Disclosure Statement: Fourth Annual Update
Operating Principles for Impact Management
International Finance Corporation
October 31, 2023
The International Finance Corporation (IFC) is a founding signatory to the Operating Principles for
Impact Management (the Impact Principles). The Impact Principles provide a reference point against
which the impact management systems of funds and institutions may be assessed. They draw onemerging best practices from a range of asset managers, asset owners, asset allocators, anddevelopment finance institutions.
This Disclosure Statement affirms that IFC’s core/client business, including (a) impact management
systems; (b) policies and practices; and (c) investment services (including debt, equity, trade andsupply chain finance, asset management, syndications, derivatives and structured finance, andblended finance instruments) are managed in alignment with the Impact Principles. Total assets
under management in alignment with the Impact Principles is US$92,111 million1 as of June 30,
2023.23

IFC Managing Director

1

Includes the following amounts:─ Portfolio exposure (includes debt, equity, trade and supply chain finance, derivatives, and structured finance in IFC’s own
account investment portfolio; exposure is defined as the sum of the (i) committed exposure for IFC’s debt
investments, (ii) fair market value of IFC’s equity investments, and (iii) total undisbursed equity commitments): $70,069
million as of 6/30/2023.
─ Syndications third-party investor portfolio (includes B Loans, agented parallel loans, Managed Co-Lending Portfolio
Program loans, A Loan participations, unfunded risk participations, and credit insurance policies): $15,312 million as of
6/30/2023;
─ IFC Asset Management Company (composed of assets under management): $2,763 million as of 6/30/2023; and─ Blended finance (blended finance resources applied to investment projects): $3,967 million, as of 6/30/2023.
2
Excluding liquidity management.
3
The sole purpose of this Disclosure Statement is to fulfill IFC’s obligations pursuant to Principle 9. This document shall notconstitute and should not be construed as an offer, solicitation, or invitation to buy or sell any securities, financial instruments
or services whether described herein or otherwise, or as any prospectus or investment- related advice in relation thereto, nor is
it intended to form the basis of a decision to participate in any investment. IFC makes no guarantee or other promise as to any
outcomes, including any financial or development impact results that may be obtained from the practices disclosed in thisstatement. While past performance may be analyzed in this Disclosure Statement, past performance should not be considered
indicative of future performance. Accordingly, IFC shall not have any liability to any of the recipients of this DisclosureStatement, nor to any other party in connection with or arising in any way from, or in relation to, the information or any
opinions expressed in this Disclosure Statement, and IFC does not accept any responsibility whatsoever for any action taken, oromitted to be taken by any party on the basis of any matter contained in, or omitted from, the Disclosure Statement.

1Principle 1 – Define strategic impact objective(s), consistent with the investment strategy: The
Manager shall define strategic impact objectives4 for the portfolio or fund to achieve positiveand measurable social or environmental effects, which are aligned with the Sustainable
Development Goals (SDGs), or other widely accepted goals. The impact intent does not need to
be shared by the investee. The Manager shall seek to ensure that the impact objectives andinvestment strategy are consistent; that there is a credible basis for achieving the impact
objectives through the investment strategy; and that the scale and/or intensity of the intended
portfolio impact is proportionate to the size of the investment portfolio.
•

IFC – a sister organization of the World Bank and member of the World Bank Group(WBG) – is the largest global development institution focused exclusively on the private
sector in developing countries. The WBG has set two goals it aims to help the world
achieve by 2030: end extreme poverty and promote shared prosperity in every country.

•

Through direct investment services, IFC provides private sector solutions that lay thefoundation for sustainable and inclusive economic growth.

•

IFC formulates country strategies to define areas of focus and deployment of resources toaddress development challenges in individual countries. IFC also develops global sector
strategies to inform how the Corporation engages in specific sectors in general, whichthen informs how IFC focuses on these sectors at the country level. Underlying thesecountry and sector strategies are a suite of country and private sector diagnostics andanalytical work, which focuses on identifying constraints to private sector investment andoperations.

