The IFC is in the middle of reviewing its policy and performance standards, the minimum environmental and social standards it applies when investing in projects. The performance standards also underpin the Equator Principles – voluntary guidelines used by banks to assess their project finance activities, and are used more broadly in the private sector finance world.

In a letter sent in July – but only recently made public – the Equator Principles Financial Institutions (EPFIs) steering committee said: “In order for the IFC to maintain its standard setting role, the EPFIs recommend that the IFC is more assertive and innovative with regards to climate change than is currently proposed in its revised drafts.”

Jorge Daniel Taillant, a strategic advisor to the Argentinean Centro de Derechos Humanos y Ambiente, said: “Through beefing up its extremely influential performance standards to favour the climate, IFC has a unique opportunity to leverage a structural shift in the world’s energy finance market, a shift towards more climate friendly energy. The question many are asking is, will it make the right decision?”

An IFC spokeswoman said: “We have just completed Phase II consultation and we are now in the process of drafting the second draft of our sustainability framework. At this point, we don't foresee major changes to our first draft, but that's still unclear.” The institution is updating on the progress of the review on its website.

The letter goes on to call for specific additions to the drafts. The project finance banks want the IFC to put more emphasis on projects using “best available technology (BAT), including BAT for climate mitigation”. Such an addition could mean, the letter suggests, that subcritical coal-fired power generation “is not a generally preferred direct financing option in most cases”.

Project developers should also be asked to report the greenhouse gas (GHG) emissions associated with large projects, the letter continues, suggesting that this could apply to projects with direct emissions of more than 100,000 tonnes of carbon dioxide equivalent, without specifying over which period.

The Equator banks also call for clearer “triggers” for when a climate change impact assessment must be carried out, “for certain projects in GHG-intensive sectors or in geographies with high vulnerability to climate change”.

Shawn Miller, chairman of the EPFI steering committee, told Environmental Finance that the banks have been in regular contact with the IFC, including face-to-face meetings and conference calls.

“We have indeed heard from the IFC that they have found the EPFIs' comments helpful and constructive,” he said. “We will continue to engage in this process closely moving forward, as any significant changes to the IFC performance standards will have an obvious consequential impact on the Equator Principles.”

The letter also makes detailed recommendations relating to how the revised performance standards address human rights impacts, biodiversity and stakeholder engagement.

Jess McCabe