STEPPING UP IN A TIME OF UNCERTAINTY 2022 ANNUAL REPORT CONTENTS 2 Letter from the IFC Board 4 Letter from David Malpass, World Bank Group President 6 Letter from Makhtar Diop, IFC Managing Director 9 Our Management Team RESULTS 10 World Bank Group 2022 Summary Results 12 IFC 2022 Year in Review STRATEGY IN ACTION 16 Stepping Up in a Time of Uncertainty CRITICAL FUNCTIONS 50 Measuring Up 52 Sustainability 54 Accountability and Oversight 56 Diversity, Equity, and Inclusion Additional information is available on IFC’s Annual Report 2022 website: www.ifc.org/AnnualReport. Cover (Vietnam): Stepping Up in a Time of Uncertainty tells the story of IFC’s determined effort to move forward, with urgency, despite mounting challenges worldwide. ABOUT IFC IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org. IFC ANNUAL REPORT 2022 1 IFC BOARD LETTER FROM THE IFC BOARD Over the last year, our shareholders But the needs are many, and more can be done. vaccines, invest in diagnostics and therapeutics, and The Bank Group is working with donor countries to strengthen health systems; to continue supporting debt asked the World Bank Group to provide mobilize financial support through diverse channels, sustainability and transparency; to build on the CCAP exceptional support in response to the including the Fund for Pandemic Prevention, to protect natural capital and biodiversity; to promote compounding crises of the COVID-19 Preparedness, and Response, as well as special digitalization; to increase private sector financing guarantees and grant financing for Ukraine. The Bank mobilization; and, with the IMF, to coordinate actions pandemic and the war in Ukraine, in Group is also working with stakeholders on the ground and orient country engagements toward a green, addition to its ongoing and extensive to implement important programs, such as the World resilient, and inclusive economic recovery. It urged the portfolio of work. This resulted in Bank Group Climate Change Action Plan (CCAP), IFC’s Bank to work toward these objectives while remaining Global Health Platform, MIGA’s Fast-Track COVID-19 focused on the twin goals of ending extreme poverty unprecedented levels of financing by Response Program and the Bank’s COVID-19 Strategic and boosting shared prosperity as well as helping the World Bank Group in fiscal 2022, Preparedness and Response Program, as well as countries achieve the Sustainable Development Goals. efforts to address debt vulnerabilities, boost the including $70.8 billion by IBRD and IDA, resilience of food systems, and support energy access We strongly support the important efforts undertaken $32.8 billion (including mobilization) and transition. We continue to stress the need to this year by Bank Group senior leadership and staff to by IFC, and $4.9 billion in guarantees address the key drivers of fragility and poverty — in address racial injustice and workplace culture through Afghanistan, Haiti, Sudan, Yemen and elsewhere —  recommendations from the staff task forces. We by MIGA. in order to build human capital, reduce inequality, welcome these improvements as we transition to a promote jobs, and foster economic recovery. hybrid work model. We were also pleased to travel By financing health operations, vaccine procurement, as a group to client countries in fiscal 2022 — the first and other initiatives, the Bank Group has helped Given the immense need for financing, the IDA20 time since the pandemic started — and observe in developing countries and their people and businesses replenishment process was advanced by a year, and person the impact of the Bank Group’s engagement. continue to address the impacts of the pandemic a $93 billion replenishment package was agreed to on poverty, health care, human and economic in December 2021. This financing is the largest ever We sincerely appreciate the ongoing commitment development, and well-being. The Bank Group has also mobilized in IDA’s 61-year history and will help low- of staff across the institutions, including our own rapidly addressed the far-reaching consequences of a income countries respond to today’s multiple teams, to the Bank Group’s mission and their hard new crisis, the war in Ukraine. The spillover effects are crises and build a greener, more resilient, and more work during these exceptional and challenging times. many — beyond the impacts related to refugees, food inclusive future. Donor countries also agreed to a We also extend a special thanks to the Emergency security, and energy, the conflict poses uncertain and review of IDA voting rights, resulting in a significant Management Team, who worked tirelessly to bring potentially lasting consequences on trade channels, adjustment to its voting rights framework. This will us back into our offices safely and securely after an foreign investment, global confidence, and financial help ensure fairness among all donors while protecting extended period of home-based work. stress. Anchored by the Bank Group’s twin goals of and enhancing recipients’ voting power. poverty reduction and shared prosperity, with a focus Amid the many current crises, the World Bank Group on fostering green, resilient, and inclusive development, At the 2021 Annual Meetings and 2022 Spring Meetings, stands ready to help countries and people across the the Board discussed and approved several important the Development Committee asked the Bank to help globe as they work to address human and economic initiatives and programs to respond to these crises. countries address immediate food security and social challenges and achieve progress on the path of protection needs; to help manufacture and deploy development. 2 IFC ANNUAL REPORT 2022 PHOTO SEATED BOTTOM, LEFT TO RIGHT: PHOTO STANDING TOP, LEFT TO RIGHT: Katharine Rechico Matteo Bugamelli Alphonse Ibi Kouagou Takashi Miyahara Michael Krake Canada Italy Benin Japan Germany Koen Davidse Nigel Ray Katarzyna Zajdel-Kurowska Adriana Kugler Taufila Nyamadzabo The Netherlands — Co-Dean Australia Poland United States Botswana Monica E. Medina Lene Lind Roman Marshavin Arnaud Buissé Erivaldo Gomes Peru Norway Russian Federation France Brazil Abdulmuhsen Saad Alkhalaf Richard Hugh Montgomery Mohd Hassan Ahmad Eva Valle Maestro Armando Manuel Saudi Arabia United Kingdom Malaysia Spain Angola Merza Hussain Hasan Rajesh Khullar Abdelhak Bedjaoui Hayrettin Demircan Junhong Chang Kuwait — Dean India Algeria Türkiye China IFC ANNUAL REPORT 2022 3 The World Bank Group is responding to these challenges with speed, clarity, scale, and impact. LETTER FROM DAVID MALPASS We’ve committed two consecutive surges of financing, President of the World Bank Group analytical work, advocacy, and policy advice to support people, preserve jobs, and restore growth — first, $150 billion in response to the COVID-19 pandemic, and now a 15-month $170 billion response to the food crisis as well as the war in Ukraine and its spillover effects. Since the start of the pandemic through fiscal 2022, the World Bank Group has provided over $14 billion to help more than 100 countries respond to the health impacts of COVID-19 and vaccinate their people. In fiscal 2022, IBRD committed $33.1 billion, including support for more than 45 middle-income countries. This includes $300 million to help Türkiye scale up private sector investment in geothermal energy. IDA committed $37.7 billion for grants and highly concessional loans to over 70 countries, including $645 million to support food system resilience and emergency response in Burkina Faso, Cameroon, Mali, Mauritania, Niger, and Togo. I welcomed our IDA partners’ agreement in December 2021 to advance the IDA20 replenishment by one year. Their record three- year contributions of $23.5 billion will anchor IDA’s financing of $93 billion for fiscal 2023–25 and help the The world is facing dangerous crises that are hammering developing poorest countries address urgent priorities — including countries, hitting the poor and vulnerable, and worsening global inequality. jobs and economic transformation, human capital, the High inflation, war in Ukraine, large macroeconomic imbalances, and reversal in learning and literacy, gender, climate change, and fragility, conflict, and violence (FCV) — and move shortages of energy, fertilizer, and food have caused the sharpest global toward restoring growth. economic downturn in 80 years, compounding the death tolls, economic Despite challenging economic headwinds, IFC provided shutdowns, and school closures of the COVID-19 pandemic. Low- and middle- strong support to the private sector with commitment income countries now face surging prices for natural gas and fertilizer and the volumes totaling $32.8 billion (including mobilization) worst food crisis in a decade, as they work to achieve progress on long-term in fiscal 2022, building on $31.5 billion of investments in fiscal 2021 and focusing on maximum impact. As development needs­  — including clean water, electricity access, reading skills, banks cut back on trade finance, IFC is stepping in to quality infrastructure, and climate-related investments. keep import/export businesses operating despite the constraints they face. In fiscal 2022, IFC’s commitments In the global fight to alleviate poverty and raise living standards, 2022 is likely to be one of the worst years in reached $9.7 billion in trade finance, the highest decades. Real median income has declined further in many countries, and the tragic reversals in development level ever; nearly 75 percent of this was invested in during the pandemic have worsened. Our June Global Economic Prospects report highlighted the risk of stagflation IDA countries and countries affected by FCV. In one and the concentrated harm to the poor. Inequality is a prominent destabilizer, with global capital and income example, Coris Bank in Burkina Faso received IFC trade allocated primarily to high-income countries through their fiscal, monetary, and regulatory policy choices. finance to import rice from various countries. Inequality is expected to worsen in coming years, leaving development goals out of reach for many. 4 IFC ANNUAL REPORT 2022 MIGA issued $4.9 billion in guarantees to help countries facilitating trade and international food supplies, high risk. Deep debt reduction will be necessary to achieve their development goals. These efforts will boosting production, and investing in climate-resilient allow new investment and growth. We work closely provide some 15 million people with new or better agriculture. with the IMF and other partners to help countries electricity service and enable $1.9 billion in loans, strengthen their transparency, governance, and including to local businesses. MIGA remained focused The disruption of energy supplies is lowering growth, accountability — all key steps in debt sustainability. on its strategic priorities, with 85 percent of its projects especially for economies that depend on fuel imports. We also continue to call on official and private sector in fiscal 2022 dedicated to countries affected by FCV, Higher prices for natural gas and shortages are putting creditors to participate quickly and fully in efforts to IDA countries, and climate mitigation and adaptation. fertilizer supplies and crop yields at risk, destabilizing reduce debt stocks. Under current creditor-country electricity grids, and increasing the use of heavily policies, expected debt payments by the poorest Fragility, conflict, and violence are rising in much of polluting fuels. The world urgently needs to increase the countries to their creditors in 2022 and 2023 will the world, including Afghanistan, Ethiopia, the Sahel, supply of energy and massively expand reliable access greatly exceed all the development assistance available and Yemen. In Ukraine, the war has led to lives, homes, to electricity in poorer countries. This will require major to these countries. Our World Development Report 2022 and livelihoods being lost, millions of refugees, and new investments in cleaner energy, energy efficiency, examines policies to mitigate interconnected financial infrastructure destroyed. The costs of reconstruction and electricity grids and transmission. The fundamental risks and steer the world toward a sustainable and are already in the hundreds of billions. As of August realignment of Europe’s energy sources away from equitable recovery. 2022, we have mobilized and facilitated the transfer dependence on Russia requires major increases in of $13 billion in emergency financing, with more than electricity generation from natural gas, hydropower, I was pleased to welcome many colleagues back to our $9 billion already disbursed to help Ukraine finance geothermal, and nuclear power to provide a less offices this year. We continue to adapt our work model critical government services and lessen the human and carbon-intensive baseload to maintain and expand to protect staff health and well-being while recognizing economic impacts. This includes a $1.5 billion World electricity grids. the value of physical interaction in delivering high- Bank package, including $1 billion in exceptional support quality results for clients and career development. from IDA, to help pay wages for government and school Climate change and extreme weather are steadily The World Bank Group’s anti-racism task force employees. World Bank Group support also extends increasing their pressure on economies and societies, continues our important work to fight racism and racial to countries that are hosting Ukrainian refugees. particularly in fragile settings. The World Bank Group’s discrimination within our institution and in countries Climate Change Action Plan 2021–25 seeks to integrate where we work. I remain committed to fostering a With the increase in energy and food costs and Europe’s climate and development, identify and develop the culture of openness and trust and improving diversity huge unmet demand for natural gas, developing most impactful projects to reduce greenhouse gas and inclusion across the organization, also through our countries are facing new strains on people and emissions and adapt to climate change, increase task force on workplace culture. economies. The sudden spike in food prices threatens direct financing throughout the World Bank Group. to worsen political and social tensions in many It will provide avenues for the global community to The crises affecting our client countries are deep- developing countries, with devastating impacts on provide the huge flow of new grant funding needed seated, but I am confident we can make a difference. the poorest and most vulnerable. In parts of Eastern for global public goods in poorer countries. Innovative To meet these challenges, we must draw on the and Southern Africa, for example, about 66 million financial tools, such as green bonds and the Wildlife innovation and dedication of our staff, the strength people are at risk of a food emergency or famine. In Conservation Bond we launched in March 2022 —  of our partnerships, and the resolve of the global May 2022, we announced support for a global response the first of its kind — will need to expand. The Climate community. The World Bank Group remains committed to the food security crisis, with up to $30 billion in Change Action Plan has also introduced a new core to helping countries overcome these challenges and financing through August 2023, including $12 billion diagnostic: Country Climate and Development Reports. work toward a more resilient and sustainable future. in new projects, to cushion the effect of higher prices As of the end of July 2022, we had published the first and boost agricultural production and supply. The of these reports for Türkiye, Vietnam, and the G5 Sahel response builds on our experience from the last food region. I’m also pleased that, with this annual report, price crisis and incorporates our data and analytical we are introducing much greater transparency in the work, including the Commodity Markets Outlook. And in World Bank’s climate disclosures. July 2022, I joined leaders of the IMF and UN agencies David Malpass in calling for urgent action to improve global food A major consequence of the current crises is the huge President of the World Bank Group security by providing quick support to the vulnerable, buildup in government debt. For many of the poorest and Chairman of the countries, the debt burden is unsustainable or at Board of Executive Directors IFC ANNUAL REPORT 2022 5 Taken together, these challenges point toward a LETTER FROM MAKHTAR DIOP singular truth: there is no going back to where we were before. We have entered a new normal, one that IFC Managing Director will require new partnerships and creative mindsets to pave the way for a more sustainable, resilient, and inclusive future. What does the new normal demand from IFC? This topic has weighed heavily on my mind this year. I am incredibly proud of what our team has accomplished in the face of unprecedented uncertainty and growing fragility around the world. Fiscal Year 2022 was another record-setting year, with total investment commitments of $32.8 billion. These investments created regional manufacturing hubs that can produce vaccines and other essential goods, helped commerce flow in fragile and conflict-affected areas, and kept climate projects on track amid economic anxiety that could have derailed them. When I step back and reflect on the totality of IFC’s accomplishments, a common thread emerges: IFC’s ability to defy uncertainty and drive outcomes that change lives. Our ability to step up in the most challenging circumstances and bring others along. Our willingness to take risks and seize opportunities. Stepping up in a time of uncertainty. Building Resilience Countries around the world are carrying the weight The title of our Annual Report reflects our determination to step forward, of converging crises. They are feeling the pull to turn with a sense of urgency, when the world needs us most. inward, shore up resources, and focus on national concerns. But strong nations and close global ties are not and should not be mutually exclusive goals. In an environment fraught with uncertainties, confronting mounting challenges with decisiveness and resolve is the only way forward. To keep trade flowing across borders in turbulent times, IFC committed record amounts in trade financing support to emerging markets, especially Global Challenges low-income countries. The slow vaccination rates in the developing world and the emergence of new variants prolonged the Another example of what is possible is building impacts of the COVID-19 pandemic. The war in Ukraine unleashed a humanitarian crisis in the region, medical supply chains to address the pandemic. triggered a global food crisis, and further disrupted global supply chains. Soaring inflation worsened poverty Since March 2020, IFC has invested and mobilized and threatened essential investments in emerging markets. More frequent and intense climate events more than $2.2 billion to help get vaccines, personal provided an ominous glimpse at the consequences of a continued disregard for the planet. protective equipment, and medical supplies into emerging markets, with a special focus on regional 6 IFC ANNUAL REPORT 2022 facilities and distribution channels in Africa that can It is hard to understate the power of these ideas into investments that move the needle and serve local populations long after the COVID-19 crisis opportunities. They have the potential to create true create new or expand existing markets including in subsides. win-win scenarios that benefit businesses, nations, fragile countries. and the entire global community. But they will also The potential implications of this approach go far require sustained effort, new partnerships, and close But even with all these initiatives, there is still beyond healthcare. We envision similar opportunities collaboration between the public and private sectors more we can and must take on. That is why we are to build resilient ecosystems in areas like agriculture — and international development organizations like IFC. proactively improving how our organization works and therefore food security — and housing. In fact, we around the world. We are implementing changes to plan to use our Global Health Platform as a model for IFC’s organizational structure and decision-making addressing food insecurity and targeting assistance to Creating a Stronger IFC frameworks that will remove silos, foster greater farmers, food processors, and fertilizer distributors in In the new normal, we all have to get comfortable collaboration, and streamline decision-making so that developing countries. taking on more challenges, which means taking frontline staff, who know on-the-ground conditions more risks and being willing to push the envelope. best, can respond quickly and effectively to clients. We will also continue to support opportunities that We have to want more for the future of the world, connect individuals with training, digital resources, My hope is that these changes will help optimize IFC do more to achieve it, and be more like the best and capital to launch businesses. These investments for the future. I want us to be an organization that versions of ourselves. are key to driving the economic engines of emerging embraces change and nurtures talent. I want us to markets and promoting the kinds of innovation that IFC has already taken so many important steps have a culture that is diverse, lively, and inclusive. Put can reshape the world. forward to meet the demands of the moment. simply, I want us to be nothing short of the very best We continue to increase our climate-related in global development—for our clients, for the people and communities we serve, and for ourselves. Multidimensional Development commitments, and we are on track for all direct investments to be aligned with the Paris Agreement Consider the energy crisis in the developing world, The new normal is not something we should fear. It by 2025. We are also building on our legacy of setting where 600 million people in Africa alone still live is something that should inspire our work toward a global standards, launching new green taxonomies for without access to electricity. The need to address this better, brighter tomorrow. climate-friendly projects or issuing guidelines for blue issue is not up for debate. Yet the ever-worsening finance to promote the blue economy and save impacts of climate change mean we cannot do it in our oceans. the same way we always have. We need to find a new path forward: one that combines advancements We continue to build out our capacity for taking in sustainable technologies, massive investments in on bold risks in a prudent manner. We know how adaptation with innovative trade agreements and important our willingness to push into challenging financing tools. This is the only way we are going to markets is, and we remain committed to charting succeed in powering Africa — while decarbonizing an paths that will encourage others to follow. We industry that is one of the world’s largest contributors intend to grow our use of blended finance tools to Makhtar Diop to greenhouse gas emissions — and helping middle help rebalance risks for private investors, and we will Managing Director income countries through their energy transition. keep taking chances on game-changing ideas and innovations. We know not every investment is going This is just one example of multidimensional to pan out, but the potential impact of the ones that development, but there are countless others. We need do far outweigh the costs. to both expand capital access for small businesses and invite in more women and underrepresented I am especially excited about the growth of our minorities to take part. We need to both build Upstream program, which has truly gone mainstream affordable housing and invest in more sustainable and become a central part of our operations. Now building materials. we’re shifting our focus to execute on a robust pipeline of commercially viable projects and convert these IFC ANNUAL REPORT 2022 7 IFC FY22: STEPPING UP, DELIVERING RESULTS $32.8 B in total investment commitments, as compared to $31.5B in FY21 CLIMATE TRADE $4.4 B in climate $9.7 B in trade finance-- 75 % of this amount was invested financing for OUR HIGHEST in IDA countries and fragile our own account LEVEL EVER and conflict-affected situations 8 IFC ANNUAL REPORT 2022 OUR IFC’s leadership develops corporate strategies and policies as well as oversees the effective deployment of our resources. The main focus is on maximizing development impact and meeting client needs. IFC’s Management Team brings together years of development experience, a broad array of expertise, MANAGEMENT TEAM and complementary cultural perspectives. Stephanie von Georgina Baker* Elena Bourganskaia Hela Cheikhrouhou John Gandolfo