Green Bond Impact Report Financial Year 2017 Table of contents 3 FY17 Highlights 4 Letter from the Vice President 5 IFC’s climate business summary 6 IFC’s Green Bond Program summary 7 IFC's Green Bond issuance summary 8 Green finance engagement 10 Awards 11 Spotlight on Green Bonds for green buildings 13 IFC Green Bond commitments by region 14 IFC Green Bond commitments by section 15 Featured project: Mocuba Solar 16 Featured project: City of Buenos Aires 17 Green Bond eligible project commitments FY17 22 Appendix A: IFC’s Green Bond process 24 Appendix B: IFC's impact reporting policy Green Bond Impact Report | Financial Year 2017 2 FY17 Highlights Expected reduction to GHG emissions amount to 33 contribute approximately 2.24 million 2.19 million new projects Green Buildings metric tons of CO2-equivalent Energy Efficiency in annual renewable energy generation Biomass sufficient to supply residents of Miami, Florida with electricity for one year*. Wind is equivalent of removing Solar Green Banking cars off the road or all cars in Washington, DC and Boston, Massachusetts combined* *Sources: http://worldpopulationreview.com/us-cities/ http://www.governing.com/gov-data/car-ownership-numbers- of-vehicles-by-city-map.html Green Bond Impact Report | Financial Year 2017 3 Letter from the Vice President It is my pleasure to present to you IFC’s annual Green Bond Impact Report The global market for green bonds has expanded rapidly in recent years – for the financial year 2017. Climate change is already impacting various totaling more than $100 billion in 2016. Nevertheless, a huge gap persists: regions across the world, with the most vulnerable being hit the hardest. few banks in developing countries have issued such bonds. IFC has undertaken several initiatives to promote the issuance of green bonds in these countries. In The effect of extreme natural disasters is equivalent to a $520 billion loss in FY17, IFC supported two banks in Colombia, Davivienda and Bancolombia, to issue annual consumption, and forces some 26 million people into poverty each year. The green bonds. Bancolombia’s was the first green bond issued by a commercial funding required for an orderly shift to a low-carbon, resilient global economy bank in Latin America. During the year, IFC also teamed up with Amundi to is estimated at trillions. This opens vast opportunities for scaling climate- structure the largest green bond fund dedicated to emerging markets, targeting smart investments. It is projected that for infrastructure alone, the world will financial institutions as green bond issuers. Looking ahead, we will continue to require about $90 trillion over the next 15 years – most of it in developing and middle- work on innovative products to crowd in investors and develop de-risking tools income countries. Climate action is a vast opportunity for sustainable global and guarantees to assist our clients to become active in the green bond markets. development, with investment potential in the trillions of dollars and the ability to drive innovation and create green industries and new jobs. An IFC Report launched in November 2016 estimates that the historic global agreement on climate change adopted in Paris can open up nearly $23 trillion in opportunities for climate-smart investments in 21 emerging markets between now and 2030. As the largest development finance institution supporting the private sector Jingdong Hua in emerging markets, IFC is well positioned to work with private enterprises to IFC Vice President and Treasurer grow climate-smart business and to green the financial sector. Since 2005, IFC has invested $18.3 billion in long-term financing from its own account and mobilized another $11 billion through partnerships with investors for climate-related projects. By the end of the financial year on June 30th 2017, IFC’s total own account climate-related investments was $3 billion, covering over 90 climate investment projects in 41 countries. We mobilized an additional $1.8 billion from other investors. Under our Green Bond Program in FY17, we issued 19 green bonds in public and retail format across six currencies amounting to a total volume of approximately $650 million. At the close of fiscal year 2017, there were 125 green bond-eligible projects supported by IFC’s green bond proceeds. The total committed amount for these projects is $4.6 billion, of which $2.8 billion has been disbursed. IFC’s outstanding green bonds amounted to around $2.3 billion. Green Bond Impact Report | Financial Year 2017 4 IFC’s climate business summary Since 2005 IFC has invested about $18.3 billion in long term financing, 5 minutes chat with … Alzbeta Klein Director IFC Climate Business and mobilized another $11 billion through partnerships with investors for climate-related projects, for renewable power, energy efficiency, sustainable agriculture, green buildings, waste, and private sector adaptation to climate change. In FY17, IFC’s climate-related long term investments from own account were close to $3 billion and we also achieved close to $1.8 billion in core mobilization, Why is Climate Risk important?  limate-smart Agribusiness: Unquestionably, •C for a total of $4.8 billion invested in climate-smart projects. Businesses in emerging markets can no longer meeting future demand for food will be one of afford to ignore the risks posed by the changing the world’s greatest climate-related challenge. In FY17, through its Advisory, IFC enabled more than $636 million in climate to their bottom lines. Ranging from  reen Buildings: Buildings are estimated to •G increasingly frequent and severe weather events climate related investments in power, resource efficiency, access, and be responsible for about one third of global to new regulations and changing consumer greenhouse gas emissions. public private partnerships. preferences, climate change is fundamentally transforming the way we do business.  