Join our LinkedIn Group

The Sustainable Development Goals (SDGs) were adopted by all United Nations member countries in 2015 as a universal, globally accepted set of social and environmental goals to deliver progress toward greater sustainability for the planet and its people. In 2022, it was estimated that the annual financing gap to achieve the SDGs in developing countries had increased to $4.3 trillion. Public and private sector alike have been called upon to mobilize their resources and efforts to secure the delivery of the SDGs by 2030. The increase in financial flows to support the SDGs in emerging markets and developing economies, where the need is the highest, cannot be achieved without systematic and thorough incorporation of sound investment practices, including those addressing environmental, social and governance (ESG) risks and impacts. It is universally accepted that private sector support for the delivery of the SDGs is crucial, such support has most frequently consisted of the provision of products and services and the allocation of excess capital toward impact, through, for example, impact investing. The extent to which private sector ESG risk management practices contribute to the SDGs has not been sufficiently explored. This report therefore focuses on the interplay between the private sector’s ESG risk management standards and its effort to realize the positive outcomes embodied in the SDGs. IFC is the largest global development institution focused on the private sector in developing countries. Over the years, IFC has played a leading role in encouraging private sector development as an investor and as an ESG standard setter. IFC encourages businesses to improve their ESG performance, including through, for relevant clients and activities, complying with the IFC’s Environmental and Social Performance Standards. The Performance Standards (PSs) and Corporate Governance Methodology (CGM) have been widely adopted by financial institutions and companies globally.The PSs were adopted by 138 Equator Principles Financial Institutionsin 38 countries, as well as other development finance institutions (DFIs) and export credit agencies. IFC CGM has become the foundationof the Corporate Governance Development Framework endorsed by 35 DFIs as a common framework to address corporate governance risks and opportunities in investment operations in emerging markets. Moreover, to support greater capital flows toward sustainability, IFC helped shape the Green Bond Principles, which led to unprecedented expansion of the market from over $37 billion in 2014 to an estimated $444 billion in 2021. IFC-supported Operating Principles for Impact Management have become a market standard for impact investing, addressing concerns about “impact washing”and facilitating greater mobilization of capital for impact. This private sector guide (referred to below as the guide) was developed to support the private sector in clarifying how companies’ ESG risk management practices that are aligned with the PSs and CGM (for the purposes of this guide, IFC’s “ESG Standards”) – can contribute to achieving the SDGs. The guide is accompanied by a dataset – Mapping of IFC’s Environmental, Social, and Governance Standards to the Sustainable Development Goals. The Dataset offers a detailed mapping of IFC’s ESG Standards against the SDG goals, targets, and indicators, in a searchable format.

Advancing UN Sustainable Development Goals through IFC’s Environmental, Social, and Governance Standards: A Private Sector Guide

Resource Key: JTK2QGBR

Document Type: Report

Creator:

Author:

  • IFC

Creators Name: {mb_resource_zotero_creatorsname}

Place: Washington D.C.

Institution: IFC

Date: September 2023

Language:

The Sustainable Development Goals (SDGs) were adopted by all United Nations member countries in 2015 as a universal, globally accepted set of social and environmental goals to deliver progress toward greater sustainability for the planet and its people. In 2022, it was estimated that the annual financing gap to achieve the SDGs in developing countries had increased to $4.3 trillion. Public and private sector alike have been called upon to mobilize their resources and efforts to secure the delivery of the SDGs by 2030. The increase in financial flows to support the SDGs in emerging markets and developing economies, where the need is the highest, cannot be achieved without systematic and thorough incorporation of sound investment practices, including those addressing environmental, social and governance (ESG) risks and impacts. It is universally accepted that private sector support for the delivery of the SDGs is crucial, such support has most frequently consisted of the provision of products and services and the allocation of excess capital toward impact, through, for example, impact investing. The extent to which private sector ESG risk management practices contribute to the SDGs has not been sufficiently explored. This report therefore focuses on the interplay between the private sector’s ESG risk management standards and its effort to realize the positive outcomes embodied in the SDGs. IFC is the largest global development institution focused on the private sector in developing countries. Over the years, IFC has played a leading role in encouraging private sector development as an investor and as an ESG standard setter. IFC encourages businesses to improve their ESG performance, including through, for relevant clients and activities, complying with the IFC’s Environmental and Social Performance Standards. The Performance Standards (PSs) and Corporate Governance Methodology (CGM) have been widely adopted by financial institutions and companies globally.The PSs were adopted by 138 Equator Principles Financial Institutionsin 38 countries, as well as other development finance institutions (DFIs) and export credit agencies. IFC CGM has become the foundationof the Corporate Governance Development Framework endorsed by 35 DFIs as a common framework to address corporate governance risks and opportunities in investment operations in emerging markets. Moreover, to support greater capital flows toward sustainability, IFC helped shape the Green Bond Principles, which led to unprecedented expansion of the market from over $37 billion in 2014 to an estimated $444 billion in 2021. IFC-supported Operating Principles for Impact Management have become a market standard for impact investing, addressing concerns about “impact washing”and facilitating greater mobilization of capital for impact. This private sector guide (referred to below as the guide) was developed to support the private sector in clarifying how companies’ ESG risk management practices that are aligned with the PSs and CGM (for the purposes of this guide, IFC’s “ESG Standards”) – can contribute to achieving the SDGs. The guide is accompanied by a dataset – Mapping of IFC’s Environmental, Social, and Governance Standards to the Sustainable Development Goals. The Dataset offers a detailed mapping of IFC’s ESG Standards against the SDG goals, targets, and indicators, in a searchable format.

Download Document