, and shortages shared telecom infrastructure resulted in improved affordability of mobile internet of funding are preventing them from taking further action. Around a and increased uptake by women and rural households. A substantial number of third of respondents see climate finance as a priority but their growing individuals remain unconnected to the internet despite an increasing emphasis on appetite for expansion of their green portfolios faces several hurdles, infrastructure-based competition. This paper investigates the impact of shared including low or insufficient customer demand for climate finance telecom infrastructure on digital connectivity and inclusion using a new dataset paired with the limited availability of longer-term funding and a limited on mobile tower sharing transactions between 2008 and 2020, i.e., acquisitions of breadth of climate finance products. The survey revealed that while towers by independent companies from mobile network operators to be rented only about a third of respondents have adopted three or more of the back to all operators. Estimates based on difference-in-differences with different eleven recommendations by the Task Force on Climate-Related Financial timing of treatment suggest that these transactions resulted in a significant drop Disclosures (TCFD), the share is set to reach 76 percent in the next two in the price of mobile connectivity as well as an increase in availability and uptake years. The results of the survey are valuable in identifying priority areas of mobile internet, especially by rural households and women. Our findings suggest where further support from development finance institutions can have that increased competition intensity through reduced market concentration the most impact. appears to be the main driver of these outcomes. IFC ANNUAL REPORT 2023 46 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION CRITICAL FUNCTIONS Measuring Up: Our Impact SUSTAINABILITY Sustainability Accountability and Oversight Diversity, Equity, and Inclusion IFC has long provided leadership in shaping as climate governance and reporting. Based on IFC’s IFC AS A STANDARD SETTER Corporate Governance Methodology, IFC has launched Auditor’s Report the environmental, social, and corporate At the core of our Sustainability Framework are a Climate Governance Progression Matrix and tip Letter to the Board of Governors governance (ESG) landscape, from IFC’s Performance Standards, which define how our sheet to assist boards of directors in identifying and pioneering sustainability safeguards for clients avoid, mitigate, and manage environmental overseeing climate-related risks and opportunities. Stay Connected and social (E&S) risks. For nearly two decades, our the private sector to establishing rigorous Performance Standards have served as a global Credits ESG risk-management practices. The benchmark. The Equator Principles, which are built on CAPACITY BUILDING Reporting Under the Task Force on these standards, have been adopted by 139 financial Through our ESG advisory services, we support Sustainability Framework and Corporate Climate-related Financial Disclosures institutions in 39 countries. A growing number of other our clients and the broader market in navigating Governance Methodology anchor IFC’s ESG financial institutions and sustainability frameworks ESG challenges. In FY23, we supported 94 clients in Compensation and Benefits risk-management approach. They establish are either adopted from or influenced by IFC’s 32 countries in improving their ESG practices and Financial Commitments to Performance Standards. approaches. We also continually develop open-source a solid foundation for growing IFC’s own IFC Trust Funds public goods on best practices related to sustainability business sustainably, as well as building the The World Bank Group’s Environmental, Health, and issues. We published new tools and knowledge Funding capacity of our clients, the private sector, Safety (EHS) Guidelines are the technical reference products, such as a tip sheet and case studies to documents of Good International Industry Practice enhance understanding around gender-based violence Financial Performance Summary and future industry leaders. (GIIP) for financial institutions, companies, and ESG and harassment risk management, and a series of case practitioners across the globe. In close collaboration studies on women leaders in fragile markets entitled As the global sustainability agenda advances, IFC with the World Bank and MIGA, we have begun Being Bold — Case Studies on Women’s Business has continued to innovate. Whether breaking new updating and modernizing the guidelines to reflect Leadership in Sierra Leone and Liberia. Our ESG ground with digital tools that monitor project the current GIIP, including strengthened guidance resources are valued by our clients and the broader impact more efficiently or forging partnerships on managing climate, community, and occupational market, with more than one million page views and to tackle emerging ESG frontiers, IFC is playing health and safety issues. The first new-generation 300,000 downloads in FY23. a catalytic role in establishing standards for EHS guidelines on airports, electric transmission and private sector growth and channeling financing distribution, and healthcare facilities are expected to IFC is also helping companies build capacity to to create more sustainable markets. be shared for public consultation in FY24. translate sustainability commitments into practical, measurable financial decisions. In FY23, we relaunched Sustainable business relies on integrating corporate the FIRST (Financial Institutions: Resources, governance considerations into the decision-making Solutions, and Tools) website, which provides financial process. IFC is continuing to set new benchmarks for institutions with information and tools to understand corporate governance, including in evolving areas such and manage E&S risks and introduces users to IFC ANNUAL REPORT 2023 47 IFC 2023 sustainable financing opportunities. The FIRST website IFC is also harnessing the power of digital tools ANNUAL REPORT was accessed more than 200,000 times over the with the development of the Sustainability Rating past fiscal year, with the majority of users based in Tool (SRT), which has been designed to provide LEADERSHIP PERSPECTIVES emerging markets. structured and consistent management of ESG risks and create operational efficiencies by helping RESULTS IFC partnered with CDP, a non-profit focused on to focus efforts and resources on managing STRATEGY IN ACTION environmental disclosure systems, to examine material ESG risks. After a successful pilot test, more than 100 disclosure practices. The report, SRT is now being rolled out to all IFC projects, CRITICAL FUNCTIONS which was developed in consultation with the UN including new business and portfolio projects. Sustainable Stock Exchanges Initiative, highlights Measuring Up: Our Impact practical examples for developing high-quality Sustainability regulation to mobilize private capital flows toward sustainable solutions. Accountability and Oversight Leveraging AI and Data Science to Drive Better Outcomes Diversity, Equity, and Inclusion We are also continuing to strengthen IFC’s E&S staff capacity. Our Professional Learning and Certification Auditor’s Report Program (PLCP) was launched in August 2022 to There is growing interest in tapping AI to generate documents in a way that will generate the most useful maintain the highest levels of E&S risk management insights on the environmental, social, and governance ESG insights. Human language, as we know, is complex Letter to the Board of Governors competency. More than 120 hours of training were (ESG) performance of companies, projects, even and nuanced. Understanding the context of what is Stay Connected delivered to nearly 80 IFC E&S specialists. We’re countries. Over 80 percent of the world’s largest firms written is key to grasping intended meaning — and exploring how elements of the PLCP could be made by revenue are reporting on sustainability aspects of preventing errors in interpretation. Credits accessible to external E&S practitioners. their businesses, and 90 percent of S&P 500 companies Reporting Under the Task Force on disclose ESG data. Credit rating agencies who once Since its launch in 2022, MALENA has analyzed over Climate-related Financial Disclosures INNOVATIVE TOOLS ranked companies purely on financial performance are 246,000 internal IFC and public documents — including impact assessments, news articles, and sustainability adding ESG metrics to their offerings, while new rating Compensation and Benefits IFC continues exploring how technology and digital firms are now popping up that specialize in ESG rankings. reports — which stretch back decades and cover over tools can help monitor — and amplify — ESG impacts. 10,000 projects in 186 countries. One of MALENA’s big Financial Commitments to IFC’s Machine Learning ESG Analyst (MALENA) is being The United Nations has created the Sustainable Stock strengths is speed: it reads 19,000 sentences in a minute. IFC Trust Funds used by IFC specialists for ESG due diligence, portfolio Exchanges Initiative that promotes networking and After scouring the documents, MALENA generates Funding monitoring, and insights. MALENA is an AI-powered research among capital market stakeholders. Regulators dashboards on ESG performance. These dashboards can platform that extracts meaningful insights from are developing standards with the goal of making ESG be a helpful reference source for IFC’s ESG experts as Financial Performance Summary unstructured ESG data at scale, enabling rapid analysis ranking methodologies more transparent, which should they make their risk assessments. and increasing productivity. IFC is beta testing an make it easier for non-specialists to understand and external version of MALENA, engaging with diverse compare ESG data sets. ESG was a central consideration With demand for ESG data growing exponentially, institutions. In May 2023, for the second consecutive in every individual investment from the more than including in emerging markets where such data is often year, MALENA was selected by the International $30 billion that IFC committed to emerging markets over lacking, AI tools like MALENA have an important role Research Centre on Artificial Intelligence (IRCAI) as the past year. in improving data quality. They can help investors meet a Global Top 100 project to meet the Sustainable their ESG goals in innovative ways. Development Goals. This year, MALENA advanced With the support of the Facility for Investment Climate by two categories from the previous year, from Advisory Services (FIAS), Denmark, and the Republic of “Promising” to “Outstanding,” and ranked in the top Korea, IFC started building its own tool, MALENA, in 10 projects. 2019 as an innovative way to use AI to help map out the ESG landscape for emerging markets. IFC’s ESG experts trained MALENA to analyze the language contained in IFC ANNUAL REPORT 2023 48 IFC 2023 finance taxonomies. SBFN continued to be the voice PARTNERSHIPS ANNUAL REPORT of emerging markets in global sustainable finance To amplify its reach, IFC partners with leading platforms such as the G20 Sustainable Finance LEADERSHIP PERSPECTIVES ESG networks and organizations. In FY23, in Working Group and through reports such as the World collaboration with the UN Sustainable Stock Bank’s Emerging Lessons & Considerations for Applying RESULTS the G20 Principles on Alignment Approaches. Exchanges Initiative and CDP, IFC offered training STRATEGY IN ACTION courses on the Task Force on Climate-Related Financial Disclosures (TCFD). These courses reached To advance efforts in identifying and managing labor CRITICAL FUNCTIONS risks, IFC’s Managing Director and the International 20,000 participants in 60 markets, with 12,000 participants joining from emerging market locations. Labour Organization (ILO) Director General agreed Measuring Up: Our Impact on a Partnership Roadmap in March 2023. As part of Sustainability In partnership with the Equator Principles Association, this roadmap, IFC and ILO are discussing opportunities IFC published a report that examines the linkages for further collaboration and synergies for knowledge Accountability and Oversight sharing and exchange, capacity building, and between IFC’s Performance Standards, the World Diversity, Equity, and Inclusion Bank Group’s EHS Guidelines, and the European promoting robust labor risk management. Union Taxonomy’s “do no significant harm” (DNSH) Auditor’s Report and minimum safeguards (MS) criteria. This research Letter to the Board of Governors found that the Performance Standards and EHS Guidelines are a credible reference framework to Stay Connected assess the alignment of a business activity with the EU Taxonomy’s DNSH and MS criteria to qualify Credits as environmentally sustainable. This research Reporting Under the Task Force on contributes to global objectives to seek interoperability Climate-related Financial Disclosures and alignment of sustainable finance regulations and standards on environmental and social risk Compensation and Benefits management, which is critical to ensure their Financial Commitments to effectiveness and avoid greenwashing. IFC Trust Funds IFC continued to serve as the Secretariat and Funding knowledge partner for the Sustainable Banking and Finance Network (SBFN), a global knowledge- Financial Performance Summary sharing and capacity-building platform for financial regulators and industry associations from emerging markets. In FY23, SBFN membership grew to 80 member institutions representing 63 emerging market countries. In May 2023, SBFN launched a toolkit on developing sustainable finance roadmaps to assist members in moving from policy formulation to implementation. Through SBFN, IFC provided technical input to a new online learning course on Sustainable Finance Taxonomies, developed by Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ), an important resource for regulators in the design and implementation of sustainable IFC ANNUAL REPORT 2023 49 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS ACCOUNTABILITY STRATEGY IN ACTION CRITICAL FUNCTIONS Measuring Up: Our Impact AND OVERSIGHT Sustainability Accountability and Oversight Diversity, Equity, and Inclusion Getting accountability right is critical for IFC maintain the trust of our stakeholders and engage function, CAO provides advice to improve IFC’s them in developing new solutions to complex systemic performance on environmental and social Auditor’s Report and our clients. IFC has taken several actions development challenges. We remain focused on sustainability. In FY23, CAO handled 58 cases related in recent years to allow us to better address working with our peers to achieve greater