Sustainable Financial Markets Facility

completed

This project is to establish a facility to deliver a comprehensive and innovative sustainability program targeted at the financial sector, building on IFC’s substantial expertise and current activity in this field. The overall goals of SFMF will be: (1) to significantly enhance the environmental and social development impact of IFC’s funding via financial intermediaries (FIs), and support FIs’ competitiveness by improving their capacity to manage environmental risk and the continuously-evolving ‘business and sustainability’ agenda; and (2) to strategically support and influence the sustainable finance agenda in the broader financial community, with the objective of increasing the potential for environmentally and socially responsible investment in emerging markets. SFMF will be structured around three outcome-led programs, delivered through a combination of sector-wide capacity building, institution-specific technical assistance, selected special projects, and horizontal support.1. Responsible Institutions Program: Promotion and facilitation of commercially-driven environmental and social responsibility and responsiveness in the delivery of banking, leasing, insurance and other services to the private sector in emerging markets; 2. Sustainable Inward Investment: Catalytic activities to stimulate the profitable uptake of sustainable and socially responsible investment principles in the private equity/venture capital and asset management sectors; 3. Strategic Market Development: Interventions designed to give sustainability greater traction in the financial sector by addressing demand-side and supply-side market inefficiencies.IFC''s role: The industry increasingly recognizes that sustainable environmental and social practices can contribute significantly to business value. However, the financial sector has lagged behind in its thinking and approach, particularly in developing countries. SFMF will enable IFC to leverage its role as a catalytic and innovative financing institution to promote greater adoption of sustainable development principles and practices in the financial sector.Developmental impact: SFMF will strengthen the environmental and social capacity of financial intermediaries and the broader financial community, thereby helping them in their abilities to prevent and mitigate adverse environmental and social impacts, implement good practice, boost their reputation, attract environmentally and socially conscious investors, and be profitable. SFMF’s positive development impacts will include direct effects (human capital, economic impact, environmental impact), indirect effects (upstream and downstream, social development, knowledge transfer), and diffuse effects (demonstration effects, financial sector).