Climate Change
Stakeholder Feedback
Frequently Asked Questions
Could IFC clarify its approach regarding the
screening of projects against climate change
issues, particularly fossil fuel investments in the
power sector? What are the criteria used in
screening? Will IFC phase out investments in
power projects using fossil fuels? Are the
Performance Standards (PSs) subordinate to
WBG strategy or can decisions on investments
in fossil fuels be driven by the PS?
What does IFC mean by ‘low carbon’
development? Provide greater clarity on how IFC
supports low-carbon technology. IFC does not
provide clear instructions for how to determine
which energy choice is better for climate. IFC
should develop a reference point or baseline in
regards to carbon dioxide (CO2) emissions so
clients have a reference point against which to
compare.
Is IFC considering allowing for gradual
improvement on GHG emissions depending on
the context of where (and how efficient) the
company operates?
IFC Response
These questions relate to the role of the Sustainability Policy and
Performance Standards in the broader strategic context for
investments in the energy and energy-intensive sectors. In
December 2008, the World Bank Group (WBG) adopted the
Development and Climate Change Strategic Framework (DCCSF).
The DCCSF remains the overarching framework guiding IFC’s
investment decisions in thermal power and fossil fuels. The
Performance Standards come into play once a project has cleared
the strategic hurdles and demonstrated consistency with the
DCCSF. In March 2010, the WBG issued the Criteria for
Screening Coal Projects under the DCCSF which provides
operational guidance for WBG Staff when considering requests for
support for projects related to coal-based power generation.
IFC has been increasing its focus on climate-friendly projects in
recent years and expects these to account for 25% of new
financial commitments within three years. Some examples of
ongoing climate-friendly projects include direct investment projects
for: (i) renewable (including geothermal) energy generation; (ii)
sustainable supply of renewable fuels (e.g. wood-based biomass);
(iii) brownfield resource efficiency upgrades; (iv) greenfield
projects demonstrating unusually high energy efficiency (including
in energy-intensive sectors); (v) manufacture of renewable energy
equipment; (vi) manufacture of high efficiency devices/appliances;
(vii) resource efficiency service providers; and (viii) carbon
sequestration including those through REDD mechanisms. IFC
also has a growing program of lending to financial institutions for
on-lending in a climate-friendly manner (for example in support of
energy efficiency credit lines for small business) and has
developed an investment instrument suitable for accelerated
lending for Cleaner Production projects with portfolio clients in
good standing. Work is ongoing to define further climate friendly
investment opportunities. For example an investment strategy for
off-grid solar investment is under development.
In addition to its mainstream direct and financial intermediary
lending, IFC has a “Clean Tech” group which supports emerging,
primarily climate friendly technologies through early stage venture
capital investment.
IFC provides further support to low carbon development through
its Advisory Services program. Activity in this area is varied,
ranging from advice to governments on energy/climate change
related regulation (e.g. review of buildings standards in Indonesia)
which when implemented promote efficiency; to development of
financing mechanisms to promote and demonstrate new GHG
mitigation techniques; and to provide advice to individual clients,
for example through the Cleaner Production advisory program
which provides expertise on this matter to portfolio clients.
Yes, though this would depend on project context. If IFC were to
fund a GHG-intensive greenfield operation, efficient performance
would be pursued at the design stage, though with the
understanding that plant commissioning/fine tuning would further
improve matters over time. However, if IFC were to support a