•Throughout the investment decision-making process, the delivery of development impact
is a key factor in IFC’s project selection and design criteria.5 Specifically, IFC’s
development impact rating system, the Anticipated Impact Measurement and Monitoring(AIMM) system, helps IFC consider the quantum of impact expected from a prospective
investment decision in the context of the relevant development gap the country faces. The
AIMM system has a line of sight to the SDGs and the expected development outcomescan be mapped to SDG targets.

Principle 2 – Manage strategic impact on a portfolio basis: The Manager shall have a process
to manage impact achievement on a portfolio basis. The objective of the process is to establish
and monitor impact performance for the whole portfolio, while recognizing that impact mayvary across individual investments in the portfolio. As part of the process, the Manager shallconsider aligning staff incentive systems with the achievement of impact, as well as withfinancial performance.
•

IFC pursues a “portfolio approach” that guides project selection and design. The portfolio
approach allows IFC to achieve its development objectives and maintain financial

4

Impact objectives can be defined as the intended impact that contributes to financial, institutional, social, environmental, orother benefits to a society, community, or group of people via one or more investment. Adapted from OECD-DAC(www.oecd.org/dac/).
5
See footnote 3.

2

sustainability, recognizing possible trade-offs between these objectives across projects.
The AIMM system is an integral tool for IFC to pursue the portfolio approach. By
combining AIMM scores – which measure impact – with financial return data, IFC isbetter positioned to build an asset allocation model, strengthening its capacity to pursue
the portfolio approach.
•

IFC manages its performance through a corporate scorecard which is cascaded into
departmental scorecards and objectives for Vice Presidents, Directors, Managers, andstaff. The scorecard includes targets for portfolio financial and impact performance, thelatter measured by average AIMM scores. Departmental awards are linked to theachievement of scorecard targets. Corporate performance awards provide additional
incentives for delivering high-impact transactions, with environmental and social (E&S)
accountability being one area of emphasis.

Principle 3 – Establish the Manager’s contribution to the achievement of impact: The
Manager shall seek to establish and document a credible narrative on its contribution to theachievement of impact for each investment. Contributions can be made through one or morefinancial and/or non-financial channels.6 The narrative should be stated in clear terms andsupported, as much as possible, by evidence.
•

IFC assesses the expected development impact contribution of its investment operations
using the AIMM framework. IFC considers AIMM scores alongside expected financial
performance in its investment decisions. In addition to the project- and market-level
effects generated by IFC’s investments, IFC’s client engagement, financial mobilization,
and advisory services also contribute to the development impact of IFC’s interventions. In
particular, IFC provides advisory services to clients and at the market level related tosustainability and environmental, social and governance (ESG) matters.

•

Additionally, all IFC investment operations must demonstrate additionality,7 which refers
to the unique contribution that IFC brings to a private investment project that is not
typically offered by sources of finance that pursue only commercial objectives. Thisadditionality may take financial and/or non-financial forms. Together with the assessmentof potential impact through the AIMM system, this establishes IFC’s contribution to theachievement of impact.

•

Additionality is a threshold condition for IFC involvement in a project, it is not a policy oran objective, but rather a requirement embedded in Article III of IFC’s Articles ofAgreement, which states that “the Corporation shall not undertake any financing forwhich in its opinion sufficient private capital could be obtained on reasonable terms.”89

6For example, this may include improving the cost of capital, active shareholder engagement, specific financial structuring,assisting with further resource mobilization, providing technical/market advice or capacity building to the investee, and/or
helping the investee to meet higher operational standards.
7
See: footnote 3.
8
See: https://www.ifc.org/ArticlesOfAgreement
9
See: footnote 3.