mart Cities: 70% of developing country •S In FY17, IFC’s total climate-related investment and advisory projects will account Increasingly, companies and their investors are populations are expected to live in cities by 2050. This opens doors for opportunities to for reducing over 6.7 million metric tons of greenhouse gas (GHG) emissions seeking opportunities to transition to and invest in climate-smart portfolios. build “smart” cities, capable of sustainably annually, equivalent to taking 1.4 million cars off the road. meeting demand for infrastructure in urban What role does the private sector play? environments. By all accounts, engaging the private sector in climate-smart investments will be a cornerstone  nergy Storage: New research from IFC suggests •E to growing climate business which will require that over the coming decade, energy storage trillions more in innovative climate-smart technologies will grow 40 percent annually investments particularly in emerging markets. in emerging markets. This growth is likely to A low carbon business strategy goes beyond unlock significant environmental, social, and environmental benefits and positions companies economic benefits. for the markets of tomorrow. IFC estimates Clean Energy: This includes renewable energy • that the Nationally Determined Contributions generation as well as energy storage. IFC (NDCs) of 21 emerging market economies supports renewable energy across the alone represent $23 trillion in investment entire value chain: from helping investors opportunities. enter renewable energy markets to advising What are IFC’s priorities in Climate finance? governments to develop climate-smart Closing off a successful fiscal year in 2017, IFC regulations and PPPs, as well as facilitating committed and mobilized close to $4.8 billion in financing for grid-tied renewables and climate-smart industries, helping scale up climate improving people’s access to modern off-grid investments in 41 emerging markets. While energy services. these industries are all showing promise, there Green Bonds: A critical challenge remains the • are five sectors where, based on our experience, ability to scale up climate-smart investments innovative approaches are poised to widen the bringing new financiers into the climate-smart tent, attracting billions in private sector capital: investment space. Green Bond Impact Report | Financial Year 2017 5 IFC’s Green Bond Program summary In FY17, IFC issued 19 green bonds in public and retail format across six 5 minutes chat with … Monish Mahurkar Director IFC Treasury Market currencies amounting to a total volume of approximately $650 million. Operations This brings the cumulative issuance since 2010 to $5.8 billion across 79 bonds in twelve currencies. At the start of the fiscal year, IFC reopened its longest tenor global green bond to satisfy investor demand by increasing the size of the bond by $500 million to an outstanding $1.2 billion. The bond was allocated to more than thirty accounts. What was the impetus for creating a IFC now has a unique position in that we not only Another notable issuance was also in the long end of the curve, IFC’s first Green Bond Program? issue green bonds, but we also support green Since 2005, climate change has been a top bond issues through anchor investments as well green bond in Swedish Krona issued in April 2017. The SEK800 million bond has strategic priority for IFC because of the risks as provide credit guarantees to allow our clients a 10-year maturity. it poses to our development mission. Initially access the green bond market and most recently, in 2010, IFC issued green bonds to meet niche we have launched the Green Cornerstone Bond Fund Throughout the year, IFC’s Impact Note retail program in the US was issued investor demands. By 2013, when we issued the with Amundi which will serve to open up the exclusively in green format. This designation was in response to demand from market’s first billion-dollar benchmark, it was green bond market in our client countries. done to promote the product from a niche one to retail investors who increasingly value green use of proceeds in addition to credit From an issuer perspective, how would you a mainstream product. It has now been 7 years consideration. The total issuance of green Impact Notes in FY17 amounted to like to see the green bond market develop? since IFC launched its Green Bond Program. There are few developments that would support $23 million. Since then in addition to providing liquidity, a more robust, diversified and transparent green we have used the product to engage investors bond market including: expansion of the market IFC continued to be active in the Japanese Uridashi retail market, having offered and educate them about green bonds. One of to new issuers, transactions in new currencies; the main objectives of the Green Bond program green notes to Japanese households amounting to $22 million during the year. facilitation of green asset-backed securities as remains to convert traditional investors to securitizations could offer investors exposure Environmental, Social and Governance (ESG) As at 30th June 2017, IFC’s outstanding green bonds amounted to around to a diversified pool of assets; introducing green investing, which means providing mainstream project bonds which would allow investors $2.3 billion. products with a familiar look and feel. The “use of gain direct exposure to the risk of the project proceeds” green bond does just. with or without potential recourse to the How has your approach changed since IFC’s issuer depending on risk appetite. Increasingly, Green Bond Program was launched? investors are asking for more transparency on We have broadened the spectrum of our green the use of green bond proceeds and reporting bonds expertise in several ways: we branched so ensuring transparency is fundamental, into demonstrating issuance in local currency but we must endeavor to maintain a balance to match local investor needs without exposing in promoting greater transparency and them to currency risk, which has a double effect encouraging growth in new directions so as not of encouraging investors to consider ESG as to deter smaller and potential issuers. mainstream investment approach even in local markets, as well as meeting our mandate of developing local capital markets. Green Bond Impact Report | Financial Year 2017 6 IFC’s Green Bond issuance summary IFC historical Green Bond issuance IFC Cumulative Green Bond issuance by currency MXN Volume Number of 0.7% Billion$ Green Bonds CNH EUR issues 0.4% SEK 1% 2% AUD 1,600 24 25 3% TRY 1,400 4% 19 18 20 INR PEN ZAR 1% 0.3% 1,200 BRL 3% NZD 6% 0.4% 1,000 15 USD 800 79% 10 600 6 3 400 5 3 5 200 1 0 0 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Green Bond Impact Report | Financial Year 2017 7 Green finance engagement IFC works closely with the financial institutions, international initiatives, IFC continues to deploy innovative ways to expand the green finance market. standard setters, and regulatory bodies engaged in green finance with In addition to IFC’s green bond program which helps unlock private capital the broader goal of promoting clean and sustainable development around investment for climate-smart projects, IFC operates a multi-faceted approach the world. to green finance an issuer, investor, provider of risk