IFC, a member of the World Bank Group, has announced that it has exceeded USD 10 billion in climate finance investments in financial institutions in developing markets since 2006, a milestone that echoes the Corporation’s commitment to green finance and the increasing demand in financial markets for climate-smart investments.
The USD 10 billion in investments in financial institutions has sustained more than USD 50 billion in climate-related projects. Over half of the USD 10 billion transpired in the last three years alone.
This milestone is vital to IFC’s broader climate strategy. Overall, IFC provided USD 5.8 billion in climate-smart financing in fiscal 2019, including USD 3.2 billion mobilized from other investors. This accounted for 30 percent of the Corporation’s total commitments for the year. In the last five years, IFC’s total climate business commitments have amounted to USD 29.9 billion.
Mobilizing private capital will be critical to funding climate action, avoiding the catastrophic consequences of climate change, and delivering broad-based growth. The World Bank Group’s target is to invest and mobilize USD 200 billion over 2021-2025 to help countries address climate adaptation and resilience, doubling its commitments from the previous five years
The USD 10-billion-plus in commitments to financial institutions, together with the advisory services IFC has provided since FY06, has led to pioneering projects in renewable energy, green buildings, and capital markets. It has also enabled an estimated annual reduction of 75 million tons in greenhouse gas (GHG) emissions from emerging markets. This is the equivalent to the annual GHG emissions of Austria or New Zealand.
Reaching USD 10 billion in climate finance investments in financial institutions in emerging markets is an important milestone for IFC, said Paulo de Bolle, senior director of IFC’s Global Financial Institutions Group.
“All of these investments align with the World Bank Group’s broader development priorities—whether it is increasing the productivity of enterprises through energy efficiency investments, boosting energy access through renewables, or providing affordable housing through green buildings,” Bolle added.
IFC achieved another important milestone in September when it crossed the USD 10 billion threshold in cumulative green bond issuance on its balance sheet. Since 2010, IFC has issued 157 green bonds, totaling USD 10.1 billion.
A recently concluded IFC FIG Climate survey provided new evidence of climate finance’s growing momentum. Of the 129 client financial institution respondents: 39 percent now track their climate portfolio with a climate impact tool (up from 18 percent in FY16); 90 percent say that they have the same or lower level of non-performing loans in their climate portfolios versus their non-climate portfolios; 72 percent say they have the same or higher profitability in their climate portfolios versus their non-climate portfolios; and 64 percent are interested in issuing green bonds.
“IFC’s green finance business continues to grow and allows for us to achieve our ambitious climate targets,” said Alzbeta Klein, Director of IFC’s Climate Business Department. “The magnitude of these investments demonstrates the rising interest in climate-smart financial instruments and provides strong momentum for the future.”
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