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Principle 4 – Assess the expected impact of each investment, based on a systematic approach: Foreach investment the Manager shall assess, in advance and, where possible, quantify the concrete,
positive impact10 potential deriving from the investment. The assessment should use a suitable
results measurement framework that aims to answer these fundamental questions: (1) What is theintended impact?11 (2) Who experiences the intended impact? (3) How significant is the intended
impact?11 The Manager shall also seek to assess the likelihood of achieving the investment’s
expected impact. In assessing the likelihood, the Manager shall identify the significant risk factorsthat could result in the impact varying from ex-ante expectations. In assessing the impact potential,
the Manager shall seek evidence to assess the relative size of the challenge addressed within thetargeted geographical context. The Manager shall also consider opportunities to increase the impactof the investment. Where possible and relevant for the Manager’s strategic intent, the Manager may
also consider indirect and systemic impacts. Indicators shall, to the extent possible, be aligned withindustry standards12 and follow best practice.13•

The AIMM system is IFC’s project impact assessment tool which allows IFC to estimate
the expected development impact of its interventions at their initial stage, when they arestill being developed.14 This approach gives IFC the capacity to set ambitious yetachievable targets, identify projects with the greatest potential for development impact
and financial sustainability, and optimize project design.15 Each new IFC investment is
assigned an ex- ante AIMM score that reflects the project’s potential for deliveringdevelopment outcomes. The assessment requires IFC investment teams, with support
from dedicated sector economists, to articulate the extent of the development challenge tobe addressed, the associated intend impact of the proposed investment, the parties that are
affected by such impact, and the intensity of the effects that flow from the intervention.

•

The AIMM system assesses impact along two dimensions: project- and market-level
effects; and assigns to each an estimate of the likelihood of achieving impact.

•

The AIMM impact assessments also take into consideration country and market context.
IFC situates all development impact claims against defined development gaps or stage ofmarket development (i.e., the relative size of the development challenge that IFC isseeking to address with its intervention). The overall potential impact assessment isanchored by this context determination.

•

The AIMM system also connects IFC’s ex-ante assessments with a results measurement
system that tracks actual impact during implementation. By using project and market

10

Impact is considered the material effect/s on people and the environment resulting from the investment, as outlined in
Principle 1. Impacts assessed under Principle 4 may also include positive ESG effects derived from the investment.
11
Adapted from the Impact Management Project (www.impactmanagementproject.com).
12
Industry indicator standards include HIPSO (https://indicators.ifipartnership.org/about/); IRIS
(https://iris.thegiin.org/); GIIRS (https://b-analytics.net/giirs-funds); GRI(https://www.globalreporting.org/standards/); and SASB (www.sasb.org), among others.
13International best practice indicators include SMART (Specific, Measurable, Attainable, Relevant, and Timely),
and SPICED (Subjective, Participatory, Interpreted & communicable, Cross-checked, Empowering, and Diverse &disaggregated), among others.
14
See: https://www.ifc.org/AIMM
15
See: footnote 34

indicators identified ex-ante, IFC measures progress against the achievement of projectand market-level claims.
Principle 5 – Assess, address, monitor, and manage potential negative impacts of each
investment: For each investment the Manager shall seek, as part of a systematic and documented
process, to identify and avoid, and if avoidance is not possible, mitigate and manage
Environmental, Social and Governance (ESG)16 risks. Where appropriate, the Manager shallengage with the investee to seek its commitment to take action to address potential gaps in current
investee systems, processes, and standards, using an approach aligned with good international
industry practice.17 As part of portfolio management, the Manager shall monitor investees’ ESG
risk and performance, and where appropriate, engage with the investee to address gaps andunexpected events.
•

IFC’s Sustainability Framework18 articulates IFC’s approach to environmentally andsocially sustainable development and is an important component in the effort to achieve
positive development outcomes in IFC investment activities. IFC’s ESG approach also
includes its Corporate Governance Methodology (CGM),19 which forms the basis of thecorporate governance risk assessment in IFC investment activities.

•

The Sustainability Framework includes a Sustainability Policy that defines IFC’s
commitments and responsibilities and eight Performance Standards (“PSs”)20 that define
IFC’s clients’ responsibilities for managing the E&S risks of their operations.