mitigation instruments and most recently a fund originator for green bonds. IFC was the sole investor in the In FY17, IFC sustained a principal role in developing the green bond market first green bond issued by a commercial bank in Latin America with its anchor through several key initiatives. An as an active member of the Executive investment in Bancolombia, Colombia’s largest commercial bank’s 350 billion Committee (EXCOM) for the Green Bond Principles (GBP), IFC contributed Colombian pesos bond. IFC was also the sole investor in the largest green bond to the drafting of the updated version of the voluntary set of transparency issue by a private financial institution in Latin America issued by Davienda, one and disclosure guidelines published in June 2017. The GBP have gained broad of the largest banks in Colombia. The bond raised 433 billion Colombian pesos. market acceptance, as good practice driving transparency and accountability, In another bid to further develop the green bond market, IFC and Amundi and membership is now at 149 members. IFC also actively participated in the collaborated to create the largest green-bond fund dedicated to emerging EXCOM’s working groups on strategic topics, such as new markets, impact markets – a $2 billion initiative that aims to deepen local capital markets and reporting, green projects eligibility etc. as well as chairing the Social Bond expand financing for climate investments. IFC will invest up to $325 million in the Working Group which successfully published the Social Bond Principles, an new Green Cornerstone Bond Fund which will buy green bonds issued by banks initiative that was awarded “Most Valuable Innovation for the Green/SRI Bond Market” in Africa, Asia, the Middle East, Latin America, Eastern Europe, and Central Asia. by GlobalCapital. Amundi will raise the rest of the $2 billion from institutional investors worldwide and will provide its services in managing emerging-market debt. Another milestone achieved during the year was the first-of-its-kind Forests Bond – a ‘green coupon’ bond issued by IFC to offer investors the option of getting repaid in either forestry credits or cash. The bond raised $152 million to help prevent deforestation in developing countries. ICMA, Green Bonds Principles Conference 2017 Green Bond Impact Report | Financial Year 2017 8 Green finance engagement IFC developed this in collaboration with BHP Billiton, who will buy the credits The report finds that 82% of all syndicated loans in 2014 financed projects in if investors elect for a cash coupon. In addition to helping conserve forests and sectors with some green activities. Of all lending to projects with some green wildlife, the revenue provides many other community benefits. It recently was use of proceeds, 41% of loans were for green real estate and 24% for infrastructure selected as Environmental’ Finance’s Sustainable Forestry Deal of the Year. and transport. By estimating the current supply of green finance provided by the financial sector, IFC enables broad analysis and supports the ability of IFC remains involved in private sector engagement around the Carbon Pricing policymakers to mobilize additional green finance as they develop clear action Leadership Coalition (CPLC) that was launched at COP21 in Paris. Given the points to close any gaps with demand at a national level. Additional findings show growing global momentum on carbon pricing as a means of driving investments that the green bond market represents the most advanced use of definitions and for a cleaner future, IFC is helping use carbon pricing to engage leading clients to tracking in the field of green finance and could serve as an example for other areas. measure and manage climate risks – and unlock new investment opportunities. Tracking green finance will become much easier and more accurate when bank Measuring green finance faces several lending and project purposes can be clearly labeled as green based on consistent challenges, namely, a lack of cohesiveness classifications. The report finally outlines key action points for market players across approaches, definitions, data availability, both in the short and medium term, with the goal of enhancing cooperation and and the inconsistent use of quantifiable building a foundational roadmap for a stronger, more integrated green finance indicators. Without an integrated approach, sector. This analysis lends support to the activities proposed under the recent it remains difficult to track green finance’s “Roadmap for a Sustainable Financial System” launched by UN Environment and the impact. In April 2017, IFC’s published “Green World Bank Group, which intends to design an action plan for moving towards a Finance: A Bottom-up Approach to Track Existing sustainable financial system and a basis for measuring progress. Flows”, a report completed in partnership with Germany’s Gesellschaft für Internationale Zussamenarbeit (GIZ). The paper seeks to provide methodologies for tracking flows that are aligned with much needed concrete definitions proposed at the project-level. Green Bond Impact Report | Financial Year 2017 9 Awards IFC’s 10-year green bond which raised $700 million for climate-smart IFC’s Forest Bond won the Environmental Finance Sustainable Forestry Deal of investments in emerging markets was awarded Best SRI Bond by Global Capital. the Year 2017 award. A key feature of the bond is that investors can choose to The bond was carries a coupon of 2.125% and was upsized from $500 million in have the coupon paid in cash, or in carbon credits. The $152 million, 5-year bond response to significant investor demand. launched in October 2016 was oversubscribed and listed on the London Stock Exchange. The Bond is an important demonstration example of leveraging markets to support a sector that needs $75 - $300 billion of investments in the next decade. IFC won the award for Best Green Bond Impact Report in the Environmental Finance Green Bonds Awards 2017 as voted for by green bond issuers, underwriting banks and other players in the industry globally. Green Bond Impact Report | Financial Year 2017 10 Spotlight on Green Bonds for green buildings Green Bond Impact Report | Financial Year 2017 11 Spotlight on Green Bonds for green buildings Green bonds are an increasingly attractive avenue to finance green EDGE reduces transaction costs for accessing green finance with its simple but robust approach, and is ideally suited for raising finance buildings. Population growth, urbanization and buildings are responsible through green bonds, as EDGE already complies with standards such as for a third of global greenhouse