Friedeburg Regional Vice President, Vice President, Regional Vice President, Vice President and Senior Vice President, Latin America and the Corporate Support Middle East, Central Asia, Treasurer Operations Caribbean, and Europe Türkiye, Afghanistan and and Central Asia Pakistan Makhtar Diop Managing Director Mohamed Gouled Ruth Horowitz Susan M. Lund Alfonso Garcia Mora Mary-Jean Moyo Vice President, Vice President, Vice President, Regional Vice President, Chief of Staff Risk and Finance Equity Mobilization Division Economics and Private Asia and Pacific (AMC) Sector Development As of June 30, 2022 Emmanuel Nyirinkindi Sérgio Pimenta Christopher Stephens *Retired in October 2021 Vice President, Regional Vice President, Vice President and Cross-Cutting Solutions Africa General Counsel, Legal and Compliance Risk IFC ANNUAL REPORT 2022 9 WORLD BANK GROUP 2022 SUMMARY RESULTS $104.4B GLOBAL COMMITMENTS In fiscal 2022, the World Bank Group provided much-needed financing; conducted in-depth analysis and research; and partnered with governments, the private sector, and other institutions to help developing countries address urgent needs and strengthen resilience amid overlapping crises and rising fragility. (BILLION) in loans, grants, equity investments, and guarantees to partner countries and private businesses. Total includes multiregional and global operations. Regional breakdowns reflect World Bank country classifications. EAST ASIA EUROPE AND LATIN AMERICA AND MIDDLE EAST SOUTH SUB-SAHARAN AND THE PACIFIC CENTRAL ASIA THE CARIBBEAN AND NORTH AFRICA ASIA AFRICA $12.7B (BILLION) $15.3B (BILLION) $17.4B (BILLION) $6.7B (BILLION) $13.5B (BILLION) $38.5B (BILLION) 10 IFC ANNUAL REPORT 2022 The Institutions of the World Bank Group Financing for Partner Countries World Bank Group By fiscal year, millions of dollars The World Bank Group is one of the world’s largest sources of financing and knowledge World Bank Group 2022 2021 2020 2019 2018 for developing countries. It consists of Commitments a 104,370 98,830 83,547 68,105 74,265 five institutions that share a commitment Disbursementsb 67,041 60,596 54,367 49,395 45,724 to reducing poverty, increasing shared IBRD prosperity, and promoting sustainable Commitmentsc 33,072 30,523 27,976 23,191 23,002 growth and development. Disbursements 28,168 23,691 20,238 20,182 17,389 IDA INTERNATIONAL BANK FOR Commitmentsc 37,727d 36,028d 30,365d 21,932d 24,010d RECONSTRUCTION AND DEVELOPMENT Disbursements 21,214d 22,921d 21,179d 17,549 14,383 (IBRD) IFC Lends to governments of middle-income and Commitmentse 22,229 20,669 17,604 14,684 19,027 creditworthy low-income countries. Disbursements 13,198 11,438 10,518 9,074 11,149 INTERNATIONAL DEVELOPMENT MIGA ASSOCIATION (IDA) Gross issuance 4,935 5,199 3,961 5,548 5,251 Provides financing on highly concessional terms to Recipient-Executed Trust Funds governments of the poorest countries. Commitments 6,407 6,411 3,641 2,749 2,976 Disbursements 4,461 2,546 2,433 2,590 2,803 INTERNATIONAL FINANCE CORPORATION (IFC) a. Includes IBRD, IDA, IFC, Recipient-Executed Trust Fund (RETF) commitments, and MIGA gross issuance. RETF commitments include all recipient-executed grants; hence, total World Bank Group commitments differ from the amount reported in the Corporate Scorecard, Provides loans, guarantees, equity, and advisory and which includes only a subset of trust-funded activities. project development services and mobilizes additional b. Includes IBRD, IDA, IFC, and RETF disbursements. capital from other sources to stimulate private sector c. Amounts are net of full terminations and cancellations relating to commitments approved in the same fiscal year. investment in developing countries. d. Commitments and disbursements exclude IDA-IFC-MIGA Private Sector Window (PSW) activities. e. Includes long-term commitments for IFC’s own account and short-term finance commitments. Does not include funds mobilized from MULTILATERAL INVESTMENT other investors. GUARANTEE AGENCY (MIGA) Provides political risk insurance and credit enhancement to investors and lenders to facilitate foreign direct investment in emerging economies. INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES (ICSID) Provides international facilities for conciliation and arbitration of investment disputes. IFC ANNUAL REPORT 2022 11 IFC 2022 YEAR IN REVIEW IFC operations are guided by our Board-approved IFC 3.0 strategy and the IFC Strategy and Business Outlook Update FY22-24. Financial Highlights Dollars in millions, as of and for the years ended June 30 2022 2021 2020 2019 2018 Net (loss) income1 $ (464) $ 4,209 $ (1,672) $ 93 $ 1,280 Grants to IDA – 213 – – 80 (Loss) income before grants to IDA (464) 4,422 (1,672) 93 1,360 Total assets $ 99,010 $ 105,264 $ 95,800 $ 99,257 $ 94,272 Investments 44,093 44,991 41,138 43,462 42,264 Key Ratios Overall liquidity ratio 111% 114% 96% 104% 100% Debt-to-equity ratio 1.6 2.1 2.2 2.2 2.5 Capital available ($ in billions) 32.5 30.7 28.2 27.8 24.7 Capital required ($ in billions) 20.1 20.5 20.3 21.8 20.1 Total reserve against losses on loans to total disbursed portfolio 4.4% 4.9% 6.3% 4.7% 5.1% 1. Financial results are not directly comparable due to the adoption of ASU 2016-01 on July 1, 2019, which resulted in all unrealized gains and losses on equity investments being reported in Net Income since the fiscal year 2019. 12 IFC ANNUAL REPORT 2022 Operational Highlights Dollars in millions, for the years ended June 30 2022 2021 2020 2019 2018 Investment Commitments1 $32,825 $ 31,500 $ 28,430 $ 24,890 $ 30,699 Long-Term Investment Commitments FOR IFC’S OWN ACCOUNT $ 12,569 $ 12,474 $ 11,135 $ 8,920 $ 11,629 Number of projects 296 313 282 269 366 Number of countries 68 71 67 65 74 MOBILIZATION2 $ 10,596 $ 10,831 $ 10,826 $ 10,206 $ 11,671 Syndicated loans $ 3,475 $ 3,647 $ 4,989 $ 5,824 $ 7,745 IFC initiatives & other $ 3,311 $ 3,693 $ 3,370 $ 2,857 $ 2,619 Asset Management Company (AMC) Funds $ 248 $ 244 $ 50 $ 388 $ 263 Advisory Mobilization3 $ 3,562 $ 3,246 $ 2,417 $ 1,137 $ 1,044 1. Investment Commitments include Long-Term Investment TOTAL LONG-TERM INVESTMENT COMMITMENTS $ 23,166 $ 23,305 $ 21,961 $ 19,126 $ 23,301 Commitments and Short-Term Investment Commitments. 2. Defined as “core mobilization” — Non-IFC financing or risk Short-Term Investment Commitments sharing arranged on commercial terms due to the active and direct involvement of IFC for the benefit of a client. Excludes Annual Commitments4 $ 9,659 $ 8,195 $ 6,469 $ 5,764 $ 7,398 $895 million of unfunded risk transfers that are accounted for under IFC’s own account. Investment Disbursements 3. Advisory Mobilization includes third-party private financing For IFC’s account $ 13,198 $ 11,438 $ 10,518 $ 9,074 $ 11,149 that has been mobilized for Public Private Partnerships, as a result of IFC’s role as lead transaction advisor. It also includes Syndicated loans $ 2,589 $ 1,309 $ 2,231 $ 2,510 $ 1,984 Corporate Finance Services, for projects in which IFC has provided TOTAL INVESTMENT DISBURSEMENTS $ 15,787 $ 12,747 $ 12,749 $ 11,584 $ 13,133 transaction advisory services to help private sector clients expand into new markets, diversify and restructure operations or bring in Portfolio Exposure5 new equity investors. 4.FY20 Annual Report reflected Short Term Finance (“STF”) Average Number of firms 1,848 1,822 1,880 1,930 1,977 Outstanding Balance for FY17-FY19. FY21 Annual Report used For IFC’s account $ 63,763 $ 64,092 $ 58,650 $ 58,847 $ 57,173 Short-Term Investment commitment for FY17-FY21. In FY20 Annual Report, Short-Term Investment commitment was reported as Syndicated loans $ 15,235 $ 15,658 $ 16,161 $ 15,787 $ 16,210 $6,473 million; the figure has been revised to $6,469 million. Short- TOTAL PORTFOLIO EXPOSURE $ 78,998 $ 79,750 $ 74,811 $ 74,635 $ 73,383 Term Finance includes Global Trade Finance Program (GTFP) and Global Trade Supplier Finance Program (GTSF). Advisory Services 5. Portfolio exposure is defined as the sum of the (i) committed exposure for IFC’s debt investments, (ii) fair market value of Advisory Services program expenditures $ 250.6 $ 244.0 $ 274.4 $ 295.1 $ 273.4 IFC’s equity investments, and (iii) total undisbursed equity Share of program in IDA countries6 51% 54% 57% 59% 57% commitments. Effective July 1, 2018, to accommodate change in accounting standards impacting how IFC reports its equity holdings, IFC has introduced the new term “Portfolio Exposure,” which, instead of disbursed and outstanding balance, uses the fair market value of IFC’s equity investments. Therefore, FY19 onwards Portfolio Exposure For IFC’s account and prior years are not directly comparable. 6. All references in this report to percentages of advisory program expenditures in IDA countries and fragile and conflict-affected areas exclude global projects. IFC ANNUAL REPORT 2022 13 FY22 Long-Term Commitments FY22 Portfolio Exposure4 Dollar amounts in millions, for IFC’s own account as of June 30, 2022 Dollar amounts in millions, for IFC’s own account as of June 30, 2022 Total $ 12,569 100.00% Total $ 63,763 100% By Industry By Industry Financial Markets $ 6,189 49.24% Financial Markets $ 24,312 38% Infrastructure $ 1,596 12.70% Infrastructure $ 9,058 14% Manufacturing $ 1,093 8.69% Funds $ 6,605 10% Health & Education $ 809 6.44% Manufacturing $ 4,471 7% Funds $ 765 6.09% Health & Education $ 4,037 6% Agribusiness & Forestry $ 706 5.62% Agribusiness & Forestry $ 3,951 6% Telecommunications & Information Technology $ 656 5.22% Tourism, Retail & Property $ 3,826 6% Tourism, Retail & Property $ 655 5.21% Trade Finance $ 3,406 5% Natural Resources 1 $ 100 0.80% Telecommunications & Information Technology $ 2,644 4% Natural Resources 1 $ 1,451 2% By Region Latin America and the Caribbean $ 3,164 25.17% By Region5 East Asia and the Pacific $ 2,965 23.59% Africa $ 13,345 21% Africa $ 2,643 21.02% Latin America and the Caribbean $ 12,956 20% South Asia $ 1,605 12.77% East Asia and the Pacific $ 12,593 20% Central Asia and Türkiye $ 1,024 8.15% South Asia $ 8,637 14% Europe $ 906 7.20% Global $ 5,641 9% Middle East $ 254 2.02% Central Asia and Türkiye $ 4,357 7% Global $ 8 0.07% Europe $ 3,620 6% Middle East $ 2,614 4% By Product Loans2 $ 10,190 81.07% By Product Equity3 $ 1,622 12.90% Loans2 $ 44,011 69% Guarantees $ 720 5.72% Equity3 $ 14,504 23% Risk-management products $ 38 0.30% Guarantees $ 4,883 8% 1. Includes IFC’s activities in oil, gas, and mining. ­ Risk-management products $ 364 1% 2. Includes loan-type, quasi-loan products. 4. Portfolio exposure is defined as the sum of the (i) committed exposure for IFC’s debt investments, 3. Includes equity-type, quasi-equity products. (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. 14 IFC ANNUAL REPORT 2022 IFC’s Largest Country Exposures6 FY22 Advisory Services Program Expenditures As of June 30, 2022 (Based on IFC’s account) Dollar amounts in millions PORTFOLIO EXPOSURE % OF GLOBAL Total $ 250.6 100% GLOBAL COUNTRY RANK ($ MILLIONS) PORTFOLIO 1 India $ 6,742 10.57% By Region 2 Brazil $ 4,223 6.62% Africa $ 98.7 39% 3 China $ 4,212 6.61% Global $ 31.2 12% 4 Türkiye $ 3,830 6.01% East Asia and the Pacific $ 28.9 12% 5 South Africa $ 2,624 4.11% Latin America and the Caribbean $ 26.1 10% 6 Vietnam $ 2,279 3.57% South Asia $ 20.0 8% 7 Nigeria $ 2,242 3.52% Europe $ 19.9 8% 8 Colombia $ 1,979 3.10% Middle East $ 14.9 6% 9 Indonesia $ 1,843 2.89% Central Asia and Türkiye $ 10.9 4% 10 Mexico $ 1,457 2.29% By Business Area 6. Excludes individual country shares of regional and global projects. IFC Industries $ 169.7 68% Financial Institutions Group 62.3 25% FY22 Long-Term Commitments by Environmental Manufacturing, Agribusiness & Services Transaction Advisory 44.0 35.1 18% 14% and Social Category Infrastructure & Natural Resources 22.6 9% COMMITMENTS NUMBER OF NEW Disruptive Technologies & Funds 5.7 2% CATEGORY ($ MILLIONS) PROJECTS Other Advisory, including Environment, Social & A $ 598 8 Governance $ 28.9 12% B $ 4,910 122 Creating Markets Regional Advisory $ 52.0 21% C $ 139 25 FI7 $ 13 1 FI-1 $ 289 4 FI-2 $ 4,429 95 FI-3 $ 2,190 41 Total $ 12,569 296 7. FI category applies to new commitments on previously existing projects. Visit www.ifc.org/escategories for information on category definitions. IFC ANNUAL REPORT 2022 15 STEPPING UP IN A TIME OF UNCERTAINTY This year, emerging markets and developing IFC’s role is to connect people with jobs and essential economies faced serious challenges: continuing waves services at a time when public finances have been of COVID-19 infections, soaring inflation, high levels of weakened by the pandemic, conflict, and climate public and private debt, and the accelerating impact change. We help countries grow stronger by building of climate change. The war in Ukraine added to the supply chains, facilitating the flow of trade, bridging growing uncertainty and fragility, calling global peace the digital divide, offering climate-smart business and security into question. Supply chains, financial solutions, and making healthcare systems stronger. systems, food security, and access to energy were Our priority is to achieve measurable results with both severely disrupted. IFC’s countries of operations, many bottom-line benefits and strong development impact, of which became increasingly fragile, struggled to with the aim of building a green, resilient, and inclusive protect their economies. recovery across the developing world. As the largest global development finance institution Three common themes ran through our work focused on the private sector, IFC is stepping up to this year: help our clients build resilience in the face of persistent uncertainty. Working closely with our partners and INNOVATION stakeholders, we are addressing global challenges INCLUSION with a renewed sense of urgency and a laser focus on scaling up impact. Together, we are finding new SETTING STANDARDS ways to unleash the power of the private sector to help those most in need. Focusing on a range of critical issues, we continued to open new pathways for private sector development, finding opportunities to lead amid uncertainty and promoting growth for years to come. We also continued adapting to meet the evolving needs of our clients, becoming nimbler and faster to rise to the challenges of our times. 16 IFC ANNUAL REPORT 2022 Supervising climate-smart refrigeration system upgrades, Romania IFC ANNUAL REPORT 2022 17 Oleksandr Mostipan Rafael Benini Owner of Nyva Pereyaslavshchyny, Ukraine Director of Empresa de Planejamento e Logística, a CLIENT AND PARTNER VOICES government entity in Brazil working with IFC to attract $16 billion in private investment for 6,000 kilometers of Support During Crisis new highway concessions. “In the first weeks after Russia’s invasion of Ukraine, IFC stepped in to support Nyva, Promoting Innovation WORKING one of Ukraine’s leading food producers. The working capital financing we received helped “With support from IFC, we are introducing us limit potential supply chain disruptions and innovations to the road concession model in Brazil address food security concerns ... all of our 1,700 that are helping boost much-needed investments employees have retained their jobs, getting their from a diversified local and international range of wages on time. We are able to pay taxes to the private sector players. One of the most relevant TOGETHER, state and local budgets and are also engaged in features of this new model is the compliance charity actions to support local communities.” with IFC’s Performance Standards, which are granting the projects internationally recognized high environmental and social standards. This Her Majesty Queen Máxima is key not only to allow us to attract interest OF THE NETHERLANDS from investors, but also to assure the long-term sustainability of the concessions.” IFC is collaborating with more The UN Secretary-General’s Special Advocate for Inclusive Finance for Development, speaking at the IFC- types of clients and partners than hosted Sustainable Banking and Finance Network global Simballa Sylla meeting. ever before. Here are a few thoughts Managing Director of Mali Shi, a shea nut processing company. Its growth will increase the incomes of about that they shared this year. Furthering Global Support for 120,000 smallholder collectors who live near Bamako. Inclusive Finance Raising Standards ACHIEVING “Above all, let us recognize this fundamental reality: that there is no stability without inclusion, “IFC’s financing and advisory services will help us and no sustainability finance without inclusive meet international standards in an industry where finance.” our international clients’ quality requirement is very high.” RESULTS Tarek Assaad Yasmine Mokhtar Managing Partner at Algebra Ventures, the world’s first venture capital fund focused on Egypt and part of IFC’s Chief Financial Officer of HSA Group, Yemen’s leading $1.6 billion global venture capital portfolio. staple food producer and a key provider to World Food Program relief in that country. Financing a Vision “IFC has been one of our strongest partners since Maintaining Operations Day One. They believed in our vision when there “IFC’s working capital funding was a critical was no venture capital to speak of in Egypt.” enabler for us.” 18 IFC ANNUAL REPORT 2022 Iván Duque PRESIDENT OF COLOMBIA 2018–2022 Citing the benefits of IFC’s EDGE green building certification program. With EDGE support, Colombia now has one of the highest rates of green building certification in the developing world. Achieving Climate Goals “EDGE certification is successful in Colombia because it addresses three essential components of a sustainability strategy: it assures quantified environmental benefits, it leverages green finance, and it contributes to the social welfare of those who need it most.” Strive Masiyiwa Founder and Executive Chairman of Cassava Technologies, whose businesses include Liquid Intelligent Technologies, Africa’s leading independent fiber and digital services provider. Developing Africa’s Digital Economy “We have a long-term relationship with IFC, because we are both being mandated to develop the African continent. With the support we’re now getting from IFC as long-term patient capital, we’re able to go into areas where we’d not normally be able to go as a purely commercial player. We’re beginning to go into deep rural areas and provide connectivity for schools and hospitals and make it possible for our young people to come into the digital economy more cheaply.” Strengthening agribusiness supply chains, Kenya IFC ANNUAL REPORT 2022 19 Oleg Kudashov STAFF VOICES Vienna, Austria “We’re not walking away. Our message to the government is ‘We RESILIENCE AND stand by you. We’re eager to support Ukraine’s reconstruction.’” Oleg Kudashov had worked tirelessly in his OPPORTUNITY home country of Ukraine since 2015, helping to design landmark public-private partnerships in transportation — including ones addressing chronic underinvestment in critical ports. All was going well in February 2022, with new private operators agreeing to invest a combined $137 million in the Black Sea ports of Kherson and Olvia, and new work underway Our staff members embody a remarkable diversity to attract others for a larger upgrade project in Chornomorsk. Then Russia invaded Ukraine. All work of skills, experiences, and backgrounds. had to be suspended, with most staff from IFC’s Kyiv office evacuated. Fortunately, the ports have received little damage to date. Whenever conditions allow, Kudashov and his colleagues are ready to resume, Many spent much of this year defying uncertainty, starting right where they left off to make Ukraine’s maritime trade infrastructure more efficient. taking remarkable steps to deliver on IFC’s mission, no matter how difficult the conditions. Here are some of their stories. 20 IFC ANNUAL REPORT 2022 Angelo Tan Manila, Philippines “The work has never felt as Milica urgent as it does today.” Sredanovic The Philippines is one of the fastest-urbanizing Belgrade, Serbia countries in East Asia and the Pacific, with new real estate development that too often results in increased “We are there to find ways environmental degradation and climate vulnerability. Since joining IFC in 2020, Operations Officer for a good project to proceed.” Angelo Tan has been increasing the sustainability of real estate in the Philippines. What made him The global pandemic proved to be no obstacle to the happiest? Seeing IFC’s EDGE green building Milica Sredanovic, the investment team lead on a certification and Building Resilience Index reach his $222.2 million IFC financing package to modernize hometown of La Union for the first time this year. Kazakhstan’s Almaty Airport under new lead owner Tan is proud to be witnessing the growth of green TAV Airports of Türkiye. Negotiations began in construction in the Philippines, where residential and March 2020, just as the global pandemic began. The commercial buildings account for half of all power discussions quickly moved online and continued consumption. virtually for months. Sredanovic and her team coordinated multiple players remotely from different locations at all hours of the day until initial agreements were reached in September 2021. The country’s regulatory environment and the first-time entry of professional airport managers posed even larger challenges, reinforcing the importance of the strong relationship between IFC and TAV, a longtime client. Then, just as financial close was nearing in January 2022, unexpected political turmoil in Kazakhstan challenged all project stakeholders. But with renewed persistence, a path forward eventually emerged. Now a new terminal is at last under construction in Almaty, the busiest air transport hub in Central Asia. IFC ANNUAL REPORT 2022 21 Marcela Ponce Mexico City, Mexico “Long-term relationships and early engagement on the knowledge-sharing side were the key to Steffie developing this innovative transaction.” Mahoro Bujumbura, Burundi Guatemala is highly vulnerable to the impacts of climate change, with most of its GDP produced in areas of considerable climate risk. But until “Having people on the ground is this year none of its banks had taken any significant steps in response, holding back an important potential source of investment. critical. If you’re going to do business in a country, you have to be there Well-versed in global trends in green banking, IFC climate finance specialist Marcela Ponce and her colleagues in the investment and and have relationships with the advisory teams began working with long-time Guatemalan client Banco government and the private sector.” G&T Continental in 2018. Since then, they have been steadily building institutional awareness of the many opportunities in sustainability From her base in Burundi, Steffie Mahoro contributed through IFC’s Green Banking Academy, a knowledge and capacity- to the country’s first IFC/World Bank private sector building initiative to support banks in making a green transformation. diagnostic report, setting priorities for private sector Their work paved the way for a new $80 million IFC subordinated loan development that the government has now embraced. that is enabling the bank to launch a climate finance business. Banco G&T The report spotlighted the need to improve access to Continental is now the country’s first financial institution to focus on credit for small- and medium-sized enterprises in the green buildings and energy efficiency for small and medium enterprises. country. IFC is addressing the issue with a $5 million Related IFC advisory services will help this bank build an important new loan to CRDB Bank Burundi, which supports lending business line, providing climate-smart solutions across Guatemala. to smaller businesses. The new loan is IFC’s first investment in Burundi in nine years. More investment support is expected in the coming years as part of IFC’s Africa Fragility Initiative, a $74 million program to catalyze investment in countries where development needs are great, but business costs are high and operational challenges are formidable. 