alignment to IFC projects in 29 countries. During the year, CAO Letter to the Board of Governors negative impacts felt by communities. This in disclosure and reporting practices. This past year, received 12 new eligible complaints, of which two were Stay Connected IFC topped a DFI Transparency Index released by CSO referred to IFC. An additional two complaints that were year, we gathered input from stakeholders Publish What You Fund. This was the organization’s referred to IFC in FY22 returned to CAO for assessment Credits on the proposed approach to remedial first comparative measure of the transparency of the in FY23. CAO closed one case after early resolution Reporting Under the Task Force on action and responsible exit principles. The world’s leading development finance institutions. in assessment and closed five cases after monitoring Climate-related Financial Disclosures dispute resolution agreements reached between consultation on the proposed IFC/MIGA project-affected people and IFC clients. In addition, Compensation and Benefits Approach to Remedial Action took place Accountability CAO closed one case after compliance appraisal as an investigation was not found to be merited and closed Financial Commitments to from February to April 2023 and included OFFICE OF THE COMPLIANCE one case after monitoring IFC’s actions in response IFC Trust Funds options for stakeholders to attend meetings to CAO’s investigation findings. More information is ADVISOR OMBUDSMAN (CAO) Funding in various languages and time zones, as available on CAO’s website. People affected by the environmental and social Financial Performance Summary well as submit written feedback. IFC is impacts of IFC projects may voice their concerns in the process of analyzing the feedback to CAO, the IAM for IFC. Reporting to the Board of INDEPENDENT EVALUATION we received from a broad spectrum Executive Directors, CAO’s mandate is to facilitate GROUP (IEG) resolution of complaints in a fair, objective, and of stakeholders, including civil society constructive manner, enhance environmental The Independent Evaluation Group (IEG) is an organizations (CSOs), international financing and social project outcomes, and foster public independent unit that reports directly to the World Bank accountability and learning to improve IFC’s Group’s Board of Directors. IEG’s mission is to strengthen institutions, clients, and independent World Bank Group institutions through evaluations that environmental and social performance. CAO’s Dispute accountability mechanisms (IAMs) of Resolution function helps resolve issues between inform strategies and future work, leading to greater multilateral development banks. affected people and IFC clients using a neutral, development effectiveness. IEG assesses the results collaborative, problem-solving approach. CAO’s of IFC operations and offers recommendations for Compliance function carries out reviews of IFC’s improvement. IEG also contributes to internal learning In addition to enhancing its accountability, IFC is also compliance with its environmental and social policies, by informing new directions, policies and procedures, continuing its journey toward greater transparency, assesses related harm, and recommends remedial and country and sector strategies. IEG’s annual reviews recognizing that this is one of the most important actions where appropriate. Through its Advisory of World Bank Group results and performance and of actions we can take as a development institution to other major reports are available on IEG’s website. IFC ANNUAL REPORT 2023 50 IFC 2023 In FY23, the World Bank Group sanctioned 23 firms and Oversight SANCTIONS SYSTEM ANNUAL REPORT individuals through uncontested determinations of The World Bank Group’s Sanctions System is a multi- the Bank’s Chief Suspension and Debarment Officer, LEADERSHIP PERSPECTIVES GROUP INTERNAL AUDIT VICE tier administrative process designed to address fraud, decisions of the World Bank Group Sanctions Board, RESULTS PRESIDENCY (GIA) corruption, collusion, coercion, and obstruction by firms and settlement agreements. It removed 17 entities from and individuals involved in its operations. sanction and converted the debarment with conditional The Group Internal Audit Vice Presidency (GIA) is release of one entity to conditional non-debarment. The STRATEGY IN ACTION an independent function reporting to the President The Integrity Vice Presidency (INT) detects, World Bank Group also recognized 44 cross-debarments CRITICAL FUNCTIONS and under the oversight of the Board of Executive deters, and prevents fraud and corruption in World from other multilateral development banks (MDBs), Directors. GIA provides senior management and the Bank Group–financed operations and involving and 12 World Bank Group debarments were eligible for Measuring Up: Our Impact Board with reasonable assurance that processes World Bank Group staff and corporate vendors. recognition by other MDBs. Sustainability for managing and controlling risks and their overall It investigates allegations of fraud, corruption, governance are adequately designed and functioning and other sanctionable practices; when these are For more information about the World Bank Group Accountability and Oversight effectively. GIA’s work helps the World Bank Group substantiated, it pursues sanctions against external Sanctions System and its annual report, visit www. serve its clients more effectively. It delivers audits, entities and provides its findings for human resources worldbank.org/integrity. Diversity, Equity, and Inclusion assurance, and advisory reviews that cover all key decisions on disciplinary measures against staff. Auditor’s Report institutional areas: strategy, operations, finance, INT also works to identify, monitor, and mitigate To report suspected fraud or corruption in World Bank and corporate functions, including IT systems, integrity risks in World Bank Group operations. Group-financed projects, visit www.worldbank.org/ Letter to the Board of Governors applications, and processes. Its work is carried out The Integrity Compliance Office, an independent fraudandcorruption. Stay Connected in accordance with the Institute of Internal Auditors’ unit within INT, reviews the compliance posture of International Professional Practices Framework. GIA individuals and entities involved in the sanctions Credits collaborates with risk management and governance process and engages with those that are working to functions within management, as well as with the meet their conditions for release from sanction. Reporting Under the Task Force on World Bank Group’s other independent oversight and Climate-related Financial Disclosures accountability units. In FY23, INT convened the fifth International Corruption Compensation and Benefits Hunters Alliance forum in Abidjan, Côte d’Ivoire, GIA’s work program focuses on institutional and engaging with anticorruption practitioners from Financial Commitments to stakeholder priorities and significant risks; it around the world on global challenges, with a focus on IFC Trust Funds delivers about 30 engagements per year. Key topics the nexus between corruption and development. This in FY23 included business continuity, conflicts year’s forum built on ongoing efforts to strengthen Funding of interest, IDA country allocations, innovative the network of anticorruption actors in confronting Financial Performance Summary use of technology in project supervision, IFC’s corruption at the local, regional, and global levels. Upstream approach, treasury asset management, personal data privacy policy, website governance The Office of Suspension and Debarment is led by the and security, and workforce planning. World Bank’s Chief Suspension and Debarment Officer and provides the first level of adjudication in the World GIA employs a flexible, risk-based delivery model Bank Group’s Sanctions System. All sanctions cases that to adjust its focus alongside changes in the World are not appealed to the Sanctions Board are resolved Bank Group’s business and risk landscape. In FY23, based on the officer’s determinations, summaries of GIA piloted the new Country Assurance and Advisory which are available to the public. Program to enhance its coverage of governance, risk management, and internal controls of in-country The Sanctions Board consists of seven members who processes. The program responds to internal are all external to the World Bank Group. It serves as the developments such as decentralization as well as final decision maker in all contested sanctions cases and the findings and recommendations from GIA’s 2022 issues publicly available and fully reasoned decisions, External Quality Assessment. For more information on which are not appealable. GIA, visit: www.worldbank.org/internalaudit. IFC ANNUAL REPORT 2023 51 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS DIVERSITY, EQUITY, STRATEGY IN ACTION CRITICAL FUNCTIONS Measuring Up: Our Impact AND INCLUSION Sustainability Accountability and Oversight Diversity, Equity, and Inclusion At IFC, we strive to build a diverse, equitable, In FY23, iCount data enabled us to view workforce FY23 marked a milestone with the release of our diversity through different lenses: race and ethnicity, first public DEI annual report. We also expanded Auditor’s Report and inclusive workplace that empowers and sexual orientation, and disability status. our workforce representation disclosure beyond Letter to the Board of Governors celebrates our staff as they deliver impactful nationality and gender to include race/ethnicity, results in private sector development. sexual orientation, and disability status. In FY24, we Stay Connected ADVANCING OUR plan to undertake more detailed analyses of race and We remain committed to our strategic Credits DEI STRATEGIC PRIORITIES ethnicity data to understand with greater accuracy priorities of gender equality, data-driven how IFC staff experience the workplace in terms Reporting Under the Task Force on Our diversity enables us to think globally and act locally of career progression and promotions, mobility, accountability, and inclusive leadership. as we develop innovative and cross-cutting solutions Climate-related Financial Disclosures compensation, and performance management. to deliver on IFC’s mission. Looking back on FY23, Compensation and Benefits Promoting diversity of thought starts with tracking we are proud of advancing our three DEI strategic 3. Gender Equality is our commitment to build on our workforce diversity data, which gives insight into our priorities, which reflect common needs across our Financial Commitments to gender equality progress to sustain equity for women’s employees’ wide range of backgrounds, skills, and organization’s global footprint: career development at IFC. IFC Trust Funds experiences. As of June 30, 2023, IFC had over 4,300 employees, 54 percent of whom are women. Our staff In FY23, we continued to track the share of women Funding 1. Inclusive Leadership is our commitment to enable and in leadership positions. Our Gender Balance Index represent more than 150 nationalities, work in over 100 countries, and speak more than 50 languages. set expectations for all staff in supervisory roles to lead (GBI) score — a metric we use to promote, measure, Financial Performance Summary by example and cultivate a value-based workplace culture and track gender distribution across our four grade To achieve a more granular picture of our workforce that fosters inclusion and belonging. groups — increased from 0.82 in FY18 to 0.87 in FY23. representation, we rely on our ongoing iCount Through learning programs and training, we aim campaign. IFC’s iCount initiative encourages staff to to model the use of inclusive communication to For information on our staffing demographics and voluntarily self-identify in terms of nationality, race create a supportive work environment for LGBTQI+ programs to create a more diverse, equitable, and and ethnicity, sexual orientation and gender identity, colleagues and allies. In FY24, we look forward to inclusive work environment, visit www.ifc.org/en/ and disability status. The iCount data we collect launching additional modules that highlight the about/diversity-equity-inclusion. helps us understand with greater accuracy how IFC role of inclusive communication in recruitment and staff experience the workplace in terms of career performance management processes. progression and promotions, mobility, compensation, and performance management. We use this data 2. Data-Driven Accountability, previously referred to take targeted actions aimed at improving IFC’s to as Performance Management Culture, is our workplace experience. commitment to strengthen our accountability and public disclosure efforts as we expand our data-driven action beyond just gender. IFC ANNUAL REPORT 2023 52 IFC 2023 AUDITOR’S REPORT LETTER TO THE BOARD STAY CONNECTED ANNUAL REPORT IFC has requested EY to perform a OF GOVERNORS IFC’s website, www.ifc.org, provides LEADERSHIP PERSPECTIVES limited assurance engagement on a The Board of Directors of IFC has comprehensive information on our RESULTS selection of non-financial information had this Annual Report prepared in work. It includes contact information STRATEGY IN ACTION disclosed in the Annual Report. The accordance with the Corporation’s for offices worldwide, news releases CRITICAL FUNCTIONS nature, scope, and conclusion of this by-laws. The President of IFC and and feature stories, data on results Measuring Up: Our Impact engagement are described in EY’s Chairman of the Board of Directors measurement, disclosure documents Sustainability limited assurance report, available in has submitted this report with the for proposed investments, and key the online IFC Annual Report. audited financial statements to the policies and guidelines. Accountability and Oversight Board of Governors. Diversity, Equity, and Inclusion The online version of IFC’s Auditor’s Report 2023 Annual Report, www. Letter to the Board of Governors ifc.org/annualreport, provides downloadable PDFs of all materials Stay Connected in this volume and translations Credits as they become available. Reporting Under the Task Force on Climate-related Financial Disclosures Compensation and Benefits Financial Commitments to IFC Trust Funds Funding Financial Performance Summary IFC ANNUAL REPORT 2023 53 IFC 2023 IFC ONLINE CREDITS ANNUAL REPORT IFC website IFC Annual Report Team: AR Photo Credits: LEADERSHIP PERSPECTIVES ifc.org Steven Shalita Cover Page 35 RESULTS Annual Report Director, IFC Communications Ajax Systems’ R&D office Luis Ángel and Diego Dussan ifc.org/AnnualReport & Outreach in Ukraine for IFC STRATEGY IN ACTION Social Media Index Jim Rosenberg Inside cover Page 36 CRITICAL FUNCTIONS ifc.org/SocialMediaIndex Manager, IFC Corporate Mwarv for IFC Daniel Santos/80 Filmes for