IFC Launches Overhaul of Sustainability Framework Guiding $4.5 Trillion in Emerging Market Investments

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  • The IFC’s Sustainability Framework influences over $4.5 trillion in emerging market financial flows.
  • The framework underpins environmental and social safeguards for IFC and Equator Principles-aligned investments.
  • The updated framework—expected by 2028—seeks stronger alignment with global ESG expectations and risks.

IFC Announces Generational Review of Sustainability Framework

The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has officially launched a multi-year overhaul of its Sustainability Framework, which underpins trillions of dollars in emerging market investments. The review aims to strengthen environmental and social (E&S) standards and adapt to evolving global challenges, with the full update not expected until 2028.

This framework—last updated in 2012—includes three core components:

  1. Performance Standards on Environmental and Social Sustainability
  2. Sustainability Policy
  3. Access to Information Policy (AIP)

These standards have become the de facto benchmark for private sector investments in developing countries, influencing over $4.5 trillion in financial flows, not only from IFC and MIGA (its sister agency) but also from over 120 global financial institutions aligned with the Equator Principles.

Why This Matters

The IFC’s Performance Standards are considered the global gold standard for ESG due diligence in emerging markets. Their widespread adoption shapes how financial institutions manage E&S risks, from biodiversity and labor rights to stakeholder engagement and transparency.

Yet critics have pointed to gaps—particularly around financial intermediary lending, which accounts for nearly half of IFC’s investment portfolio. Unlike other multilateral lenders, IFC does not have a standalone safeguard for this growing risk category, raising questions about consistency and accountability.

“This review represents a generational opportunity to align trillions in financial flows with responsible investment practices,” said Kate Geary, Programme Director for Rights & Accountability at Recourse.

Kate Geary, Programme Director for Rights & Accountability at Recourse

What Is Changing?

The update will unfold in two formal phases:

  • Phase I: Dialogue Phase (2025–Q1 2026)
    Focuses on stakeholder engagement and feedback on overall approach and themes, such as climate risk, financial intermediaries, human rights, and Indigenous rights.
    Deliverables: Summary of feedback and consultation plan for Phase II.
  • Phase II: Public Consultation (Q2 2026–Q1 2028)
    Two rounds of global consultations with draft framework releases.
    Deliverables: Final framework and comprehensive public feedback report.

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The IFC is also working closely with MIGA and exploring greater harmonization with the World Bank’s safeguards. Importantly, the new framework is expected to address climate change, just transition, and emerging ESG risks that did not feature in the 2012 version.

Who’s Affected by the Updated Sustainability Framework?

The review’s impact extends far beyond IFC’s direct clients. The Performance Standards are:

  • Embedded in the Equator Principles, used by over 120 global financial institutions.
  • A reference point for private equity ESG policies, particularly those investing in high-risk geographies.
  • Used by blended finance vehicles and impact investors that rely on the IFC framework to demonstrate ESG integrity.
  • A bellwether for ESG risk assessment in sovereign and corporate debt across emerging markets.

The updated framework could set new expectations around nature, climate-related financial disclosures, Indigenous rights, grievance mechanisms, and supply chain risks.

What Comes Next?

Stakeholder engagement is now open, and the IFC has encouraged input from corporates, investors, civil society organizations, and affected communities. The final framework—expected in 2028—will be publicly released with a summary of feedback.

For fund managers, development finance institutions, and ESG officers focused on emerging markets, this review presents a rare chance to shape one of the most influential sustainability frameworks globally.

“This process has the potential to shift the ESG investment landscape for the next decade,” said an ESG policy advisor at a major multilateral bank. “If your portfolio touches emerging markets, you’ll want to follow this closely.”