22 IFC ANNUAL REPORT 2022 Anissa Kanoun Dubai, United Arab Emirates “At a time of crisis, we were able to Saramory (Sary) support our client in its efforts to spur Kampo innovation, entrepreneurship, and job AND creation in a frontier region like the Fatoumata (Mimi) West Bank and Gaza. It’s important Keita to make a difference in difficult times. Conakry, Guinea That’s why I joined IFC — to do deals like this.” “Mining is by far the biggest sector in the Guinean economy. We’re working to extend its benefits more Many company founders in the West Bank and Gaza broadly to local communities and businesses in struggle to access the financing and mentorship they need to grow. IFC is addressing this issue by investing Guinea, especially in empowering women and youth.” $2.5 million in Ibtikar Fund II, a venture capital vehicle for Palestinian technology startups. Our investment Guinea has extensive natural resources, including the world’s largest reserves comes with an additional $500,000 from the Women of bauxite, the ore from which aluminum is produced. Entrepreneurs Finance Initiative (We-Fi) to ensure continued support to women-led startups. Sary Kampo and Mimi Keita, by collaborating closely with the World Bank, the government of Canada, UN agencies, IFC investee clients, the government Investment officer Anissa Kanoun worked to develop of Guinea, local community organizations, civil society and others, have the transaction in April and May 2021, just as a new led a multi-tiered program that shows many results in sustainable bauxite round of armed conflict was breaking out. She was development. These include the Buyers and Suppliers Marketplace, a local undeterred by the challenging context, seeing it content and business linkage initiative with a digital platform. Since its launch instead as a chance to build a better future in the in 2018, the project has helped Guinean small and medium enterprises to West Bank and Gaza. boost their competitiveness, resulting in more than $16 million in contracts with the natural resources industry. It now targets opportunities in other industries as well. In addition, the team supports gender inclusion in the mining industry and alternative livelihoods for hundreds of women and youth from host communities. IFC ANNUAL REPORT 2022 23 BENEFICIARY VOICES Gabriel Muli Kenya FROM THE Co-owner of Elex Products, a Kenyan small business, which pivoted to start producing hand sanitizer for the local market with financing from IFC client Co-operative Bank of Kenya. PEOPLE WE SERVE Pivoting in the Pandemic “Simply put, the pandemic was an opportunity to serve our community by providing sanitizers and empathizing with locals who had lost their jobs by creating employment opportunities. We were able to adapt our business practices and Through investment, advisory services, and a wide make quick decisions because we had support.” range of broader initiatives, IFC makes a difference in people’s lives. Here are some reflections from those who have recently benefited from our work. Remzi Bala Kosovo Whose small family farm in Kosovo can withstand market disruptions because of financing it received from KEP Trust, an IFC-supported microfinance institution, during the pandemic. Improving Living Standards “I can buy books and clothes for my four children — and not worry.” 24 IFC ANNUAL REPORT 2022 Hina Khan Siny Samba Geetha Manjunath Pakistan Senegale India An employee of Artistic Milliners in Pakistan, which CEO of Senegalese baby food producer Le Lionceau, CEO and Founder of NIRAMAI, a low-cost, software- opened its first on-site daycare center with IFC’s which is expanding the market for locally made baby based medical device to detect early-stage breast support as part of an effort to improve female labor food in West Africa. Samba is using financing from an cancer. NIRAMAI is one of the winning startups force participation in its workforce. IFC client SME investment group to help farmers in her selected by a panel of experts as part of The Global supply chain become more efficient. Women’s HealthTech Awards, supported by IFC, Giving Peace of Mind the World Bank, and the Consumer Technology Entrepreneurial Association. “I used to leave my child with my neighbor, landlady or relatives. I used to leave him there, Energy Offering Global but my heart was never satisfied. I feel much better now that my child has started coming to “The more you help [local farmers] build their Recognition capacities, the more efficient their yields are, and the daycare center. Now I have no tension. I’m “Winning this Global Health Tech Award means more markets can be created. Everybody wins.” much more relaxed mentally at work.” a lot to the NIRAMAI team, which has been striving very hard to create a novel solution to detecting breast cancer and taking the solution to women in India — and globally as well.” Javier Hernández Malek Sukkar Pakistan Honduras CEO of Averda, a Dubai-based waste management One of more than 3,000 Honduran small-scale firm that is scaling up its innovative solutions in new farmers who have improved crop yields with financing markets with a $30 million IFC financing package. from IFC’s AgroMoney program with local client Grupo Cadelga. Expanding for Impact Rural Credit “This IFC loan will help us all by significantly accelerating our sustainable projects in Oman, “I was impressed by the very good service from Morocco, and South Africa.” those responsible for providing the credit lines. I like the ease with which you can get a loan.” IFC ANNUAL REPORT 2022 25 COVID-19 RELIEF FOCUSED ON A RESILIENT RECOVERY Photo left & right: Biological E Limited, India 26 IFC ANNUAL REPORT 2022 With the global pandemic taking an ongoing heavy The Facility provided more than $7.4 billion to finance toll, IFC continued to provide large-scale COVID-19 104 projects that are providing liquidity, working relief financing in FY22, supporting our clients in times capital, and trade finance to keep companies in of volatility and uncertainty. We focused on three business, especially in the industries most affected complementary areas: relief, restructuring, and resilient by COVID-19, such as financial services and recovery. Our financing packages target the places and manufacturing. IFC’s work contributed to the World people that need it most, often complemented with Bank Group’s larger crisis response initiative to save additional funds mobilized from others. both lives and livelihoods. IFC’s Fast-Track COVID-19 Facility, launched in 2020, has With vaccination campaigns well underway in many now increased from $8 billion to $8.6 billion. This includes a countries, IFC sharpened its focus on the regions where Base of the Pyramid Program for financial service providers need is greatest. Our $30 million financing package targeting lower-income borrowers. The Program, which will assist India’s BioE in expanding its supply of low- offers additional support to the poorest and those hardest priced, generic vaccines for the routine immunization hit by the pandemic, launched at $400 million last year of children and expand into new vaccines. New and then received an additional $200 million in funding agreements with Senegal’s Institut Pasteur de Dakar this year. and the Rwanda Development Board will increase vaccine production across Africa. Drawing on its Global Health Platform (GHP), IFC also increased the delivery of vaccines, personal protective equipment, and medical supplies throughout emerging market economies. The $4 billion platform, created $8.6B in 2020, is a financing platform to increase local companies’ supply of critical medical equipment and services. In February 2022, the Board confirmed the FUNDING extension of the GHP for an additional one and a half years. To date, IFC has invested about $1.1 billion from our own account in addition to $576 million mobilized from others. IFC’s investment pipeline for the platform IFC’S FAST-TRACK COVID-19 FACILITY stood at around $800 million at the end of FY22. CONTRIBUTED TO SAVE BOTH LIVES AND LIVELIHOODS IFC ANNUAL REPORT 2022 27 UKRAINE INVASION AND FOOD INSECURITY RESPONDING TO INTERRELATED CRISES Even before the war in Ukraine, the global recovery to alleviate food-security concerns. However, we was highly uneven, with emerging markets and realized that other countries in the region would also developing economies struggling to keep pace need support to buffer the impacts of the war. We with wealthier nations. The war unleashed new understood that the spike in food prices would have shockwaves, making the recovery even more dramatic impacts on developing countries already uncertain. Russia and Ukraine are among the top struggling to feed their people. global producers and exporters of wheat, corn, barley, sunflower seeds, and sunflower oil. Russia is also a As a result, we are preparing to launch two new major supplier of crude oil and natural gas in addition financing platforms: to fertilizer and agricultural commodities. Disruptions of these supplies fueled a surge in prices, with negative  he first platform would support projects in •T consequences for global trade and welfare, and the Ukraine, leveraging blended finance. It will prioritize burden falling heaviest on developing countries that investments to support the resilience of businesses, rely on imports to feed their populations. displaced people, and affected municipalities and address immediate logistics and energy needs. IFC responded quickly to provide working-capital  he second platform would support global food •T financing to our clients in Ukraine, enabling continued security. Modeled on IFC’s Global Health Platform, access to food, fuel, and medicine. We also kept the facility will target assistance for commodity our trade lines open to support the import of traders, farmers, food processors, and fertilizer- critical supplies. We helped one of Ukraine’s leading related businesses. agricultural producers stay in business, so it could proceed with spring planting and procure grains 28 IFC ANNUAL REPORT 2022 IFC has supported more than $200 billion of trade in developing economies since 2004 and forecasts TRADE providing nearly $100 billion more by 2030. This year, we began preparing a $1 billion Africa Trade and Supply Chain Recovery Initiative to address trade and value- chain financing needs across Africa in the wake of the COVID-19 pandemic. We also continued to develop our capital relief products with major global banks and provided one of the world’s largest synthetic KEEPING TRADE risk transfers to date. A landmark IFC guarantee of a $4 billion-equivalent Crédit Agricole CIB reference portfolio will help the bank significantly expand its trade finance in emerging markets. Looking ahead, the digitalization of trade transactions FLOWS ALIVE and blockchain will increasingly define the future of trade. Both offer great potential for promoting integration and inclusion. Our first digital trade transaction occurred in July 2021, supporting a coffee purchase contract guarantee by Vietnam’s Prosperity Joint Stock Commercial Bank, processed via a global digital trade finance platform. We will be more active In uncertain times, continued access to trade finance is in these kinds of transactions, while also providing essential to keep companies afloat and preserve jobs, capacity-building programs with the World Trade especially in emerging markets. But in today’s difficult Organization and other partners. Our partnerships will conditions, with growing supply chain disruptions help emerging market banks and small- to medium- as well as rising inflation and food security issues, sized enterprises address challenges provoked by many international banks are pulling back from trade supply chain disruptions. finance. Their retreat severely limits local lenders’ ability to finance clients’ import and export needs. $200B+ The situation is creating record demand for IFC’s trade and supply chain platforms. IFC helped to of trade supported rapidly fill the gap with risk mitigation in challenging in developing markets where trade lines are constrained. Combined economies since commitments increased by 14 percent from last year, 2004 reaching their highest-ever level of $9.7 billion. About 75 percent of this amount was invested in low-income and fragile countries. IFC’s trade facilities of up to $24 million to Vista Bank’s subsidiaries in Guinea and Burkina Faso ($12 million each) will help the banks to finance imports of foodstuffs, raw materials, refined oil products, equipment, consumer goods, and other important items. By joining IFC’s Global Trade Finance Program, Vista Bank will gain access to a network of correspondent banks, enhancing its ability to meet the financing needs of SMEs. IFC ANNUAL REPORT 2022 29 PARTNERSHIPS COLLABORATING TO CREATE MARKETS AND MOBILIZE PRIVATE INVESTMENT FOR DEVELOPMENT Family healthcare, Pakistan 30 IFC ANNUAL REPORT 2022 Support from our development partners is integral to the accomplishment of IFC’s mission. Our partnerships urgency to this work. IFC is responding proactively, strengthen IFC’s impact by channeling resources to working with a growing variety of development programs that improve the lives of the poor, create jobs, partners. empower women and youth, grow opportunities in fragile Increasingly, we are partnering through multi-sector and conflict-affected states, and support the planet thematic and country platforms — a strategic and efficient way to collaborate and crowd in funds through climate change mitigation and adaptation. from multiple development partners with shared visions and objectives. IFC has launched platforms IFC partners with more than 30 government development for innovative efforts in climate, healthcare, fragility, agencies, foundations, corporations, and multilateral SMEs, and other areas, and anticipates new platforms organizations. In FY22, our development partners being developed in the coming year in response to committed about $175 million for IFC’s advisory services emerging priorities. These platforms provide the and early-stage market and project preparation flexibility needed to fund multiple projects, expediting (“Upstream”) work. In addition, they committed about IFC’s ability to create markets, maximize development $40 million for blended finance initiatives, which involves impact, and enable more private sector participation the use of relatively small amounts of concessional donor across emerging markets in a cost-effective manner. funds to mitigate specific investment risks and help rebalance risk-reward profiles of pioneering investments that are unable to proceed on strictly commercial terms. These contributions support IFC’s capacity to build business and institutional capacity, take on more risk, and invest in high-impact projects. Our partners also support IFC’s work to improve global standards and knowledge transfer while enabling us to deliver on our global and country-level strategic priorities. We are collaborating with our partners on many strategic priorities, such as ongoing relief and recovery efforts, climate response and energy transition, healthcare resilience, food and energy security, a sharpened focus on fragility, and digital transformation. As a market leader, IFC is able to incubate new ideas and scale proven solutions with flexibility. Setting market precedents and demonstrating impact creates pathways for others, thereby mobilizing additional sources of capital to create development impact. Today’s global operating environment adds increased complexity, uncertainty, and IFC ANNUAL REPORT 2022 31 IDA PSW AND LOCAL CURRENCY ESSENTIAL TOOLS IN IFC’S TOOLKIT The IDA Private Sector Window Blended finance is one of IFC’s essential tools — one that involves close collaboration with development partners to mobilize private investment in pioneering projects and challenging environments. By using relatively small amounts of concessional donor funds alongside IFC’s own resources, we can mitigate specific investment risks and support investments that otherwise could not proceed on strictly commercial terms. 32 IFC ANNUAL REPORT 2022 Local Currency Financing IFC provides long-term local currency financing in more than 70 currencies. Much of this support comes from the IDA Private Sector Window (PSW), which was established in It is one of our core development 2017 to help catalyze private sector investment in finance products, helping clients who the poorest and most fragile countries. Since then, more than $2.6 billion of PSW funds have supported earn most of their revenues locally 128 IFC transactions across 33 fragile and low-income avoid the exchange rate risk that countries. comes with borrowing in dollars, IFC’s PSW commitments reached $992 million euros, or other hard currencies. in FY22. We do so through a variety of market-based Among other projects, PSW support allowed IFC to approaches, including the use of local swap markets finance the expansion of Robust International, an and structured finance solutions. In countries where agribusiness firm that has the potential to improve capital markets are not developed and market livelihoods for thousands of smallholder farmers in solutions are not sufficiently available, we draw on conflict-affected northern Nigeria, where poverty blended finance from the IDA PSW’s Local Currency levels are five times higher than in the south. The IFC Facility for support. For additional impact, we also financing package of $18 million includes a $9 million issue and purchase landmark local currency bonds that loan from IFC’s own account and a $9 million strengthen local capital markets. concessional loan from the PSW. Robust will use the loan proceeds to build modern warehouses and These steps to provide local currency financing are sesame processing facilities. As a result, farmers will especially important in sectors like infrastructure, no longer need to store their crops under today’s poor housing, and SMEs. In FY22, we provided the equivalent conditions, which lead to high post-harvest losses and of $3.9 billion in local currency financing in a wide contribute to greenhouse gas emissions. The project range of countries as compared with $2.1 billion in would not be possible without PSW support due to FY21 — an almost two-fold increase. In Tajikistan, a limited collateral availability and potential security $5 million-equivalent IFC loan in Tajik somoni is helping risks in the country. IMON International, a leading microfinance institution, increase its lending to micro, small and medium July 1, 2022, marked the beginning of a new three-year enterprises (MSMEs) affected by the COVID-19 IDA cycle, with an initial allocation of $2 billion in PSW pandemic. In Tanzania, more than 2,000 women- funding available to enable more IFC transactions of owned small businesses will grow with proceeds of a this kind in the most challenging markets. gender bond for the Tanzanian shilling equivalent of $32 million that NMB Bank issued on the Dar es Salaam Stock Exchange with IFC as an anchor investor. IFC ANNUAL REPORT 2022 33 INNOVATION LEANING INTO THE FUTURE Today’s conditions of global uncertainty mean IFC can no longer do business as usual. New products and platforms are essential for meeting our ambitious goals to increase the private sector’s contribution to development. Digital payment systems for small business owners, Egypt 34 IFC ANNUAL REPORT 2022 Mobilizing Finance to Reduce Climate Change Vulnerability At a time when government budgets are stretched, it is critical to mobilize private finance and Accelerating Investment help countries mitigate climate change. IFC is in Mini-Grids developing novel ways to increase climate-related financing in areas like energy, transport, and An estimated 600 million people across manufacturing. Africa — and 759 million people globally — lack access to electricity, an essential foundation for One new program builds on the IFC Managed Co-Lending Portfolio Program (MCPP) model, which has successfully raised more than $10 billion development. for direct lending to private firms across more than 50 developing Mini-grid systems offer an excellent solution in many regions, using economies since 2013. The new platform, MCPP One Planet, is the world’s primarily renewable energy sources to efficiently deliver reliable, low- first cross-sectoral portfolio of emerging market loans aligned with the cost power in cities and rural areas beyond the reach of national grids. Paris Agreement, an international treaty to combat climate change. MCPP This promising industry is poised for growth but has been held back One Planet, which was launched in November 2021 at the UN Climate by a lack of stable public-private partnership frameworks and other Change Conference in Glasgow (COP26), combines institutional investor obstacles, resulting in low levels of private investment. contributions with IFC’s own funds to maximize available financing for private sector firms on the front lines of climate change. The World Bank Group’s Scaling Mini-Grid initiative addresses the barriers that impede large-scale projects and investment. IFC, in close In FY22, IFC joined with partners to substantially increase finance for collaboration with the World Bank and MIGA, worked “Upstream” to climate mitigation. IFC and Amundi, a French asset management develop a comprehensive mini-grid platform that offers governments company, agreed to establish a new $2 billion fund to fight inequality and and the private sector necessary financing, advisory support, and climate change. The initiative expands availability and demand for new risk mitigation. A major advantage of the platform is its replicability: segments of the sustainable bond market. The fund will help developing the Scaling Mini-Grid approach can be adopted in multiple locations, nations recover from COVID-19 and strengthen resources to make future promoting the efficient, timely completion of projects — with the crises less severe. potential to significantly increase the development of mini-grids globally. The Scaling Mini-Grid initiative is modeled after Scaling Solar, another World Bank Group collaboration that successfully unlocked private investment in solar power in several African countries before expanding to Uzbekistan. The first country-level delivery of the Scaling Mini-Grid initiative kicked off in October 2021, when a mandate was signed with the government of the Democratic Republic of Congo. The initiative is supporting an upcoming mini-grid project that will add more than 200 megawatts of capacity, contributing to the Government’s objective to increase the local population’s electricity supply rate to 30 percent by 2024 — up For IFC’s reporting under the guidelines from the current 19 percent. This will especially aid two of the country’s recommended by the Task Force on Climate- largest cities: Mbuji-Mayi and Kananga, with combined populations of more than 4 million. related Financial Disclosures (TCFD), see p. 60. IFC ANNUAL REPORT 2022 35 Making Healthcare Systems in Africa More Resilient The fact that African countries received fewer COVID-19 vaccines from the global supply than the rest of the world highlighted the urgent need to improve Africa’s capacity to produce its own vaccines, whether for COVID-19 or other diseases. Africa imports 99 percent of its vaccine supply, with just 1 percent covered by local manufacturing. The African Union aims to have 60 percent of the continent’s routine vaccines manufactured locally by 2040. IFC signed a mandate letter in March 2022 with the Institut Pasteur de Dakar, launching a collaborative effort to build a new vaccine manufacturing facility in Senegal. The $222 million facility will be financed with a mix of public, grant, and private funding and will be able to produce up to 300 million vaccine doses annually, for both COVID-19 and routine shots. “Fast-tracking vaccine production for Africa in Africa is paramount to facing down this unprecedented pandemic and mitigating future waves of COVID-19,” said IFC Managing Director Makhtar Diop. The Africa Centres for Disease Control and Prevention have identified Senegal, Rwanda, and South Africa as potential hub countries for vaccine manufacturing. IFC is now working with the Rwanda Development Board to develop the country’s vaccine capacity, with the goal of strengthening regional supply chains and developing a successful technical and policy framework for Rwanda’s new collaborations with BioNTech and the kENUP Foundation. Across the continent, IFC’s Africa Medical Equipment Facility makes affordable long-term financing available for the rental or purchase of advanced medical supplies by small- and medium-sized health companies so that they can provide more advanced and higher quality care. Getinge, a firm headquartered in Sweden, joined the Africa Medical Equipment Facility in April 2022, increasing the availability of life-saving surgical equipment. 