IFC Communications Facebook Page 3 Page 37 Measuring Up: Our Impact facebook.com/IFCwbg Rebecca Post Mimi Dabestani/World Bank Saba Rehman for IFC Editor Sustainability Twitter Page 5 Pages 38-39 twitter.com/IFC_org Rob Wright Jodiann Anderson/World Bank Mandeni Municipality Accountability and Oversight Writing, Design and Production LinkedIn Page 6 Page 40 Diversity, Equity, and Inclusion linkedin.com/company/IFClinkedin Julia Schmalz IFC Mwarv for IFC Photo Editor Auditor’s Report YouTube Page 7 Page 42 youtube.com/c/InternationalFinanceCorporation Hannfried von Hindenburg Djenno Bacvic/IFC Djenno Bacvic/IFC Writing Letter to the Board of Governors Instagram Page 8 Page 43 instagram.com/IFC_org/ Keith Weller Linh Nguyen for IFC Photo courtesy Milken Stay Connected Writing Institute Medium Page 18 Credits medium.com/@ifc-org Victoria Solan Factstory for IFC Back cover Editorial Consultant Layepro for IFC Reporting Under the Task Force on SoundCloud Page 21 soundcloud.com/IFC_org Vinit Tyagi Layepro for IFC Climate-related Financial Disclosures Online Coordinator Page 22 Compensation and Benefits Berrin Akyildiz Oleksandra Shergina for IFC Communications Analyst Financial Commitments to Page 25 Melanie Mayhew Kazi House Productions for IFC IFC Trust Funds Senior Communications Officer, Creative Productions Page 26 Funding Abhishek N.Chinnappa/JDOT Julia Oliver Productions for IFC Financial Performance Summary Reputational Risk and Issues Management Page 28 IFC Brenna Lundstrom Transparency and Reporting Page 29 Birom Seck/IFC Design: Addison Page 30 www.addison.com Courtesy of Toters Printing: Page 31 Sandy Alexander PlusFourFour Events for IFC www.sandyinc.com Pages 32-33 Translation: Photos courtesy of Nuru World Bank Group – Global Page 34 Corporate Solutions – Amit Ramrakha for IFC Translation and Interpretation IFC ANNUAL REPORT 2023 54 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION CRITICAL FUNCTIONS Measuring Up: Our Impact Sustainability Accountability and Oversight Diversity, Equity, and Inclusion Auditor’s Report Letter to the Board of Governors REPORTING UNDER Stay Connected Credits Reporting Under the Task Force on Climate-related Financial Disclosures THE TASK FORCE Compensation and Benefits Financial Commitments to IFC Trust Funds Funding ON CLIMATE-RELATED Financial Performance Summary FINANCIAL DISCLOSURES IFC ANNUAL REPORT 2023 55 IFC 2023 with the goals of the Paris Agreement starting in July CLIMATE-RELATED FINANCIAL GOVERNANCE ANNUAL REPORT 2025 (85 percent starting in July 2023), and further DISCLOSURE What’s New? scaling climate finance. LEADERSHIP PERSPECTIVES This report is IFC’s sixth consecutive disclosure The President of the World Bank Group sets the RESULTS Group’s public climate targets. Progress on targets is under the guidelines recommended by the • Updated IFC’s Board of Directors and management STRATEGY IN ACTION reported to the IFC Board as part of IFC’s quarterly team on the progress of climate finance and Paris Task Force on Climate-related Financial Investment Operations Report Updates. Separately, CRITICAL FUNCTIONS Alignment. the Group also reports annually to its Boards of Disclosures (TCFD). The report reflects • Integrated the Climate Business Department with Directors specifically on climate including progress Measuring Up: Our Impact IFC’s perspective that climate change is a the Vice Presidency of Industries. toward all climate commitments (see Metrics and Sustainability Targets section for further details). IFC’s Board material risk and opportunity for our core • Drafted and operationally tested the procedural received climate updates and technical briefings on Accountability and Oversight framework for the implementation of the business and therefore a key component transaction-based approach to Paris Alignment. Paris Alignment and climate finance in July 2022 and Diversity, Equity, and Inclusion in February and May 2023. In addition, IFC seeks of our non-financial disclosures and formal Board approval for most projects, except • Finalized the frameworks for the counterparty Auditor’s Report business strategy. It aims to provide our approach to Paris Alignment in collaboration with those approved with delegated authority, many of the other multilateral development banks. which entail detailed engagement, particularly in Letter to the Board of Governors stakeholders with material information that hard-to-abate sectors. In the last fiscal year, there accurately reflects the integration of climate • Developed sector notes in collaboration with the Stay Connected was significant engagement with IFC’s Board and World Bank. considerations into our operations. Finally, it management on several projects in hard-to-abate Credits sectors such as chemicals and airports, which resulted Reporting Under the Task Force on represents IFC’s continued commitment to in the development of specific strategic approaches for IFC’s Articles of Agreement outline the composition, investing in such sectors. Climate-related Financial Disclosures maintain and strengthen our climate-related roles, and responsibilities of IFC’s senior governance Compensation and Benefits financial risk assessment, management, body, its Board of Directors. The Audit Committee of Additional touch points with the IFC Board and and reporting practices. All six reports can its Board of Directors plays a key role in overseeing management team are integrated into our business Financial Commitments to risk management at IFC. Under the direction of and reporting processes, through written and verbal IFC Trust Funds be found online www.ifc.org/AnnualReport its Managing Director, IFC’s management team is communications including the Annual Portfolio Review, with links to relevant references. responsible for IFC’s day-to-day operations including Strategy and Business Outlook, Capital Package and Funding the management of existing and potential risks. the Forward Look Implementation Update, annual Financial Performance Summary Climate Change Action Plan (CCAP) updates, updates IFC has its TCFD reporting audited by EY, a recognized IFC’s climate business and risk are overseen by IFC’s on climate finance drivers and calculations as well as third party, as part of the annual review of IFC’s Managing Director, who reports to the President of Paris Alignment of projects, carbon pricing and climate non-financial reporting. This review of our qualitative the World Bank Group on all climate commitments risk discussions in project Board papers, and deep dives and quantitative disclosures helps us improve our TCFD including climate business performance, climate risk and technical briefings as requested. reporting every year and ensures that the information evaluation, and Paris Alignment of IFC’s operations. provided is material to stakeholders and is aligned with The World Bank Group President reports to the Climate is integrated into all aspects of IFC’s operations. global best practices. Since 2006, IFC has ensured that World Bank Group (IBRD, IDA, IFC, and MIGA) Board IFC’s Climate Business Department is responsible for a third party audits its climate finance numbers to of Directors. Following the climate commitments as providing in-house expertise on climate and guiding the provide independent assurance on its climate finance part of IFC’s 2018 capital increase, in FY21 its Board achievement of our climate targets. It serves as a hub results reporting. approved IFC’s commitment to align its investments that informs, trains, and enables IFC investment and with the goals of the Paris Agreement. As part of IFC’s other departments — the spokes — to integrate climate This report follows the TCFD framework’s four capital increase and Paris Alignment commitments, all into IFC’s operations, engage with our clients, and thematic areas: governance, strategy, risk investments are now screened for physical climate risk broaden our impact. The Climate Business Department management, and metrics and targets. and IFC has committed to aligning all new investments helps set corporate climate strategy, shape policy, IFC ANNUAL REPORT 2023 56 IFC 2023 and support investment teams in identifying climate Industry anchors have been playing a similar role in to integrate climate risk further into overall risk ANNUAL REPORT investment opportunities and mitigating climate championing IFC’s climate business targets and the roll management practices, to be followed by identification risk. It also addresses medium to long-term climate out of Paris Alignment in their respective sectors. of next steps. To further integrate climate LEADERSHIP PERSPECTIVES risks by building the capacity of IFC staff and clients, considerations into all operations, the Climate Business providing advisory services, and developing thought Beyond the Climate Business Department and the Department has also begun training business units RESULTS leadership to create climate markets. The Department is industry teams, climate is well integrated into other such as the Corporate Portfolio and Operations STRATEGY IN ACTION responsible for developing approaches to help IFC meet IFC operations and products. IFC’s Blended Finance Management on climate risk and strategy, including its Paris Alignment commitment, as well as supporting team deploys donor funds in conjunction with Paris Alignment and climate finance. CRITICAL FUNCTIONS investment teams with adhering to these requirements IFC’s commercial funds to catalyze climate-smart Measuring Up: Our Impact through project assessments, development of tools and investments with high development impact that IFC’s Sustainability Framework applies to all support materials, and delivering training to IFC staff would not occur under normal market conditions. By investment and advisory clients’ projects and includes Sustainability and clients as needed. mitigating specific investment risks and rebalancing eight Performance Standards (PS), which define clients’ risk-reward profiles, the team addresses market responsibilities for managing their environmental and Accountability and Oversight This year the Climate Business Department has been failures, helps mobilize private investment in social risks. Climate and Biodiversity risk considerations Diversity, Equity, and Inclusion further integrated into IFC’s operations. Previously pioneering projects and challenging environments, are mainstreamed into all IFC projects through these under the purview of the Cross-Cutting Solutions and demonstrates their business case. IFC’s Upstream Environmental and Social Performance Standards. Auditor’s Report Vice Presidency, the department is now under the work focuses on early-stage market and project Vice President of Industries, who reports to IFC’s preparation work to build a pipeline of well-prepared, IFC nominates directors to the boards of investee Letter to the Board of Governors Managing Director. The Vice President of Industries commercially viable climate investment opportunities. companies to add value in line with its development Stay Connected also oversees all IFC’s industry departments as well as IFC’s Treasury and Mobilization Vice Presidency is mandate. Throughout their board service, Nominee the Corporate Portfolio and Operations Management responsible for issuing climate bonds and mobilizing Directors are supported by a dedicated IFC Nominee Credits departments. IFC’s industry departments are private capital to reduce climate change vulnerability. Directorship Center. Recognizing the importance of Reporting Under the Task Force on responsible for originating and processing investments, The Environmental and Social Policy and Risk and embedding good climate governance into the boards Climate-related Financial Disclosures including those that are reported as direct climate Environmental, Social, and Governance (ES&G) of our client and investee companies, the Climate financing. This realignment reflects IFC’s position that Sustainability Advice and Solutions departments Business Department has developed training sessions Compensation and Benefits climate change is a material priority to be integrated ensure that IFC implements appropriate E&S risk- for IFC Nominee Directors to build and improve across all projects, operations, investment cycles, and management systems and procedures. The ES&G capacity of investee companies on climate change, Financial Commitments to including climate finance and climate risk. organizational processes. Sustainability Advice and Solutions department works IFC Trust Funds closely with investment teams and clients to identify, Funding IFC is actively integrating climate business throughout evaluate, and manage ESG risks through clients’ IFC has also developed climate governance guidance the institution through its Climate Anchors Network. adoption of ESG standards. for the private sector through two online resources: Financial Performance Summary This Network comprises senior staff in each industry Climate Governance: Equipping Corporate Boards and regional department as well as key operational Climate risk is being further integrated into IFC’s to Mitigate Climate Risks and Seize Climate departments including Legal and Compliance Risk, enterprise risk framework and operations through a Opportunities, and IFC’s Climate Governance Corporate Risk Management, and Environmental and cross-organizational Climate Risk Working Group Matrix and Tip Sheet for Corporate Boards. Social. Regional and departmental Climate Anchors (CRWG), chaired by the Vice Presidents of Risk and These resources recommend best practices to help report jointly to their department director and to the Finance and the Vice President of Industries, and boards identify and oversee climate-related risks and Climate Business Director. IFC has hired Regional including members from IFC’s Climate Business opportunities. IFC continues to provide peer review, Industry Climate Business Development Leads department, Corporate Risk Management advisory services, and technical assistance, as well as for each of its regions of operations, who report to department, ES&G Sustainability Advice and Solutions, lend its convening power to support the development of their Regional Industry Directors and to leadership Corporate Portfolio and Operations Management additional taxonomies and standards around the world. in the Climate Business Department. These leads are department, and others. In FY23, the Climate Risk responsible for identifying opportunities to unlock Working Group led the efforts to identify and manage IFC staff actively engages with civil society more climate business in their regions, including cross- IFC’s overall exposure to climate-related risks and organizations (CSOs) including during the World cutting opportunities. Regional and industry teams opportunities. In June 2023, the CRWG presented the Bank Group Spring