•

It also includes the Access to Information Policy (“AIP”) describing IFC’s commitment totransparency and disclosure. In support of these policies, IFC has developed andcontinually develops guidance and procedures.

•

IFC undertakes E&S due diligence on all its investments and only finances investment
activities that are expected to meet the requirements of the PSs over a reasonable periodof time.

•IFC uses a categorization system (A, B, C for its direct investments and FI-1, FI-2, FI-3
for investments through financial intermediaries (FIs)) that allow it to assess the potential
magnitude of E&S risks of its investments and thereby allocate resources and determine
approval processes according to risk. E&S project due diligence is subject to multiple
elements of quality control and assurance.

16

The application of good ESG management will potentially have positive impacts that may or may not be theprincipal targeted impacts of the Manager. Positive impacts resulting from ESG matters shall be measured andmanaged alongside with, or directly embedded in, the impact management system referenced in The Impact
Principles 4 and 6.
17
Examples of good international industry practice include: IFC’s Performance Standards(www.ifc.org/performancestandards ); the United Nations Guiding Principles for Business and Human Rights(https://www.unglobalcompact.org/library/2); and the OECD Guidelines for Multinational Enterprises(http://mneguidelines.oecd.org/themes/human-rights.htm).
18
See: www.ifc.org/sustainabilityframework
19
IFC’s Corporate Governance Methodology (www.ifc.org/cgmethodology)
20
See: www.ifc.org/performancestandards

5•For direct investments, IFC’s E&S due diligence is commensurate with the nature, scale,and stage of the business activity, and with the level of E&S risks and impacts. IFC
conducts due diligence of all new direct investments that are being considered for IFC
support, whether in the design, construction, or operational stage.21•

For investments in FIs, E&S due diligence requires the review of the existing portfolio
and prospective business activities of its FI clients to identify those that could entail
serious E&S risks and defines requirements for managing them. IFC reviews theimplementation capacity of FI clients as well as their E&S management system.22•

Additionally, for each investment, IFC evaluates the corporate governance practices ofinvestee companies based on its CGM. The CGM is an approach to evaluate and improvethe corporate governance of a company—including the governance attributes of key
environmental and social policies and procedures—to identify, reduce, and manage risk.
Its use can help a company confirm its commitment to demonstrate leadership andpromote effective environmental, social, and corporate governance throughout thecompany. The CGM includes the assessment of six key CG parameters: (1) Commitment
to Environmental, Social, and Governance, (2) Structure and Functioning of the Board of
Directors, (3) Control Environment (4) Disclosure and Transparency, (5) Treatment of
Minority Shareholders, and (6) Governance of Stakeholder Engagement.

•

Created in 1999, the Office of the Compliance Advisor Ombudsman (CAO) is theindependent recourse and accountability mechanism of IFC and Multilateral Investment
Guarantee Agency (MIGA) for social and environmental concerns. The IFC/MIGA
Independent Accountability Mechanism (CAO) Policy (the CAO Policy) outlines CAO’s
purpose, mandate and functions, core principles, governance, and operating procedures.23
The mandate of the CAO is to facilitate the resolution of complaints from people who
may be affected by IFC/MIGA supported projects in a manner that is fair, objective, andconstructive; to enhance the E&S outcomes of projects in which those institutions play arole; and to foster public accountability and learning to enhance the E&S performance of
IFC/MIGA and reduce the risk of harm to people and the environment.24

IFC’s Sustainability Policy, para 26.
IFC’s Sustainability Policy, para 34.
23
https://documents1.worldbank.org/curated/en/889191625065397617/pdf/IFC-MIGA-IndependentAccountabilityMechanism-CAO-Policy.pd
24
See: Section 7(c) of the CAO Policy.
21
22