36 IFC ANNUAL REPORT 2022 Digital Transformation for Small-Scale Retailers New technology platforms are changing the game for small farmers and informal retailers. Local app-based solutions now provide opportunities for significant income growth by correcting inefficiencies that have hampered growth. Unthinkable only a few years ago, such technology is giving smallholders and informal retailers greater transparency and insight into supply, distribution, pricing, and payment — the fundamentals to making more profitable sales. IFC’s venture capital investments in firms in this fast- emerging industry open significant new opportunities for inclusion. This year, IFC invested $10 million in Sayurbox, Indonesia’s leading e-grocery start-up. Part of a $120 million overall fundraising round, the investment allows Sayurbox to scale up its innovative digital platform. Sayurbox’s proprietary algorithm forecasts demand and optimizes delivery routes for some 5,000 food products, allowing consumers in Jakarta and Surabaya to buy straight from the farm. By eliminating intermediaries, Sayurbox’s model allows farmers to enjoy substantial income gains. The firm, founded in 2017, expects to quadruple the number of farmers on its platform to 40,000 by 2024. GrowSari, a tech-enabled B2B platform in the Philippines, is another recipient of IFC’s early-stage equity investment, receiving $10.5 million in two venture capital rounds. Named for the country’s small sari-sari retail stores, GrowSari aims to increase the profitability of MSMEs. As of May 2022, GrowSari has raised about $110 million, the largest sum to date raised in the regional B2B and MSME space. GrowSari has supported small roadside and market shops since 2016, many of them owned by women. It provides bill payment as well as telecom services and credit, allowing informal businesses to implement digital upgrades. GrowSari now serves over 150,000 stores in more than 220 municipalities. Sayurbox links farmers and markets, Indonesia IFC ANNUAL REPORT 2022 37 UPSTREAM FROM IDEAS TO IMPACT 38 IFC ANNUAL REPORT 2022 IFC’S EARLY-STAGE MARKET AND PROJECT PREPARATION WORK One of the greatest obstacles to increased private sector 52 percent of that potential investment in climate investment aligned with mitigating activities, 31 percent in IDA-Fragile and development goals is not the Conflict-Affected Situations (IDA-FCS) countries availability of capital. It is the and 15 percent in Low-Income IDA Fragile and Conflict-Affected Situations (LICIDA-FCS) shortage of well-prepared, countries. commercially-viable investment Not all of the pipeline will successfully convert opportunities. into investments. This type of work is experimental, and it is time and resource intensive. It requires To fill the void, IFC has, since 2019, significantly patience and a willingness to fail. But in FY22, expanded focus on Upstream, early-stage market IFC saw good early progress. As our operations and project preparation work. We are focused on matured, we focused not just on building the finding imaginative — and replicable — solutions pipeline, but also on advancing the projects to some of the world’s toughest development in it and converting some of the successful problems, working proactively to remove engagements into committed investments for investment barriers and create opportunities that IFC, alongside mobilized private capital. attract private capital where it is needed most. Our five-year pipeline remains strong and IFC took several steps to lay the groundwork for continued to grow in FY22, with one third focused success. We defined our approach and business on IDA/FCS countries. Almost 80 percent of the model; increased our capacity (hiring dedicated pipeline involves infrastructure and manufacturing staff); developed our systems and operations; projects, which have a direct impact on the real and built a robust, credible pipeline of market- economy. From a regional perspective, Asia and level and project-specific interventions that Africa make up the largest geographic distribution, seeks to unlock investment within the next five providing fertile ground for our Upstream years. The pipeline has grown quickly: from projects to open new channels of investment $5 billion at the end of FY20, to $16 billion at the and development. end of FY21, then $29 billion at the end of FY22. It also reflects IFC’s strategic focus areas, with IFC ANNUAL REPORT 2022 39 UNLOCKING INVESTMENT: DELIVERING REPLICABLE Establishing a New Trade PRODUCTS AT SCALE: Hub in Southeast Asia Helping Utilities Adapt to Climate Change Development challenge: Overcoming barriers to trade in Lao PDR, a land-locked country with Development challenge: Helping subnational inadequate transport and logistics infrastructure. water utilities across emerging markets respond to climate change. Many utilities, reliant on insufficient Upstream solution: The government of public sector funding, lacking access to commercial Lao awarded a concession for a “dry port,” an finance, and in need of technical assistance, cannot inland logistics hub, to a local sponsor. But an address climate goals while meeting basic service infrastructure PPP on such a scale was a first needs. The utilities need investment and knowledge for both the government and the sponsor. IFC to plan for the future. partnered with the sponsor to provide early- stage, project development support. Beginning Upstream solution: IFC launched the Utilities in 2020, IFC strengthened the bankability for Climate (U4C) initiative to help utilities of the concession agreement, and helped to adapt to climate change and to unlock water mitigate risks and build client capacity, bringing infrastructure investment opportunities. U4C the project to international project finance offers water utilities tailored advice to reduce standards. water losses and improve efficiency, peer-to- peer learning with other utilities facing similar Enabling investment challenges, and investment products to support any resulting capital expenditure plans. This project development work enabled an IFC- led financing commitment of $67 million. The dry port, when constructed, will facilitate efficient, Enabling investment cost-effective bilateral and transit trade in the Since its launch in 2021, the initiative has region, with connections to Thailand, China, and supported five utilities in three countries and Vietnam. generated of $238 million in investment. One engagement with Corsan, a water company with 6.3 million customers in Brazil, is helping the company reduce losses from 44 percent currently to 35 percent by 2024, by developing a plan to install water meters and replace obsolete electric pumps and hydrometers. The plan is supported by a $58 million loan. Corsan, Brazil 40 IFC ANNUAL REPORT 2022 RAPID INNOVATION, CLEAN ENERGY DELIVERED AT SCALE: SOLUTIONS: Enabling the Digital Transformation Privately Financed Hydropower of Higher Education in Africa Development challenge: Assisting universities Development challenge: Meeting Gabon’s in developing countries to quickly transform their increasing demand for power in a sustainable, business models to meet the suddenly accelerated commercially viable way. demand for online learning resulting from the COVID-19 pandemic, in a commercially viable, Upstream solution: Hydropower offers great sustainable way. potential for sustainable, reliable energy in Gabon. However, in 2018, there were significant Upstream solution: IFC created the Digital for hurdles to the development and preparation of Tertiary Education Program (D4TEP) to advise the country’s first independent power producer higher education institutions on developing and (IPP) hydropower project. IFC’s Upstream work funding their digital transformation strategies, focused on making the project more appealing from online learning to admissions, instruction, to investors. We helped to secure concrete and administration. Developed rapidly in commitments from public counterparts on the response to the pandemic, the product was power sector’s financial sustainability; developed piloted with four clients across multiple regions a bankable contractual framework underpinned in 2020. It was then launched in Latin America in by an innovative credit enhancement 2021, with five higher education institutions, and mechanism; and established the project’s globally in 2022, with six additional universities in biodiversity action plan. Africa, Asia, and Latin America. Enabling investment Enabling investment Our activities proved pivotal in helping lenders The product expanded significantly in FY22, conduct their due diligence and obtain internal increasing from 9 to 15 engagements with approvals. The result? Meridiam, a French institutions across all IFC regions of operation infrastructure firm, is now working with FGIS, and enabling $100 million of committed Gabon’s sovereign wealth fund, to develop the investments. One university participating in new 34 megawatt Kinguele Aval hydropower the initiative, Colombia’s Uniminuto, targets project. IFC put together a comprehensive lower-income students, primarily women. financing package for the €178 million project, It offers distance and virtual learning as well lending €33 million, providing a concessional loan as traditional classroom instruction and is of €20 million from the Canada-IFC Renewable using IFC advice, along with a $25 million loan, Energy Program for Africa, and mobilizing an to make new technology investments and additional €98 million from other institutions. expand to new campuses — all part of its digital Working alongside World Bank Group colleagues transformation agenda. is critical to success. MIGA has also issued guarantees to Meridiam. IFC ANNUAL REPORT 2022 41 INCLUSION OPENING NEW DOORS IFC seeks to engage more diverse players, using new approaches to reach more people in need, helping them move from the margins of society to the economic mainstream. In this way, our efforts will help address significant, interrelated problems due to COVID-19, climate change, conflict, food insecurity, and energy shortages. 42 IFC ANNUAL REPORT 2022 Narrowing the Gender Gap for Women-Led Startups In the Middle East and North Africa, women-led startups receive a mere six percent of all private equity and venture capital funding. In March 2022, She Wins Arabia brought together in Dubai, United Arab Emirates some 80 entrepreneurs IFC and the Abu Dhabi Global Market, the UAE-based to provide training in how to pitch to investors, how financial center, aim to improve those numbers. to gauge the size of a market, and how to develop They joined together in December 2021 to launch She a business plan. She Wins Arabia hosted a pitch Wins Arabia, a program designed to tackle gender competition, with three women winning in-kind inequality in the startup space. They aspire to create prizes, including mentoring sessions, business strategy an “entrepreneurial ecosystem” that allows women- support, and credits with Amazon Web Services. led startups to grow and thrive. She Wins Arabia is part of a larger IFC effort to In a short time, the program has trained women create more economic opportunities for women entrepreneurs and connected them with mentors and across the Middle East and North Africa. Fewer than with investors. It has also worked with accelerators 20 percent of women in the region are in the labor and venture capital funds, helping them to provide force. The program also contributes to an effort to stronger support to women entrepreneurs. leverage technology to address a range of long- standing challenges in the Middle East and North Africa, including unemployment and a lack of access to finance. IFC ANNUAL REPORT 2022 43 Supporting Refugees and Migrants in Accessing Financial Services A Seat in the Many refugees and migrants have no access to a bank Boardroom account, severely hindering their ability to get a loan and start a new business. This limits their participation IFC, as an equity investor that often takes influential in the economies of the new countries in which minority stakes in client companies, can provide they are living. Women, who are often the primary hands-on strategic guidance to critical players in caretakers for children, are especially vulnerable and local and regional economies. We sometimes do so often without childcare needed to enable them to by placing IFC nominees on their boards of directors. work. In FY22, IFC took several actions to promote the Each of the directors is an experienced industry financial inclusion of this vulnerable population — and professional who adds value to the board by putting a support their host communities. greater emphasis on inclusion and sustainability and in other areas of his or her expertise. In May 2022, the Kakuma Kalobeyei Challenge Fund competition, sponsored by IFC, announced the We now actively manage 157 board seats — a growing winners of its first round of grants and technical community actively supported by IFC’s Nominee support to 40 recipients in Turkana West, Kenya. The Directorship Center through ongoing education area hosts a large population of refugees, and the and resources for enhanced board oversight. At the support offered by the awards is creating hundreds end of this fiscal year, 62 percent of IFC nominee of jobs, including opportunities for women and directors were women, our highest total to date. IFC’s young people. The competition supports IFC’s goal nominees provide leadership on the full spectrum of of empowering host communities and refugees by environmental, social and governance issues, including promoting private sector development in and around gender equality. the Kakuma refugee camp. The next awardees will be selected in the later part of 2022. Monica Aparicio, the former CEO of Santander Bank, served on the board of BanBif in Peru for six years. IFC and Colombia’s first microfinance bank, Bancamía, She encouraged BanBif to assign more women to launched a pilot program in partnership with We-Fi senior management roles and increase its focus on and FIAS in November 2021, which helps migrants sustainable investment, now one of its differentiators access banking services. The program is designed for in Peru’s highly competitive banking market. This year local Venezuelans who have fled turmoil in their home country. Almost 5,300 loans have been administered already, and more than half of the recipients are women. The loans allow women and men to start small businesses and become independent. 44 IFC ANNUAL REPORT 2022 Giving Creative Industries the Spotlight IFC lent BanBif $25 million to finance green housing, Whether music, film, fashion, or video games, In November 2021, we hosted IFC UpNext, our first helping local building developers decrease their developing countries generate — and sell — many high-level virtual event highlighting investment environmental footprint. creative products that contribute to worldwide opportunities in Africa’s creative economy and its economic growth. role in sustainable development. The event featured Oscar Chemerinski, a former IFC global agribusiness creative industry leaders in African music, fashion, director, serves on the board of South Africa’s Hans The creative economy is projected to reach a global and film, who used performances, storytelling, and Merensky Holdings, the parent company of Westfalia valuation of $985 billion by 2023, according to the think discussions to generate new ideas on how to promote Fruit, the world’s global leader in fresh avocados. He tank G20 Insights, with the potential to represent progress. In June 2022, we hosted a similar IFC UpNext has championed Westfalia’s use of inclusive business 10 percent of global GDP before 2030. Digital event focused on opportunities in Latin America and practices and strong commitment to local community platforms, which enable artists and performers to the Caribbean’s creative economy. engagement. Since IFC first invested in the company reach new audiences, are contributing to exponential in 2012, Westfalia has introduced modern avocado growth of the sector. In Africa, revenue from digital Diop kept the conversation on creative industries production to Colombia, Kenya, Mozambique, and Peru, music streaming is expected to reach $500 million by going by launching a new podcast, “Creative linking local growers to global markets. It now also 2025, up from only $100 million in 2017, according to Development with IFC.” Episodes explored how buys mangoes from more than 2,000 smallholders in the World Bank. finance and economic development influence — and Burkina Faso, drying them for export to Europe and the are influenced by — creative industries around the United States. “Digitization is bridging the gap between the creative world. Diop’s guests included actors Don Cheadle and economies of developing countries and world Idris Elba, fashion designer Selly Raby Kane, and singer Proactively and strategically managing our equity markets,” says IFC Managing Director Makhtar Diop. Baaba Maal. portfolio, as well as making full use of nominee “This is important because the transmission of cultural directors who further IFC’s values and mission, wealth can mobilize social change and provide jobs for IFC is undertaking an in-depth mapping of the creative enable us to serve as a positive force for long-term young people.” industries market, with the intent of investing in the sustainable investments in emerging markets. creative economy in the immediate future. In FY22, IFC embarked on a new journey to tap into the creative industries market and unlock its potential to significantly improve development outcomes. The COVID-19 pandemic, which caused an increase in at- home entertainment and a rapid growth of streaming services, offered an optimal opportunity for this exploration. IFC ANNUAL REPORT 2022 45 SETTING STANDARDS REACHING FARTHER FOR GREATER IMPACT IFC continues to set standards and demonstrate its leadership in accountability. In addition to investing, advising, and mobilizing capital, IFC plays a critical role in helping to raise standards for sustainability-driven business in a host of industries — creating opportunities for increased investment flows. Often, we invest in groundbreaking transactions that prove the business case for these high standards. This work builds on IFC’s history of standard setting, beginning with the creation of our environmental and social performance standards that formed the basis for the Equator Principles, the financial industry’s benchmark for assessing environmental and social risk in projects launched in 2003. Our work continued with the creation of the Impact Principles in 2019, a framework to ensure impact considerations are integrated throughout the investment lifecycle. The Impact Principles now have 161 signatories from 38 countries. 46 IFC ANNUAL REPORT 2022 Guiding Investments to Support the Blue Economy Blue finance, defined as investment or refinance activity that contributes to ocean protection and sustainable freshwater management, is a growing market — and an essential tool for helping countries meet sustainability targets. By 2030, the blue economy is projected to reach $3 trillion, employing as many as 40 million people. In addition to attracting potential investors, blue finance investment aids in securing coastal livelihoods, improving access to clean water, selection, management of proceeds, impact reporting, and preserving saline and freshwater ecosystems. and external review for blue development projects. The guidelines build on existing green bond and green As blue finance becomes more mainstream, IFC is loan principles, clearly explaining how ocean and offering guidance and encouraging best practices for freshwater projects need to be framed to achieve investment. IFC’s FY22 publication, Guidelines for Blue desired environmental, social, and governance goals, Finance, identifies eligible blue project categories to in credible, evidence-backed ways. guide IFC’s investments. The document covers project In June 2022, IFC issued the first blue financing loan in Central and Eastern Europe to increase funding for blue economy projects in Romania. IFC extended the landmark €100 million loan to Banca Transilvania SA (BT), the largest bank in the country. IFC’s support will help the bank establish a blue finance product to extend loans to MSMEs in line with IFC’s guidelines. Further blue bond issuances by IFC partners are expected in China, India, Indonesia, and Thailand. IFC ANNUAL REPORT 2022 47 Providing an International Standard for Green Buildings Green buildings represent a significant low-carbon investment opportunity in emerging markets: about $24.7 trillion by 2030. Predicting the carbon footprint of a building project can be complicated and expensive. IFC’s EDGE (Excellence in Design for Greater Efficiencies) program has simplified the process. EDGE offers a straightforward certification process that makes it faster, easier, and more affordable to design and certify resource-efficient and zero carbon buildings. The EDGE app is just one tool to help identify the most cost-effective ways to reduce the resource intensity of a building. So far, EDGE has given its green approval to more than 42 million square meters of floor space around decarbonization of South Africa’s energy sector and the world. Participating buildings are saving more addressing the country’s large housing deficit. than 65 billion cubic meters of water each year and embodied energy savings in materials exceed 84 billion In Latin America, IFC signed a $60 million loan to gigajoules. support BBVA Peru’s green building business line by financing homebuyers’ green mortgages and providing In FY22, IFC partnered with banks and property advisory services through EDGE. The investment is developers to expand the scale, scope, and impact of IFC’s first green project in Peru supported by the its EDGE program. In December 2021, South Africa’s UK-IFC Market Accelerator for Green Construction Nedbank issued a $65.2 million green bond, with IFC program, which helps increase green construction as an anchor investor. The bond will enable Nedbank across emerging markets by incentivizing financial to expand its portfolio of EDGE-certified buildings. intermediaries to scale up green residential Scaling up financing for green buildings, particularly construction. in the residential sector, is critical to supporting the 48 IFC ANNUAL REPORT 2022 Building a Market for Sustainability-Linked Bonds Global capital markets are a vast source of private IFC guided the development of the growing sector funding for climate-friendly projects, driven sustainability-linked bonds market by chairing the by institutional investors who stand ready to finance influential executive committee of the Sustainability- well-defined green business ventures under the Linked Bonds Principles throughout FY22. The right conditions. Growth increasingly comes from principles, launched in June 2020, give investors new products like sustainability-linked bonds — debt confidence by setting clear and transparent definitions instruments whose issuers set hard, independently for these eco-friendly debt instruments. Before the end verified targets for improving their environmental, of 2020, $11.4 billion in sustainability-linked bonds had social, and governance performance over time and then been issued already, with the total rising to $118.8 billion award issuers interest-rate reductions when they hit in 2021. the targets (or penalize issuers when they miss). In September 2021, IFC further helped broaden the impact of sustainability-linked bonds by serving as the anchor investor in the first sustainability-linked bond issuance by an energy company in Southeast Asia, a 10.5-year, 675 million Singapore dollars (approximately $485 million) issue from Sembcorp Industries, a Singapore-based pan-Asian energy and urban solutions provider. The investment marked IFC’s first sustainability-linked bond investment globally, supporting Sembcorp’s drive to increase renewable energy capacity in its key markets. Under the incentive-based deal’s structure, pricing will rise by 0.25 percent starting in April 2026 if Sembcorp does not reach its agreed sustainability target: greenhouse gas emissions intensity reduction to 0.40 tons of carbon dioxide equivalent per megawatt hour or lower. IFC ANNUAL REPORT 2022 49 MEASURING UP: OUR IMPACT Measuring the results of our work and evaluating our effectiveness is fundamental to our approach to development. Share of Project Ratings for Committed Projects —  Ex-ante AIMM Ratings IFC has developed a comprehensive system to guide operations to maximize our RATING DISTRIBUTIONS development impact. This helps ensure that IFC and our clients are reaching the people and markets that most need our help. DESCRIPTION FY22 FY21 Projects Rated “Excellent” (AIMM scores 68 to 100) 11% 6% AIMM — ASSESSING EXPECTED DEVELOPMENT Projects Rated “Good” (AIMM scores 43 to 67) 61% 78% Projects Rated “Satisfactory” (AIMM scores 23 to 42) 28% 16% IMPACT AND MEASURING RESULTS Projects Rated “Low” (scores 10–22) 0% 0% IFC’s impact assessment tool, Anticipated Impact Measurement and Monitoring (AIMM), enables IFC to better define, measure, and monitor the development impact of each project. IFC rates all investment and selected advisory projects for In addition to assessing the expected development impact of projects, IFC conducts development impact using the AIMM framework, which then allows development portfolio monitoring for all of its active and mature investment projects1 after they impact considerations to be weighed against a range of strategic objectives, come into portfolio. IFC teams collect self-reported data from clients, and economists including volume, financial return, risk, and thematic priorities. use these data to assess and update AIMM project scores. Updated portfolio AIMM scores and results for selected corporate reporting indicators go through internal Since the AIMM framework was introduced in 2017, IFC has rated over 2,000 investment and external quality assurance processes before they are aggregated for IFC projects and over 100 advisory projects for their expected development impact. corporate reporting. Share of Project Ratings — Portfolio AIMM Ratings In FY22, IFC own account climate-related investment commitments reached over $4.4 billion. RATING DISTRIBUTIONS DESCRIPTION FY22 FY21 Projects Rated “Excellent” (AIMM scores 68 to 100) 8% 8% Projects Rated “Good” (AIMM scores 43 to 67) 55% 49% Projects Rated “Satisfactory” (AIMM scores 23 to 42) 27% 32% Projects Rated “Low” (scores 10–22) 10% 11% 1. Exemptions apply. Exemption criteria and exemption cases are reviewed by the external auditor. 