IFC Environmental & Social Performance Standards: Soft Law Project & Company Financing Partnerships towards Good Environmental Governance, Business Sustainability and Sustainable Development in Developing Countries

Abstract

This study is an outcome of a previous work by the author captioned ‘Sustainable Development: A Soft Law Concept Transforming SD-Oriented Initiatives of the UN System into Hard Law Instruments in UN Member-states and Promoting Partnerships around the Globe’. The previous work establishes that there are numerous examples of SD-oriented partnership mechanisms associated with business sustainability, environmental protection, good public sector governance (good governance: GG) and sustainable development (SD), of which the Sustainability Framework of the International Finance Corporation (IFC) is one. The aim of this study is to examine how the IFC’s environmental and social (E&S) performance standards, as key aspects of the corporation’s sustainability framework, are being implemented as soft law mechanisms in developing countries (also called developing markets) and emerging economies (also known as emerging markets), where the IFC is engaged in financing, managing developmental projects and corporate financing in various ways. The sustainability framework and its component E&S standards are international benchmarked standards that have the potential to boost business sustainability and overall SD in developing markets and economies in transition. The study arrives at the finding that the IFC’s sustainability framework and the E&S standards ingrained in it are engineering the E&S performances of IFC clients engaged in IFC project and corporate financing schemes in developing countries and emerging economies, as well as contributing to business sustainability. These standards are also boosting environmental protection, good environmental governance, corporate social responsibility, social responsibility of host governments and generating SD-oriented partnerships, such as Private Sector Partnerships and Public-Private Sector Partnerships, which contribute to betterment of the welfare of citizens, generic human wellbeing and environmentally-sound and socio-economically equitable growth, prosperity and SD in developing countries. This is particularly so in developing countries where domestic environmental laws, corporate responsibility systems and government social responsibility fall short of the stipulations of the IFC’s sustainability framework and its component E&S performance standards. Keywords: International Finance Corporation (IFC); Sustainability Framework; Project Financing; Corporate Financing; Developing Countries; Emerging Markets; Environmental and Social Performance (E&S) Standards; Sustainability Framework; Soft Law; Business Sustainability; Sustainable Development; Good Environmental Governance (GEG); Government Social Responsibility (GSR); Corporate Social Responsibility (CSR); SD-oriented Partnerships; Private Sector Partnerships; Public-Private Sector Partnerships (PPSPs); Impact-benefits; Human Wellbeing. DOI: 10.7176/IAGS/81-07 Publication date: April 30 th 2020