International Finance Corporation Research Articles

Addressing significant impacts coherently in environmental impact statements

Determining if and why an impact is significant is a key task to inform decisions on the acceptability of a project through Environmental Impact Assessment (EIA). Hence, an Environmental Impact Statement (EIS) should be coherent in reaching conclusions about impact significance and in reverberating them in recommendations about mitigation. In this paper we present a procedure to analyze whether significant impacts are addressed coherently in an EIS, by analyzing if significance determination is grounded in information presented in the baseline and project description, supported by prediction of impact magnitude and if it unfolds into mitigation measures. In order to test the procedure, we applied it to two EIS selected from the International Finance Corporation's database. Results show that all impacts classified as significant were supported by information presented in the baseline and project description, as well as connected to corresponding mitigation measures. However, prediction of impact magnitude was not substantiated either on qualitative or quantitative methods. We argue that coherence in addressing significant impacts is one measure of EIS quality. If an EIS does not address its impacts coherently its reliability and credibility are impaired.

DÜNYA BANKASI'NIN SAĞLIK REFORMLARI ÜZERİNE ETKİSİ ; TÜRKİYE’DE SAĞLIKTA DÖNÜŞÜM ÖRNEĞİ

There has been a neoliberal change taking place for 40 years in a lot of countries within the field of health. Beginning of the change was based on Washington Consensus made in 1978. In this review, it was aimed to assess the effect of the World Bank Group (WBG) on health reforms in the example of Turkey. In the review, WBG documents, Ministry of Health of Turkey documents and scientific literature related to health reforms belonging to 1978-2018 period were investigated, additionally related events and legislative regulations were tabularized chronologically. Health reform in Turkey has spread over a long term process during the rulerships of right-winger, left-right coalition or military coup governments and it has been structured in the form of interventions being in a specific order and supporting each other. The process has been accelerated substantially and legal regulations were completed to a great extent after the Justice and Development Party, which is a right conservative party, came into power in 2002 and remained in power for four terms. Within this period, many reports have been written by the WBG, Loan agreements have been signed and legislative regulations related to reform have been made. Particularly in recent years, health reform has been actualized as a result of decentralization of the WBG and establishment of second largest center of the International Finance Corporation (IFC) in Turkey. WBG's impact on the countries within the process of health reform should be observed and monitored; and the commercialization of health care services should be controlled.

Balancing international financial institutions’ immunity with private individuals’ right to effective remedy

ABSTRACTThis article focuses on the immunity of international financial institutions (IFIs) by advocating for a balancing mechanism between the obligation to provide legal remedy to private individuals and the immunity of IFIs. In seeking to balance these conflicting interests and to ensure that neither is undermined, the article examined the doctrine of IFIs’ immunity vis-à-vis the fundamental right to effective remedy. It examined the nature of IFIs’ immunity as well as the arguments for and against it. Using the recent US Supreme Court’s decision in Jam v International Finance Corporation, it argues that the existing dispute resolution mechanisms of the IFIs are inadequate to provide for meaningful remedy to project-affected individuals. The article concludes by advocating for the use of domestic courts to close the accountability gap when IFIs operate in situations where the IFIs cannot provide an effective remedy to project-affected individuals.

Jam and Others v. International Finance Corporation

International organizations — Immunity — Absolute immunity — Restrictive immunity — International Finance Corporation — International Organizations Immunities Act 1945 (“IOIA”) — Whether IOIA conferring same immunity on international organizations as foreign governments enjoying under Foreign Sovereign Immunities Act 1976 — Whether international organizations enjoying absolute or limited immunity under United States Federal law — Whether restrictive immunity meaning unlimited exposure to suitJurisdiction — Immunity — Immunity from suit — International Organizations Immunities Act 1945 — Privileges and immunities of international organizations comparable to those enjoyed by foreign governments — Whether international organizations enjoying absolute or limited immunity under United States Federal law — Whether restrictive immunity meaning unlimited exposure to suit — Whether International Finance Corporation enjoying absolute immunity from suitEnvironment — Pollution — Construction and operation of coal-fired power plant in India — International Finance Corporation (“IFC”) making loan to Indian company for construction of plant — Non-compliance of Indian company with environmental and social action plan — Loan agreement allowing IFC to revoke financial support if terms of agreement not complied with — Petitioners bringing claims against IFC — Whether IFC having immunity from suit under International Organizations Immunities Act 1945 — The law of the United States