50 IFC ANNUAL REPORT 2022 DEVELOPING COMMON INDICATORS TO WHAT WE LEARNED FROM RESEARCH & MONITOR IMPACT SELF-EVALUATION RESULTS The decade-long Harmonized Indicators for Private Sector Operations partnership IFC uses a combination of research, data analytics, and self-evaluations to fill of 38 development finance institutions develops metrics for sectors and themes knowledge gaps and provide real-time solutions. including job quality, biodiversity, land, digital and disruptive technologies, The insights from these publicly available research and data analytics generate agribusiness, health, and education. important lessons that inform the way we assess development impact and refine The initiative continues to harmonize, refine and expand sector-level impact metrics AIMM frameworks. Notable examples completed in FY22 include: that have informed UN-led initiatives, such as the UN CFO Coalition for the SDGs Unleashing the Power of Educational Technology in Technical and Vocational and the Global Investors for Sustainable Development Alliance. This past year, IFC, Education and Training (TVET) Systems demonstrates the accelerated development together with other multilateral development banks and the International Monetary of EdTech during COVID-19 and its future potentials. It provides recommendations for Fund, started to work on developing a set of harmonized and flexible principles for policy makers on how to develop EdTech for skills development to ensure it is used multilateral development banks to articulate their contribution to the Sustainable effectively. Development Goals. The Impact of Internet Access on Innovation and Entrepreneurship in Africa shows a EFFECTIVENESS RESULTS OF IFC ADVISORY positive effect of access to high-speed internet on innovation at the firm level, with availability of digital skills within the firm playing a key role. It also found evidence of PROJECTS internet-induced entrepreneurship concentrated in the service sector. In FY22, 102 completed advisory projects were self-assessed for development- effectiveness ratings. Seventy-one percent of the projects were rated mostly Introducing the Adequate Housing Index (AHI) provides a comparative assessment of successful or better, remaining stable relative to FY21. Some regions recorded adequate housing, harmonizing the most recent household expenditure and declines — East Asia and the Pacific, Latin America and the Caribbean, and the consumption surveys. Using the AHI, the paper estimated considerable sizes of Middle East — due to the effect of the COVID-19 pandemic. housing deficit and inadequacy across 64 sampled emerging economies. Self-evaluations of mature or completed projects are another important component of our impact-assessment framework. In FY22, our evaluation agenda was focused on performance evaluations of key partnerships with donors and rapid assessments. IFC completed five evaluations in FY22 that helped us better understand the impact of our investments beyond individual projects and capture valuable lessons learned that will inform industry strategies and operations. Drip Irrigation Impact Evaluation tested the viability and sustainability of a private sector approach to promoting drip irrigation technologies and solar powered water pumps among smallholder farmers in Niger. Over the lifetime of the project, roughly 1,100 Nigerien farmers were trained, approximately half being women, on the use of drip irrigation and solar pumping systems. An ecosystem of SMEs providing operations and maintenance support was also established to deliver irrigation services to farmers. The benefits for farmers included more reliable access to drip irrigation and technical support and increased farm productivity. The assessment, based on surveys of 1,250 participating and non-participating farmers, confirmed that the majority of participating farmers had greater agronomic productivity and more crop cycles per year compared to non-participants, validating the envisioned outcomes of the approach, as well as providing insights on several additional impacts, especially for women, such as improved personal security. IFC ANNUAL REPORT 2022 51 SUSTAINABILITY Sustainability is a critical component of IFC’s STRENGTHENING ESG RISK Risk Framework comprises nine dimensions and 33 indicators. We launched the Contextual Risk Good operations and fundamental to achieving MANAGEMENT Practice Note for public consultation in April 2022. development impact. As IFC’s business The note is being revised to address feedback and is We continued our dynamic change process to shifts more to fragile and conflict-affected anticipated to be finalized in FY23. manage E&S risks more effectively by enhancing our contexts with challenging and complex internal and external capacity, and overhauling and We also continued strengthening IFC’s institutional modernizing our processes, systems and tools. environmental, social, and governance capacity and approach to grievance response, with a focus on proactive and early resolution of complaints (ESG) risk profiles, supporting clients in In FY22, IFC updated its internal Environmental and as well as enhancing project-level grievance managing these risks becomes increasingly Social Review Procedures (ESRP) for Investment mechanisms to better handle complaints. Operations, which introduced a more efficient, critical. Our ESG approach is anchored in our differentiated process for regular and high-risk projects For our clients and the broader market, we offer a Sustainability Framework and Corporate to deliver more business in challenging markets and in series of publications and tools to support best practice Governance Methodology, integral parts a sustainable way. adoption in respect of sustainability and corporate of our approach to ESG risk management governance issues. In the last fiscal year, our external We strengthened our E&S risk management approach publications tackled topics such as women in business in our investments. Both the Sustainability to financial intermediaries (FIs). We clarified the leadership, internal controls, grievance mechanisms, definition of higher risk projects that triggers additional Framework and the Corporate Governance E&S due diligence requirements and enhanced IFC and gender-based violence prevention. We also offer training and guidance to our specialists and staff Methodology lay the foundation for our support. We launched IFC’s Environmental and Social on emerging ESG issues. Where possible, we use an client and market-level capacity-building Management System (ESMS) Diagnostic Tool for FIs, “integrated ESG” approach, for example by leveraging which is designed to assess the quality of an ESMS and efforts as well as for our sustainability benchmark it against IFC’s Performance Standard 1 and our corporate governance investment due diligence to support the effective oversight and management of investments, climate and gender work, good market practices. gender-based violence and harassment. green and sustainability bond issuances, and We continued developing our tools to identify and impact investing. assess contextual risks in the broader operating environment of projects in support of our E&S due diligence and project supervision. The Contextual 52 IFC ANNUAL REPORT 2022 IFC AS AN ESG STANDARD LEVERAGING TECHNOLOGY SETTER This fiscal year, the Sustainable Banking Network was renamed the Sustainable Banking and AND INNOVATION The value of our standards goes far beyond managing Finance Network (SBFN) to reflect its engagement This fiscal year, we continued the development of ESG risks and enhancing ESG performance in our in the broader financial sector ecosystem, an ESG artificial intelligence tool, Machine Learning portfolio. The broad adoption of IFC’s standards including capital markets, pensions, insurance, Environment Analyst (MALENA). Developed in among development finance actors and emerging and asset management. IFC hosts the SBFN partnership with FIAS, Denmark and the Republic of market participants helps create a benchmark for ESG Secretariat and provides technical assistance to Korea, MALENA uses natural language processing, practices to foster continuous improvement of ESG its 72 member institutions from 62 countries in machine learning, and prediction analytics to help performance for private firms in emerging markets. the development and adoption of sustainable inform our ESG due diligence. In January 2022, MALENA finance frameworks. This year, SBFN is celebrating was selected as a Global Top 100 project for solving IFC’s Environmental and Social Performance Standards its 10th anniversary. Over 500 participants from problems related to the Sustainable Development have been accepted by financial institutions, export more than 100 countries gathered for its seventh Goals through Artificial Intelligence. We have also credit agencies, and development finance institutions Global Meeting held in April 2022, to discuss policy made progress on the development of IFC’s Sustainable across the world. Through our partnership with the frameworks for a strong pipeline of sustainable Rating Tool (SRT), with the beta launch of the E&S Equator Principles Association and collaboration investments across emerging markets. and corporate governance components. The SRT will with the OECD, we delivered a series of learning provide a dynamic ESG rating to improve our internal events on key E&S issues. We play an active role in risk management processes and operational efficiency. the Corporate Governance Development Framework, which convenes 35 development finance institutions using the Corporate Governance Methodology as a common approach to corporate governance risks and ADDRESSING CLIMATE RISKS opportunities in investment operations. To translate We are working on the development of an ESG our ESG approach to capital markets, we launched module for IFC’s climate risk assessment tool. This the ESG Performance Indicators for Capital Markets, module will leverage the Performance Standards allowing emerging market companies to disclose and Corporate Governance Methodology to identify through platforms such as ESG Books, of which IFC project-level impacts, conduct risk assessments, is a founding partner. We have strengthened our propose adaptation measures, assess internal controls partnership with the United Nations Sustainable over climate risks and the consideration of climate risks Stock Exchanges initiative (UN SSE) to cover areas and opportunities in sponsor strategy, supporting our such as disclosure, women in business leadership commitments relating to Paris Alignment. (including updated guidance on how exchanges can advance gender equality) and sustainability for small We are also updating IFC’s Corporate Governance and medium enterprises. IFC, in collaboration with Methodology to include a “Climate Governance” the UN SSE and the CDP (formerly known as the parameter, focused on climate-related risk Carbon Disclosure Project), offered Task Force on management in our investment operations. This work Climate-Related Financial Disclosures (TCFD) training will allow the development of an advisory service courses. These courses reached 8,600 participants offering and knowledge products to help boards and in 33 markets, with 5,800 participants joining from senior management address climate risk. emerging market locations. IFC ANNUAL REPORT 2022 53 ACCOUNTABILITY AND OVERSIGHT We are accountable to our partners, trust of our stakeholders and gain crucial feedback as advisory function, CAO provides advice with the we develop new solutions to the biggest development purpose of improving IFC’s systemic performance on clients, and communities as we work challenges. environmental and social sustainability. In FY22, CAO toward our development objectives in an handled 53 cases related to IFC and MIGA projects in 30 countries. During FY22, CAO received 11 new eligible environmentally and socially responsible Accountability complaints of which 5 were referred to IFC.1 CAO manner. IFC continues to prioritize efforts to released 5 compliance investigations of IFC projects strengthen accountability and transparency OFFICE OF THE COMPLIANCE and closed 4 cases after compliance review. across the institution, including in response ADVISOR OMBUDSMAN (CAO) to an independent external review of People affected by adverse environmental and social NEW CAO POLICY IFC’s environmental and social (E&S) impacts of IFC projects may voice their concerns to The new CAO Policy, which went into effect at the CAO, the independent accountability mechanism start of this fiscal year, ensures public access to a accountability completed in 2020. for IFC. As of July 1, 2021, with the implementation predictable and transparent complaints process, with of the IFC/MIGA Independent Accountability an increased focus on outcomes for communities, IFC/ This year, a key area of focus included training staff on Mechanism (CAO) Policy, CAO reports to the Boards MIGA clients, and other stakeholders. It puts greater implementation of the new IFC/MIGA Independent of IFC and MIGA, strengthening the Board’s role in emphasis on resolving complaints early and proactively Accountability Mechanism (CAO) Policy, which became the accountability process and enhancing CAO’s and includes timebound management action plans operational on July 1, 2021. Additionally, IFC continues independence. CAO is mandated to facilitate the developed in consultation with complainants and to improve systems and procedures for E&S due resolution of complaints from people affected by IFC clients. The CAO Policy also provides clear eligibility diligence and supervision as well as strengthening projects in a fair, objective, and constructive manner; requirements for complaints related to FI clients and grievance response. An effort is also underway to enhance environmental and social project outcomes; supply chains and includes a provision for considering explore options for remedial actions to address adverse and foster public accountability and learning to complaints under exceptional circumstances for E&S impacts in projects financed by IFC and pilot a improve IFC performance and reduce the risk of harm projects where IFC and MIGA have exited (for up to 15 principles-based approach to responsible exit from our to people and the environment. CAO helps resolve months). This year, in collaboration with CAO, IFC held investments. issues between affected people and IFC project introductory trainings for E&S and operational staff on operators using a neutral, collaborative problem- the new CAO Policy. We have also taken several steps to improve solving approach through its dispute resolution transparency around our use of blended finance and function. CAO’s compliance function carries out our investments in financial intermediaries (FIs). reviews of IFC’s compliance with environmental and We believe that continuous evolution toward more social policies, assesses related harm, and recommends 1. This is a new provision in the CAO Policy that supports transparency is one of the most important things we complainants to engage in good faith efforts with IFC/MIGA remedial actions where appropriate. Through its can do as a development institution to maintain the or the client to resolve issues prior to initiating a CAO process. 54 IFC ANNUAL REPORT 2022 INDEPENDENT EVALUATION Oversight World Bank Group’s fiduciary responsibility over the development resources it manages, by investigating GROUP GROUP INTERNAL AUDIT VICE allegations and pursuing sanctions against outside firms and individuals, and discipline against World The Independent Evaluation Group (IEG) is an independent unit that reports directly to the World Bank PRESIDENCY Bank Group staff, found to have engaged in fraud, corruption, collusion, coercion, or obstruction. Following Group’s Board of Directors. IEG’s mission is to strengthen The Group Internal Audit (GIA) Vice Presidency sanctioning decisions, the Integrity Compliance Office World Bank Group institutions through evaluations that provides independent and objective risk-based (ICO) engages with sanctioned firms and individuals in inform strategies and future work — and lead to greater assurance, insight, and advice to protect and enhance working toward meeting their conditions for release development effectiveness. IEG assesses the results the value of the World Bank Group. GIA gives from sanction. In addition, preventive efforts by INT this of IFC operations and offers recommendations for management and the Board of Directors reasonable year helped to identify, monitor, and mitigate integrity improvement. IEG also contributes to internal learning assurance that processes for managing and controlling risks. In FY22, the World Bank Group sanctioned 35 firms by informing new directions, policies and procedures, risks — as well as their overall governance — are and individuals. Based on ICO determinations, the World and country and sector strategies. IEG’s annual reviews adequately designed and functioning effectively. GIA Bank Group also removed 22 entities from sanction and of World Bank Group results and performance and of reports to the President and is under the oversight of converted the debarments with conditional release of other major reports are available on IEG’s website at the Audit Committee. For more information on GIA, one entity to conditional non-debarments. The World http://ieg.worldbankgroup.org. visit: www.worldbank.org/internalaudit. Bank Group recognized 72 cross-debarments from other multilateral development banks (MDBs). Twenty- INTEGRITY VICE PRESIDENCY eight World Bank Group debarments were eligible for recognition by other MDBs. For more information and Reflecting the World Bank Group’s commitment the World Bank Group Sanctions System Annual Report, to fight and prevent corruption, the Integrity Vice visit www.worldbank.org/integrity. To report suspected Presidency (INT) detects, deters, and prevents fraud fraud or corruption in World Bank Group-financed and corruption in World Bank Group-financed projects projects, visit www.worldbank.org/fraudandcorruption. and involving World Bank Group staff and corporate vendors. As an independent unit within the institution, INT plays a fundamental role in supporting the IFC ANNUAL REPORT 2022 55 DIVERSITY, EQUITY, AND INCLUSION IFC employs over 4,200 people, who Our DEI efforts focus on three strategic priority areas: Our ongoing iCount initiative, which achieved a completion rate of 61 percent, up from 49 percent represent over 150 nationalities and speak 1. Inclusive Leadership skills enable IFC’s managers to one year ago, encourages staff’s voluntary self- more than 50 languages. This makes it lead diverse and equitable teams. identification in terms of nationality; race and essential to create a culture that recognizes, In FY22, IFC continued with the third cohort of its ethnicity; sexual orientation and gender identity; sponsorship and the second cohort of its reverse and disability status. By providing management values, and harnesses what makes every with a more accurate picture of the organization mentoring programs, involving over 70 staff who individual unique. Diversity, Equity and have demonstrated leadership potential, serving and a better understanding of how staff Inclusion (DEI) is a strategic priority and as mentees, advisees, sponsors, or mentors. These experience promotions and progressions, mobility, programs assist in building a pipeline of leaders with compensation, and performance management, this a critical element of IFC’s employee value data is helping to build a culture of accountability. inclusive leadership capabilities. proposition. IFC also introduced an inclusive leadership learning 3. Gender Equality ensures equity for women with respect program for over 700 managers which includes to career advancement and development. FY22 marked the first full year of dedicated DEI training on how to address unconscious bias in program management at IFC. We took major steps In FY22, IFC increased the share of senior performance management conversations. on our DEI journey, focusing on building inclusive professionals who identify as female to 45 percent. leadership and strengthening accountability toward One of the ways we measure inclusive leadership IFC also earned the second level certification of the achievement of our DEI objectives. We expanded is through IFC’s Inclusion Index, which we derive EDGE (Economic Dividends for Gender Equality) the DEI team, enhancing our project management, from our Employee Engagement Survey (EES). following an independent audit on gender balance, data analytics, learning, and communication At 63 percent, our overall Inclusion Index has gender pay equity, policies and practices for capabilities. We also refreshed our DEI Council to remained steady since 2019 and has increased by equitable career flows, and inclusive workplace include representation from all of IFC’s regions of three percentage points since 2016. culture. Our action plan for the next certification operations. This Council promotes initiatives and cycle focuses on continuing to ensure equal pay advises IFC’s management team on how to meet 2. Performance Management Culture creates for equal work, awareness training on gender diversity goals and foster a diverse, equitable, and accountability as we move toward our DEI goals. biases, introducing gender equality objectives into inclusive environment. We use a data-driven approach to define, measure, performance evaluation plans for managers, and and report on our DEI program. This year, IFC encouraging men to take full parental leave. released its first DEI public disclosure document to demonstrate our progress. 56 IFC ANNUAL REPORT 2022 Employee Resource Group Initiatives Volunteer staff members lead our four Employee IFC GLOBE Millennial Resource Group+ Resource Groups (ERGs), which foster an inclusive culture, cultivate support networks, expand knowledge A network for lesbian, gay, bisexual, A group for Millennials and others sharing, and increase a sense of belonging across the and transgender (LGBT+) staff to support generational diversity organization. ERG co-leads are part of the DEI Council and help advance IFC’s DEI goals through diverse and inclusion perspectives. This year, the network held its first elections for co-leads and board members, executed an In FY22, the group launched a chapter in Asia, Beyond our ERGs, IFC participates in the WBG organization-wide campaign to celebrate LGBT+ complementing similar efforts in Africa and Disability Advocacy and Resource Employee Group allyship in the workplace, and launched the Out & headquarters. It also held a series of events on (DARE) to further build a space for staff members Proud awards for LGBT+ role models. topics ranging from women’s rights to DEI. with disabilities and advocate for the interests of this community. Women’s Network African Descent Alliance A network fostering the recruitment, A staff community focused on providing development, and retention of equal opportunity and leveraging diverse talent talents, ideas, skills, and experience of professionals of African descent The network held a townhall with IFC’s Managing Director Makhtar Diop and offered During Black History Month, the group a series on workshops and events throughout supported an interactive session on IFC’s African the year focused on female leadership, work-life American Talent Outreach. In addition, the balance, and career narrative. network hosted a reception to honor Juneteenth featuring a black-owned business and providing the opportunity to learn about the history of this newly acknowledged federal holiday IFC ANNUAL REPORT 2022 57 AUDITOR’S REPORT LETTER TO THE BOARD STAY CONNECTED IFC has requested EY to perform a OF GOVERNORS Web & Social Media Resources limited assurance engagement on a The Board of Directors of IFC has IFC’s website, www.ifc.org, provides selection of sustainable development had this annual report prepared in comprehensive information on every information disclosed in the Annual accordance with the Corporation’s aspect of our activities. It includes Report. The nature, scope and by-laws. The President of IFC and contact information for offices conclusion of this engagement are Chairman of the Board of Directors worldwide, news releases and feature described in EY’s limited assurance has submitted this report with the stories, data on results measurement, report, available in the online IFC audited financial statements to the disclosure documents for proposed annual report. Board of Governors. investments, and key policies and guidelines. The online version of IFC’s 2022 Annual Report, www.ifc.org/ annualreport, provides downloadable PDFs of all materials in this volume and translations as they become available. 