gas emissions. IFC is helping promote a the Green Bond Principles in the following ways: universal and accessible green performance standard to identify areas for 1. Criteria 2. Second opinion 3. Allocation process 4. Reporting cost savings in buildings. EDGE is already Since EDGE is an IFC offers training to The institution partnering with accepted international the financial institution issuing the green Currently, only a small volume of buildings are designed and certified as green. standard-setting bodies standard, the staff on how to process bond must report on Developers and consumers are only beginning to become aware of the financial to ensure that projects independent opinion green loans using environmental and are in compliance with on asset selection is EDGE. This makes social impacts of each benefits of resource-efficient buildings, and financing is not yet designed to criteria for eligible green streamlined. the validation of the financed project. EDGE support green development. In contrast, IFC’s report on Climate Investment projects. Buildings allocation process more staff can execute this Opportunities in Emerging Markets found that there is a $16 trillion investment in the pipeline can simplified. information easily potential for green buildings between now and 2030. IFC also executed a deep be greened using the from our certification free EDGE software tracking dashboard. dive analysis of market potential in 30 countries. This potential can be captured and certified at an utilizing IFC’s EDGE green buildings certification which is part of a larger affordable price. creating markets program. EDGE is a software, a standard, and a green building certification system IFC has invested in green bonds for green buildings, including transactions with tailored for emerging markets that makes it faster, easier, and more affordable Punjab National Bank in India (secured non-convertible debenture) and Guaranti than ever to build and brand green. EDGE recognizes the need for a measurable Bank in Turkey (covered bond for green mortgages). We have also invested in solution, with free software for choosing the most cost-effective ways to build green bond issuances in Colombia and Poland, where a significant portion of green; a simple green building standard of 20% efficiency across only three the financing was earmarked for green buildings. IFC’s cumulative investments categories; and a certification system to reward green building projects. EDGE in green buildings now tops $3 billion (including own account and mobilization is different from other certification systems, because it includes a financial via syndicated loans), of which almost $600 million was invested through other calculator to estimate the cost of green measures in a ‘one-stop shop’ approach. financial institutions. IFC’s EDGE Green Buildings program, green buildings This will translate to annual savings of: 8.9m 330k footprint grew exponentially this year with: 1.5m nearly 1.5 million m2 2m additional 2 million m2 8.9 million kWh of energy 330,000 m3 of water EDGE is now available in more than of floor space certified registered for certification 130 countries, with Estonia, Greece, Latvia, Positively impacting the utility bills of the customers of EDGE clients. Lithuania, and Poland joining in FY17. Green Bond Impact Report | Financial Year 2017 12 IFC Green Bond commitments by region As of June 30, 2017, there were 125 green bond eligible projects supported by Disbursements Commitments IFC’s green bond proceeds. The total committed amount for these projects is Total $4.6 billion, of which $2.8 billion has been disbursed. The current pipeline of in M$ undisbursed commitments to green bond eligible projects is $1.8 billion. FY14 936 242 FY15 1,155 956 FY16 966 754 FY17 1,555 899 178 382 284 320 66 228 265 217 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Commitments M$ Disbursements M$ Europe and Central Asia 34 143 119 203 123 112 55 9 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Commitments M$ Disbursements M$ 618 422 96 534 156 551 210 400 Middle East and FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 North Africa 155 200 233 125 117 103 62 11 Commitments M$ Disbursements M$ Latin America and FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 the Caribbean Commitments M$ Disbursements M$ South Asia 229 204 18 43 50 39 36 - - - - 23 18 21 - - FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 44 18 17 10 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Commitments M$ Disbursements M$ - - - - Commitments M$ Disbursements M$ East Asia and FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Sub-Saharan Africa the Pacific Commitments M$ Disbursements M$ Multi Region Green Bond Impact Report | Financial Year 2017 13 IFC Green Bond commitments by sector Commitments by sector in M$ 86 51 134 131 94 296 756 808 311 579 521 845 FY14 FY15 FY16 FY17 Renewable Energy Renewable Energy Renewable Energy Renewable Energy Energy Efficiency Energy Efficiency Energy Efficiency Energy Efficiency Special Climate Special Climate Special Climate Special Climate Total M$ 936 Total M$ 1,155 Total M$ 966 Total M$ 1,555 Green Bond Impact Report | Financial Year 2017 14 Featured project:Mocuba Solar (ID: 36787) IFC’s support includes a $19 million own account loan, a $19 million Mocuba Expected loan from the Climate Investment Funds, and a $17 million Development Impacts syndicated loan from the Emerging Africa Infrastructure Fund. Generate 77 GWh The project also received a $7 million Viability Gap Funding of electricity per grant from the Private Infrastructure Development Group. The year, serving remaining $14 million in project costs were raised through sale of 65,000 customers equity in the project company, Central Solar de Mocuba S.A. in Mozambique’s electrical grid Mocuba project – Mocuba Solar, IFC’s first engagement in Mozambique’s Avoid 14,800 tons Mozambique stands out amongst its South African neighbors as having renewable energy sector and first solar PV project in Sub- of CO₂ emissions the largest power generation potential in the region capable of generating Saharan Africa, is expected to deliver power to a rural area in one annually 187 gigawatts (GW) of power. This includes an estimated 23 GW from of the least developed regions in the country. The project will – renewables, mostly from unexploited solar power. Create 380 short contribute to climate resilience and adaptation by diversifying and long term jobs Mozambique’s electricity generation mix and reducing during construction Development of electrical infrastructure for renewable energy has helped