and Annual Meetings around issues are hiring additional staff at all levels to enhance findings of an initial scoping exercise to IFC’s Corporate of sustainable supply chains, Paris Alignment and their climate-related competencies and offerings. Risk Committee (CRC) on a potential roadmap sustainability in financial intermediary investments. IFC ANNUAL REPORT 2023 57 IFC 2023 IFC continues to engage formally and informally with Table 1: Climate Change Commitments: Five-Year Trend ANNUAL REPORT private, public, financial sector, and CSOs on climate risk and opportunities, and retains membership in TOTAL CLIMATE FINANCE COMMITMENTS LEADERSHIP PERSPECTIVES several climate-related corporate leadership initiatives. (US$ MILLIONS) FY23 FY22 FY21 FY20 FY19 RESULTS Own Account Long-Term Finance (LTF) $ 7,628 $4,401 $4,021 $3,324 $2,603 STRATEGY Core Mobilization $ 6,769 $3,346 $3,610 $3,500 $3,172 STRATEGY IN ACTION Total $14,396 $7,747 $7,631 $6,824 $5,775 CRITICAL FUNCTIONS What’s New? Measuring Up: Our Impact Figure 1: IFC Climate Business as a Percentage of Total Long-Term Sustainability • IFC completed the pilot and has mainstreamed Paris Own Account Commitments: Ten-Year Trend Accountability and Oversight Alignment for all new projects in real and financial sectors with defined use of proceeds. Diversity, Equity, and Inclusion • FY23 own-account investment in climate: Auditor’s Report $7.6 billion. % % Letter to the Board of Governors • FY23 mobilization of private capital for climate: % % $6.8 billion. % Stay Connected % % % % • IFC performed a transition scenario analysis exercise % Credits % on its portfolio in select sectors. % % % Reporting Under the Task Force on Climate-related Financial Disclosures % Compensation and Benefits Climate Change Action Plan % Financial Commitments to IFC’s strategic priorities for its climate business are IFC Trust Funds anchored in its Capital Increase Package commitments and the FY21-25 World Bank Group Climate Change As part of this plan, IFC will increase its direct account long-term finance in climate accounted for Funding climate financing to 35 percent of total commitments 46 percent of our new investments (see Table 1). Action Plan (CCAP). In June 2021, the Board endorsed Financial Performance Summary the CCAP for FY 2021-25. The CCAP focuses on on average over the five-year period, significantly increasing climate finance to reduce emissions, higher than the 26 percent average achieved between These climate volumes are a record high for IFC. strengthening climate change adaptation, and aligning FY16 and FY20. Additionally, IFC will align its financial This achievement is the result of significant efforts financial flows with the goals of the Paris Agreement. flows with the objectives of the Paris Agreement. to mainstream climate into operations and the It provides a roadmap on aligning climate and Starting July 1, 2023, 85 percent of all new investments introduction of new and innovative products. development goals using new diagnostics, prioritizing in all sectors are aligned with the Paris Agreement’s Screening projects for Paris Alignment has also enabled transition in five key systems that generate 90 percent goals, and 100 percent of these will be aligned starting the climate team to identify and flag climate finance of emissions and face significant adaptation challenges: July 1, 2025. opportunities to investment teams at the earliest energy; agriculture, food, water, and land; cities; stages of project design. transport; and manufacturing. The CCAP also commits IFC to increase finance to support the transition, Climate Financing IFC creates a pipeline of climate opportunities through including by mobilizing private capital and supporting In FY23, IFC’s total climate-related commitments (both direct investments, providing thought leadership, global efforts to raise and deploy concessional finance. own account and core mobilization) were $14.4 billion, advisory and capacity building services, and private making it a record year for IFC. At $7.6 billion, our own capital mobilization and issuance of bonds through its Treasury operations. IFC ANNUAL REPORT 2023 58 IFC 2023 IFC continues to diversify its climate business, has coordinated closely with the other MDBs to Africa — to help catalyze the development of a pipeline ANNUAL REPORT identifying new areas of growth. In FY23, IFC retained develop and publish the Joint MDB Methodological of green projects in target sectors. This project involves strong climate business (our long-term own-account Principles for Assessment of Paris Agreement engaging with stakeholders from the public, private, LEADERSHIP PERSPECTIVES investment as well as mobilization) through financial Alignment of New Operations: Direct Investment and financial sectors to develop solutions to incentivize intermediaries ($4.6 billion), and in renewable energy Lending Operations (real sectors) and, along with the the development of private sector projects in the RESULTS ($4.3 billion), urban, transport, and waste ($2.4 billion), European Bank for Reconstruction and Development, identified sector for each country. It also involves STRATEGY IN ACTION green buildings ($1.8 billion) and resource efficiency led the development of the Joint MDB Methodological engaging with regulators on developing national green ($950 million). IFC’s industry departments are Principles for Assessment of Paris Agreement Alignment finance taxonomies and collaborating with client banks CRITICAL FUNCTIONS responsible for originating and processing investments, of New Operations: Intermediated Financing. Joint on climate risk management as well as increasing the Measuring Up: Our Impact including those that are considered climate finance. methodological principles have also been prepared for proportion of green investments in their portfolios General Corporate Purpose Financing. Paris Alignment to green the domestic financial sector and generate Sustainability Our climate finance represents the climate-related includes alignment with both mitigation (Building Block, climate finance at scale. value add of our business. This is different from our or BB, 1 of the Joint MDB Framework) and adaptation Accountability and Oversight commitment to Paris Alignment, which ensures that and resilience (Building Block, or BB, 2 of the Joint MDB We continue to develop and set environmental Diversity, Equity, and Inclusion every project adheres to a certain minimum standard. Framework) components. and social standards through our Performance Standards as well as our work on developing national Auditor’s Report The integration of Paris Alignment into our operations and subnational taxonomies for green finance, Letter to the Board of Governors Paris Alignment has changed how IFC does business. Paris Alignment green buildings, and other key sectors. In addition Our work on Paris Alignment has helped us define an requirements are best met when integrated into to numerous global frameworks including the work Stay Connected overall climate risk and opportunities strategy that existing business processes. Our implementation on climate finance and Paris Alignment standards incorporates governance structures, risk management, plan recognizes and reflects this, with project cycle and methodologies with other MDBs, our work Credits integration. Climate considerations are included early on national and subnational taxonomies and and metrics and targets. Reporting Under the Task Force on in the project design process, allowing investment standards encompasses over 25 countries, across Climate-related Financial Disclosures teams to both address any climate risks that are Southeast Asia, Sub-Saharan Africa, Latin America and foreseen as well as take advantage of the business the Caribbean, South Asia, Eastern Europe, and the Compensation and Benefits An IFC investment is considered aligned when opportunities presented through adaptation measures Middle East and North Africa. A few highlights of this new financing flows and guarantees provided and helping clients transition to a low-carbon pathway. work in FY23 include: Financial Commitments to will be consistent with the objectives of the Paris IFC Trust Funds Agreement and a country’s pathway toward • Global Guidelines for Blue Finance for structuring, Funding low greenhouse gas emissions and climate- Providing Market Enabling, Advisory, evaluating, and monitoring blue bond issuances and resilient development. IFC directly applies the blue loans. Financial Performance Summary MDB Principles for Direct Investment operations, and Capacity-Building Services • A report on Deep Blue Opportunities for Blue Financial Intermediary and General Corporate Market Enabling Activities. Critical to identifying Carbon Finance in Coastal Ecosystems, highlighting Financing. The outcome of a Paris Alignment climate opportunities for IFC’s operations are the the role of tidal wetlands as a potential source of assessment for an operation is “aligned” or regulatory, legal, and market environments of the blue carbon credits. “nonaligned.” For operations to be aligned, a client countries in which we operate. A crucial part of taking • In collaboration with the World Bank and Global may be required to take action before and during advantage of these opportunities is engaging with Environment Fund (GEF), we launched IFC’s Practices the tenor of the financing, as needed. stakeholders and helping build the market-enabling for Sustainable Investment in Livestock Operations, environments that are conducive to climate investment building on IFC Performance Standards that are and resilient to both transition and physical risks at a especially relevant to the livestock sector, and macro level. include the promotion of decarbonization pathways, Since the signing of the Paris Agreement in 2015, IFC has worked closely with the World Bank, MIGA, and enhancement of climate resilience of operations and Recognizing the need for bankable green projects prevention of the loss of biodiversity. eight other multilateral development banks (MDBs) as a key hurdle to scaling private climate finance to develop the Joint MDB Methodological Principles • The Sustainable Banking and Finance Network under the Scaling up Climate Finance through the (SBFN), of which IFC is the Secretariat, launched for Assessment of Paris Agreement Alignment, which Financial Sector Program, IFC is working in four pilot consider the specific contexts of the emerging markets the SBFN Toolkit: Developing Sustainable Finance countries — Egypt, Mexico, Philippines, and South Roadmaps, in May 2023. within which IFC and the other MDBs operate. IFC IFC ANNUAL REPORT 2023 59 IFC 2023 To support our clients in implementing robust systems, $14.4 billion in climate finance was monitored and we are helping to develop a potential future pipeline of ANNUAL REPORT we have done substantial work on promoting reported through CAFI. We are applying lessons low carbon and climate resilient investments in both standardization and comparability across such from a decade of work through IFC’s Excellence in real and financial sectors. LEADERSHIP PERSPECTIVES frameworks. In FY23, IFC published its first joint Design for Greater Efficiencies (EDGE) Green Building research report and accompanying tools with the certification system to expand to green cities through RESULTS Equator Principles Association entitled “Promoting the Advanced Practices for Environmental Excellence in Exploring Creative Solutions to STRATEGY IN ACTION Interoperability Across Environmental and Social Cities program. Target New Areas of Growth Risk Management Frameworks — How the IFC CRITICAL FUNCTIONS Environmental and Social Performance Standards and In FY23, IFC conducted more than 16 Paris Alignment In addition to expanding its existing climate business, World Bank Group Environmental, Health and Safety training sessions reaching 800 staff across IFC’s IFC continues to target new areas of climate-smart Measuring Up: Our Impact growth using innovative tools and solutions. Guidelines Align with the EU Taxonomy’s ‘Do No regions and sectors and intends to conduct several Sustainability Significant Harm’ and Minimum Safeguards Criteria.” more in FY24. Through this training, IFC has provided internal guidance materials to support capacity Building a Pipeline of Low-Carbon and Resilient Accountability and Oversight Capacity Building. IFC recognizes that bringing our building, including Paris Alignment assessment Projects. IFC’s Upstream units are embedded across clients along on the climate journey will be critical to questionnaires, case studies, and factsheets. We have industries and regions to lay the groundwork for Diversity, Equity, and Inclusion managing our climate risk, engaging in new business developed tools, guidance notes, and training for investment opportunities within a three-to-five-year Auditor’s Report opportunities, and implementing our overarching investment staff to communicate and guide clients on horizon. In the last year, IFC has prioritized climate- climate strategy. To do so, we work closely with aligning with the Paris Agreement. These measures will related business development through Upstream and Letter to the Board of Governors related activities such as scaling up climate finance our clients in both real and financial sectors to build help our clients in emerging markets to improve their Stay Connected capacity on key topics. climate risk management capacity and enable them to by greening the financial sector and catalyzing a report in line with the recommendations of the TCFD. pipeline of green investments in target markets. IFC Credits We have issued IFC Green Bond Procedures, a Guide is also investigating business models for Upstream to Green Bond Issuance for Financial Institutions Supported by the governments of Japan and the activities in adaptation and resilience. Upstream Reporting Under the Task Force on and work extensively through our Green Bonds Netherlands, IFC has developed and delivered activities consist of pre-investment work in three Climate-related Financial Disclosures categories, often in collaboration with the World Bank Technical Assistance Program (GB-TAP) to provide virtual climate training to 90 staff in three financial Compensation and Benefits technical assistance to financial institutions on green institutions to improve capacity in managing climate and MIGA: (i) creating markets (regulatory reform or bond issuances and deliver global public goods through risk and leveraging climate opportunities. Through the standard setting), (ii) creating opportunities (through Financial Commitments to technical assistance to private sector clients), and (iii) a range of activities and initiatives. To date, GB-TAP TCFD for Financial Institutions advisory program, IFC Trust Funds has trained over 1,000 professionals