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Principle 6 – Monitor the progress of each investment in achieving impact against expectations
and respond appropriately: The Manager shall use the results framework (referenced in Principle
4) to monitor progress toward the achievement of positive impacts in comparison to the expected
impact for each investment. Progress shall be monitored using a predefined process for sharing
performance data with the investee. To the best extent possible, this shall outline how often data
will be collected; the method for data collection; data sources; responsibilities for data collection;and how, and to whom, data will be reported. When monitoring indicates that the investment is
no longer expected to achieve its intended impacts, the Manager shall seek to pursue appropriate
action.25The Manager shall also seek to use the results framework to capture investment
outcomes.26•

IFC’s end to end results measurement system comprises three building blocks: diagnostics
to inform investment decisions, a rating tool – the AIMM system – to assess impact claims
prior to project approval and during supervision, and an evaluation mechanism to promotelearning and accountability. While IFC has employed a range of tools to measure impact
through the years, development impact has always been at the center of its business.

•

IFC uses development impact indicators that are aligned with indicator usage practices
and performance metrics catalogued in the Harmonized Indicators for Private Sector
Operations (HIPSO) and the Joint Impact Indicators (JII). IFC uses these indicators tomeasure the development results of its investment services.

•As part of its investment service agreements with clients, IFC outlines data collection,
methodologies, and responsibilities prior to the beginning of supervision activities andrequires that its clients report on key development impact indicators each year. This helps
IFC report on its own performance in ways that reinforce public trust and expand IFC’s“license to operate”.

•

Changes in project ratings inform IFC’s investment managers of progress in deliveringdevelopment outcomes. Portfolio officers and managers, through periodic client visits,
assess progress against development outcomes and work with clients to take remedialaction in cases where development outcomes are at risk.

Principle 7 – Conduct exits considering the effect on sustained impact: When conducting an
exit,27 the Manager shall, in good faith and consistent with its fiduciary concerns, consider theeffect which the timing, structure, and process of its exit will have on the sustainability of the
impact.
•

IFC considers the effect on maintaining development impact when making exit decisions
in its equity portfolio. This can affect the timing, structure, and choice of who to sell to.

25

Actions could include active engagement with the investee; early divestment; adjusting indicators/expectations
due to significant, unforeseen, and changing circumstances; or other appropriate measures to improve the portfolio’s
expected impact performance.
26
Outcomes are the short-term and medium-term effects of an investment’s outputs, while the outputs are the products,
capital goods, and services resulting from the investment. Adopted from OECD-DAC (www.oecd.org/dac/).
27
This may include debt, equity, or bond sales, and excludes self-liquidating or maturing instruments.

7

Most debt and guarantee investments are self-liquidating without exit decisions.28•

IFC documents equity exits decisions through sales memoranda, which provide rationales
for exits.29•

IFC has prepared draft responsible exit principles as part of its ongoing efforts to further
and more systematically integrate how it analyzes and addresses E&S issues throughout
its investment project cycle. 30 IFC held a public consultation between February 21 andApril 20, 2023 to solicit feedback on these principles, as well as on a draft IFC/MIGA
Approach to Remedial Action. IFC is currently reviewing the feedback received throughthe consultation as it explores further development of the responsible exit principles.

Principle 8 – Review, document, and improve decisions and processes based on theachievement of impact and lessons learned: The Manager shall review and document the impact
performance of each investment, compare the expected and actual impact, and other positive
and negative impacts, and use these findings to improve operational and strategic investment
decisions, as well as management processes.
•

The WBG entities, including IFC and the Independent Evaluation Group (IEG)31 havedeveloped an evaluation framework which stipulates the role of independent and selfevaluations to inform operational strategy and policy.

•

IFC conducts mandatory self-evaluations on a representative sample of investment andadvisory operations once they have reached operational maturity (or closure in the case ofadvisory operations). These self-evaluations are done typically five years following
approval and are validated by IEG. The aggregate results of our investments and advisory
operations are reported to the Board annually and disclosed publicly.

•

In addition, IEG undertakes fully independent evaluations of WBG operations,32 policies,
and strategies, and reports directly to the Board of Executive Directors. These IEG
evaluations may be around broad development themes, strategies, specific sectors, or
specific mandates that the WBG entities are charged with delivering. The evaluations
include recommendations, for which Management develops and commits to an action
plan, which is monitored on an annual basis.

