Leveraging IFC’s Influence to Enhance Environmental and Social (E&S) Outcomes

Summary

The Advisory Note “Leveraging IFC’s Influence to Enhance Environmental and Social (E&S) Outcomes” is part of CAO’s Advisory Insight Series on Strategic E&S Topics. It examines how the International Finance Corporation’s (IFC) use of leverage over its clients affects its ability to meet E&S policy commitments, prevent harm, and support the delivery of remedy.

Drawing on lessons from CAO cases, interviews with IFC staff and external experts, as well as innovative practices at other financial institutions, the Note highlights how leverage plays an integral role in enabling IFC to achieve its environmental and social (E&S) objectives, a core component of its broader development mandate. It underscores the critical importance of sustaining leverage throughout the investment lifecycle to support strong E&S performance and effective implementation of remedial solutions.

The Note also identifies key challenges related to due diligence, supervision practices, and gaps in maintaining influence over time. It outlines practical ways to enhance leverage in IFC investments, including strengthening foundations, improving risk identification, closing implementation gaps, and expanding the toolbox of leverage options. These efforts, the Note argues, should be brought together through a unified, strategic approach to leverage.