58 IFC ANNUAL REPORT 2022 REPORTING UNDER THE TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES CLIMATE-RELATED FINANCIAL GOVERNANCE on climate including progress toward all climate commitments (see Metrics and Targets section below DISCLOSURE What’s New? for further details). The most recent climate update to the Management Team was held on June 27, 2022, and This report is IFC’s fifth consecutive to the Board on July 7, 2022. disclosure under the guidelines • Deepened the integration of climate champions Additional touch points with the Board and across the organization through the hiring of recommended by the Task Force on Management Team are integrated into our business Regional Industry Climate Business Development and reporting processes, through written and verbal Climate-related Financial Disclosures Leads communications including the Investment Operations (TCFD). The report reflects IFC’s • Developed and rolled out the frameworks for Paris Report, Annual Portfolio Review (with RAROC on Alignment in coordination with other multilateral climate and non-climate), Strategic Business Outlook, continued commitment to maintain development banks (MDBs) annual Climate Change Action Plan (CCAP) updates, and strengthen our climate-related • Discussed with the Management Team and carbon pricing and climate risk discussions in project Board papers, and deep dives and technical briefings financial risk assessment, management, Board the Paris Alignment approach and plans for as requested. implementation and reporting practices. All five reports • Established a Climate Risk Working Group to oversee Climate is integrated into IFC’s organizational can be found online at www.ifc.org/ structure following a hub-and-spoke model. the development of methodologies for managing AnnualReport with links to relevant climate risks on the portfolio and balance sheet Responsibility for providing deep in-house expertise references. on climate and guiding the achievement of our climate targets rests with the hub, a dedicated IFC’s climate business and risk are overseen by Climate Business Department, which enables the IFC has its TCFD reporting audited by IFC’s Managing Director (MD) and Executive Vice investment departments and others — ​ the spokes — ​ President, who reports to the President of the World to engage with our clients on climate and broaden EY, a recognized third party, as part of our impact. The Climate Business Department helps Bank Group on all climate commitments such as the annual review of IFC’s non-financial climate business performance, climate risk evaluation, set corporate climate strategy and shape policy, and supports investment teams to identify climate reporting. This review of our qualitative and Paris Alignment of IFC’s operations. The World investment opportunities and mitigate climate Bank Group President reports to the World Bank Group and quantitative disclosures helps us (IBRD, IDA, IFC, MIGA) Board of Directors. Following risk. The Climate Business Department is housed under the Cross-Cutting Solutions Vice Presidency, improve our TCFD reporting every the climate commitments as part of the 2018 capital currently reporting to the MD and Executive VP. This increase, in FY21 the Board approved IFC’s commitment year and ensures that the information to align its investments with the goals of the Paris placement reflects IFC’s position that climate change is a key implementation priority to be integrated provided is material to stakeholders and Agreement. As part of IFC’s capital increase and Paris across all operations, investment cycles, and Alignment commitments, all investments are now is in-line with global best practices. screened for physical climate risk. IFC has committed organizational processes. to aligning all new investments with the goals of the Paris Agreement starting in July 2025, and further The Climate Business Department conducts and scaling climate finance in 2030. supports assessment of transition and physical climate risk in investment projects. It also works with The President of the World Bank Group sets the mainstream investment and business development Group’s public climate targets. Progress on targets teams to identify low-carbon investment opportunities is reported to the IFC Management Team and the and align operations with the Paris Agreement Board as part of the Corporation’s Quarterly Updates through its industry sector experts, climate finance to the Board. Separately, the Bank Group also professionals, and policy. It develops and helps reports annually to the Board of Directors specifically implement and monitor tools and approaches 60 IFC ANNUAL REPORT 2022 such as carbon pricing and climate project tagging. is helping to build capacity in investment teams, Industry Climate Business Development Leads for Recognizing the importance of embedding good especially Industry Specialists and Environmental and each of IFC’s six regions of operations, who will report climate governance into the boards of our client and Social (E&S) Specialists who are core to the project to their Regional Industry Directors and to leadership investee companies, the department is developing teams and will be undertaking the Paris Alignment in the Climate Business Department. The role of these trainings for IFC Nominee Directors to build and assessments for projects upon mainstreaming. leads will be to identify opportunities to unlock more improve capacity of investee companies on climate Assessment for climate risk and adaptation will be climate business in their regions, including cross- change, including climate finance and climate risk. The mainstreamed over time through sectoral tools and cutting opportunities. Regional and industry teams are department continues to report individual climate approaches that will allow project teams, via industry also hiring additional staff at all levels to enhance their finance numbers to the Board. and E&S specialists, to conduct project assessments. climate-related competencies and offerings. Since the signing of the Paris Agreement in 2015, IFC IFC has brought on board seven new staff members IFC regularly consults with peers to further common has worked closely with the World Bank, MIGA, and in the Climate Business Department over recent understanding of good practices. The TCFD informal eight other multilateral development banks (MDBs) months to meet the ambitions of its Paris Alignment working group of MDBs convened by IFC in 2020 to develop the Joint MDB Framework for Paris commitment as well as to help IFC’s industry teams continues to share experiences, discuss challenges, and Alignment of MDB Financing. The definition of Paris build capacity to assess their projects themselves ideate solutions to help each organization integrate Alignment so derived takes into account the specific and integrate Paris Alignment into the existing the recommendations of TCFD more comprehensively contexts of the emerging markets within which IFC project cycle. into their operations. operates. IFC has coordinated closely with the other MDBs to develop the Joint MDB Framework for Climate Risk Working Group. In FY22, IFC’s Corporate IFC continues to engage with organizations on climate Paris Alignment of Direct Lending (real sectors) Risk Committee approved the creation of a cross- risk and opportunities, such as 2⁰ Investing Initiative, and, along with the European Bank for Reconstruction cutting Climate Risk Working Group to oversee the Citi, Oliver Wyman, PCAF-Navigant, Potsdam Institute, and Development (EBRD), led the development of development of methodologies and recommend Standard Bank, Science-Based Targets Initiative, S&P the Joint MDB Framework for Paris Alignment policies and procedures to measure and manage IFC’s Global Trucost, UNEP-FI, and WSP, among others. More of Financial Intermediaries (FIs). IFC’s Climate exposure to climate-related risks at the portfolio and broadly, IFC retains membership in several climate- Business Department leads and coordinates the balance sheet level. The Working Group will be led by related corporate leadership initiatives, such as the development of the frameworks and implementation the Corporate Risk Management (CRM) and Climate Principles for Responsible Investment, the TCFD (where of Paris Alignment across IFC’s operations in close Business departments, with participation from other IFC is a supporting institution), the Task Force on collaboration with relevant industry teams. This stakeholders as appropriate. The Corporate Risk Nature-Based Financial Disclosures (TNFD — ​ IFC was governance structure allows for consistency and Management department is situated within the a member of the Informal Working Group that shaped standardization at this early stage of integrating Risk and Finance Vice Presidency and supports IFC’s the TNFD and is now a member of the TNFD Forum, Paris Alignment into our operations, especially as financial sustainability through activities such as Race to Zero, the Global Green Bond Partnership, the implementation requires expert judgement and the use capital allocation, financial forecasting, stress testing, Green Bond Principles (of which IFC was elected Chair of specialized tools. Meeting Paris Alignment targets is and exposure limits management. Within CRM, the in 2020) the Carbon Pricing Leadership Coalition, the part of the performance scorecard for the department. climate risk team is exploring the development of tools CCS+ Initiative (where IFC is a member of the advisory Summaries of the assessment and status of Paris and methodologies to measure and manage climate group), and the Fashion Industry Charter for Climate Alignment of individual projects will be included in risks on IFC’s portfolio and balance sheet. Change (where IFC is a supporting institution). project documentation at investment review stage, for review by the Investment Committee. IFC’s Climate Anchors Network continues to Beyond strengthening our own climate governance, integrate climate business throughout the institution. we continue to develop and set environmental and As implementation of the Paris Alignment framework The Climate Anchors Network comprises senior social standards through our Performance Standards. progresses and matures, investment teams will be staff in each industry and regional department as In addition, IFC has been supporting the development trained to do the assessments for their projects, with well as key operational departments including Legal of green and blue taxonomies, as well as national quality review from the Climate Business Department. and Compliance Risk, Corporate Risk Management, taxonomies for Colombia, Mongolia, South Africa, Assessment for mitigation issues for more complex and Environmental and Social teams. Regional and Dominican Republic, and others. These domestic projects will continue to be centralized within the departmental Climate Anchors jointly report to their taxonomies are national standards that define what is Climate Business Department. The Department department Director and to the Climate Business green eligible for investments in those countries. Director. This year, IFC has begun hiring Regional IFC ANNUAL REPORT 2022 61 STRATEGY Table 1: Climate Change Commitments: Five-Year Trend What’s New? TOTAL CLIMATE FINANCE COMMITMENTS (US$ MILLIONS) FY22 FY21 FY20 FY19 FY18 Own Account Long-Term Finance (LTF) $4,401 $4,021 $3,324 $2,603 $3,910 • IFC completed the pilot of the Paris Alignment Core Mobilization $3,346 $3,610 $3,500 $3,172 $4,542 Framework for real sectors and is now rolling out Total $7,747 $7,631 $6,824 $5,775 $8,452 across operations • IFC led and completed the development of the Paris Alignment Framework for intermediated financing Figure 1: IFC Climate Business as a Percentage of Total Own Account • FY22 own-account investment in climate: $4.4 billion Commitments: Ten-Year Trend • FY22 mobilization of private capital for climate: IFC Climate Business % of own account only $3.3 billion % % % % % % % % % Increasing IFC’s investment in % % climate business. % % % % In FY22, IFC’s total climate-related commitments were % over $7.7 billion. At $4.4 billion, our own account long- % term finance in climate accounted for 35 percent of our % new investments (see Table 1). Despite the economic % ramifications of the ongoing COVID-19 pandemic IFC’s total climate commitments saw a year-on- year increase. Paris Alignment. In June 2021, the World Bank Group commitments on average over the five-year period, a common, comparable, measurable definition on Board endorsed the new Climate Change Action Plan significantly higher than the 26 percent average what it means to align financial flows with “a pathway (CCAP) for FY 2021-25. The CCAP focuses on increasing achieved between FY 2016 and FY2020. IFC also toward low greenhouse gas (GHG) emissions and climate finance to reduce emissions, strengthen committed to aligning its financial flows with the climate-resilient development” as articulated in climate change adaptation, and align financial flows objectives of the Paris Agreement. Starting July 1, Article 2 of the Paris Agreement. IFC defines Paris with the goals of the Paris Agreement. It provides a 2023, 85 percent of all new investments in all sectors Alignment as providing support to clients in ways roadmap on aligning climate and development goals will be aligned with the Paris Agreement’s goals, that are consistent with low-carbon and climate- using new diagnostics, prioritizing transition in five key and 100 percent of these will be aligned starting resilient development pathways, aligned with the systems that generate 90 percent of emissions and July 1, 2025. Our work on Paris Alignment has helped objectives of the Paris Agreement, and consistent with face significant adaptation challenges,1 and increasing us define an overall climate risk and opportunities client countries’ nationally determined contributions finance to support the transition, including by strategy that incorporates governance structures, risk (NDCs), long-term strategies, and other national mobilizing private capital and supporting global efforts management, and metrics and targets. climate commitments. This includes alignment with to raise and deploy concessional finance. both mitigation (Building Block, or BB, 1 of the Joint IFC has been working with its sister WBG institutions MDB Framework) and adaptation and resilience As part of the new commitments, IFC will increase and eight other MDBs to create the Joint MDB (Building Block, or BB, 2 of the Joint MDB Framework) its direct climate financing to 35 percent of total Framework on Paris Alignment, in order to develop components. 1. The five key systems that the CCAP focuses on are: energy; agriculture, food, water, and land; cities; transport; and manufacturing. 62 IFC ANNUAL REPORT 2022 To enable comprehensive integration of Paris transaction-based assessment (for projects with An IFC investment is considered aligned when: Alignment into our operations, IFC has also developed defined use of proceeds) and another approach for (i) on climate mitigation, it has no negative and is conducting trainings for investment staff to help counterparty-based assessment (for projects with impact on decarbonization pathways; or them communicate the commitments and implications undefined use of proceeds). We have begun the pilot supports low/net-zero GHG emissions activities of Paris Alignment. To help with this, we are developing of this framework on our business with financial in line with decarbonization goals of the Paris tools, guidance notes, and other relevant material. intermediaries that have defined use of proceeds as of Agreement; or generates GHG emissions but is These measures will help our clients in emerging July 2022 and intend to roll it out in a phased manner in line with the country’s low carbon transition markets to improve their climate risk management over the course of FY 2023 with an open feedback loop and avoids long-term carbon lock-in; and (ii) on capacity and enable them to report in line with the to integrate learnings and course correct as needed climate adaptation and resilience, it identifies and recommendations of the TCFD, which will provide the before mainstreaming in July 2023. Along with the manages vulnerability to physical climate risks market — ​ with a better insight as well as the client — ​ other MDBs, we intend to publish a technical note on and is considered aligned with a country-specific, into the entity’s climate risk exposure. Paris Alignment of intermediated finance for COP27 as climate-resilient development pathway. was done for the real sector before COP26. Integrating low-carbon and resiliency across sectors. IFC continues to diversify its climate business, In order to ensure transparency, the Paris Alignment identifying new areas of growth. In FY22, IFC retained frameworks and methodologies were also discussed In FY22, IFC conducted over 16 Paris Alignment training strong climate business (our own account investment with Civil Society Organizations (CSOs) at the sessions with a cumulative 1,500 staff in attendance as well as mobilization) through FIs ($3 billion), and in WBG-IMF Spring Meetings held in April 2022 under and intends to conduct several more in FY23. These resource efficiency ($882 million), renewable energy Chatham House rules. IFC intends to engage with trainings were delivered to IFC staff from across ($1.2 billion), green buildings ($1.2 billion) and urban, CSOs on the Paris Alignment approach for FIs in the IFC’s regions and sectors of operation and leveraged transport, and waste ($1.1 billion). coming months. Coordination of the engagement will relevant regional and sectoral case studies. Through be undertaken as a joint World Bank Group exercise. these trainings, IFC has disbursed internal guidance materials to support capacity building, including Paris Focus on Financial Sector Enhancing IFC FI clients’ capacity. In addition to Alignment assessment questionnaires, case studies, In FY22, IFC’s total overall own account commitments ensuring that our own business is climate resilient and and factsheets. amounted to $12.5 billion, of which 50 percent — ​ or low-carbon per the Paris Agreement, IFC recognizes $6.2 billion — ​ comprised of our work with financial the urgency to help this sector make its business The integration of Paris Alignment into our intermediaries. Given that such a significant proportion resilient to climate risks and help our clients move operations has changed how IFC does business. of our business is in the financial sector, focusing toward Paris aligned pathways for climate resilient Paris Alignment requirements are best met when on this part of our portfolio is crucial to integrating and low-carbon business. We have developed integrated into existing business processes, including climate considerations and Paris Alignment across IFC’s and continue to expand training on climate risk due diligence, appraisal, and concept and investment operations. management and TCFD for both financial institutions review. Our implementation plan recognizes and and real sector companies. IFC is working with reflects this, with project cycle integration and Paris Alignment for IFC’s Intermediated Financing. stock exchanges to help them develop disclosure clear definitions of roles and responsibilities of staff IFC and the European Bank for Reconstruction and guidelines for listed entities. IFC is the Secretariat across IFC a key element of our roll-out. Climate Development (EBRD) led the development of a Paris of the Sustainable Banking and Finance Network of considerations — ​ both mitigation as well as risk and Alignment framework for intermediated financing central banks and regulators, which is helping banks in adaptation — ​ are included much earlier in the project in coordination with the other MDBs, which is now member countries to implement the recommendations design process, allowing investment teams to both complete. Similar to the approach taken for the pilot of the TCFD. address any climate risks that are foreseen as well as take advantage of the business opportunities of the real sector methodology, IFC will begin piloting the proposed methodology for financial intermediaries IFC offers a range of technical climate assistance, presented through adaptation measures and helping in FY23. Aligning this part of our portfolio is crucial to advisory and investments services according to the clients transition to a low-carbon pathway. Finally, integrating Paris alignment across IFC’s operations. client’s level of maturity and readiness for investment we are also exploring the overlap between climate, through its Financial Institutions Group (FIG) offerings. especially Paris Alignment, and IFC’s Performance Our framework for intermediated financing This includes capacity building support for climate Standards to better integrate into our existing client is two-pronged and includes an approach for risk assessment and management to support FIs’ requirements and business practices. alignment with the goals of the Paris Agreement. IFC ANNUAL REPORT 2022 63 Some additional topics that IFC offers advisory services of a pipeline of green projects in target sectors. This practice and stimulating other corporates, both in to support clients include access to green finance, project involves engaging with stakeholders from the infrastructure sector and beyond, to adopt similar green bonds and loans, blue bonds and loans, climate- the public, private, and financial sectors to develop a ambitious sustainability strategies and targets and tap related disclosure, and decarbonization pathways. roadmap of actionable solutions on how to incentivize novel financing structures such as SLBs. Through the Green Bond Technical Assistance Program the development of private sector projects in target (GB TAP), IFC helps train banks to understand and sectors. IFC will work with client financial institutions Country Climate and Development Reports issue green bonds. The Green Banking Academy trains to channel private sector capital into these projects, (CCDRs). In FY22, the World Bank Group launched financial institutions on the four pillars of a green bank simultaneously helping to green the financial sector in a new, core diagnostic tool — ​ the Country Climate (eco-efficiency (their own footprint), environmental the pilot countries. and Development Report (CCDR). IFC, the World risk management, green products and services, and Bank, and MIGA lead the development of the green strategic commitment) and offers a green CCDRs, along with support from the IMF, and active finance certificate to professionals. The Climate Exploring Creative Solutions to engagement with the private sector, government Assessment for Financial Institutions (CAFI) platform Target New Areas of Growth: counterparts, academia, think tanks, and civil society helps our client financial institutions assess the climate organizations. The CCDRs aim to (i) integrate climate eligibility of their investments and estimate the In addition to growing its existing climate business, change and development considerations and help development impact of their climate-related activities. IFC continues to target new areas of climate resilience client countries prioritize the most impactful actions By FY22Q2, 75 percent of active climate partner using innovative tools and solutions. that can reduce greenhouse gas (GHG) emissions financial institutions used the tool and reported over and boost adaptation; (ii) explore opportunities, $7.9 billion in climate loans in CAFI, leading to an Sustainability-Linked Finance. We are helping reforms, and policy instruments to leverage private estimated reduction