Transparency of Responsible Investment Environment

The study deals with measuring the investment environment transparency for responsible investment, assessing it in Ukraine, and improving it through the rating means in sustainable development. There are ratings, rankings, indices, benchmarks and sustainable development standards as unique markers in responsible investment markets, considering the ESG − criteria for screening companies. The authors prove that ratings are tools for minimizing information asymmetry at the micro and macro levels, which is quite significant, especially in the responsible investment field. Rating is a leading factor in creating a transparent environment for investment decisions and ensuring a favorable investment climate in the world (considering the sustainable development ratings and progress towards sustainable development) and the investment attractiveness of companies (considering ESG − reporting criteria on sustainable development of companies). The authors pay much attention to the world’s sustainable development ratings, which incorporate the transparency component of the investment environment. The authors analyze Ukraine’s position in these rankings and conclude that its status and investment attractiveness are deteriorating in the international arena, particularly due to insufficient transparency of the investment environment, perception of corporate social responsibility and weak progress towards the Sustainable Development Goals. Structural and dynamic analysis of the signatories and participants of the UN Global Compact network in Ukraine confirm this thesis. Despite the positive dynamics of network members, especially in recent years, their number and composition are unrepresentative towards companies, financial sector institutions, NGOs and government organizations as leaders in the values of sustainable development and social responsibility in Ukraine. Consideration of the European countries’ experience embodied in the new EU investment plan, comprising three areas and ten measures aimed at mobilizing 650 billion euros of investment in sustainable development and the investigations made by a supranational organizations network (OECD, UN Development Program, the Sustainability Accounting Standards Board). The Global Reporting Initiative, the International Finance Corporation, the Global Impact Investing Network, and other stakeholders are essential steps in increasing Ukraine’s investment environment transparency. Ensuring environment transparency of the responsible investment by introducing methods of ranking companies and countries considering their social responsibility and achievements in the sustainable development field and its goals, standardization of products, techniques and strategies of responsible investment are key priorities of Ukrainian state investment policy. Keywords: Transparency, Investment Environment, Information Asymmetry, Ranking, Sustainable Development, Responsible Investing.

Long-Run Returns to Impact Investing in Emerging Markets and Developing Economies

There is growing interest in impact investing, the idea of deploying capital to obtain both financial and social or environmental returns. Examination of every equity investment made by the International Finance Corporation, one of the largest and longest-operating impact investors, across 130 emerging market and developing economies shows that this portfolio has outperformed the S&P 500 by 15 percent. Investments in larger economies have higher returns, and returns decline as banking systems deepen and countries relax capital controls. These results are consistent with imperfect integration of international capital markets, and a core thesis of impact investing that some eligible markets do not receive sufficient investment capital. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Geospatial analysis of environmental noise levels in a residential area in Lagos, Nigeria

AbstractNoise is an inevitable part of daily life and has been identified as a cause of several health deficiencies across the world. It has increasingly become a significant concern on the health and well-being of people. Studies are required to advance knowledge on the sources and impacts of noise in residential neighbourhoods of Lagos State, Nigeria. Therefore, this study assesses the spatial variation of noise levels within a section of the Festac residential area in Lagos in line with noise limits specified by the World Bank Group International Finance Corporation (IFC) Environmental, Health, and Safety (EHS) Guidelines and the Nigerian National Environmental Standards and Regulations Enforcement Agency (NESREA) Noise Standards and Control guidelines for community noise. Data for this research come from a field study comprising measurements of noise levels from 6 observation stations and questionnaire survey with 200 respondents. The criteria for siting the stations was based on factors such as proximity to the roadside, land use and population density, while the questionnaire was administered at random to assess the peoples’ level of awareness on the sources and effects of noise. A digital sound level meter was used to measure noise level variations over a period of 3 weeks for morning, afternoon and evening periods. The measured noise levels were analysed using Analysis of Variance (ANOVA) statistics and the Kriging Geostatistical interpolation technique. Also, logistic regression was used to determine the relationship between the respondents’ perceptions to noise and noise levels. The results indicated that the mean noise levels were within the approximate range of 53.5 – 94.0dBA over the entire period. The highest mean noise levels occurred in the north-western part of the study area where a bus park is present. In general, the noise levels in the area surpass the recommended noise limit of 55dBA, and the logistic regression showed that morning, afternoon and evening mean noise levels were significant predictors of noise variation as perceived by the dwellers. Proper legislation to regulate human activities with respect to noise generation is highly recommended to the local, state and national legislators.

About some questions of classification of institutional conditions determining the structure of doing business in Uzbekistan

Subject/topic. The formation of a modern competitive entrepreneurial sector in the national economy of the Republic of Uzbekistan is directly related to such key components of the institutional support of entrepreneurial activity in the country as the interaction of small and private entrepreneurship (business) with state power, with existing financial and credit institutions, industrial and technological institutions. Goals/objectives. On a systematic basis, study the institutions that ensure the availability and transparency of information for conducting small and private entrepreneurship. To consider the problems related to the effective state regulation of entrepreneurial activity, which is manifested in the creation of an external entrepreneurial environment and in which the most favourable and effective conditions for supporting the development of entrepreneurship will be provided with the optimal combination of the interests of private entrepreneurs and the state regulator. Methodology. In the work with the help of observations, statistical analysis and targeted monitoring of the business environment, various criteria are analyzed that affect the state of the institutional and business environment. Results. The reasons leading to the emergence of ineffective shadow institutions in entrepreneurship are identified. Based on the study of international ratings, on the example of the World Bank and Doing Business International Finance Corporation ratings and business environment surveys, specific measures are proposed to improve entrepreneurship institutions in Uzbekistan. Conclusions/relevance. It is concluded that in the context of the transformation of the national economy, targeted state efforts to further remove administrative barriers to doing business by small and private entrepreneurship entities can make a difference and help the sector enterprises to take their place in the new market of the Eurasian Economic Community, as well as facilitate the entry of Uzbekistan into WTO.

