Arne Hoel, The World Bank

CAO's Compliance Review of IFC's Financial Sector Investments

CAO launches a review of IFC's environmental and social assurance process for financial sector investments

April 13, 2011 - IFC's investment activities expanded significantly in recent years. This growth has been distributed across all the key sectors including financial services, infrastructure, and general manufacturing with investments through FIs recording the highest growth. Given the overall growth of IFC portfolio and the increasing significance of financial sector in the overall portfolio, the CAO Vice President believes it is the right time to initiate a compliance review on how IFC assures itself of the environmental and social performance of its financial sector portfolio. Initially, the CAO will map and select a limited sample of investments to verify IFC's assurance process related to those specific investments.

In selecting the investment sample, the CAO is mapping IFC's current financial sector portfolio according to set criteria and selecting a representative sample of investments for analysis. The CAO Compliance commenced this work early in 2011 and it is scheduled for completion by the end of the calendar year.

"IFC welcomes this opportunity to work constructively with the CAO to provide public assurance about the performance of its financial sector portfolio and how we can raise standards" said Jyrki Koskelo, IFC's Vice President Global Industries.

"A core part of IFC's strategy is expanding its development reach through the financial sector to create sustainable businesses, jobs, and opportunities for people to escape poverty.

“We have to ensure that the business activities we support through the financial sector are aligned with IFC's values of being socially and environmentally sound. That’s why we are proposing new revisions to the performance standards to allow us to better define and manage risks as well as strengthen our capacity to deal with enhanced disclosure and supervision.

“With ever greater public scrutiny on the financial sector since the global crisis, it is right that IFC is accountable for delivering on its development mandate. We hope the CAO's work will help us identify both what we do well, and where improvements can be made, so that even more people can escape poverty through the growth of the private sector."