from over 300 we have delivered training on climate risk to almost crystalizing opportunities (project risk structuring financial institutions across over 70 emerging market 3,500 participants to help banks that are ready to and investor mobilization). IFC’s management team is Funding regularly updated on the climate share of the Upstream countries and stimulated more than $2.1 billion in integrate climate into their governance, strategy, Financial Performance Summary green bonds and $3.4 billion in social and sustainability risk management, and metrics and targets per the pipeline, allowing a line of sight on green business bonds. The GB-TAP continued to offer online training recommendations of the TCFD. opportunities. in partnership with the International Capital Market Association and several partner universities. IFC’s Green Banking Academy trains financial Sustainability-Linked Finance. We are helping institutions on the four pillars of a green bank our clients green their operations based on a clearly Our in-house expertise helps us develop several (eco-efficiency, environmental risk management, identified decarbonization roadmap with innovative business tools and systems over the years to build green products and services, and green strategic financial arrangements. In FY23, IFC continued its client capacity. For example, our Climate Assessment commitment) and offers a green finance certificate to sustainability-linked financing by investing 3.75 billion for Financial Institutions (CAFI)1 platform helps our professionals. Indian rupees (about $50 million) for IFC’s own account client financial institutions assess the climate eligibility in a sustainability-linked bond issued by Tata Cleantech of their investments and estimate the development These programs not only help us build capacity for IFC Capital Limited (TCCL) in India to increase financing for impact of their climate-related activities. By the third clients but also let us set and raise market standards on renewable energy projects and diversify its on-lending quarter of FY23, 252 active climate partner financial climate finance, climate risk management, issuance of into the energy efficiency and e-mobility sectors over institutions were registered to use the tool and over green bonds, and other important topics. In this way, the next three years. This is the first such instrument 1. IFC, with donor support, created the CAFI platform, a transparent algorithm harmonized with other MDBs to support the tracking of growing climate finance volumes of IFC client banks and other MDBs to which IFC selectively licenses the tool. IFC ANNUAL REPORT 2023 60 IFC 2023 issued by a private financial institution in India and will IFC financing to support the reduction of their GHG as promote the sustainable management of natural ANNUAL REPORT support the country’s shift to a clean energy economy. emissions over the project lifetime by incorporating resources. This reference guide helps IFC and other Under the structure, TCCL will benefit from a reduction innovative technologies, practices, or knowledge, and investors identify investment activities that generate LEADERSHIP PERSPECTIVES in coupon rate should it achieve the key performance managing carbon lock-in and stranded asset risk. We biodiversity co-benefits, support nature restoration indicator targets as set under its sustainability have developed comprehensive sector strategies and and conservation, and integrate nature-based RESULTS performance targets. roadmaps for key sectors, such as chemicals, and are solutions into infrastructure projects. IFC has also STRATEGY IN ACTION developing more for circular economy, construction updated the guide to map the investment activities to Country Climate and Development Reports. In materials, electric vehicles value chain and battery the targets in the Global Biodiversity Framework. CRITICAL FUNCTIONS FY23, IFC, the World Bank, and MIGA continued to manufacturing value chain. Measuring Up: Our Impact strengthen the Country Climate and Development Private Capital Mobilization and Bond Issuances. Report (CCDR) as a diagnostic tool, and lead the Biodiversity Finance and Nature-Based Solutions. IFC’s Treasury Operations: IFC is one of the earliest Sustainability development of the CCDRs, along with support from IFC recognizes that climate and biodiversity are deeply issuers of green bonds, having launched a Green Bond the IMF, and active engagement with the private interlinked and managing the risks and opportunities Program in 2010 to help catalyze the market and Accountability and Oversight sector, government counterparts, academia, think for one is incomplete without addressing the other. unlock investment for private sector projects that Diversity, Equity, and Inclusion tanks, and civil society organizations. In FY23, the This principle is enshrined within the CCAP for FY 2021- support renewable energy and energy efficiency. In World Bank Group published 23 CCDRs covering 27 25, and we are working to articulate the business case FY23, IFC raised $2 billion in green bonds across 20 Auditor’s Report countries. The CCDRs aim to (i) integrate climate for biodiversity finance and nature-based solutions for trades in six different currencies. change and development considerations and help both climate mitigation and for green infrastructure Letter to the Board of Governors client countries prioritize the most impactful actions solutions. We continue to engage with stakeholders In FY23, IFC issued its first green bond in the Australian Stay Connected that can reduce greenhouse gas (GHG) emissions and on this issue, intend to grow our own biodiversity dollar market, raising 900 million Australian dollars boost adaptation; (ii) explore opportunities, reforms, finance business, and contribute to the growth of for climate-friendly projects, which is the largest Credits and policy instruments to leverage private sector the biodiversity finance market globally. IFC is an Australian dollar green bond issued by a multilateral Reporting Under the Task Force on resources and solutions for both climate change active member of the Network of Central Banks and development bank in 2022 and is also IFC’s largest Climate-related Financial Disclosures adaptation and mitigation; and (iii) inform World Bank Supervisors for Greening the Financial System (NGFS) “Kangaroo” transaction in over a decade. The proceeds Group country engagement products, including IFC’s Working Group on Nature and the World Economic of the bond will be earmarked for climate-smart Compensation and Benefits Country Private Sector Diagnostics. These reports Forum Working Group on Biodiversity Credits and projects, including clean energy, energy-efficient will form the foundation for building internal climate is engaged with other MDBs through the Nature buildings, transport, green banking, agriculture, and Financial Commitments to capacity, engaging in market development activities, Heads and Climate Heads fora. We sit on the Advisory climate adaptation in developing economies. IFC Trust Funds and integrating climate opportunities and risks into the Committee on Resource Mobilization established by Funding core strategic decisions. the UN Secretariat of the Convention on Biological Resilience of Strategy (Scenario Analysis). IFC Diversity. IFC was an early member of the Informal continues to develop an approach to ensure the Financial Performance Summary Industry-Specific Decarbonization Strategies. Working Group that shaped the Task Force on Nature- resilience of our business in the face of physical and IFC has been conducting deep dives to embed climate Related Financial Disclosures (TNFD), and we continue transition impacts of climate change. We engage into sectoral strategies for high-emitting sectors like to be a part of the TNFD Forum with organizations with MDBs, financial institutions, industry specialists, chemicals and power. IFC’s focus on manufacturing that recognize the impetus for and opportunity in consulting firms and other stakeholders on the most has evolved to be centered around carbon abatement, biodiversity finance. IFC is currently assessing its own appropriate factors, indicators, tools, scenarios, and industry transition to lower carbon pathways, greening capabilities on reporting along TNFD guidelines and data sources to deploy. While we work to develop a of supply chains, waste reduction, and circularity. helping clients do the same, pending finalization of the cohesive methodology and strategy to fully integrate A core aspect of this strategy is to ensure that our framework expected in calendar year 2023. climate risk into our overall risk management, in the investment evaluation takes a nuanced approach interim we are trying to build resilience at different to the development status, needs, and economic In FY23, IFC developed and launched the world’s first levels of our business: complexity of a country. In subsectors where full Biodiversity Finance Reference Guide, which builds upon • Project and asset level. IFC has begun to GHG abatement is not possible (heavy industries), the Green Bond Principles and Green Loan Principles implement several interim bottom-up measures to we focus on climate transition and lower carbon and provides an indicative list of investment projects, ensure the resilience of our investments. Many of pathway approaches. These pathways make explicit activities, and components that help protect, maintain, these have been integrated into our Paris Alignment the steps to be taken by clients during the tenor of or enhance biodiversity and ecosystem services, as well approach and implementation — individual assets and IFC ANNUAL REPORT 2023 61 IFC 2023 RISK MANAGEMENT ANNUAL REPORT SPOTLIGHT: emerging market senior loans. $2.5 billion have been raised to-date from three investors for One Planet What’s New? LEADERSHIP PERSPECTIVES Private Capital Mobilization which was operationalized in September 2022. Under RESULTS through the Managed this platform IFC shares with investors enhanced impact reporting, mapping to the Sustainable • 100 percent physical climate risk screening for STRATEGY IN ACTION Co-Lending Portfolio Development goals, assisting the investors to all IFC’s operations in real sectors with tools, CRITICAL FUNCTIONS tangibly demonstrate their contributions to the methodologies, and approaches in place. Program One Planet climate agenda and development more broadly. Measuring Up: Our Impact • Physical and transition risk incorporated into Paris In addition, One Planet also provides enhanced Climate transition has created opportunities for Alignment approaches and roll-out. Sustainability ESG risk reporting on underlying investments IFC to develop innovative structures to attract to assist investors in meeting the “do no harm” Accountability and Oversight and mobilize private capital from institutional disclosure requirements resulting from a growing investors leveraging IFC’s environmental, social, and The Climate Business Department conducts and body of regulation, such as the Sustainable Finance Diversity, Equity, and Inclusion corporate governance (ESG) practices. At COP26, supports assessment of transition and physical Disclosure Regulation (SFDR) in the EU. In FY23, IFC IFC announced its intention to develop MCPP One climate risk in investment projects. It also works with Auditor’s Report committed $1.75 billion with borrowers under the Planet, the world’s first portfolio of Paris Aligned mainstream investment and business development One Planet program. Letter to the Board of Governors teams to identify low-carbon investment opportunities and align operations with the Paris Agreement Stay Connected through its industry sector experts, climate finance Credits projects are assessed using tools that incorporate of existing tools, climate data, and approaches professionals, and policy team. It develops and helps climate scenarios. We are evaluating the resilience available today in the market. In FY23, IFC piloted implement and monitor tools and approaches such as Reporting Under the Task Force on carbon pricing and climate project tagging. of our portfolio by considering carbon lock-in risk, an approach to conduct an exploratory transition Climate-related Financial Disclosures potential stranded asset risk, and exposure to scenario analysis on selected clients in sectors with physical climate risks in of our investments, in a potentially material high-risk exposure to transition Integrating Risk Assessment in Paris Alignment Compensation and Benefits Frameworks. In FY23, IFC integrated our existing longer time horizon than simply our project tenor. risk such as the oil, gas, mining, and power sectors. Financial Commitments to With each project now assessed for both mitigation This exercise leveraged the scenario framework of the climate-risk management of both physical and IFC Trust Funds as well as adaptation and resilience components of Central Banks and Supervisors Network for Greening transition risk into IFC’s Paris Alignment frameworks. Paris Alignment, IFC is building a green, low-carbon, the Financial System (NGFS) and industry-based IFC’s systems were updated to enhance accurate Funding documentation, calculations, and reporting of climate climate resilient portfolio. emissions intensity data, and assessed the financial, volume and climate percentages of projects. We Financial Performance Summary • Portfolio and balance sheet level. IFC continues credit risk, and market risk impact to their portfolios. to explore approaches to integrating climate risk A bottom-up approach was taken to project each also equipped our IT systems with Paris Alignment into our overall risk-management framework. Our selected client’s financial statements over several transaction-based assessment questions to evaluate portfolio mainly comprises unlisted, private clients time horizons under different climate scenarios and adaptation risk for all projects and mitigation-related in emerging markets, which limits the applicability several assumptions. risk for all financial institution projects. Physical Risk.2 During project appraisal, IFC’s project teams assess potential direct and indirect effects that climate-related impacts may have on the project’s financial, environmental, and social performance. Potential risks are further explored and, where necessary, addressed and mitigated through a variety of measures that may include operational or CAPEX interventions. Physical risk screening for 2. Physical risks are those resulting from disruptions and impacts of climate change-related events and can be both acute and chronic. Examples of physical risks include droughts, floods, increasing sea levels, rising temperatures, and other factors that may have an impact on supply chains, operational capacity, damage to physical assets, and other aspects