•

In addition, IFC also conducts demand-driven evaluations to fill knowledge gaps related
to assessment of project performance, provide strategic insights to management, and/or tomeet demands of external stakeholders for performance evaluation. IFC has updated its
evaluation strategy in line with the WBG Principles on Evaluation and has introduced amore rigorous process of engaging with operational teams to identify and review
evaluation topics and their findings. Demand-driven evaluations are conducted according

28

See: footnote 3.
See: footnote 3.
30
https://www.ifc.org/content/dam/ifc/doc/2023/ifc-draft-responsible-exit-principles-en.pdf
31
See: http://ieg.worldbankgroup.org
32
See: footnote 3.
29

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to principles designed to ensure independence, particularly when they are conductedprimarily for external stakeholders such as with donors who have provided funds foradvisory programs or blended finance.
Principle 9 – Publicly disclose alignment with the Impact Principles and provide regular
independent verification33 of the alignment: The Manager shall publicly disclose, on an annual
basis, the alignment of its impact management systems with the Impact Principles and, at regularintervals, arrange for independent verification of this alignment. The conclusions of thisverification report shall also be publicly disclosed. These disclosures are subject to fiduciary andregulatory concerns.
•

This Disclosure Note re-affirms the alignment of IFC’s procedures with the Impact
Principles.

•

The independent assurance report on the alignment of IFC with the Operating Principles
for Impact Management will be made available in the third quarter of 2023 athttps://www.ifc.org/en/our-impact/impact-investing-at-ifc. The verification will be
replicated every year.

•

In addition, as part of its annual reporting practices, IFC seeks both an independent
assessment of the effectiveness of its impact measurement approach and an independent
verification of the resulting impacts achieved. The conclusions of the auditor are disclosed
in IFC’s Annual Report (see: https://www.ifc.org/AnnualReport).

•

Information on the current independent verifier is as follows:
Name and Address:

EY & AssociésTour First 1 place des Saisons TSA 14444 92037 Paris La
Défense Cedex France

Qualifications:“EY is a global leader in assurance, tax, transaction andadvisory services. The insights and quality services we deliver
help build trust and confidence in the capital markets and ineconomies the world over. We develop outstanding leaders whoteam to deliver on our promises to all of our stakeholders. In sodoing, we play a critical role in building a better working world
for our people, for our clients and for our communities. EY
refers to the global organization, and may refer to one or more,of the member firms of Ernst & Young Global Limited, each ofwhich is a separate legal entity. Ernst & Young Global Limited,a UK company limited by guarantee, does not provide services
to clients. Information about how EY collects and uses personal
data and a description of the rights individuals have under data

33

The independent verification may be conducted in different ways, i.e., as part of a financial audit, by an independentinternal impact assessment committee, or through a portfolio/fund performance evaluation. The frequency andcomplexity of the verification process should consider its cost, relative to the size of the fund or institution concerned,
and appropriate confidentiality

9

protection legislation are available via ey.com/privacy. For more
information about our organization, please visit ey.com.”
Most Recent Review:
Current Review:
Next Planned Review:

October 2022
October 2023
October 2024

Disclaimer: The information contained in this Disclosure Statement has not been verified or
endorsed by the Global Impact Investing Network (“the GIIN”) or the Secretariat or Advisory
Board. All statements and/or opinions expressed in these materials are solely the responsibility ofthe person or entity providing such materials and do not reflect the opinion of the GIIN. The GIIN
shall not be responsible for any loss, claim or liability that the person or entity publishing thisDisclosure Statement or its investors, Affiliates (as defined below), advisers, employees or agents, or
any other third party, may suffer or incur in relation to this Disclosure Statement or the impact
investing principles to which it relates. For purposes hereof, “Affiliate” shall mean any individual,
entity or other enterprise or organization controlling, controlled by, or under common control with
the Signatory.

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