in emissions of 19.5 million tons our clients green their operations based on a clearly sector resources and solutions for both climate of Carbon Dioxide equivalent per year. These advisory identified roadmap of innovative solutions. In FY22, change adaptation and mitigation; and (iii) inform programs not only help us build capacity for our clients IFC anchored its first-ever sustainability-linked bond WBG country engagement products, including IFC’s but also let us set and raise market standards on (SLB) issuance, a 675 million Singapore dollar offering Country Private Sector Diagnostics (CPSDs). CCDRs climate finance, climate risk management, issuance of on the Singapore Stock Exchange, by leading Pan-Asian can serve as an important platform for governments, green bonds, and other important topics. energy and sustainable solutions provider Sembcorp their citizens, and our partners to engage with the Industries Limited. The transaction formed the first development and climate agenda, supported by better In addition to the provisions above, IFC is developing SLB by an energy company in Southeast Asia and coordination at the country level. CCDRs can also be and delivering virtual climate trainings directly to the region’s largest such issue to date. Under the SLB deployed to more effectively mobilize resources from financial institutions to create new markets for climate terms, Sembcorp committed to reducing its GHG development financiers, including non-traditional risk and opportunities. Supported by the governments emissions intensity by 20 percent in the next four donors and the private sector. In June 2022, the first of Japan and the Netherlands, IFC has developed a years, with a 0.25 percent margin step-up if this target CCDR — ​ for Türkiye — ​was released and identified key training module for banks in emerging markets to is not met. priorities for climate action to help Türkiye reduce GHG raise awareness on climate issues as relevant to the emissions and boost resilience. The World Bank Group financial sector and build their capacity on climate risk IFC’s investment comprised an own account expects to publish more than 20 CCDRs in the first management. These webinars and trainings will be anchor allocation of 150 million Singapore dollars half of FY23. These reports will form the foundation followed by one-on-one advisory services provided by (approximately US$110 million) and mobilization for building internal climate capacity, engaging in the FIG regional teams to help those banks that are of approximately 475 million Singapore dollars market development activities in country offices, and interested in integrating climate into their governance, (approximately US$350 million) to be applied toward integrating climate opportunities and risks into the strategy, risk management, and metrics and targets as renewable energy projects and potentially other core strategic decisions. per the recommendations of TCFD. sustainable assets. Industry-Specific Decarbonization Strategies. IFC Finally, recognizing the need for bankable green In addition to anchoring the issue, IFC helped has been conducting deep dives to embed climate projects as a key hurdle to scaling private climate Sembcorp develop a sustainable financing framework, into sectoral strategies for high-emitting sectors like finance under the Scaling up Climate Finance through the including selection of specific performance targets as chemicals and power. IFC’s focus on manufacturing Financial Sector (30x30 Zero) Program, IFC is working in well as systems and processes for implementation. This in particular has evolved over the last few years to four pilot countries to help catalyze the development successful SLB is expected to contribute significantly be centered around carbon abatement, industry to decarbonization efforts by demonstrating best 64 IFC ANNUAL REPORT 2022 transition to lower carbon pathways, greening of enhance biodiversity and ecosystem services as well as Building a pipeline of low-carbon and resilient supply chains, waste reduction, and circularity. We look sustainably manage natural resources. This guide was projects. IFC’s Upstream units are embedded across at investments for their ability to support resilience in opened for public comment in June-July 2022, to which industries and regions to lay the groundwork for regional clusters. A core aspect of this strategy is to we received 23 comprehensive responses from entities investment opportunities within a three-to-five-year ensure that our investment evaluation takes a nuanced including non-profits, academia, cooperative financial horizon. In the last year, IFC has prioritized climate- approach to the development status, needs and institutions, international organizations, multiutility related business development through Upstream and economic complexity of a country. In subsectors where operators, and financial and technical advisory firms. related activities such as scaling up climate finance by full abatement is not possible (heavy industries), we Comments focused on a range of topics including greening the financial sector and catalyzing a pipeline focus on climate transition and lower carbon pathway impact reporting, data and knowledge sharing, of green investments in target markets. IFC is also approaches. These projects are set up in a way that elaboration of ties to the Green Bond and Green Loan investigating possible business models for upstream supports the reduction of their emissions over the Principles, and potential alignment with national and activities in adaptation and resilience. Upstream project lifetime by incorporating new technologies and international legislation. After an extensive review activities consist of pre-investment work in three knowledge, thereby reducing the risk of carbon lock-in. process, an updated version of the document will be categories, often in collaboration with the World Bank We have developed comprehensive sector strategies made public in the coming months. The Biodiversity and the Multilateral Investment Guarantee Agency and roadmaps for key sectors, such as textiles and Finance Reference Guide is a living document, and we (MIGA): 1) creating markets (regulatory reform or chemicals, and are developing more for circular expect it to evolve over time as the market develops standard setting), 2) creating opportunities (through economy, construction materials, electric vehicles (EV) and matures. technical assistance to private sector clients), and 3) value chain and battery manufacturing value chain. IFC is also providing clients in hard-to-abate sectors with advisory services to support the development of actionable decarbonization roadmaps that assess their carbon footprint, identify cost-effective SECTOR SPOTLIGHT: investments to build the blue economy and requests eligible projects to contribute to Sustainable decarbonization solutions, set targets, and develop Blue Bonds and Loans Development Goal (SDG) 6 (ensure availability and investment programs compliant with sustainable finance principles. sustainable management of water and sanitation The ocean generates more than half of our planet’s for all) and SDG 14 (conserve and sustainably use the oxygen, is home to most of the world’s biodiversity, oceans, seas and marine resources for sustainable Biodiversity and Nature-Based Solutions. IFC and offers food and economic opportunities for recognizes that climate and biodiversity are deeply development) without compromising other SDGs. billions of people. It is estimated that the global interlinked and managing the risks and opportunities value of the blue economy is $2.5 trillion annually, for one is incomplete without also addressing the IFC sees a huge opportunity to develop business equivalent to the size of the world’s seventh-largest lines for blue finance. We have pioneered other. This principle is enshrined within the WBG CCAP economy. Blue finance is an emerging area in for FY 2021-25, and we are working to articulate the investments in blue finance with key partners climate finance, with growing recognition from the leading to several first-in-the-market transactions. business case for biodiversity finance and nature- market of the countless investment opportunities based solutions (NBS) for both climate mitigation These include IFC’s subscription of up to it offers while simultaneously addressing pressing $100 million in the first blue bond in the Philippines and for green infrastructure solutions. We continue global challenges by contributing to economic to engage with stakeholders on this issue, intend (FY22) and the first blue bond by a commercial bank growth, improve livelihood, and the health of in Thailand (FY22). IFC also anchored and mobilized to grow our own biodiversity finance business, and marine ecosystem. This principle is enshrined in the contribute to the growth of the biodiversity finance a $300 million blue loan for Thailand’s Indorama World Bank Group’s Climate Change Action Plan Ventures exclusively focused on addressing marine market globally. As mentioned earlier, IFC was an early (CCAP) for FY 2021-25. member of the Informal Working Group that shaped plastic pollution (FY21). Since 2020, IFC has provided the TNFD, and we continue to be a part of the TNFD more than $400 million in blue finance to the IFC has been at the forefront of developing market private sector, recognizing the untapped potential Forum with likeminded organizations that recognize standards and guidelines on blue finance and the impetus for and opportunity in biodiversity for clients to grow their blue financing products and launched the Blue Finance Guidelines in early 2022. services, and to develop a systematic global blue finance. We have developed a reference guide on This document provides guidance on eligible use biodiversity finance that fuses conservation needs with finance market. of proceeds for market participants and private sustainable development to provide an indicative list of investment activities that help protect, maintain or IFC ANNUAL REPORT 2022 65 crystallizing opportunities (project risk structuring to maximize the emissions reduction potential of the Physical risk2. IFC screens projects for climate risk and investor mobilization). IFC’s management team project. This will serve as a tool to engage further in an expanding number of sectors. During project is regularly updated on the climate percentage of the with clients on project design, while supporting our appraisal, IFC’s project teams assess potential direct upstream pipeline, allowing the management team ex-ante GHG emissions estimates of absolute and and indirect effects that climate related impacts may a line of sight on green business opportunities in baseline emissions. have on the project’s financial, environmental, and coming years. • Portfolio and balance sheet level. IFC is exploring social performance. Potential risks are further explored how to incorporate climate scenarios into its stress and, where necessary, addressed and mitigated Resilience of strategy/scenario analysis. IFC testing framework, as well as the development of through a variety of measures that may include continues to explore how to integrate scenario analysis other tools to measure and manage climate risks at operational or CAPEX interventions. and climate risk into our overall risk management. the portfolio and balance sheet level. The Climate IFC has road-tested leading market approaches to Risk Working Group will oversee this workstream in Physical risk screening for IFC’s projects has been scenario analysis and found them to be unsuitable FY23 and beyond. integrated into the adaptation and resilience (BB2) for evaluating the resilience and risk of IFC’s portfolio component of Paris Alignment, where assessment which mainly comprises of unlisted, private clients poses explicit questions on exposure to climate risk in emerging markets. We are in discussion with RISK MANAGEMENT and potential opportunities, measures for climate MDBs, financial institutions, consulting firms and risk mitigation, levels of residual risk after adaptation, other stakeholders on the most appropriate factors, indicators, tools, scenarios, and data sources to develop What’s New? potential for maladaptation, and consistency with national contexts for climate resilience. an internal approach. IFC has mainstreamed the assessment of the risk • Tools, methodologies, and approaches for physical • Project and asset level. IFC has begun to implement climate risk screening developed for 46 percent of and resilience component of Paris Alignment (BB2) several interim bottom-up measures to ensure the for 46 percent of real sector operations and is in the resilience of our investments. Many of these have IFC’s real sectors of operations; 35 percent more process of mainstreaming for an additional 35 percent. been integrated into our Paris Alignment approach underway In this context, sectors are considered ‘mainstreamed’ and implementation — ​ individual assets and • Analysis of IFC’s active portfolio for exposure to when a methodology or tool has been developed for projects are assessed using tools that incorporate transition risk, with the aim to identify key sectors industry and E&S specialists to be able to conduct climate scenarios. Our previously developed or regions requiring additional risk mitigation focus climate risk screening for their projects with limited systematic methodology to evaluate the alignment support from the Climate Business Department. of our investments in hard-to-abate sectors with • Physical and transition risk incorporated into Paris Sectors for which physical risk screening has been countries’ NDCs on a project-by-project basis has Alignment approaches and roll-out mainstreamed in this manner include roads, ports been incorporated into our methodology for BB1 and waterways, airports, forestry insurance, pulp and (mitigation). We are evaluating the resilience of our paper, mining, hydropower, solar, wind, manufacturing, portfolio by also considering carbon lock-in risk and In FY22, IFC continued to expand our existing climate water, and sanitation. Methodologies and tools potential stranded asset risk of our investments, in risk management of both physical and transition for adaptation and resilience are currently under a longer time frame than simply our project tenor. risk, by integrating both into IFC’s Paris Alignment development for dairy, waste, financial intermediaries, With each project now assessed for adaptation frameworks. tourism, retail and property (TRP), health and and resilience compliance with Paris Alignment, education, railways, and mass transit sectors. We IFC is building a green, low-carbon, climate In its first year of road testing, the framework for Paris expect to complete the mainstreaming of adaptation resilient portfolio. Alignment of real sector investments, IFC has assessed and resilience assessments for all real sectors starting • Sector level. In addition, we have taken a sectoral 80 percent of real sector projects that were approved in in July 2023, thereby completing the integration of approach with transport as a pilot. IFC is working FY22 for alignment with both mitigation and adaptation physical risk screening into IFC’s operations. to develop methodologies for applying scenario goals of the Paris Agreement. Assessments are analysis to all the modes of transport in which we conducted at the concept development stage to ensure In FY22, IFC has also developed two bespoke tools to invest, starting with roads. The transport model will that the principles of Paris Alignment are enshrined at help industry teams screen in the interim even those allow us to test scenarios by stacking interventions the earliest stages of project development. projects for which sector-specific tools are in various 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. 66 IFC ANNUAL REPORT 2022 stages of development. The GeoViewer tool developed medium size enterprises, women-owned businesses, As noted above, IFC incorporates transition risk into by IFC with support from external consultants, climate-related projects, and housing finance. our Paris alignment process, particularly for the BB1 assesses a project’s exposure to climate hazards based The use of proceeds is disclosed on IFC’s Project (Mitigation component). The assessment process on location and helps climate specialists provide a Information Portal. Through our Approach to Greening includes analysis of consistency with NDCs, long- comprehensive high-level assessment for adaptation Equity Investments for new equity and equity-like term strategies, and regional, national, and sectoral and resilience. It uses over 50 climate indicators investments, IFC seeks to help our financial institution policies on climate change to mitigate policy risk. It and provides data on potential hazards for four clients increase their climate lending and reduce their also explicitly includes analysis of stranded asset and different time horizons based on two Representative exposure to coal-related projects to zero or near-zero carbon lock-in risk as criteria for evaluation of Paris Concentration Pathway (RCP) scenarios for 50th and by 2030. alignment for IFC projects. We continue to develop 66th percentile probability. The Portfolio Sensitivity measures to deepen our assessment and management tool goes one step further and includes factors such Despite our low exposure, IFC is currently examining of transition risk. as supply chain and market exposure to provide high- our portfolio for potentially high-risk projects in level information on potential financial exposure to carbon-intensive sectors, and potential measures to IFC has developed decarbonization pathways for hard- climate hazards. mitigate transition risk in those sectors. The analysis to-abate sectors such as chemicals, power and textiles, is based on historical portfolio data covering the and continues this work for other carbon-intensive We continue to use previously developed tools in last decade of IFC’s business, and both total sectoral sectors. Through our Sustainable Infrastructure further embedding physical risk screening into our emissions and sectoral emissions intensity (based on Advisory program, IFC supports clients to formulate operations, including a forward-looking tool to assess project size). Through this effort, IFC has identified the and implement decarbonization strategies and net the exposure of IFC’s portfolio to key physical climate sectors that comprise our largest carbon exposure: gas zero plans through manageable steps, drawing hazards by sector and country developed in FY21. The distribution, thermal power generation, cement, waste from over 150 separate science-based solutions and dominant drivers in IFC’s most exposed operations treatment and management, chemicals, glass, and tailoring them to each individual client’s needs. IFC include those related to water, such as water stress, animal production. We will be using these categories to offers technical assistance and investment services drought, and flood. This tool was validated using our identify which future projects might potentially need according to the client’s level of maturity and readiness portfolio from 2016 to 2019, which was assessed for to be subject to additional analysis on transition risk. for climate investment, including the development physical climate impact using supervision reports. of low-carbon roadmaps and compliance with IFC continues to use carbon pricing as a measure to sustainable finance principles. We support clients in Transition risk.3 Relative to most large banks manage transition risk and avoid stranded assets. assessing their carbon footprint, setting baselines operating in our markets, IFC has limited exposure Since May 2018, a carbon price has been included in and targets, monitoring and evaluation, developing to fossil fuels and no exposure to coal power the economic analysis of project finance and corporate results measurement frameworks, and complying with generation at utility scale in our portfolio. As of FY22, loans with defined use of proceeds in the cement, international disclosure requirements and standards. renewables represented 69 percent of our power chemicals, and thermal power generation sectors, Our counterparty-based approach for Paris Alignment generation portfolio. IFC follows the WBG practice where estimated annual project emissions are over of financial intermediaries also requires clients to of not investing in greenfield coal power generation. 25,000 tons of carbon dioxide equivalent. IFC includes commit to decarbonization pathways and better In 2019, IFC extended this practice to upstream oil the impact of the carbon price on the project’s climate-related risk management. and gas investments. In the last ten years, IFC has economic performance and viability in Board papers. had no new investments in coal mining or coal power The price levels continue to be consistent with the At IFC, biodiversity risk considerations are generation projects. High-Level Commission on Carbon Prices and with mainstreamed into all IFC projects through the the World Bank. Carbon pricing is also integrated into Environmental and Social Performance Standards. As part of our efforts to address climate risks and our Anticipated Impact Measurement and Monitoring Performance Standard 6 on Biodiversity Conservation minimize indirect exposure to coal-related projects, (AIMM) framework where applicable and will become and Sustainable Management of Living Natural IFC does not provide loans to financial institutions for a standard part of Paris Alignment assessments for Resources and Performance Standard 3 on Resource coal-related activities. To further reduce exposure to mitigation for all projects with annual emissions Efficiency and Pollution Abatement in particular coal, IFC no longer provides general-purpose loans greater than 25,000 tons of carbon dioxide equivalent . address risks associated with deforestation, impact on to financial institutions. Targeted loans are directed species, soil health, pollutants in natural environments, to key strategic sectors, such as micro, small, and water use, and other risks to biodiversity. 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 2022 67 METRICS AND TARGETS Paris Alignment. As discussed previously, IFC sector projects with emissions over 25,000 metric is committed to aligning 85 percent of all new tons of carbon dioxide equivalent, and net emissions What’s New? investments with the goals of the Paris Agreement starting July 1, 2023, and 100 percent of these starting on a project-by-project basis for real sector projects where possible. IFC continues to disclose ex-ante on July 1, 2025. In FY 2022, IFC screened 80 percent of aggregate estimated annual gross GHG emissions real sector projects with defined use of proceeds at through the publicly available Environmental and Social • Climate investments comprised 35 percent of total concept stage for alignment with the Paris Agreement. Review Summary,5 and project level emissions through own account FY22 commitments The assessment covers both mitigation (greenhouse the Project Disclosure Portal in support of Performance • 80 percent of new real sector projects with known gas) and adaptation (risk and resilience) goals of the Standard 3. use of proceeds were assessed for Paris Alignment Paris Agreement. For mitigation, the methodology at Concept Review stage covers Scope 1 and 2, and Scope 3 where significant. IFC has begun developing a transition plan to As discussed above, IFC has also led the MDBs in transfer responsibility for ex-ante absolute GHG • Responsibility for project GHG accounting was designing a Paris Alignment methodology to assess project emissions from the E&S Department to consolidated in Climate Business Department, with intermediated financing, which was finalized in FY the Climate Business Department. This will involve effect from July 2022 2022. The corporation is committed and on track working through the project cycle to improve climate to achieve both 2023 and 2025 targets for real and knowledge management and unite processes for Paris financial sector operations. Alignment, GHG accounting, climate finance, and Climate investments are those that reduce GHG climate impact data assessment for every investment. emissions or increase resiliency, as measured by joint Investment disclosure. IFC reports climate finance The objective is to ensure more consistent, robust MDB guidelines. The Joint MDB Methodology for commitments in this annual report and in the Joint ex-ante GHG estimates using methodologies which are Climate Finance Tracking was updated to account Report on Multilateral Development Banks’ Climate Finance. both feasible and practical for implementation in the for the evolving market context, limit climate-related In our annual Green Bond Impact Report, IFC also reports real world to eventually facilitate ex-post GHG data. risks, and take advantage of new climate opportunities. on the expected environmental impact of projects IFC has applied this updated methodology across financed through the green bonds that IFC issues. As a IFC has been carbon neutral in all our business its operations since July 2021. The revised metrics signatory of the Principles for Responsible Investment operations including business travel (Scope 1 and include detailed criteria and guidance across sectors. (PRI), IFC is mandated to report under PRI’s TCFD- 2 emissions) since FY 2009. Prior initiatives have In October 2021, the methodology was published aligned indicators. cut energy use in IFC’s headquarters by 18 percent as the Common Principles for Climate Mitigation including installing lighting occupancy sensors, Finance Tracking, which are applied to the operations Emissions calculations. IFC continues to estimate adjusting building-wide heating and cooling set points, of all MDBs, including IFC. IFC has been closely and report aggregate GHG emissions reductions from and reducing an hour of heating, cooling, and lighting involved in the development and updating of these IFC investments (Scope 3 emissions). Through the IFI standard operations for the facility. In FY 2019, IFC set methodologies. GHG Accounting Group, IFC works with the UNFCCC, a global, internal carbon-reduction commitment to other MDBs, some commercial banks and bilateral cut our facility-related emissions (Scope 1 and 2) by Climate finance targets. In FY22, IFC’s climate DFIs to harmonize Standards for GHG accounting. 