IFC implements new transparency process prior to investing in projects

MANILA, Philippines - The International Finance Corp. (IFC) has implemented a new transparency process prior to investing in projects, making it the first development finance institution to require a systematic corporate-governance analysis of every investment transaction as part of its due diligence process.

In its fiscal year 2011 alone, IFC supported 33 investment operations with full corporate-governance assessments, totaling more than $1.8 billion in new debt and equity investments across all regions.

“As of today, all new IFC investments will be subject to a focused corporate-governance analysis during the appraisal process. The depth of IFC’s analysis will depend on the client and project characteristics. For some clients, a simple corporate-governance review will be appropriate while others will require a more comprehensive assessment conducted by IFC’s Corporate Governance Unit,” IFC, the private investment arm of the World Bank, said in a statement.

It added that good governance makes clients more accountable and transparent to investors, and enables them to respond to legitimate stakeholder concerns, such as sustainable environmental and social development.

“Mainstreaming our corporate-governance methodology is expected to help our clients make better decisions and manage their businesses and their risks more strategically,” said William Bulmer, IFC director for environment, social, and governance.

He added that the process includes promoting a better understanding of the business case for being sensitive to broader stakeholder issues, such as environmental and social development standards.

It is still unclear how this will affect possible investments in the Philippines’ Public-Private Partnership (PPP) projects since IFC expressed interest in participating such projects.

IFC Philippine resident representative Jesse Ang said earlier they are keen in the bidding process for the Ninoy Aquino International Airport (NAIA) 3 projects.

But he said the Aquino government must make the program attractive to both domestic and foreign investors. “The government must do things right, and must create the impression that the Philippine is sincere, and that it will end the virtual cycle of corruption or inefficiency.”

The IFC allocated $564 million for new investments in the Philippines for fiscal year 2008-2009. It has averaged over $300- to $400-million in investments a year.

It likewise provided more than 6,600 direct firm-level interventions, helping facilitate $2.9 billion in new financing in over 30 countries.

IFC has contributed to the development of 48 corporate-governance codes in 32 countries, including 11 of the world’s poorest countries under the World Bank’s International Development Association. As of today, IFC has delivered board leadership training resources that have been used to train about 600 corporate-governance trainers in 46 countries.