The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has launched a sweeping review of its Sustainability Framework—an update that could transform how trillions of dollars are invested across emerging markets. This framework, which last underwent revision in 2012, has long served as the gold standard for environmental and social safeguards in private sector finance, guiding over $4.5 trillion in financial flows across developing economies. From direct investments by the IFC and MIGA to decisions by more than 120 global financial institutions aligned with the Equator Principles, the framework’s influence is far-reaching.
Now, with global environmental, social, and governance (ESG) expectations evolving rapidly, the IFC is preparing a major overhaul expected to culminate in 2028. At the core of the framework are three components: the Performance Standards on Environmental and Social Sustainability, the Sustainability Policy, and the Access to Information Policy. These elements are foundational to how ESG risks are assessed and managed—from biodiversity protection and labor rights to community engagement and transparency.
But as the global sustainability landscape becomes more complex, the framework’s gaps are becoming harder to ignore. One of the most pressing concerns surrounds the growing share of IFC’s investment portfolio channeled through financial intermediaries. This category—largely unchecked by standalone safeguards—has raised serious accountability questions. Advocacy groups have long called for more robust oversight, especially given the IFC’s role in shaping responsible investment practices in high-risk regions.
Kate Geary, Programme Director at Recourse, describes the review as a once-in-a-generation opportunity to reorient financial flows in emerging markets toward more ethical and transparent practices. Her sentiment echoes a wider push to modernize how institutions address risks linked to climate change, Indigenous rights, financial disclosures, and global supply chains.
Read more: My thoughts on private sector companies flouting ESG rules to miss IFC funding
The review process will unfold in two formal phases. Between 2025 and early 2026, the IFC will embark on a global listening tour—gathering feedback on core themes such as climate resilience, human rights, and the role of financial intermediaries. A detailed consultation plan will follow. From mid-2026 to early 2028, two rounds of public consultations will take place, each accompanied by draft releases of the updated framework. The final version, shaped by extensive stakeholder input, is slated for release by the end of 2028.
While the update will directly apply to IFC-funded projects, its impact will stretch much further. The Performance Standards are deeply embedded in the Equator Principles, used to guide lending decisions by international banks. They also serve as a reference point for ESG frameworks in private equity, blended finance structures, and sovereign debt portfolios in emerging markets. In effect, any investor or institution operating in the global South will likely feel the ripple effects of this overhaul.
As consultations begin, the IFC is calling on a broad spectrum of voices—corporates, ESG professionals, civil society organizations, and affected communities—to engage with the process. For many in the sustainability space, this marks a critical chance to shape one of the most influential frameworks in development finance.
A policy advisor at a leading multilateral development bank summed it up aptly: “This process has the potential to shift the ESG investment landscape for the next decade. If your portfolio touches emerging markets, you’ll want to follow this closely.”
