The International Finance Corporation’s (IFC) Environmental Sustainability Initiatives

Joyita Mukherjee of the International Finance Corporation (IFC) office in New Delhi has the exciting job of identifying projects and extending advisory in India with large scale environmental impact. As the private sector lending arm of the World Bank Group, IFC’s program objectives aim at inclusive growth and climate change adaptation. The two arms of their organization – technical assistance and investment lending – look at different aspects of environmentally oriented businesses. Their main focal points are investments in manufacturing and services; infrastructure, specifically power, ports and roads; and finally, mobilizing local financial markets.

Little low hanging fruit for IFC-sized objectives. Joyita articulated the commonly expressed view that the low-hanging fruit haven’t jumped out. Partly, this is a function of IFC’s business, which is more likely to push large green new construction than smaller opportunities or retrofits. This is a major difference from Eastern Europe where large housing blocks are being converted and rehabbed for energy and water efficiency.

In India, for some reason, IFC hasn’t pursued this business line but that may be as a result of the size of the projects. IFC looks for an average $15 million commitment but is willing to do projects as small as $2 million in order to explore a new area. However, because they won’t take more than a 20-25% share of the equity, the project sizes have to be quite large to merit IFC involvement. Perhaps IFC would be willing to back a fund that on-lends to smaller projects for energy efficiency, for instance, but for now, that market remains unexplored by the IFC.

Need for projects in underaddressed areas. IFC seems to be interested in developing markets in social sectors, like education (though it appears that this has not traditionally been a good investment for IFC), and in sustainability.  The organization has yet to explore the key barriers to sustainable property development although a program to bridge the incremental cost of building green might be a possibility in coming years. Cities in poor northeastern states are also an area of need as much of the investment thus far has been focused on higher income states. Some of the newly industrializing areas in the northeast might be good candidates.

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