of the business. IFC ANNUAL REPORT 2023 62 IFC 2023 IFC’s projects has been integrated into the adaptation and climate resilient portfolio over time. As a result, IFC loans with defined use of proceeds in the cement, ANNUAL REPORT and resilience (BB2) component of Paris Alignment, has limited or no exposure to fossil fuels, coal power chemicals, and thermal power generation sectors, whose assessment poses explicit questions on generation and upstream oil and gas investments. The where estimated annual project emissions are over LEADERSHIP PERSPECTIVES exposure to climate risk and potential opportunities, majority of IFC’s power sector investments are now in 25,000 tons of carbon dioxide equivalent. IFC includes measures for climate risk mitigation, levels of residual the renewables sector. the impact of the carbon price on the project’s RESULTS risk after adaptation, potential for maladaptation, economic performance and viability in its Board papers. STRATEGY IN ACTION and consistency with national contexts for climate IFC has also developed a Green Equity Approach (GEA) The price levels continue to be consistent with the resilience. IFC has developed general guidance and to help our financial sector clients take on ambitious High-Level Commission on Carbon Prices and with the CRITICAL FUNCTIONS Sectoral Notes for the assessment of physical risk commitments to reduce coal in their portfolio and World Bank. Where applicable, carbon pricing is also Measuring Up: Our Impact and alignment with the adaptation and resilience continue to do business in a changing climate. This integrated into our Anticipated Impact Measurement component of the Paris Agreement, for all projects more formalized approach and its application to equity, and Monitoring framework and will become a standard Sustainability with defined use of proceeds across all sectors. sub-debt, and convertible loans is consistent with the part of Paris Alignment assessments for mitigation for Paris Agreement. As part of our efforts to address all projects with annual emissions greater than 25,000 Accountability and Oversight IFC is operationalizing Paris Alignment through IFC’s climate risks and minimize indirect exposure to coal- tons of carbon dioxide equivalent. Diversity, Equity, and Inclusion Climate Risk Portal, a one-stop-shop platform used by related projects, IFC does not provide loans to financial IFC teams to identify and manage the exposure and institutions for coal-related activities. Since January 1, As noted above, IFC incorporates transition risk Auditor’s Report vulnerabilities of potential projects to physical climate 2023, IFC has required a commitment from FI clients to into our Paris Alignment process, particularly for risks. The portal comprises the Geoviewer tool and not originate and finance any new coal projects from the Mitigation component. The assessment process Letter to the Board of Governors Sectoral Climate Risk Screening toolkits and is used to the time IFC becomes a shareholder. To further reduce includes analysis of consistency with NDCs, long- Stay Connected assess over 400 new investments annually. exposure to coal, IFC does not provides general- term strategies, and regional, national, and sectoral purpose loans to financial institutions. Targeted loans policies on climate change to mitigate policy risk. It Credits • The GeoViewer tool assesses a project’s exposure to are directed to key strategic sectors such as micro, also explicitly includes analysis of stranded asset and Reporting Under the Task Force on climate hazards based on its location and provides small, and medium-size enterprises, women-owned carbon lock-in risk as criteria for evaluation of Paris Climate-related Financial Disclosures investment teams a comprehensive high-level businesses, climate-related projects, and housing Alignment for IFC projects. We continue to develop climate exposure and risk assessment for adaptation finance. The use of proceeds is disclosed on IFC’s measures to deepen our assessment and management Compensation and Benefits and resilience. It uses over 50 climate indicators Project Information Portal. Through the GEA, IFC seeks of transition risk. and provides data on potential hazards for four to help our financial institution clients increase their Financial Commitments to different time horizons based on two Representative climate lending and reduce their exposure to coal- IFC has mapped decarbonization pathways for IFC Trust Funds Concentration Pathway scenarios for 50th and 66th related projects. hard-to-abate sectors such as chemicals and mining Funding percentile probability. and continues this work for other carbon-intensive • IFC has developed Sectoral Climate Risk Screening IFC calculates and discloses in the Environment and sectors. Our counterparty-based approach for Paris Financial Performance Summary Toolkits to screen projects in Airports, Roads, Social Review Summary (ESRS) the emissions for all Alignment of financial intermediaries and corporates Railways, Mass Transport, Ports, Insurance, Financial real-sector projects with annual emissions of over also requires clients to commit to decarbonization Institutions, Forestry, and other sectors for exposure 25,000 metric tons of carbon dioxide equivalent pathways and better climate-related risk management, to physical climate risk. In addition, in FY23, IFC (mtCO2e). IFC’s experience with climate finance has where needed. developed climate risk sectoral notes covering enabled us to ensure that our projects are evaluated all sectors that IFC invests in, and which provide for and use best available technologies that reduce Enhancing Clients’ Climate Risk-Management granular sector and sub-sector specific guidance emissions and enhance climate resilience to the Capacity. IFC offers a range of technical climate for the systematic screening of physical risk and degree possible. assistance, advisory, and investment services according adaptation assessment. to the client’s level of maturity and readiness for IFC continues to use carbon pricing as a measure to investment. This includes capacity building support for Transition Risk.3 This bottom-up approach to manage transition risk and avoid stranded assets. climate risk assessment and management to support evaluating each project’s emissions and a commitment Since May 2018, a carbon price has been included in alignment with the goals of the Paris Agreement. to climate finance has allowed IFC to develop a robust the economic analysis of project finance and corporate 3. Transition risks are those faced by investors as part of the global shift to a low-carbon economy. Examples of transition impacts include changes in climate and energy policies, a shift to low-carbon technologies, changes in consumer preferences, and reputation and liability issues. Transitional impacts can vary substantially depending on scenarios for policy and technology changes. IFC ANNUAL REPORT 2023 63 IFC 2023 We have developed and continue to expand training on METRICS AND TARGETS For tracking adaptation finance, IFC applies the Joint ANNUAL REPORT climate risk management and TCFD for both financial MDB Methodology for Adaptation Finance, which was institutions and real sector companies. IFC is working reviewed and updated by MDBs over the 2021-2022 LEADERSHIP PERSPECTIVES with stock exchanges to help them develop disclosure What’s New? period. IFC is also exploring the potential of additional guidelines for listed entities, and we have developed an metrics for adaptation and resilience finance, which RESULTS executive training program with the UN Sustainable would measure the outcomes of resilience investments Stock Exchange to help emerging market banks • Climate investments comprise 46 percent of IFC’s and interventions. STRATEGY IN ACTION understand, identify, and manage climate risk. IFC is own-account FY23 commitments. CRITICAL FUNCTIONS the Secretariat of the Sustainable Banking and Finance • 90 percent of new real sector projects and 100 Climate Finance Targets & Results. In FY23, IFC’s Measuring Up: Our Impact Network of central banks and regulators, which is percent of new financial sector projects with known climate investments 4 comprised 46 percent of total helping banks in member countries to implement use of proceeds were assessed for Paris Alignment own-account commitments, exceeding the corporate Sustainability the recommendations of the TCFD as well as develop at the concept review stage. target of 35 percent. For additional details, please refer to national green taxonomies. the Strategy section of this TCFD report. The IFC corporate Accountability and Oversight target is translated to departmental and regional Diversity, Equity, and Inclusion IFC continues to use the CAFI tool to improve At IFC, climate-tagged investments are those that climate business targets. In institutional departmental transparency in climate reporting by the financial reduce GHG emissions or increase climate resiliency, scorecards, IFC reports against the 35 percent target of Auditor’s Report services industry, assess the climate eligibility of our climate projects as a percentage of long-term finance as measured by the Joint MDB Methodology for investments, and estimate the development impact of own account commitments. Letter to the Board of Governors Climate Finance Tracking , which is regularly updated our climate-related activities. In FY23, IFC enhanced to account for the evolving market context, limit Stay Connected the functionality of the CAFI tool by linking it to climate-related risks, and take advantage of new Paris Alignment Targets & Results. As stated earlier, IFC’s EDGE database for green buildings, to enable climate opportunities. IFC has been actively involved IFC committed to aligning 85 percent of all new Credits users to automatically import data on green building investments with the goals of the Paris Agreement in the development and updating of the methodology Reporting Under the Task Force on project impact, thereby improving the efficiency and for both mitigation and adaptation. IFC has applied starting July 1, 2023, and 100 percent of these starting Climate-related Financial Disclosures reliability of the tool. The tool was also updated to this updated methodology across its operations on July 1, 2025. Meeting Paris Alignment targets is reflect the most recent Common Principles for Climate since July 2021. The revised metrics include detailed part of the corporate performance scorecard for the Compensation and Benefits Finance Mitigation Tracking, exponentially increasing criteria and guidance across sectors. In October 2021, Climate Business Department. IFC’s Paris Alignment its efficiency and usage across both investment and the methodology was published as the Common assessment covers both mitigation (greenhouse Financial Commitments to advisory financial intermediary projects. Principles for Climate Mitigation Finance Tracking , gas) and adaptation (risk and resilience) goals of the IFC Trust Funds Paris Agreement. For mitigation, the methodology which are applied to the operations of all MDBs, Funding including IFC. To improve climate finance tracking, covers Scope 1 and 2, and Scope 3 where significant. the Common Principles are updated every two years Assessments are conducted at the concept Financial Performance Summary development stage to ensure that the principles of jointly by the MDBs and members to incorporate their experiences and address comparability of reporting Paris Alignment are enshrined at the earliest stages of processes. IFC is leading the midterm update of the project development. Common Principles for Climate Mitigation Finance Tracking, which are due to be published at the end of In FY23, IFC screened 90 percent of eligible real-sector 2023. IFC has also developed internal climate finance projects with defined use of proceeds at concept stage methodologies to expand upon and interpret the for alignment with the Paris Agreement. Similarly, Common Principles in the context of our business, such IFC exceeded its target by assessing and aligning 100 as the Climate Smart Agriculture approach and the percent of eligible financial sector projects, amounting Excellence in Design for Greater Efficiencies (EDGE) to 111 projects with defined use of proceeds, of which 47 Green Building certification. were committed in the last fiscal year. The corporation is committed and on track to achieve both 2023 and 2025 targets for real and financial sector operations. 4. IFC’s Definitions and Metrics for Climate-Related Activities identifies projects and sectors that qualify as climate investments; these definitions are harmonized with other multilateral development banks. https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/climate+business/resources/ifc-climate-definition-metrics IFC ANNUAL REPORT 2023 64 IFC 2023 Investment Disclosure. IFC reports climate finance In FY23, IFC transferred responsibility for the ANNUAL REPORT commitments in this annual report and in the Joint calculation of ex-ante absolute GHG project emissions Report on Multilateral Development Banks’ Climate Finance. from the E&S Department to the Climate Business LEADERSHIP PERSPECTIVES In our annual Green and Social Bond Impact Report, IFC Department to consolidate climate-related metrics in also reports on the expected environmental impact one team. This involved working through the project RESULTS of projects financed through the green bonds that cycle to improve climate knowledge management and STRATEGY IN ACTION IFC issues. The IFC Green Bond Program follows best merge processes for Paris Alignment, GHG accounting, practices and the Green Bond Principles, a voluntary climate finance, and climate impact data assessment CRITICAL FUNCTIONS set of guidelines for transparency and disclosure. IFC’s for every investment. The objective is to ensure Green Bond Program has been reviewed by the Center more consistent, robust ex-ante GHG estimates and Measuring Up: Our Impact for International Climate and Environmental Research disclosures using methodologies that are both feasible Sustainability at the University of Oslo (CICERO), now a part of the and practical for implementation in the real world to S&P Global, which provided a second opinion on IFC’s eventually facilitate ex-post GHG data. Accountability and Oversight framework and guidance for assessing and selecting Diversity, Equity, and Inclusion eligible projects for green bond investments. As a IFC continues to provide guidance and resources signatory of the Principles for Responsible Investment to build capacity in emerging markets through Auditor’s Report (PRI), IFC is mandated to report under PRI’s TCFD- publications such as Technical Guidance for Financial aligned indicators. Institutions — Assessment of Greenhouse Gases to Letter to the Board of Governors guide