dependence on the existing long-distance transmission system. and operation the country attract foreign direct investment in its natural resource sectors, – EdM will operate the plant under a 25-year Power Purchase including aluminum and titanium. Consequently, Mozambique has undergone Diversify Agreement designed to produce electricity more affordably than rapid economic growth, averaging 7.1% annual GDP growth over the last ten Mozambique’s fossil fuel based alternatives. heavily hydropower- years. Consequently, the domestic energy demand has been growing at 11% based electricity per year but the country’s electrical grid infrastructure has not kept pace. As a Given expectations of more severe droughts and floods in the mix and contribute result, only 40% of Mozambican households have access to electricity – with future, the Mocuba Solar project aligns closely with objectives to energy security rural electricity access even lower at 27%. Moreover, over 70% of Mozambique’s by generating set out by the Mozambican government Strategy for New electricity from a electricity comes from a long-distance power transmission system in the Cahora and Renewable Energy Development primarily aimed at domestic renewable Bassa hydropower plant, which is vulnerable to increasingly frequent climate accelerating rural electrification and diversifying the country’s resource related events like droughts, floods, and storms. In effect, those Mozambicans energy generation portfolio away from hydropower. Projects – who have access to electricity often experience frequent service interruptions. Contribute like Mocuba demonstrate how Mozambican renewable $19.4 million in energy projects remain a viable and attractive opportunity tax revenue, Responding to these challenges, Norway-based independent power producer for commercial financing – with the ability to drive shared concession, and Scatec Solar partnered with Mozambique’s electricity utility Electricidade de CSR benefits to the economic growth and adaptation to climate change. Moçambique (EdM), and Nortec, Norway’s development finance agency, to government over develop the country’s first utility scale 40.5 MW solar PV plant in Mocuba, the project’s lifetime Mozambique. The $76 million Mocuba Solar project is supported by a landmark $55 million project debt finance package from IFC. Green Bond Impact Report | Financial Year 2017 15 Featured project: City of Buenos Aires (ID: 38533) The remaining $350 million from the city’s transportation strategy City of BA Expected was funded through other resources and borrowing, including Development Impacts a $252.5 million financing package from the Inter-American Avoid 794 tons Development Bank (IDB). This package included two IDB Group of CO₂ emissions loans totaling $152.5 million and a syndicated loan of $100 million annually (670 from from the Industrial and Commercial Bank of China (ICBC) and Colon-Alem BRT federated investors. This financing is supporting upgrades of the and 124 from bus Ecobici bicycle sharing station, interconnection Buenos Aires CBA metropolitan area road network, including the construction of terminals) not Argentina is one of the most urbanized countries in the world, with over a bridge and relocation of the Illia Highway – improving the quality including emissions 90% of its population living in cities. The City of Buenos Aires (CBA), of life of residents in the CBA metropolitan area by enhancing saved through bicycle sharing is no exception, being the center of a metropolitan area with 14 million mobility and reducing travel time for commuters. program inhabitants that is 30% of the country’s population. The metropolitan – IFC’s investment in CBA is also helping promote thought area also acts a hub for economic activity nationwide, accounting for Recover equivalent leadership amongst cities on sustainable urban governance by to $3 million nearly half of Argentina’s GDP and hosting 6 million passengers traveling coupling this loan with a broad program of advisory support annually in through the city each business day. In this context, good governance through the LAC Cities Platform. As part of this support, IFC is economic savings of CBA transportation systems has become critical to generating and and 1.2 million hours offering technical assistance to help CBA compare economic sustaining inclusive and climate-smart economic growth in Argentina. in annual passenger benefits of transportation projects, identify alternative funding time through Colon- Without investing in public transportation infrastructure, CBA’s low income sources to expand bicycle sharing stations, promote green Alem BRT system workers are disproportionately affected by the increased use of cars through building standards through the IFC Excellence in Design for – Expand and traffic congestion, accidents and pollution. For these reasons, CBA announced Greater Efficiencies EDGE program, and develop a policy to improve access of an ambitious $400 million transportation strategy for 2016 – 2017, supported combat gender-based violence in the public transport system. 250,000 Buenos in part through an IFC $50 million loan. IFC financing is being used to finance Looking ahead, IFC is exploring the opportunity to improve the Aires’ commuters City’s solid waste management system through a potential to safe, efficient, construction of a new 3.5 km bus rapid transport (BRT) line connecting Paseo and affordable bus Colon to Avenida Alem, one of the busiest traffic corridors in Buenos Aires, as waste-to-energy plant. transportation, not well as construction of the Flores and Pacifico bus interconnection terminals. including expanded As IFC’s first subnational investment in Argentina, the City of IFC funds are also being used to establish 88 new stations to the Ecobici bicycle bicycle ridership BA project is expected to demonstrate the viability of holistic sharing network and adding 33 km of segregated bicycle lanes. Supporting CBA’s approaches to transport system planning, promoting economic financial strategy to reduce its share of foreign denominated debt, IFC offers productivity and social inclusion while enhancing environmental the option of disbursing this funding in local currency. This is expected to lead sustainability and improving city-wide safety. The project will to reduced refinancing risk, improving the City’s position for financing in future also help pave the way for increased commercial financing for capital raising efforts and potentially helping elevate its credit rating. infrastructure in the city as it pursues its ambition to be a global leader in green, inclusive, and safe