The International Finance Corporation (IFC), a member of the World Bank Group, claims to be the first development finance institution to require a systematic corporate governance analysis of every investment transaction as part of its due diligence.
According to their press release, all new IFC investments will be subject to a focused corporate governance analysis during the appraisal process. The depth of IFC’s analysis will depend on the client and project characteristics. For some clients, a simple corporate governance review will be appropriate while others will require a more comprehensive assessment conducted by IFC’s Corporate Governance Unit. In fiscal 2011 alone, IFC supported 33 investment operations with full corporate governance assessments, totaling more than $1.8 billion in new debt and equity investments across all regions.
With more than a decade of implementing corporate governance projects, IFC’s experience has shown that sound corporate governance helps businesses operate more efficiently, better manage risks, and attract investment on better terms. Good governance makes clients more accountable and transparent to investors, and enables them to respond to legitimate stakeholder concerns, such as sustainable environmental and social development. According to William Bulmer, IFC Director for Environment, Social, and Governance:
Mainstreaming our corporate-governance methodology is expected to help our clients make better decisions and manage their businesses and their risks more strategically. This includes promoting a better understanding of the business case for being sensitive to broader stakeholder issues, such as environmental and social development standards.
IFC addresses corporate governance across its investment and advisory offerings. Their integrated approach has delivered strong results over the last five years. IFC provided more than 6,600 direct firm-level interventions from FY06–10, helping facilitate $2.9 billion in new financing in over 30 countries.
IFC has contributed to the development of 48 corporate-governance codes in 32 countries, including 11 of the world’s poorest countries under the World Bank’s International Development Association. As of today, IFC has delivered board leadership training resources that have been used to train about 600 corporate governance trainers in 46 countries.
IFC is the largest global development institution focused on the private sector in developing countries. They create opportunity for people to escape poverty and improve their lives by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, IFC investments climbed to a record $18 billion in fiscal 2010.