Financial Intermediaries
Stakeholder Feedback
Frequently Asked Questions
Why did IFC not consider a separate
Performance Standard on financial institutions
(FIs), following the EBRD’s example?
How are IFC’s requirements for FI clients
proportional to the level of risk in the FI’s entire
business portfolio?
What would IFC require of current FI clients that
decide to support riskier subprojects than
originally expected?
For subprojects where informed consultation is
required, who (IFC or FI client) is responsible for
determining that broad community support
(BCS) exists and for disclosing information on
its determination?
Comments
There is no public information disclosing
IFC Response
IFC did consider creating a stand-alone FI Performance Standard
(PS), but decided against it as PS are topic-related and designed
to be applicable to various IFC products and financial structures,
including transactions that are intermediates through others. This
is similar to how other cross-cutting themes have been addressed,
such as gender, climate change, and stakeholder engagement
generally. A separate Guidance Note specifically focused on FIs
will be developed before submitting the final version of the PPS to
the IFC Board of Directors.
IFC’s requirements and the scope of their application for FI clients
depend on the risks associated with IFC investment; the use of
proceeds from IFC investment; and the level of risk associated
with the FI’s portfolio.
FI clients are required to implement a social and environmental
management system that is commensurate with the level of social
and environmental risks, in accordance with the principles of PS 1;
All FI clients are required to apply relevant requirements of PS 2 to
its workers;
All FIs will apply IFC’s Exclusion List and follow respective national
laws;
FIs with portfolio and/or prospective business activities that present
moderate to high social or environmental risks will require high risk
business activities they support to apply relevant requirements of
the Performance Standards.
IFC requires that clients inform IFC when there is a material
change in their businesses, or when they plan to enter into a new
business area that is materially different from what was proposed
when IFC made the investments. In such circumstances, IFC will
assess whether the new business area poses social and / or
environmental risks and / or impacts. If this is the case, IFC will
require the FI to enhance its management system in a manner
consistent with potential environmental and social risks and
impacts associated with material changes of these new
businesses, and with applicable requirements of the Performance
Standards.
Neither of them. The term BCS is used to describe IFC’s
responsibility in cases of direct investments. In cases of
investments through an FI, a client at the subproject level is
required to follow requirements of PS 1 and to provide the FI with
evidence of informed consultation. The FI client needs to have a
management system that would allow for an appropriate
assessment of subproject documentation confirming adequate
stakeholder engagement.
For FI clients, IFC publicly discloses information through the
whether IFC’s Financial Intermediary clients
have social and environmental management
systems in place – FIs should be held to the
same standards as other IFC clients.
Summary of Investment Information (SII) pertaining to
requirements for their social and environmental management
systems. Where supplemental actions were identified by IFC to
enhance the management system or mitigate certain
environmental and social risks, IFC will disclose the supplemental
action plan, along with any updates from the client regarding the
actions they have taken to implement that plan. And as indicated
in IFC’s Policy on Social and Environmental Sustainability, and
commensurate with the risks associated with the FI’s investment
activities, FI clients are required to comply with relevant
requirements of PS 1.

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.