urban development. Green Bond Impact Report | Financial Year 2017 16 Green Bond eligible project commitments FY17 The Impact Assessment table below lists the expected climate results from projects funded, in whole or in part, with IFC Green Bond Proceeds. The table includes only the projects committed in FY17. The projects are organized by sector and are categorized by project type as renewable energy (RE), energy efficiency (EE) or Special Climate activities which are activities that contribute to mitigation but for which GHG reduction calculations are not available. climate sector rehabilitated constructed/ Climate loan Annual GHG RE capacity Green Bond short name description Project ID reduction produced Expected Country savings volume Annual Annual Project Project energy energy Type M$ MWh kWh MWh tCO2 * Green Peninsula 33972 Tanzania EE Design and construction of green retail and office facilities 17.5 - 1,540,000 - 444 Buildings in Tanzania adhering to international best practices and conforming to international fire and safety standards. Green UniJaveriana 37307 Colombia EE Expansion of Pontificia Universidad Javeriana campus 30.0 - 864,000 - 93 Buildings compliant with IFC’s EDGE Program: construction and equipment of a new main student building, new engineering, health, science faculty and other buildings. Green Shangri-La 37908 Mongolia EE Design and construction of green building business facilities 50.3 - - - 1,475 Buildings UB 2 including a hotel, offices, and an apartment complex complaint with IFC’s EDGE Program in Mongolia. Green Elazig Health 38035 Turkey EE Construction of a 1,038-bed hospital compliant with IFC’s green 87.6 - 9,935,944 - 4,750 Buildings building standards in Elazig, Turkey. Green Rede Dor 38202 Brazil EE Design, construction and upgrade of hospital infrastructure 37.4 - 10,600,000 - 756 Buildings Growth meeting IFC’s green building standards. Green Vinte- 38374 Mexico EE Construction of 2,000 homes in line with IFC’s EDGE 17.8 - 2,928,000 - 620 Buildings NuEDGE Program in middle to low income housing sector in Mexico. In addition to reducing energy and water use by at least 20%, the project will address a long-standing housing shortage in the area. Green ISCH III El Sal 39042 El Salvador EE 22.0 - 2,318,000 - 527 Buildings Refurbishment and expansion of shopping malls in El Salvador, Nicaragua, and Honduras. The project targets Green ISCH III Hon 39043 Honduras EE EDGE certification after reducing water and energy usage, 10.0 - 2,427,000 - 1,126 Buildings and embedded energy in materials by at least 20%. Green ISCH III Nic 39044 Nicaragua EE 13.0 - 2,258,000 - 851 Buildings * Based on resource efficiency measures (summarized in Environmental and Social Review Summaries for each project), impact data was estimated using the EDGE software. Green Bond Impact Report | Financial Year 2017 17 Green Bond eligible project commitments FY17 climate sector rehabilitated constructed/ Climate loan Annual GHG RE capacity Green Bond short name description Project ID reduction produced Expected Country savings volume Annual Annual Project Project energy energy Type M$ MWh kWh MWh tCO2 Green Grivalia 38285 Greece EE Energy efficiency improvements of existing commercial 53.2 - - - - Buildings REIC buildings in Athens in line with IFC’s Green Building standards. Green LLP Peru 40154 Peru EE Construction of warehouses and logistics infrastructure in 14.0 - 858,535 - 255 Buildings Peru. Client is targeting EDGE certification with at least 20% more efficiency in water, energy, and materials. Green Consorcio RE 36053 Chile RE A second commitment to support Banco Consorcio, Chile to 30.0 - - - - Banking finance small scale Renewable Energy projects.* Green ABC Climate 37960 Brazil RE A credit line to ABC Brasil for climate related SME financing 42.8 - - - 214,748 Banking of RE and EE projects, including manufacturing of RE and EE equipment, and green buildings. ABC Bank reports and monitor results for eligible climate sub-projects using the CAFI (Climate Assessment for FI Investment) platform. Green DCM L&T 37995 India RE Investment in non-convertible debentures to finance solar 103.6 - - - 80,069.4 Banking Green Bond projects in India. Green AlexBank 38160 Egypt RE and EE Sustainable energy finance to medium and large corporates 25.0 - - - 46,590 Banking Loan in Egypt. Green FinansL EE III 38496 Turkey RE and EE Sustainable energy finance to micro-, small and medium 50.0 - - - 106,802 Banking enterprises in Turkey reducing GHG emissions and SMEs’ energy costs. Green City of BA 38533 Argentina Special Climate Integration of low emission public transportation 50.0 - - - 794 Banking infrastructure (bike lanes, bus rapid transport, metro lines, improved connectivity and sidewalks) in the city of Buenos Aires. Green DCM Green 38649 Turkey EE Investment in the Green Mortgage Covered Bond issued by 75.0 - 12,175,200 - 5,771 Banking MCB Türkiye Garanti Bankasi AS. The proceeds will support the bank’s green mortgages to residential housing in Turkey, as part of IFC's ongoing green building market creation program in the country. * For the second and all consequent commitment loans we do not estimate GHG or energy saved since they are accounted under the first commitment. Green Bond Impact Report | Financial Year 2017 18 Green Bond eligible project commitments FY17 climate sector rehabilitated constructed/ Climate loan Annual GHG RE capacity Green Bond short name description Project ID reduction produced Expected Country savings volume Annual Annual Project Project energy energy Type M$ MWh kWh MWh tCO2 Green DCM BCP 38717 Morocco RE Investment in a green bond issued by Banque Centrale 112.1 725,000 - - 494,557 Banking Green Bond Populaire. The proceeds will refinance eligible renewable energy infrastructure projects in Morocco. Green DCM BC 38731 Colombia Special Climate Investiment in the first green bond issuance in Columbia by 117.1 - - - 75,180 Banking Green Bond Bancolombia S.A. to fund renewable energy projects and green buildings in line with country’s climate change goal of reducing GHG in 20% by 2030. IFC launched the green building creation program in the country in 2017. Green DCM Dav- 39057 Colombia RE and EE Investment in a Green Bond issued by Banco Davivienda 150.0 - - - 170,521 Banking Green Bond S.A. in the Colombian Segundo Mercado supporting the creation and development of a local green bond market in the country. The proceeds will fund renewable energy, green building, energy efficiency and cleaner production projects in Colombia. Green DCM CBC- 39811 Sri Lanka RE and EE Supporting Commercial Bank of Ceylon PLC to expand access 