financial institutions in the disclosure of GHG Stay Connected Emissions Calculations. IFC continues to estimate emissions. and report aggregate GHG emissions reductions Credits from IFC investments (Scope 3 emissions). Through IFC Corporate. IFC has been carbon neutral in all our Reporting Under the Task Force on the IFI GHG Accounting Group, IFC works with the business operations including business travel (Scope United Nations Framework Convention on Climate 1 and 2 emissions) since FY2009. Prior initiatives have Climate-related Financial Disclosures Change (UNFCCC), other MDBs, some commercial cut energy use in IFC’s headquarters by 18 percent Compensation and Benefits banks, and bilateral DFIs to harmonize Standards for including installing lighting occupancy sensors, GHG accounting. This includes development of GHG adjusting building-wide heating and cooling set points, Financial Commitments to accounting methodologies and standard emission and reducing an hour of heating, cooling, and lighting IFC Trust Funds factors for power grid GHG emissions in more than 100 standard operations for the facility. In FY2019, IFC set countries. IFC applies the IFI Harmonized Approach to a global, internal carbon-reduction commitment to Funding GHG Accounting and IFI sector-specific approaches, cut our facility-related emissions (Scope 1 and 2) by Financial Performance Summary where available, to estimate absolute, baseline and 20 percent by 2026, from a 2016 baseline. This target relative ex-ante GHG emissions where use of proceeds is in line with the World Bank Group’s commitment is defined. IFC estimates gross GHG emissions for all to reduce facility-related emissions by 28 percent real sector projects with emissions over 25,000 metric over the same period. All remaining emissions are tons of carbon dioxide equivalent, and net emissions compensated via carbon offsets. More information, on a project-by-project basis for real sector projects visit: www.ifc.org/en/about/corporate-responsibility where possible. IFC continues to disclose ex-ante aggregate estimated annual gross GHG emissions through the publicly available Environmental and Social Review Summary,5 and project level emissions through the Project Disclosure Portal in support of the review of projects and clients under Performance Standard 3. 5. IFC Project Information & Data Portal. https://disclosures.ifc.org/#/landing. IFC ANNUAL REPORT 2023 65 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES Essential Information RESULTS STRATEGY IN ACTION CRITICAL FUNCTIONS Measuring Up: Our Impact The information in this annex will appear in Sustainability our online report. Accountability and Oversight Diversity, Equity, and Inclusion 67 Auditor’s Report Letter to the Board of Governors OUR PEOPLE & PRACTICES Stay Connected 67 Compensation and Benefits Credits 68 Financial Commitments to IFC Trust Funds Reporting Under the Task Force on Climate-related Financial Disclosures 69 Funding Compensation and Benefits 70 Financial Performance Summary Financial Commitments to IFC Trust Funds Funding Financial Performance Summary IFC ANNUAL REPORT 2023 66 IFC 2023 ANNUAL REPORT Compensation and Benefits LEADERSHIP PERSPECTIVES Ensuring competitive compensation and benefits, IFC applies the World Bank Group’s compensation framework. EXECUTIVE COMPENSATION RESULTS Competitive compensation is essential to attract and retain a highly qualified, diverse staff. Salaries for staff recruited in Washington, D.C. are based on the U.S. market. Salaries for staff hired outside the United States are The salary of the President of the World Bank Group is STRATEGY IN ACTION based on local competitiveness as determined by independent local market surveys. Given the World Bank Group’s determined by the Board of Directors. status as a multilateral organization, staff salaries are determined on a net-of-tax basis. CRITICAL FUNCTIONS The salary of the IFC Managing Director is determined Measuring Up: Our Impact As of June 30, 2023, the salary structure (net of tax) and annual average net salaries/benefits for World Bank Group based on the U.S. WB salary structure and positioned staff were as follows: in the salary range for the GK grade. The executive Sustainability salary structure is reviewed annually and updated Accountability and Oversight based on the U.S. labor market movement or IMF’s Staff Salary Structure and Benefits (Washington, D.C.) projected U.S. CPI movement, whichever is lower. Diversity, Equity, and Inclusion The compensation of our executive leadership is AVERAGE transparent. Auditor’s Report STAFF AT SALARY/ AVERAGE REPRESENTATIVE MINIMUM MIDPOINT MAXIMUM GRADE GRADE BENEFITSa Letter to the Board of Governors GRADES JOB TITLES (US$) (US$) (US$) LEVEL (%) (US$) (US$) IFC MD Makhtar Diop received an annual salary of GA Office Assistant 31,300 44,700 58,100 0.01% 44,620 21,216 $437,680 net of taxes. Stay Connected GB Team Assistant, Information Credits Technician 37,100 53,000 68,900 0.04% 48,415 23,020 GC Program Assistant, Information Reporting Under the Task Force on Assistant 45,400 64,900 84,400 4.83% 67,732 32,205 Climate-related Financial Disclosures GD Senior Program Assistant, Compensation and Benefits Information Specialist, Budget Assistant 54,100 77,300 100,500 5.68% 82,765 39,353 Financial Commitments to GE Analyst 74,100 105,900 137,700 9.51% 97,640 46,425 IFC Trust Funds GF Professional 98,300 140,500 182,700 23.61% 127,171 60,466 Funding GG Senior Professional 127,600 182,300 237,000 38.93% 178,089 84,677 Financial Performance Summary GH Manager, Lead Professional 171,800 245,500 319,200 14.75% 249,956 118,848 GI Director, Senior Advisor 259,900 324,900 389,900 2.22% 324,889 154,477 GJ Vice President 316,000 371,800 427,600 0.36% 379,286 180,341 GK Managing Director, Executive Vice President, Senior Vice President 351,300 413,300 475,300 0.07% 431,211 170,666 Note: Because WBG staff, other than U.S. citizens, usually are not required to pay income taxes on their WBG compensation, the salaries are set on a net-of-tax basis. These salaries are generally equivalent to the after-tax take-home pay of the employees of the comparator organizations and firms from which WBG salaries are derived. Only a relatively small minority of staff will reach the upper third of the salary range. a. Includes medical, life and disability insurance; accrued termination benefits; and other non-salary benefits. Excludes tax allowances. IFC ANNUAL REPORT 2023 67 IFC 2023 ANNUAL REPORT Financial Commitments to IFC LEADERSHIP PERSPECTIVES Trust Funds (ADVISORY & UPSTREAM, US$ MILLION EQUIVALENT) RESULTS STRATEGY IN ACTION Summary FY23 FY22 Corporations, Foundations, and NGOs FY23 FY22 Governments 155.75 148.94 Bill & Melinda Gates Foundation 7.11 1.00 CRITICAL FUNCTIONS Institutional/Multilateral Partners 7.70 20.20 Rockefeller Foundation 0.00 5.00 Measuring Up: Our Impact Corporations, Foundations, and NGOs 7.11 6.00 Total 7.11 6.00 Sustainability Total 170.56 175.14 Accountability and Oversight Governments FY23 FY22 Australia 3.86 17.00 Diversity, Equity, and Inclusion Auditor’s Report Austria Canada 5.22 4.35 5.63 0.00 Financial Commitments to IFC Letter to the Board of Governors Czechia 1.00 0.00 Trust Funds (BLENDED FINANCE, US$ MILLION EQUIVALENT) Denmark 0.00 2.65 Stay Connected Governments FY23 FY22 France 2.10 0.00 Credits Germany 0.00 27.85 Canada 68.23 0.00 Reporting Under the Task Force on Ireland 1.82 1.08 Germany 31.97 0.00 Climate-related Financial Disclosures Italy 0.27 0.00 Korea, Republic of 10.00 0.00 Japan 28.35 8.93 Netherlands 44.23 0.00 Compensation and Benefits Switzerland 10.00 0.00 Korea, Republic of 20.00 0.00 Financial Commitments to United Kingdom 31.07 13.15 Luxembourg 8.76 0.00 IFC Trust Funds Total 195.50 13.15 Netherlands 1.00 1.08 Funding New Zealand 2.68 0.00 Institutional/Multilateral Partners FY23 FY22 Financial Performance Summary Norway 0.00 2.26 Women Entrepreneurs Finance Initiative (We-Fi) 0.00 2.27 Spain 3.92 0.00 Sweden 2.33 6.57 Corporations, Foundations, and NGOs FY23 FY22 Switzerland 52.10 68.67 Rockefeller Foundation 0.00 25.00 United Kingdom 14.99 0.51 Total 195.50 40.42 United States 3.00 6.71 Total 155.75 148.94 Institutional/Multilateral Partners FY23 FY22 European Commission (EC) 4.77 5.55 Global Environment Facility (GEF) 0.00 4.20 Global Infrastructure Facility (GIF) 2.93 1.77 Women Entrepreneurs Finance Initiative (We-Fi) 0.00 8.68 Total 7.70 20.20 IFC ANNUAL REPORT 2023 68 IFC 2023 ANNUAL REPORT Funding FY23 Total Borrowing AMOUNT (US$ CURRENCY EQUIVALENT) % LEADERSHIP PERSPECTIVES IFC raises funds in the international capital markets for RESULTS private sector lending and to safeguard IFC’s triple-A U.S. dollar USD 5,220,120,000 38.14% credit ratings by ensuring adequate liquidity. Issuances STRATEGY IN ACTION Australian dollar AUD 3,671,717,500 26.83% include benchmark bonds in core currencies such as U.S. dollars, thematic issuances to promote strategic British pound GBP 1,147,568,000 8.38% CRITICAL FUNCTIONS priorities such as addressing climate change, and Hong Kong dollar HKD 726,431,893 5.31% Measuring Up: Our Impact issuances in emerging-market currencies to support New Zealand dollar NZD 601,772,500 4.40% the development of capital markets. Most of IFC’s Sustainability lending is denominated in U.S. dollars, but we borrow Swedish Krona SEK 497,146,376 3.63% Accountability and Oversight in many currencies to diversify access to funding, Canadian dollar CAD 366,972,477 2.68% reduce borrowing costs, and encourage the growth Norwegian Krone NOK 298,237,466 2.18% Diversity, Equity, and Inclusion of local capital markets. Chinese yuan Auditor’s Report (Renminbi) CNY 219,257,109 1.60% Romanian Leu RON 144,860,060 1.06% Letter to the Board of Governors Brazilian Real BRL 135,601,113 0.99% Stay Connected Hungarian forint HUF 129,213,116 0.94% Credits Uzbekistani so’m UZS 99,784,232 0.73% Reporting Under the Task Force on Mexican peso MXN 89,386,698 0.65% Climate-related Financial Disclosures Other 338,699,019 2.47% Compensation and Benefits Total 13,686,767,558 100% Financial Commitments to IFC Trust Funds Funding Financial Performance Summary IFC ANNUAL REPORT 2023 69 IFC 2023 ANNUAL REPORT Financial Performance Summary LEADERSHIP PERSPECTIVES The overall market environment has a significant influence on IFC’s financial performance. The main elements of IFC’s net income and other RESULTS comprehensive income, and influences on the level and variability of net income and other comprehensive income from year to year are: STRATEGY IN ACTION Main Elements of Net Income and Other Comprehensive Income CRITICAL FUNCTIONS ELEMENTS SIGNIFICANT INFLUENCES Measuring Up: Our Impact Net income: Sustainability Yield on interest earning assets (principally loans) Market conditions including spread levels and degree of competition. Nonaccruals and recoveries of interest on loans formerly in Accountability and Oversight nonaccrual status, and income from participation notes on individual loans are also included in income from loans. Diversity, Equity, and Inclusion Liquid asset income Realized and unrealized gains and losses on the liquid asset portfolios, in particular the portion of the liquid asset portfolio Auditor’s Report funded by net worth, which are driven by external factors such as the interest rate environment and liquidity of certain asset classes within the liquid asset portfolio. Letter to the Board of Governors Stay Connected Income from the equity investment portfolio Global climate for emerging markets equities, fluctuations in currency markets and company-specific performance for equity investments. Overall performance of the equity portfolio. Credits Reporting Under the Task Force on Provision for losses on loans, guarantees, and available- Risk assessment of borrowers, probability of default, loss given default, and expected balance at default considering prepayment Climate-related Financial Disclosures for-sale debt securities and disbursement assumption estimates as well as expected utilization rates. Compensation and Benefits Other income and expenses Level of advisory services provided by IFC to its clients, the level of expense from the staff retirement and other benefits plans, Financial Commitments to the approved and actual administrative expenses, and other budget resources. IFC Trust Funds Gains and losses on other non-trading financial Principally, differences between changes in fair values of borrowings, excluding IFC’s credit spread and associated derivative Funding instruments accounted for at fair value instruments and unrealized gains or losses associated with the investment portfolio including puts, warrants, and stock options, Financial Performance Summary which in part are dependent on the global climate for emerging markets. These securities may be valued using internally developed models or methodologies, utilizing inputs that may be observable or non-observable. Other comprehensive income: Unrealized gains and losses on debt securities accounted Global climate for emerging markets, fluctuations in currency and commodity markets and company-specific performance, and for as available-for-sale consideration of the extent to which unrealized losses are considered a credit loss. Debt securities may be valued using internally developed models or methodologies, utilizing inputs that may be observable or non-observable. Unrealized gains and losses attributable to instrument- Fluctuations in IFC’s own credit spread measured against reference rate, resulting from changes over time in market pricing specific credit risk on borrowings at fair value under the of credit risk. As credit spreads widen, unrealized gains are recorded, and when credit spreads narrow, unrealized losses are Fair Value Option recorded. Unrecognized net actuarial gains and losses and Returns on pension plan assets and the key assumptions that underlay projected benefit obligations, including financial market unrecognized prior service costs on benefit plans interest rates, staff expenses, past experience, and management’s best estimate of future benefit cost changes and economic conditions. IFC ANNUAL REPORT 2023 70 IFC 2023 Net income for FY23 was $672 million compared to a net loss of $464 million in FY22, primarily driven by ANNUAL REPORT reversal of mark-to-market losses from the previous year and additional interest income in Treasury, as well as higher income from loans and debt securities. The $1.1 billion increase in FY23 when compared to FY22 was LEADERSHIP PERSPECTIVES principally a result of the following factors: RESULTS STRATEGY IN ACTION Change in Net Income FY23 vs FY22 (US$ MILLIONS) CRITICAL FUNCTIONS , Measuring Up: Our Impact , Sustainability , Accountability and Oversight Diversity, Equity, and Inclusion Auditor’s Report Letter to the Board of Governors Stay Connected Credits Net Reporting Under the Task Force on Total Loss URG L * on Equity URG L * on Administrative URG L * on Others*** Change in Treasury Income Provision Loans Income Equity Expenses & Borrowings Net Income Climate-related Financial Disclosures from Loans and Debt Investments Income** Pensions and Debt Securities Compensation and Benefits Securities** Financial Commitments to * Unrealized gains (losses). IFC Trust Funds ** Total income from loans and debt securities and net treasury income are net of allocated charges on borrowings. Funding *** Others mainly represents foreign exchange gains/losses, service fees, and net advisory service expenses. Financial Performance Summary Equity investment portfolio returned $191 million of $29 million in FY23 compared to $140 million in IFC’s administrative expenses were $1.2 billion in FY23 compared to $208 million in FY22. The FY23 FY22. Included in the FY22 provision was a qualitative in FY23 compared to $1.1 billion in FY22, an return comprised dividends ($164 million), realized overlay of $135 million, which remained unchanged at increase of $73 million primarily driven by gains on sales ($161 million) and unrealized losses FY23-end. higher staff costs and higher travel expenses. ($134 million). Pension expenses decreased by $48 million to IFC reported income of $241 million on liquid assets $214 million in FY23 from $262 million in FY22. Net income from loans, debt securities and associated in FY23, net of allocated charges on borrowings, derivatives, net of allocated charges on borrowings, compared to a loss of $521 million in FY22. The FY23 was $1.6 billion in FY23 compared to $1.1 billion in FY22. treasury income benefited from more favorable Unrealized gains from loans and debt securities were market movements. $175 million in FY23 compared to unrealized losses of $123 million in FY22. IFC recorded provisions for losses IFC ANNUAL REPORT 2023 71 IFC 2023 IFC’s net income or loss for the past three fiscal years are presented below: ANNUAL REPORT LEADERSHIP PERSPECTIVES IFC’s Net Income (Loss) FY21–FY23 (US$ MILLIONS) RESULTS 2021 4,209 STRATEGY IN ACTION 2022 (464) 2023 672 CRITICAL FUNCTIONS Measuring Up: Our Impact Sustainability IFC uses Income Available for Designations (a non-U.S. GAAP measure) as a basis for designations of retained earnings. Income Available for Designations comprises net income excluding unrealized gains and losses on Accountability and Oversight investments and borrowings and grants to IDA in the year ended June 30, 2021. Diversity, Equity, and Inclusion Auditor’s Report Reconciliation of Net Income (Loss) to Income Letter to the Board of Governors Available for Designations Stay Connected (US$ MILLIONS) FOR THE YEAR ENDED JUNE 30 2023 2022 2021 Credits Net income (loss) $ 672 $ (464) $ 4,209 Reporting Under the Task Force on Adjustments to reconcile Net income (loss) to Climate-related Financial Disclosures Income Available for Designations Compensation and Benefits Unrealized (gains) losses on investments (41) 740 (3,285) Unrealized losses (gains) on borrowings 50 106 (71) Financial Commitments to Grants to IDA – – 213 IFC Trust Funds Income Available for Designations $ 681 $ 382 $ 1,066 Funding Financial Performance Summary IFC ANNUAL REPORT 2023 72 IFC 2023 Summary of Financial Results ANNUAL REPORT (US$ MILLIONS) LEADERSHIP PERSPECTIVES FOR THE YEAR ENDED JUNE 30 2023 2022 2021 RESULTS Consolidated statement of operations highlights: STRATEGY IN ACTION Income from loans and guarantees, including realized gains and losses on loans and associated derivatives $ 2,290 $ 1,156 $ 1,116 CRITICAL FUNCTIONS (Provision) release of provision for losses on loans, off-balance sheet credit exposures and other receivables (22) (126) 201 Measuring Up: Our Impact Income from equity investments and associated derivatives 191 208 3,201 Sustainability Income from debt securities, including realized gains and losses on debt securities and associated derivatives 518 414 340 Provision for losses on available-for-sale debt securities (7) (14) (3) Accountability and Oversight Income (loss) from liquid asset trading activities 1,464 (413) 327 Diversity, Equity, and Inclusion Charges on borrowings (2,598) (302) (326) Auditor’s Report Other income 518 419 595 Other expenses (1,721) (1,653) (1,687) Letter to the Board of Governors Foreign currency transaction (losses) gains on non-trading activities (86) 76 (148) Stay Connected Income (loss) before net unrealized gains and losses on non-trading financial instruments accounted for at fair Credits value and grants to IDA 547 (235) 3,616 Net unrealized gains (losses) on non-trading financial instruments accounted for at fair value 125 (229) 806 Reporting Under the Task Force on Climate-related Financial Disclosures Income (loss) before grants to IDA 672 (464) 4,422 Grants to IDA – – (213) Compensation and Benefits Net income (loss) $ 672 $ (464) $ 4,209 Financial Commitments to IFC Trust Funds (US$ MILLIONS) Funding AS OF THE YEAR ENDED JUNE 30 2023 2022 Financial Performance Summary Consolidated balance sheets highlights: Total assets $ 110,547 $ 99,010 Liquid assetsa 40,120 41,717 Investments 51,502 44,093 Borrowings outstanding, including fair value adjustments 52,443 48,269 Total capital $ 35,038 $ 32,805 of which Undesignated retained earnings $ 11,589 $ 10,840 Designated retained earnings 221 298 Accumulated other comprehensive income (loss) (AOCI) 632 (82) Paid-in capital 22,596 21,749 a. Net of securities sold under repurchase agreements, payable for cash collateral received and associated derivatives. IFC ANNUAL REPORT 2023 73 IFC 2023 Key Financial Ratios COMMITMENTS ANNUAL REPORT (US$ BILLIONS, EXCEPT RATIOS) Total commitments (Long-Term Finance and Short- LEADERSHIP PERSPECTIVES AS OF THE YEAR ENDED JUNE 30 2023 2022 Term Finance) was $43.7 billion in FY23 as compared to $33.6 billion in FY22. Long-Term Finance (LTF) RESULTS Overall liquidity ratioa 104% 111% Commitments comprise Own Account and Core Debt-to-equity ratio b 1.6 1.6 Mobilization and totaled $31.7 billion in FY23, an STRATEGY IN ACTION Total reserve against losses on loans to total disbursed portfolioc 3.7% 4.4% increase of $8.5 billion or 37% from FY22. IFC’s FY23 CRITICAL FUNCTIONS LTF Own Account Commitments were $16.7 billion Capital measures: Measuring Up: Our Impact ($12.6 billion in FY22) and Core Mobilization was Capital availabled 34.8 32.5 $15.0 billion ($10.6 billion in FY22). Short-Term Finance Sustainability Capital required e 21.1 20.1 (STF) Commitments Own Account were $11.0 billion Capital utilization ratiof 60.7% 62.0% in FY23 ($9.7 billion in FY22) and Core Mobilization was Accountability and Oversight $996 million in FY23 ($767 million in FY22). Diversity, Equity, and Inclusion a.Overall Liquidity Policy states that IFC would at all times maintain a minimum level of liquidity, plus undrawn borrowing commitments from the IBRD, such that it would cover at least 45% of the next three In direct response to the COVID-19 pandemic, IFC Auditor’s Report years’ estimated net cash requirements. IFC’s overall liquidity as a percentage of the next three years’ estimated net cash needs stood at 104% as of June 30, 2023, above the minimum requirement of the committed $4.1 billion in FY23 including $1.0 billion Letter to the Board of Governors Board of 45%. under its Fast Track COVID-19 Facility in support of IFC’s existing clients. Outside of the facility, IFC b.Debt-to-equity (leverage) ratio is defined as outstanding borrowings plus committed guarantees Stay Connected divided by total capital (comprises paid-in capital, retained earnings and Accumulated other committed an additional $3.1 billion in financing to comprehensive income (loss)). IFC’s debt-to-equity ratio was 1.6 as of June 30, 2023, well within the support clients in response to COVID-19. Since the Credits maximum of 4 required by the policy approved by IFC’s Board of Directors. start of the COVID-19, IFC committed $8.4 billion under Reporting Under the Task Force on c.Total reserve against losses on loans to total disbursed loan portfolio is defined as reserve against the Fast Track COVID-19 Facility and an additional Climate-related Financial Disclosures losses on loans as a percentage of the total disbursed loan portfolio. $17.0 billion outside of the facility. d.Capital available: Resources available to absorb potential losses, calculated as: Balance Sheet Capital Compensation and Benefits less Designated Retained Earnings. CORE MOBILIZATION Financial Commitments to e.Capital required: Aggregate minimum Economic Capital required to maintain IFC’s AAA rating. Core Mobilization is financing from entities other than IFC Trust Funds f.CUR is defined as Capital Required divided by Capital Available. IFC that becomes available to clients due to IFC’s direct Funding involvement in raising resources. Financial Performance Summary Total Commitments (Own Account and Core Mobilization) (US$ MILLIONS) FOR THE YEAR ENDED JUNE 30 2023 2022 Total Commitments (Own Account and Core Mobilization) $ 43,729 $ 33,591 Long-Term Finance Own Account 16,677 12,569 Long-Term Finance Core Mobilization 15,029 10,596 Short-Term Finance Own Account 11,027 9,659 Short-Term Finance Core Mobilization 996 767 IFC ANNUAL REPORT 2023 74 IFC 2023 AMC ANNUAL REPORT IFC Equity Mobilization Department (AMC), invests third-party capital and IFC capital, enabling outside investors to invest alongside IFC in LEADERSHIP PERSPECTIVES developing markets. Investors in funds managed by AMC have included sovereign wealth funds, national pension funds, multilateral and bilateral RESULTS development institutions, national development agencies and international financial institutions (IFIs). The Funds managed by AMC and their activities as of and for the years ended June 30, 2023 and 2022 are summarized as follows: STRATEGY IN ACTION CRITICAL FUNCTIONS Funds Managed by AMC THROUGH JUNE 30, 2023 Measuring Up: Our Impact TOTAL FUNDS RAISED Sustainability SINCE INCEPTION FOR THE YEAR ENDED JUNE 30, 2023 FROM CUMULATIVE INVESTMENT INVESTMENT Accountability and Oversight OTHER INVESTMENT COMMITMENTS DISBURSEMENTS (US$ MILLIONS) TOTAL FROM IFC INVESTORS COMMITMENTSa MADE BY FUNDb MADE BY FUND Diversity, Equity, and Inclusion Post Investment Period Auditor’s Report IFC Capitalization (Equity) Fund, LP (Equity Capitalization Fund) $ 1,275 $ 775 $ 500 $1,214 – – Letter to the Board of Governors IFC Capitalization (Subordinated Debt) Fund, LP (Sub-Debt Capitalization Fund) 1,725 225 1,500 1,614 – – Stay Connected IFC African, Latin American and Caribbean Fund, LP (ALAC Fund) 1,000 200 800 864 – – IFC Catalyst Fund, LP, IFC Catalyst Fund (UK), LP and IFC Catalyst Fund Credits (Japan), LP (collectively, Catalyst Funds) 418 75 343 363 – 8 Reporting Under the Task Force on IFC Global Infrastructure Fund, LP (Global Infrastructure Fund) c 1,430 200 1,230 902 – – Climate-related Financial Disclosures IFC Global Emerging Markets Fund of Funds, LP and IFC Global Emerging Markets Fund of Funds (Japan Parallel), LP (collectively, GEM Funds) 800 150 650 757 – 86 Compensation and Benefits Women Entrepreneurs Debt Fund, LP (WED Fund) 115 30 85 110 – – Financial Commitments to IFC Middle East and North Africa Fund, LP (MENA Fund) 162 60 102 86 4 8 IFC Trust Funds China-Mexico Fund, LP (China-Mexico Fund) 1,200 – 1,200 362 – 10 Funding IFC Financial Institutions Growth Fund, LP (FIG Fund) 505 150 355 344 – 3 Financial Performance Summary IFC Emerging Asia Fund, LP (Asia Fund) 693 150 543 573 16 97 Post Investment Period Total 9,323 2,015 7,308 7,189 20 212 Liquidated Funds Africa Capitalization Fund, Ltd. (Africa Capitalization Fund) 182 – 182 130 – – IFC Russian Bank Capitalization Fund, LP (Russian Bank Cap Fund) 550 250 300 82 – – Liquidated Funds Total 732 250 482 212 – – Grand Total $10,055 $2,265 $7,790 $7,401 $20 $212 a. Net of commitment cancellations. b. Excludes commitment cancellations from prior periods. c. Includes co-investment fund managed by AMC on behalf of Fund LPs. IFC ANNUAL REPORT 2023 75 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES Funds Managed by AMC RESULTS THROUGH JUNE 30, 2022 TOTAL FUNDS RAISED STRATEGY IN ACTION SINCE INCEPTION FOR THE YEAR ENDED JUNE 30, 2022 CRITICAL FUNCTIONS FROM OTHER CUMULATIVE INVESTMENT INVESTMENT COMMITMENTS INVESTMENT DISBURSEMENTS (US$ MILLIONS) TOTAL FROM IFC INVESTORS COMMITMENTSa MADE BY FUNDb MADE BY FUND Measuring Up: Our Impact Sustainability Investment Period IFC Financial Institutions Growth Fund, LP (FIG Fund) $ 505 $ 150 $ 355 $ 347 $ 90 $ 138 Accountability and Oversight IFC Emerging Asia Fund, LP (Asia Fund) 693 150 543 559 187 197 Diversity, Equity, and Inclusion Investment Period Total 1,198 300 898 906 277 335 Auditor’s Report Post Investment Period Letter to the Board of Governors IFC Capitalization (Equity) Fund, LP (Equity Capitalization Fund) 1,275 775 500 1,214 – – Stay Connected IFC Capitalization (Subordinated Debt) Fund, LP (Sub-Debt Capitalization Fund) 1,725 225 1,500 1,614 – – Credits IFC African, Latin American and Caribbean Fund, LP (ALAC Fund) 1,000 200 800 864 – – IFC Catalyst Fund, LP, IFC Catalyst Fund (UK), LP and IFC Catalyst Fund Reporting Under the Task Force on (Japan), LP (collectively, Catalyst Funds) 418 75 343 363 – 7 Climate-related Financial Disclosures IFC Global Infrastructure Fund, LP (Global Infrastructure Fund) C 1,430 200 1,230 929 – – Compensation and Benefits IFC Global Emerging Markets Fund of Funds, LP and IFC Global Emerging Markets Fund of Funds (Japan Parallel), LP (collectively, GEM Funds) 800 150 650 757 – 117 Financial Commitments to Women Entrepreneurs Debt Fund, LP (WED Fund) 115 30 85 110 – – IFC Trust Funds IFC Middle East and North Africa Fund, LP (MENA Fund) 162 60 102 82 4 13 Funding China-Mexico Fund, LP (China-Mexico Fund) 1,200 – 1,200 362 47 47 Financial Performance Summary Post Investment Period Total 8,125 1,715 6,410 6,295 51 184 Liquidated Funds Africa Capitalization Fund, Ltd. (Africa Capitalization Fund) 182 – 182 130 – – IFC Russian Bank Capitalization Fund, LP (Russian Bank Cap Fund) 550 250 300 82 – – Liquidated Funds Total 732 250 482 212 – – Grand Total $10,055 $2,265 $7,790 $7,413 $328 $519 a. Net of commitment cancellations. b. Excludes commitment cancellations from prior periods. c. Includes co-investment fund managed by AMC on behalf of Fund LPs. IFC ANNUAL REPORT 2023 76 IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION CRITICAL FUNCTIONS On the back cover: Aerial photo of a cutting-edge rice-processing facility that entrepreneur Mamounata Velegda is building that aims to position Burkina Faso as a leading regional rice producer. Her venture is financed by IFC client, Coris Bank International. IFC 2023 ANNUAL REPORT LEADERSHIP PERSPECTIVES RESULTS STRATEGY IN ACTION CRITICAL FUNCTIONS International Finance Corporation 2121 Pennsylvania Avenue, NW Washington, DC 20433 USA ifc.org