IFC Prioritizes Climate Finance Amid Global Transition Efforts, Makhtar Diop Reveals

By Faridat Salifu

The International Finance Corporation (IFC), a vital arm of the World Bank Group, is putting significant emphasis on the transition towards a green and climate-conscious economy amidst worldwide efforts for sustainability.

IFC, a leading development finance institution, is dedicated to closing funding gaps in emerging economies by supporting financially constrained projects, thereby catalyzing additional private-sector investments.

Makhtar Diop, the Managing Director of IFC, disclosed this during the World Governments Summit in Dubai that the green and climate-conscious economy holds substantial importance, with half of the corporation’s operations being connected to climate change.
“Promising developments are underway,” Diop noted.

Reports say that in the fiscal year 2023, IFC facilitated the delivery of $7.6 billion in climate finance and stimulated an additional $6.8 billion from supplementary sources, as per its official website.

The allocation of climate finance was diverse within various sectors including financial institutions, renewables, green buildings, agribusiness, and industrial efficiency, among others.

Diop emphasized the corporation’s strategic approach to influencing partners towards greener practices, stating, “When we engage with a bank, for instance, we outline that the funding we provide is with the aim of encouraging greener portfolios and the development of pro-green policies.”

In response to the global shift towards environmental policies, countries worldwide are adopting climate-friendly measures to reduce greenhouse gas emissions, consequently driving the demand for sustainable bonds.

We gathered, a forecast from S&P Global Ratings projected that global issuance of sustainable bonds could reach between $900 billion and $1 trillion, buoyed by escalating demand and climate-conscious policies.

Moreover, the UAE Cop28 presidency introduced a significant collaboration with forthcoming climate conference hosts, Azerbaijan and Brazil, to ensure the pivotal 1.5ºC climate goal remains achievable.

The “Cop presidencies troika” initiative seeks to fortify cooperation and maintain coherence amongst the hosts of the annual climate summits, aligning with the mission of “1.5ºC”.

Diop commended the UAE for its impressive efforts in mobilizing resources and committing to financing the energy transition, acknowledging the nation’s strong leadership in this realm.