100.0 - - - 165,040 Banking Green DPR to finance for energy efficiency projects to SMEs in Sri Lanka. Biomass Thomas 34754 Philippines RE Development and operation of biomass power plants with a 63.9 429,240 - 70 181,569 Lloyd RE total of 70MW capacity in three locations in the Philippines. The co-location of intermittent and base-load power contributes to grid stabilization. Recycling Assan-VII 37550 Turkey Special Climate Acquisition of scrap recycling plant, modernization of two 12.8 - - - - existing recycling furnaces, installation of new furnaces and production lines, including improvement of overall plant maintenance and production efficiency. The investment will lower production costs, recover metal scrap for re-use and reduce energy and water consumption. Energy Pilkington IV 38822 World EE Funding R&D expenses geared towards improving energy 24.2 - 266,990 - 45,042 Efficiency efficiency of the manufacturing processes and to produce more climate friendly products, and financing recent cold repairs, which are expected to generate an approximate 20% reduction in energy consumed at the glass furnace level. Green Bond Impact Report | Financial Year 2017 19 Green Bond eligible project commitments FY17 climate sector rehabilitated constructed/ Climate loan Annual GHG RE capacity Green Bond short name description Project ID reduction produced Expected Country savings volume Annual Annual Project Project energy energy Type M$ MWh kWh MWh tCO2 Wind Alibunar 32752 Serbia RE Construction of 42 MW of wind farm in Serbia, one of the 17.3 116,900 - 42 77,240 WPP first in the country heavily dependent on coal-fired electricity generation. The project is expected to increase the renewable energy capacity, displace carbon from the country’s thermal generation plants and reduce pollution. Wind Envision 36094 China RE Supporting expansion of Envision company that services the 50.0 - - - - windfarm industry, including procurement, assembling, on-site commissioning and operation of windfarm projects. Wind Tricon 38229 Pakistan RE Construction, operation and maintenance of a 150 MW 66.0 522,800 - 147.9 313,450 BostonWind windfarm in Pakistan. Solar Mocuba 36787 Mozambique RE Design, construction and operation of a 40MW solar PV 18.8 77,000 - 40.5 14,748 Solar power plant in Mocuba, in the Zambézia Province. This plant has dual adaptation-mitigation benefits. Solar Chint 38815 China RE Expansion of a China-based integrated solar system solution 40.0 125,108 - 165 56,129 New Energy provider, engaged in solar PV manufacturing and solar power generation enabling the company to develop solar power generation projects in emerging markets outside of China (South-South investment). Solar FRV Solar 39151 India RE 14.4 95,500 113,652 50 90,731 India Investment in a 100MWac/136 MWdc solar photovoltaic plant constructed by FRV Andhra Pradesh Solar Farm I Private Limited and FRV India Solar Park II Private Limited. This is IFC’s first ‘Green Project Bond’ globally in the infrastructure sector. The projects are 50MW each. Solar FRV Solar 40186 India RE 14.4 95,500 113,652 50 90,731 Park Transport Nibulon CL 39155 Ukraine Special Climate Expansion of one of the largest Ukrainian grain and oilseeds 24.0 - - - - companies that helps to link farmers with end markets by giving farmers the access to modern storage infrastructure and using low emission transportation. Total 1,555 2,187,048 46,398,973 565 2,240,609 Green Bond Impact Report | Financial Year 2017 20 Appendices Green Bond Impact Report | Financial Year 2017 21 Appendix A IFC’s Green Bond process IFC Green Bond Program follows best market practice, and is compliant with the Green Bond Principles. Use of proceeds Evaluation and selection Proceeds from IFC’s Green Bonds are allocated to a special sub-portfolio that In addition to meeting the green bond eligibility criteria, all projects financed is linked to lending operations for climate-related projects (“Eligible Projects”). by IFC comply with IFC’s Performance Standards for environmental and social Eligible Projects are selected from IFC’s climate-related loan portfolio, which issues and IFC’s Corporate Governance Framework and have undergone a comprises projects that meet IFC Definitions and Metrics for Climate-Related rigorous due diligence process. Activities. IFC’s project evaluation and selection criteria have been reviewed by the Center Only the loan portions of the projects are eligible for funding via Green Bond for International Climate and Environmental Research at the University of Oslo proceeds (equity investments and guarantees are ineligible). The sub-portfolio is (CICERO). CICERO’s Second Opinion is published on IFC’s website. credited as disbursements are made towards Eligible Projects. Projects eligible for Green Bond financing include the following sectors: Energy efficiency Renewable energy Resource efficiency: Cleaner technology (EE): investments in (RE): investments in investments to improve production: equipment, systems equipment, systems industrial processes, investments in and services which and services which services and products manufacturing result in a reduced enable the productive that enhance the of components use of energy per use of energy from conversion efficiency of used in energy unit of product or renewable resources manufacturing inputs efficiency, renewable service generated, such as wind, hydro, (energy, water, raw energy or cleaner such as waste heat solar and geothermal materials) to saleable production, such as recovery, cogeneration, production outputs, including solar photovoltaics, building insulation, reduction of impact at manufacture of energy loss reduction source turbines, building in transmission and insulation materials distribution Financial intermediaries: lending to financial intermediaries with the requirement that IFC’s investments are on-lent to specific climate projects that fit IFC’s green bond eligibility criteria; and Sustainable forestry Green Bond Impact Report | Financial Year 2017 22 IFC’s Green Bond process Management of proceeds Reporting All proceeds from IFC Green Bonds are set aside in a designated Green Cash IFC Green Bond Impact Report follows the GBP’s reference framework for Account and are invested in accordance with IFC’s conservative liquidity policy reporting “Working towards a harmonized framework for Green Bond impact until disbursement to Eligible Projects. Disbursement requests for Eligible reporting”, which aims at ensuring integrity of the market through increased Projects take place in accordance with IFC’s established policies and procedures transparency. and are often made over a