The Environmental and Social Risk Management Program
A framework for sustainable finance.
The ESRM program1 was developed by IFC with the support the Swiss State Secretariat for Economic Affairs (SECO) and other donors, to increase the uptake of Environmental and Social (E&S) standards by Financial Institutions (FIs) operating in Sub-Saharan Africa. The project supports the regulator in the development and implementation of E&S regulations and guidance for financial institutions.
The ESRM Program also provides local capacity building for E&S specialists and practitioners (both banking professionals and consultants) and supports Financial Institutions in improving their E&S risk management systems which increases the percentage of their lending portfolio screened/appraised against good E&S management standards.
The Business Case for ESG Risk Management
E&S risk management and financial performance makes business sense. A number of studies looking at the relation between companies’ ESG practices and their financial performance find a direct link: Companies that do good by the environment, their labor force, and communities do well financially, across multiple asset classes and regions. The integration of ESG considerations into management systems and practices brings tangible benefits for financial institutions, including new clients and lines of business, greater access to financing, enhanced shareholder value, and improved reputation and goodwill.
Sustainable finance is the integration of environmental, social and governance (ESG) standards into business or investment decisions and the application of sustainable financing tools.
ESRM is part of IFC’s suite of "Environmental, Social and Governance Advisory Programs"
"In reality, if you look at ESG, it's about income generation, cost saving, avoidance of delays and building a more motivated staff which will help with turnover."
Shami Nissan, Head, Responsible Investment, Actis
IFC is a recognized global leader in advising companies on the practice and implementation of environmental, social and corporate governance (ESG) standards, based on our globally respected and well-tested methodology for evaluating ESG practices, risks, and opportunities.
In 2006, IFC introduced the first version of its Sustainability Framework, which articulates IFC's strategic commitment to sustainable development and is an integral part of our approach to risk management. IFC's Performance Standards for Environmental and Social Sustainability of 2012 (link to IFC Performance Standards), which are part of the Sustainability Framework, have become globally recognized as a benchmark for ESG risk management in the private sector.
IFC has a comprehensive framework of market level advisory programs to support the ESG agenda with integrated approaches to risk management and corporate governance.
The Environmental and Social Risk management Program (ESRM)
The ESRM program’s work with FIs promotes the stability of financial systems in emerging markets, and channels finance to responsible companies. Our work with regulators and stock exchanges to introduce ESG standards to markets also addresses challenges that are beyond the ability or responsibility of a company to solve alone. This provides finance for the lasting benefit of both clients and the society at large.
The Africa Corporate Governance Program
"If management is about running business, governance is about seeing that it is run properly. All companies need governing as well as managing."
Robert Tricker, one of the ‘fathers’ of modern governance
Working globally, IFC has a successful track record of delivering targeted corporate governance support to companies. With advisors worldwide, IFC has a well-established reputation of being the leader in corporate governance and board training in developing markets. Moreover, IFC has assisted over 15,000 companies in more than 30 countries to implement better corporate governance practices, leading these clients to over US$5 billion in new financing.
The current corporate governance program focuses on Governance for Sustainability (G4S) and has the following components.
- Investors: mobilizes investors to apply sustainability standards in their investment operations and leverage their influence over their corporate clients
- Firm: supports companies to become adopters of sustainability standards and practices – the program provides Governance for Sustainability advisory services to companies.
- Market: build capacity of local intermediaries to support good sustainability practices in selected sectors and themes
- Regulatory: supports the integration of ESG standards into codes and regulations
The IFC Corporate Governance methodology is also now reflected in the Corporate Governance Development Framework, a common approach adopted in 2011, to which 35 international and bilateral development finance institutions have subscribed. For more information visit www.ifc.org/corporategovernance
The Economic Cooperation and Development Division of the Swiss State State for Economic Affairs (SECO) plans and implement economic cooperation and development activities with middle-income countries as well as the new member states of the European Union. SECO focuses its efforts on eight middle-income priority countries and five transition countries. SECO thrives to encourage sustainable and inclusive growth. The measures deployed by SECO are targeted towards achieving effective institutions and services, more and better jobs, increased trade and competitiveness and low-emission and climate resilient economies. For more information, visit https://www.seco-cooperation.admin.ch
SECO in Ghana
Ghana is a priority country of SECO’s economic cooperation and development. After two decades of relative economic success, Ghana now faces a variety of challenges. SECO supports public institutions in their efforts to deliver efficient services. It is also supporting Ghana in diversifying its economy and making it more competitive. For more information, visit: https://www.seco-cooperation.admin.ch/secocoop/en/home/laender/ghana.html
SECO in South Africa
South Africa is a priority country of SECO’s economic cooperation and development. For several years now, South Africa as one of Africa’s most influential countries in geopolitical terms has had to face stagnating growth. SECO supports businesses and the government especially in their efforts to reduce disparities and unlock the economic potential of the country’s burgeoning cities and townships. For more information, visit: https://www.seco-cooperation.admin.ch/secocoop/en/home/laender/south-africa.html
The ESRM Africa program currently operates in the following countries: