Advice to Enhance IFC and MIGA Systematic Performance on Environmental and Social Sustainability
In FY26, we launched several new Advisory workstreams to advance our efforts to advise IFC, MIGA, and their Boards on strengthening environmental and social (E&S) sustainability.
As IFC and MIGA update their Sustainability Framework and embark on new institutional strategies, this body of work seeks to provide data, analysis, insights, and recommendations on policies, processes, guidance, strategic issues, emerging trends, and broader E&S matters.
Our Advisory work is informed by CAO’s past and ongoing caseload, engaging with experts both externally and at IFC and MIGA, and reviewing of available international good practices to help shape and strengthen our strategic guidance on important E&S issues.
FY26 – FY27 Advisory Workstreams
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Leveraging IFC’s Influence to Enhance E&S Outcomes
CAO Advisory has developed a Note to explore IFC’s “leverage deficit”, proposing ways in which IFC can strengthen and better apply its leverage over clients to achieve E&S risk and impact management throughout the lives of its investments and fulfill its role and responsibilities as set out in its Policy on E&S Sustainability. CAO has engaged with IFC Management throughout the production of this report and more recently shared its findings and recommendations with the WBG Board. CAO’s Note entitled, “Leveraging IFC’s Influence to Enhance Environmental & Social (E&S) Outcomes” will be published in Q4 FY26.
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Lessons Learned from CAO Complaints Relating to Labor Issues
To assist IFC and MIGA in contributing meaningfully to the World Bank Group’s jobs agenda for greater development impact, in FY26, we initiated a focused Advisory workstream on labor issues as seen in CAO caseload. Issues relating to Performance Standard 2 (Labor and Working Conditions) have consistently been prevalent in CAO’s caseload. We completed a review and analysis of 55 cases together with good international practices with an objective to identify areas: i) requiring strengthening of the existing labor standards; and ii) where the current labor-related standards would benefit from an update.
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Application of the Performance Standards in IFC Lending through Financial Intermediaries (FIs)
CAO established a strategic advisory committee comprising experts from the financial, regulatory, and legal sectors and convened a series of learning sessions to support its baseline study examining application of E&S standards to IFC’s FI lending practices. Based on the baseline assessment, our Advisory team is assisting IFC in enhancing understanding of ringfencing in an FI context through a three-tiered workshop series focusing on: i) problem framing about limitations of current ringfencing/use of proceeds practices relating to FI E&S risk management, ii) testing boundaries of the problem framed in Workshop 1 and determine magnitude, where ringfencing clarifies vs. fails; iii) and solution pathways to evaluate and identify practical, evidence-based solutions to address systemic and boundary issues identified in Workshops 1 and 2.
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Equity
As IFC executes its strategy to increase its volume of equity investments, our Advisory team will examine how IFC manages E&S risks in its equity portfolio. This work will consider leverage, client capacity and commitment, and other topics relevant to IFC's equity investments. Scoping, research, and analysis will take place during FY26, with a view to producing a report in FY27.