Could energy efficiency initiatives in carbon
intensive sectors be undermined in the context
of a ‘low carbon’ investment strategy?
Will IFC introduce a PS on climate change, given
the importance of the issue? Will IFC include a
stronger statement on climate change in the
Sustainability Policy since climate change is
also a strategic issue?
On what basis is IFC further tightening the
requirements around GHG emissions when no
international agreement has yet been reached on
the global regulation of such emissions?
The policy context and guidance provided on
adaptation to climate change for private sector
companies and communities is very limited in
the current version of the Sustainability Policy
and Performance Standards. Can this be
strengthened?
Do smaller businesses have a higher risk (higher
costs) associated with complying with GHG
calculation requirements?
Will IFC provide clear guidelines on monitoring,
reporting and verification of GHG emissions?
Do guidelines address sector specific
requirements?
Will IFC require independent third party
certification of its client’s greenhouse gas (GHG)
brownfield operation which had not previously considered energy
efficiency in a comprehensive manner, change would be gradual
as the company develops and adopts energy efficiency measures.
IFC would typically require an audit and an implementation
schedule would follow and would be part of the action plan.
This should not be the case as it would represent a sort of
perverse outcome, since some of the best energy efficiency
opportunities are in energy intensive sectors. IFC is actively
exploring opportunities to support energy efficiency opportunities,
including in energy-intensive sectors, in its existing investment
portfolio and in new investments in both financial intermediaries
and industrial/service companies in direct receipt of IFC support.
After careful consideration, it was decided not to introduce a
stand-alone performance standard on climate change. The issue
of climate change is so pervasive that it is best treated as a fully
mainstreamed issue through each PS where it is relevant. In this
context as well, the wording relating to climate change in the
Sustainability Policy has been further strengthened to reflect IFC’s
commitment to the issue and in response to feedback received
during the consultation process.
IFC is of the view that measures to enhance energy and resource
efficiency are inherently good business and good for the
environment and should therefore be supported and promoted.
The combination of the Sustainability Policy, the WBG
Development and Climate Change Strategic Framework,
Performance Standard 3 and relevant Environmental, Health and
Safety Guidelines provide the strategic and operational framework
for responsible decision-making in energy intensive sectors.
The issue of adaptation to climate change as it applies to risks
related to the private sector can be a difficult one. There are
nonetheless basic climate-related risk aspects that clients can
consider as part of their due diligence (intense rains followed by
risk of floods and/or landslides, severe weather, sea surges, etc…)
and therefore introduce an adaptation context into project design
and operation. Additional guidance is planned on this front through
the Guidance notes and other avenues as the concept of
adaptation and its applicability at the enterprise/project level is
further developed.
No, not necessarily. If GHG emissions are linked largely to the use
of electricity (as would be the case with most small businesses)
then the calculations would be based on the carbon intensity of the
local grid, information that should be readily available. There are
also several calculation tools publicly available which can be used
by businesses to estimate their GHG footprint, including their
direct emissions. Going through this exercise may also help clients
to recognize the opportunity to reduce electricity use through
efficiency improvements.
Guidelines address sectoral CO2 emissions, where significant, due
to process chemistry or energy intensity (e.g. cement and glass).
IFC will expand its guidance on monitoring and reporting, and the
Guidance Note to PS 3 will suggest references for this purpose.
Unless required by local regulations, IFC will not require
independent certification. Clients will report on their GHG
emissions calculations? If so, who will assume
the cost?
Why did IFC decide to set GHG emissions
measurement and reporting at 25,000 tpa CO2-
eq?
Is IFC considering using GHG intensity as a
relative measure (relative reduction of
emissions), with benchmarking levels for
different sectors (e.g. airline, shipping, cement,
aluminum)?
Comments
IFC should revise the draft Sustainability Policy
to include all global warming pollutants rather
than simply greenhouse gas emissions.
Remove the option for clients to offset GHG
emissions, instead requiring clients to conduct
an overall assessment of options for best
available low-carbon technologies.
IFC should make emission accounting public,
granting public access to information
concerning current emissions of global warming
pollutants, as well as the set goals and
timetables.
To achieve the objective "To promote more
sustainable use of resources, including energy
and water,” IFC should develop performance
indicators for water consumption by sector or by
technology type.
Include requirements for FIs/fund managers to
emissions in accordance with the agreed reporting requirements
for emissions, whether gaseous, liquid or solid. Third party
certification would add unnecessary costs to a process of reporting
which is intended to bring client attention to their GHG emissions
and the opportunities available to reduce their GHG footprint.
IFC lowered the reporting threshold to 25,000 tpa CO2-eq to better
capture the GHG footprint in its portfolio and to expand the scope
and reach of energy efficiency analysis to a larger number of
projects. GHG emissions measurement and reporting reflects
emerging regulatory reporting requirements in the EU and US.
Yes. IFC will continue to benchmark against industry specific
standards which are commonly made available by equipment
suppliers, industry associations and regulatory agencies among
others. This has been a standard approach in the development of
the Environment, Health and Safety Guidelines.
IFC acknowledges the importance to climate policy development
of black carbon, aerosols and short-acting non-UNFCCC gases.
Work in this field is ongoing. At the present time IFC does not
consider that quantification of global warming impact from these
compounds at a project level is practical. IFC expects that the
next IPCC report will provide useful guidance on assessing the
impact of the compounds in question, and will act when greater
clarity and consensus are achieved.
The most significant sources of black carbon are poorly adjusted
stoves, emissions from fired heaters and engines and agricultural
burning. Performance Standard 3, through its interface with
Environmental, Health and Safety Guidelines, does contain
provision to combat this issue. Both the EHS Guidelines and
certain sector-specific guidelines contain qualitative guidance and
include guideline limits for point source emissions of particulate
matter, NOx and in certain cases VOC emissions from projects. In
addition, the EHS Guideline for Annual Crop Production advises to
desist from open burning of straw and other organic matter.
IFC agrees with this recommendation, and has removed the
provision for GHG offsets from Performance Standard 3.
IFC will continue to disclose in its ESRS (Environmental and
Social Risk Sheet) the actual or expected emissions of project
activities when they are above the proposed 25,000 tpa CO2-eq
threshold.
In many sectors, water and energy consumption benchmarks are
available - from industry groups, regulators, advice from
government, equipments suppliers, rules of thumb known to
practitioners and others. Many of these benchmarks are already
incorporated into IFC’s sector-specific EHS Guidelines and IFC
will continue to use these. However, IFC recognizes that further
work is necessary to expand benchmarking knowledge in support
of Performance Standard 3 implementation.
As the proposed threshold (now proposed at 25,000 tpa CO2-eq)
uphold the threshold (i.e. 25,000 tpa CO2-eq). is in Performance Standard 3, it would apply to projects financed
through FI and Funds, as would other requirements of the
Performance Standards when found to be applicable.

IFC should adopt an “exclusion list” of
technologies to guarantee that most of its
resources are channeled toward interventions
that contribute to emission reduction targets and
do not have significant adverse social and
environmental impacts.
This question relates to strategic choices that IFC makes in the
selection of projects that it supports. IFC does not have an
exclusion list that relates to technology choices. Performance
Standard 3, which addresses energy efficiency and GHG
emissions as well as resource efficiency more generally, requires
the adoption of Good International Industry Practice and there is a
presumption that for many greenfield projects Best Available
Technology will be adopted. It is important to note however, that
the choice of technology must take account of country and sector
circumstances. This means for example that BAT in the European
Union, as defined by the IPPC Bureau, is not necessarily
applicable to every IFC-supported project. Some technologies
may be appropriate in one setting but not in another.

Note: IFC’s responses to questions and comments are based on the current draft (Version 2) of IFC’s Sustainability
Framework. They are subject to change as the Framework is further revised. No text in the Framework or in these
interim comments and responses is final until approved by IFC’s Management and Board.