20 percent by 2026, from a 2016 baseline. This target investments comprised 35 percent of total own This includes development of GHG accounting is in line with the World Bank Group’s commitment to account commitments, meeting the corporate target. methodologies and standard emission factors for reduce facility-related emissions by 28 percent over the As part of the CCAP, the World Bank Group announced power grid GHG emissions in more than 100 countries. same period. All remaining emissions are compensated that climate investments4 will comprise, on average, IFC applies the IFI Harmonized Approach to GHG via carbon offsets. 35 percent of IFC’s own-account investments over Accounting and IFI sector-specific approaches, where the FY 2021–25 period. The IFC corporate target is available, to estimate absolute, baseline and relative translated to departmental and regional climate ex-ante GHG emissions where use of proceeds is business targets. defined. IFC estimates gross GHG emissions for all real 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 5. IFC Project Information & Data Portal. https://disclosures.ifc.org/#/landing. 68 IFC ANNUAL REPORT 2022 Essential Information The information in this annex will appear in our online report. 70OUR PEOPLE & PRACTICES 70 Compensation and Benefits 71 Financial Commitments to IFC Advisory Trust Funds 72 Funding 73 Financial Performance Summary IFC ANNUAL REPORT 2022 69 Compensation and Benefits Ensuring competitive compensation and benefits, IFC applies the World Bank Group’s compensation framework. EXECUTIVE COMPENSATION 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 based on local competitiveness as determined by independent local market surveys. Given the World Bank Group’s is determined by the Board of Directors. The salary status as a multilateral organization, staff salaries are determined on a net-of-tax basis. structure for the IFC Managing Director is determined by positioning a midpoint between the salary As of June 30, 2022, the salary structure (net of tax) and annual average net salaries/benefits for World Bank Group structure of staff at the highest level, as determined staff were as follows: annually by independent U.S. compensation market surveys, and the salary of the World Bank Group President. The compensation of our executive Staff Salary Structure and Benefits (Washington, D.C.) leadership is transparent. AVERAGE STAFF AT SALARY/ AVERAGE IFC MD Makhtar Diop received an annual salary of REPRESENTATIVE MINIMUM MIDPOINT MAXIMUM GRADE GRADE BENEFITSa $416,830, net of taxes. GRADES JOB TITLES (US$) (US$) (US$) LEVEL (%) (US$) (US$) GA Office Assistant 29,300 41,800 54,300 0.01% 42,090 20,020 GB Team Assistant, Information Technician 35,100 50,200 65,300 0.07% 49,043 23,328 GC Program Assistant, Information Assistant 43,400 62,000 80,600 5.31% 65,112 30,971 GD Senior Program Assistant, Information Specialist, Budget Assistant 51,500 73,600 95,700 5.69% 79,651 37,887 GE Analyst 70,600 100,900 131,200 9.60% 93,627 44,534 GF Professional 93,400 133,400 173,400 23.60% 121,583 57,832 GG Senior Professional 120,800 172,600 224,400 37.94% 170,215 80,964 GH Manager, Lead Professional 165,300 236,100 306,900 15.02% 239,612 113,973 GI Director, Senior Advisor 254,000 317,500 381,000 2.29% 309,354 147,146 GJ Vice President 301,000 354,100 407,200 0.39% 367,691 174,894 GK Managing Director, Executive Vice President, Senior Vice President 334,600 393,600 452,600 0.08% 416,214 205,741 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. 70 IFC ANNUAL REPORT 2022 Financial Commitments to IFC Advisory Financial Commitments to IFC Blended Finance Trust Funds (US$ MILLION EQUIVALENT) Trust Funds (US$ MILLION EQUIVALENT) Summary FY22 FY21 Governments FY22 FY21 Governments 148.94 179.42 Netherlands 0.00 17.50 Institutional/Multilateral Partners 20.21 31.15 United Kingdom 13.16 53.68 Corporations, Foundations, and NGOs 6.00 0.00 Institutional/Multilateral Partners FY20 FY21 Total 175.16 210.57 Women Entrepreneurs Finance Initiative (We-Fi) 2.27 0.00 Governments FY22 FY21 Corporations, Foundations, and NGOs FY20 FY21 Australia 17.00 3.11 Rockefeller Foundation 25.00 0.00 Austria 5.63 1.32 Total 40.42 71.18 Canada 0.00 3.98 Denmark 2.65 3.28 France 0.00 2.42 Germany 27.85 63.64 Hungary 0.00 10.00 Ireland 1.08 0.71 Japan 8.93 37.14 Korea, Republic of 0.00 9.00 Netherlands 1.08 21.09 Norway 2.27 8.63 Sweden 6.57 1.19 Switzerland 68.67 3.80 United Kingdom 0.51 10.11 United States 6.71 0.00 Total 148.94 179.42 Institutional/Multilateral Partners FY22 FY21 European Commission (EC) 5.56 28.07 Global Environment Facility (GEF) 4.20 0.00 Global Infrastructure Facility (GIF) 1.77 3.08 Women Entrepreneurs Finance Initiative (We-Fi) 8.68 0.00 Total 20.21 31.15 Corporations, Foundations, and NGOs FY22 FY21 Bill & Melinda Gates Foundation 1.00 0.00 Rockefeller Foundation 5.00 0.00 Total 6.00 0.00 IFC ANNUAL REPORT 2022 71 Funding FY22 TOTAL BORROWING AMOUNT (US$ CURRENCY EQUIVALENT) % IFC raises funds in the international capital markets for U.S. dollar USD 3,868,000,000 42.5% private sector lending and to safeguard IFC’s triple-A Australian dollar AUD 1,652,917,600 18.2% credit ratings by ensuring adequate liquidity. British pound GBP 926,742,000 10.2% Issuances include benchmark bonds in core currencies New Zealand dollar NZD 416,580,000 4.6% such as U.S. dollars, thematic issuances to promote Canadian dollar CAD 400,320,256 4.4% strategic priorities such as addressing climate change, Kazakhstani tenge KZT 226,445,877 2.5% and issuances in emerging-market currencies to support the development of capital markets. Most Chinese yuan (Renminbi) CNY 224,590,011 2.5% of IFC’s lending is denominated in U.S. dollars, but we borrow in many currencies to diversify access to Euro EUR 202,905,123 2.2% funding, reduce borrowing costs, and encourage the Hong Kong dollar HKD 166,350,130 1.8% growth of local capital markets. Hungarian forint HUF 160,327,027 1.8% Japanese yen JPY 138,544,454 1.5% Mexican peso MXN 107,120,278 1.2% Uzbekistani so'm UZS 103,816,836 1.1% Other 508,650,343 5.6% Grand Total 9,103,309,935 100% 72 IFC ANNUAL REPORT 2022 Financial Performance Summary The overall market environment has a significant influence on IFC’s financial performance. The main elements of IFC’s net income and other comprehensive income, and influences on the level and variability of net income and other comprehensive income from year to year are: ELEMENTS SIGNIFICANT INFLUENCES Net income: 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 nonaccrual status, and income from participation notes on individual loans are also included in income from loans. Liquid asset income Realized and unrealized gains and losses on the liquid asset portfolios, in particular the portion of the liquid asset portfolio 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. 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. 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 for-sale debt securities and disbursement assumption estimates as well as expected utilization rates. 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, the approved and actual administrative expenses, and other budget resources. 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 instruments accounted for at fair value instruments and unrealized gains or losses associated with the investment portfolio including puts, warrants, and stock options, 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 Fair Value Option are recorded. Unrecognized net actuarial gains and losses and Returns on pension plan assets and the key assumptions that underlay projected benefit obligations, including financial unrecognized prior service costs on benefit plans market interest rates, staff expenses, past experience, and management’s best estimate of future benefit cost changes and economic conditions. IFC ANNUAL REPORT 2022 73 IFC reported a net loss of $464 million in FY22, primarily driven by lower treasury income as a Change in Net Income in FY22 vs FY21 (US$ MILLIONS) result of sharply rising yields for U.S. Treasuries since January 2022. In comparison, IFC's net , income of $4.2 billion in FY21 had a substantial component of unrealized gains on investments of $3.3 billion, when the markets rebounded post the immediate effect of COVID-19. The $4.7 billion decrease in FY22 when compared to , FY21 was principally a result of the following: , , , , , , , Equity Unrealized Total Provision Unrealized Net Administrative Others** Change in Income Gains on Income for Losses Gains on Treasury Expenses & Net Income Equity from Loans on Loans Loans and Income* Pensions Investments and Debt and Debt Debt Securities* Securities Securities * Total income from loans and debt securities and net treasury income are net of allocated charges on borrowings. ** Others mainly represents foreign exchange gains/losses, unrealized gains/losses on borrowings (net of swaps), service fees, and net advisory service expenses. 74 IFC ANNUAL REPORT 2022 Equity investment portfolio returned $208 million in pension expenses were partially offset by a $47 million increase in administrative expenses primarily from higher FY22 compared to $3.2 billion in FY21. The FY22 return travel costs and support fees. comprised dividends ($183 million), realized gains on sales ($642 million) and unrealized losses ($617 million). IFC’s net (loss) income for each of the past three fiscal years is presented below: Net unrealized losses were $617 million in FY22 mainly due to reclassifying gains from unrealized to realized upon sales and to a lesser extent driven by valuation IFC's Net (Loss) Income FY20–FY22 changes, as compared to unrealized gains of $2.6 billion in FY21 when the markets rebounded post the Fiscal year ended June 30 (US$ millions) immediate effect of COVID-19. 2020 (1,672) Net income from loans, debt securities and associated 2021 4,209 derivatives was $1.1 billion in FY22 as compared 2022 (464) to $2.2 billion in FY21. IFC recorded a provision of $140 million in FY22 compared to a release of provision of $198 million in FY21. The provision in FY22 comprised: (1) a qualitative overlay of $135 million for estimated IFC uses Income Available for Designations (a non-U.S. GAAP measure) as a basis for designations of retained provisions due to the impact of the war in Ukraine earnings. Income Available for Designations generally comprises net income excluding unrealized gains and losses and other compounding global crises which have not on investments and borrowings1 and grants to IDA. yet been reflected in the model calculated reserves and cannot be directly attributed to any individual borrowers; (2) a release of the previous qualitative Reconciliation of reported Net (Loss) Income to Income overlay of $40 million related to COVID-19; and (3) Available for Designations a provision for individual and portfolio losses of $45 million. Net unrealized losses on loan and debt (US$ MILLIONS) FY22 FY21 FY20 securities were $123 million, as compared to unrealized Net (loss) income $ (464) $ 4,209 $ (1,672) gains of $735 million in FY21, reflecting a reversal of unrealized gains on debt securities of $197 million Adjustments to reconcile Net (loss) income to Income Available for Designations when it was reclassified from debt security to equity investment upon its IPO in FY22 Q1 and widening of the Unrealized losses (gains) on investments 740 (3,285) 2,026 Credit Default Swap (CDS) spreads in FY22. Unrealized losses (gains) on borrowings 106 (71) 218 Grants to IDA – 213 – IFC reported a loss of $521 million on liquid assets in FY22, net of allocated charges on borrowings, Income available for designations $ 382 $ 1,066 $ 572 compared to an income of $224 million in FY21. The FY22 net loss was mainly driven by sharply rising yields for U.S. Treasuries since January 2022. FY21 income benefited from the significant tightening of credit spreads which was not repeated in FY22. Administrative and pension expenses decreased by $46 million from $1.41 billion in FY21 to $1.36 billion in FY22 mainly due to decrease in pension expenses of $93 million, primarily driven by the higher asset return in FY21, which resulted in lower amortization of unrecognized actuarial losses during FY22. The lower 1. Unrealized gains and losses on investments and borrowings presented in the table above includes unrealized gains and losses from associated derivatives. IFC ANNUAL REPORT 2022 75 Summary of Financial Results (US$ MILLIONS) AS OF AND FOR THE FISCAL YEARS ENDED JUNE 30 2022 2021 2020 Consolidated income highlights: Income from loans and guarantees, including realized gains and losses on loans and associated derivatives $ 1,156 $ 1,116 $ 1,510 (Provision) release of provision for losses on loans, off-balance sheet credit exposures and other receivables (126) 201 (638) Income (loss) from equity investments and associated derivatives 208 3,201 (1,067) Income from debt securities, including realized gains and losses on debt securities and associated derivatives 414 340 231 Provision for losses on available-for-sale debt securities (14) (3) – (Loss) income from liquid asset trading activities (413) 327 1,039 Charges on borrowings (302) (326) (1,181) Other income 419 595 559 Other expenses (1,653) (1,687) (1,628) Foreign currency transaction gains (losses) on non-trading activities 76 (148) 144 (Loss) income before net unrealized gains on non-trading financial instruments accounted for at fair value and grants to IDA (235) 3,616 (1,031) Net unrealized (losses) gains on non-trading financial instruments accounted for at fair value (229) 806 (641) (Loss) income before grants to IDA (464) 4,422 (1,672) Grants to IDA – (213) – Net (loss) income $ (464) $ 4,209 $ (1,672) Consolidated balance sheet highlights: Total assets $ 99,010 $ 105,264 Liquid assets portfolioa 41,717 41,696 Investments 44,093 44,991 Borrowings outstanding, including fair value adjustments 48,269 55,699 Total capital $ 32,805 $ 31,244 of which Undesignated retained earnings $ 10,840 $ 11,395 Designated retained earnings 298 207 Accumulated other comprehensive (loss) income (AOCI) (82) (1,118) Paid-in capital 21,749 20,760 a. Net of securities sold under repurchase agreements, payable for cash collateral received and associated derivatives. 76 IFC ANNUAL REPORT 2022 Key Financial Ratios COMMITMENTS (US$ IN BILLIONS, EXCEPT RATIOS) 2022 2021 Long-Term Finance Commitments comprise Own Account and Core Mobilization and totaled $23.2 billion Overall liquidity ratio a 111% 114% in FY22, a decrease of $140 million or 1 percent from Debt-to-equity ratiob 1.6 2.1 FY21. IFC's FY22 Long-Term Finance Own Account Total reserve against losses on loans to total disbursed portfolio c 4.4% 4.9% Commitments were $12.6 billion ($12.5 billion in FY21) Capital measures: and Core Mobilization was $10.6 billion ($10.8 billion in FY21). Short-Term Finance Commitments were Capital availabled 32.5 30.7 $9.7 billion in FY22, as compared to $8.2 billion at FY21. Capital requirede 20.1 20.5 Total program delivery (LTF and STF) was $32.8 billion Capital Utilization Ratio f 62.0% 66.6% in FY22 as compared to $31.5 billion in FY21. a. Overall Liquidity Policy states that IFC would at all times maintain a minimum level of liquidity, plus In direct response to the COVID-19 pandemic, IFC undrawn borrowing commitments from the IBRD, such that it would cover at least 45 percent of the next three years’ estimated net cash requirements. committed $5.3 billion in FY22 including $1.6 billion b. Debt-to-equity (leverage) ratio is defined as outstanding borrowings plus committed guarantees divided under its Fast Track COVID-19 Facility in support by total capital (comprised of paid-in capital, retained earnings and Accumulated other comprehensive of IFC’s existing clients. Outside of the facility, IFC loss). The definition of debt-to-equity ratio (leverage ratio) was updated effective FY22 Q1 (the three- committed $3.7 billion in financing to support clients month period ended September 30, 2021) in line with the updates to IFC's capital adequacy framework. in response to COVID-19. In FY21, IFC committed As a result, the debt-to-equity ratio as of June 30, 2022 is not directly comparable to prior years. The debt-to-equity ratio under the updated definition as of June 30, 2021 would have been 1.9. For additional $2.3 billion under the Fast Track COVID-19 Facility and information regarding IFC's new Economic Capital (EC) Framework, see Section I Executive Summary. additional $8.5 billion outside of the facility. c. Total reserve against losses on loans to total disbursed loan portfolio is defined as reserve against losses on loans as a percentage of the total disbursed loan portfolio. CORE MOBILIZATION d. Capital available: Under IFC’s economic capital framework, resources available to absorb potential losses, calculated as: Balance Sheet Capital less Designated Retained Earnings. Core Mobilization is financing from entities other than e. Capital required: Aggregate minimum Economic Capital required to maintain IFC’s AAA rating. IFC that becomes available to clients due to IFC’s direct f. Starting in the three months ended September 30, 2021 (FY22 Q1), IFC uses CUR, defined as (Capital involvement in raising resources. Required divided by Capital Available), as a measurement of capital adequacy under IFC's updated capital adequacy framework. The CUR replaces the previous Deployable Strategic Capital (DSC) ratio. CUR and DSC ratio have a one-to-one mapping expressed as (CUR = 90% – DSC ratio). For additional information regarding IFC's new EC Framework, see Section I Executive Summary. Long-Term Finance Commitments (Own Account and Core Mobilization) and Short-Term Finance (US$ MILLIONS) FY22 FY21 Long-Term Finance Commitments (Own Account and Core Mobilization) and Short-Term Finance $ 32,824 $ 31,500 Long-Term Finance Own Account Commitments 12,569 12,474 Core Mobilization 10,596 10,831 Short-Term Finance Commitments 9,659 8,195 IFC ANNUAL REPORT 2022 77 Asset Management Company (AMC) Funds Managed by AMC THROUGH JUNE 30, 2022 TOTAL FUNDS RAISED SINCE INCEPTION FOR THE YEAR ENDED JUNE 30, 2022 FROM CUMULATIVE INVESTMENT INVESTMENT OTHER INVESTMENT COMMITMENTS DISBURSEMENTS (US$ MILLIONS) TOTAL FROM IFC INVESTORS COMMITMENTSa MADE BY FUNDb MADE BY FUND Investment Period IFC Financial Institutions Growth Fund, LP (FIG Fund) $ 505 $ 150 $ 355 $ 347 $ 90 $ 138 IFC Emerging Asia Fund, LP (Asia Fund) 693 150 543 559 187 197 Investment Period Total 1,198 300 898 906 277 335 Post Investment Period IFC Capitalization (Equity) Fund, LP (Equity Capitalization Fund) 1,275 775 500 1,214 – – IFC Capitalization (Subordinated Debt) Fund, LP (Sub-Debt Capitalization Fund) 1,725 225 1,500 1,614 – – 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 (Japan), LP (collectively, Catalyst Funds) 418 75 343 363 – 7 IFC Global Infrastructure Fund, LP (Global Infrastructure Fund) C 1,430 200 1,230 929 – – 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 Women Entrepreneurs Debt Fund, LP (WED Fund) 115 30 85 110 – – IFC Middle East and North Africa Fund, LP (MENA Fund) 162 60 102 82 4 13 China-Mexico Fund, LP (China-Mexico Fund) 1,200 – 1,200 362 47 47 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 $519 Net of commitment cancellations. a. b. Excludes commitment cancellations from prior periods. c. Includes co-investment fund managed by AMC on behalf of Fund LPs. 78 IFC ANNUAL REPORT 2022 Asset Management Company (AMC) Funds Managed by AMC THROUGH JUNE 30, 2021 TOTAL FUNDS RAISED SINCE INCEPTION FOR THE YEAR ENDED JUNE 30, 2021 FROM CUMULATIVE INVESTMENT INVESTMENT OTHER INVESTMENT COMMITMENTS DISBURSEMENTS (US$ MILLIONS) TOTAL FROM IFC INVESTORS COMMITMENTSa MADE BY FUNDb MADE BY FUND Investment Period IFC Financial Institutions Growth Fund, LP (FIG Fund) $ 505 $ 150 $ 355 $ 259 $ 81 $ 45 IFC Middle East and North Africa Fund, LP (MENA Fund) 162 60 102 78 12 7 IFC Emerging Asia Fund, LP (Asia Fund) 693 150 543 374 203 127 Investment Period Total 1,360 360 1,000 711 296 179 Post Investment Period IFC Capitalization (Equity) Fund, LP (Equity Capitalization Fund) 1,275 775 500 1,214 – – IFC Capitalization (Subordinated Debt) Fund, LP (Sub-Debt Capitalization Fund) 1,725 225 1,500 1,614 – – IFC African, Latin American and Caribbean Fund, LP (ALAC Fund) 1,000 200 800 876 – 2 IFC Catalyst Fund, LP, IFC Catalyst Fund (UK), LP and IFC Catalyst Fund (Japan), LP (collectively, Catalyst Funds) 418 75 343 363 – 24 IFC Global Infrastructure Fund, LP (Global Infrastructure Fund) C 1,430 200 1,230 929 – – 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 – 112 Women Entrepreneurs Debt Fund, LP (WED Fund) 115 30 85 110 – – China-Mexico Fund, LP (China-Mexico Fund) 1,200 – 1,200 350 30 17 Post Investment Period Total 7,963 1,655 6,308 6,213 30 155 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 $7,136 $326 $334 Net of commitment cancellations. a. b. Excludes commitment cancellations from prior periods. c. Includes co-investment fund managed by AMC on behalf of Fund LPs. IFC ANNUAL REPORT 2022 79 IFC ONLINE CREDITS IFC website IFC Annual Report Team: Photography: ifc.org Steven Shalita Cover Page 37 Annual Report Director, IFC Communications saravutvanset/Getty Eka Nickmatulhuda/IFC ifc.org/AnnualReport & Outreach Page 3 Pages 38–39 Social Media Index John Donnelly Grant Ellis/World Bank Dominic Chavez/IFC ifc.org/SocialMediaIndex Senior Adviser, IFC Communications & Outreach Page 4 Pages 40–41 Facebook Jacek Waszkiewicz/ Marcelo Scandaroli/Illuminati facebook.com/IFCwbg Jim Rosenberg World Bank Films and Photos/IFC Head of Corporate Twitter Communications Page 6 Page 42 twitter.com/IFC_org IFC photo owngarden/Getty Pierre Mejlak LinkedIn Head of Media & Digital Page 9 Page 43 linkedin.com/company/IFClinkedin David Hills/IFC TAJ Photoz/Shutterstock Jennine Meyer YouTube Editor Pages 16–17 Page 44 youtube.com/c/InternationalFinanceCorporation Mirela Momanu/IFC Jono Erasmus/Shutterstock Rob Wright Instagram Writing, Design and Production Page 19 Page 45 instagram.com/IFC_org/ Courtesy of Twiga Foods Dominic Chavez/IFC Victoria Solan Medium Editorial Consultant Pages 20–23 Pages 46–47 medium.com/@ifc-org IFC staff photos Diego Dussan/IFC Vinit Tyagi IFC photo SoundCloud Online Coordinator Pages 26–27 soundcloud.com/IFC_org Anindito Mukherjee/IFC Page 47 Berrin Akyildiz John White Photos/Getty Communications Analyst Page 28 Евгения Матвеец /Getty Page 48 Charlotte Doyle Mint Images/Getty Communications Analyst Page 29 Kevin Phillips/Getty Page 49 Melanie Mayhew Susan B Sheldon/Shutterstock Senior Communications Page 30 Officer, Creative Productions Saba Rahman/IFC Aaron Rosenberg Page 31 Chief of Public Affairs Marcelo Scandaroli/Illuminati Films and Photos/IFC Brenna Lundstrom Nadia Bseiso/IFC Public Affairs Pages 32–33 Design: Nyani Quarmyne/Panos Addison www.addison.com Pages 34 Oliver Weiken/IFC Printing: Sandy Alexander Pages 35 www.sandyinc.com Emidio Josine/IFC Translation: Page 36 World Bank Group —  Morsa Images/Getty Global Corporate Solutions — Translation and Interpretation International Finance Corporation 2121 Pennsylvania Avenue, NW Washington, DC 20433 USA ifc.org 60 IFC ANNUAL REPORT 2022