period of time depending on project milestones etc. The report provides a list of projects that received funding from Green Bond In some cases, the climate-related component of a project supported by Green proceeds and subject to confidentiality considerations, it also provides a Bonds may be a part of a larger investment. In such cases, the Green Bond brief description of each project, the amount disbursed, and the expected portfolio only finances the eligible portion of the project. environmental impact. The report only covers projects eligible for Green Bond financing, for more information on IFC’s climate business visit Monitoring of the projects comprises regular reports by the investee company www.ifc.org/climatebusiness. on project activities and performance throughout the lifetime of investment. Green Bond Impact Report | Financial Year 2017 23 Appendix B Impact reporting policy IFC access to information policy IFC’s GHG Methodology and Climate Related Definitions and Metrics are The Access to Information Policy is the cornerstone of the IFC Sustainability available at IFC’s Climate Business website.2 Framework and articulates our commitment to transparency. The Impact Assessment table allows for quantification of a few core indicators, We seek to provide accurate and timely information regarding our investment but it is important to appreciate the limitations of data reported. The main and advisory services activities to clients, partners, and stakeholders, and considerations to adequately interpret results are: disclose the relevant information pertaining to project, environmental, Scope of results: Reporting is based on “ex-ante” estimates at the time of project and social implications, as well as expected development impact prior to appraisal and mostly for direct project effects. consideration by our Board of Directors. Uncertainty: An important consideration in estimating impact indicators is that This commitment also applies to projects funded by the Green Bond Program. they are often based on a number of assumptions. While technical experts aim Impact indicators to make sound and conservative assumptions that are reasonable based on IFC reports on a number of core indicators for projects included in the Green the information available at the time, the actual environmental impact of the Bond Program in accordance with the Harmonized Framework for Impact Reporting projects may diverge from initial projections. In general, behavioral changes or developed by a group of multilateral development banks including IFC. shifts in baseline conditions can cause deviations from projections. The four core indicators are as follows: Comparability: Caution should be taken in comparing projects, sectors, or whole 1. Annual energy savings portfolios because baselines (and base years) and calculation methods may vary 2. Annual Greenhouse Gas (GHG) emissions reduced or avoided significantly. In addition, the cost structures between countries will also vary, so 3. Annual renewable energy produced that developing cost-efficiency calculations (results per unit of amount invested 4. Capacity of renewable energy plant(s) constructed or rehabilitated . in eligible projects) could place smaller countries with limited economies of scale Interpreting impact indicators at a disadvantage and will not take into consideration country specific context. The impact indicators are tracked on a project-level basis and have not been Omissions: Projects may have impact across a much wider range of indicators pro-rated for the portion of IFC’s contribution. Special climate projects are those than captured in the Impact Assessment table and may have other important which contribute to mitigation, but do not have an agreed methodology for development impacts. Furthermore, there may be some projects for which the impact’s calculation. Investments in financial intermediaries ensure that climate proposed core indicator is either not applicable or the data is not available. finance is available for smaller clients that IFC cannot reach directly, such as small and medium sized enterprises. It is important for IFC that our partner While IFC takes efforts to improve the consistency and availability of reported financial intermediaries assess climate impacts of their investment portfolio, metrics over time, projects with climate impact can over a wide diversity of and therefore, IFC has developed the web-based application CAFI (Climate sectors and sub-sectors making complete harmonization of reporting metrics Assessment for FI Investment) which enables financial intermediary clients to challenging.   monitor results for investments in the areas of energy efficiency, renewable energy, climate adaptation, and special climate.1 1 See http://www.ifc.org/cafi 2 http://www.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/CB_Home/Measuring+Reporting/ Green Bond Impact Report | Financial Year 2017 24 Disclaimer This document has been prepared for informational purposes only, and the information herein may be condensed or incomplete. IFC specifically does not make any warranties or representations as to the accuracy or completeness of these materials. IFC is under no obligation to update these materials. This document is not a prospectus and is not intended to provide the basis for the evaluation of any securities issued by IFC. This information does not constitute an invitation or offer to subscribe for or purchase any of the products or services mentioned. Under no circumstances shall IFC or its affiliates be liable for any loss, damage, liability or expense incurred or suffered which is claimed to have resulted from use of these materials, including without limitation any direct, indirect, special or consequential damages, even if IFC has been advised of the possibility of such damages. For additional information concerning IFC, please refer to IFC’s current “Information Statement”, financial statements and other relevant information available at www.ifc.org/investors. This report was prepared by IFC’s Climate Business and Treasury Market Operations Departments. The authors are Esohe Denise Odaro, Berit Lindholdt-Lauridsen, Zauresh Kezheneva, Olga Khlebinskaya, Francisco Avendano Ugaz, Maria Antonia Panan, Rusmir Music, Sihui Yan, and Philip Neil Killeen. The report was reviewed by Sona Panajyan and Emma-Kate Symons. Icons made by Freepik from www.flaticon.com Green Bond Impact Report | Financial Year 2017 25 IFC Investor Relations International Finance Corporation 2121 Pennsylvania Avenue NW Washington, DC 20433 Email: investors@ifc.org Twitter @IFC_Investors ifc.org/investors October 2017