Letter to the Journal The Default Rule of the Immunity of International Organizations: Budha Ismail Jam, et al., Petitioners v. International Finance Corporation

Letter to the Journal The Default Rule of the Immunity of International Organizations: Budha Ismail Jam, et al., Petitioners v. International Finance Corporation

Arbitral Institutions and the Enforcement of Climate Change Obligations for the Benefit of all Stakeholders: The Role of ICSID

Abstract In 2015, States concluded the landmark Paris Agreement, which committed to a long-term goal of “holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels”. The Paris Agreement galvanises all signatory nations in a common cause — combating climate change and adapting to and investigating its effects, and with enhanced support to assist developing countries to do so. As such, it charts a new course in the global climate effort. The goals of the Paris Agreement will only be achieved through massive investment in pursuit of a common objective. According to the International Finance Corporation, an estimated US$90 trillion investment is required to implement the Paris Agreement. The current regime of international investment agreements (IIAs) provides an invaluable opportunity to promote the investment required to achieve the Paris Agreement objectives, including mitigation, adaptation and transition from fossil fuels. However, users must take care to ensure that investment is, in fact, protected and encouraged, and to maintain critical progress in promoting international climate change policy. ICSID is one of the five arms of the World Bank Group, which recognises that “[c]limate change is a threat to the core mission of the World Bank Group”. The ICSID Convention is also designed to promote international private investment. As such, ICSID sits at an important nexus in this discussion. This article: (i) provides an overview of several influential arbitration decisions relating to international environmental disputes, and the way in which the existing climate change regime uses arbitration as a dispute resolution mechanism; (ii) examines the evolution of investment treaties, prior decisions, especially in the field of renewable energy, and the tools available within IIAs for tribunals to promote the Paris Agreement objectives; (iii) discusses what arbitral institutions have done to date, in terms of tools, procedures, rules and other mechanisms, to promote climate change expertise and facilitate the resolution of disputes in a way that is consistent with climate change concerns; and (iv) considers ICSID's position as an arm of the World Bank, particularly in light of the WBG Climate Change Action Plan commitment to scaling up climate action and aligning internal processes with intentionally agreed climate change goals.

Towards a digital work environment: the influence of collaboration and networking on employee performance within an enterprise social media platform

Today’s organizations increasingly implement enterprise social media platforms to provide a digital work environment. Hereby, organizations expect various benefits, such as improved employee performance. In our research, we aim at uncovering how the introduction of enterprise social media platforms can support creating a digital work environment and how this digital work environment can influence an employee’s performance. To answer these research questions, we perform a survey-based investigation among 247 employees of an international financial corporation headquartered in Germany. For our investigation, we conceptualize that a digital work environment must consist of a task and a social dimension. Our findings show that enterprise social media platforms address both work environment dimensions by enabling collaboration, as well as networking among employees. We also find that employees who collaborate and network via enterprise social media platforms, increase their work performance by becoming more efficient and also more innovative. We find that networking’s impact on an employee’s innovativeness is significantly stronger than that of collaboration. Finally, we show that our research contributes to the literature by, for example, shedding light to the relationship between ESM use and employee performance. Furthermore, by showcasing the relevant ESM platform functionalities that influence the collaboration and networking impacts, we provide insights to the actual IT artifact. Building on this, our study also yields various practical implications, such as proving which of the ESM functionalities are essential when increasing the employees’ collaboration and networking, and ultimately increasing their performance.

Jam v. International Finance Corp.

In Jam v. International Finance Corp., the U.S. Supreme Court held that the International Organizations Immunities Act of 1945 (IOIA) affords international organizations (IOs) the same immunity from suit in U.S. courts that foreign governments currently enjoy under the Foreign Sovereign Immunities Act of 1976 (FSIA), which codifies the restrictive theory of foreign sovereign immunity. The International Finance Corporation (IFC) had argued that the IOIA, which grants international organizations the “‘same immunity’ from suit … ‘as is enjoyed by foreign governments’” (p. 15), should be understood to provide international organizations with absolute immunity, which it argued foreign governments enjoyed prior to the United States’ explicit adoption of the restrictive theory in 1952. Under the restrictive theory, a foreign state is immune from suit for its sovereign acts (acta jure imperii), but not for its commercial acts (acta jure gestionis). By interpreting language in the IOIA as granting the “same immunity” to international organizations as foreign governments enjoy at the time the suit is filed, the Supreme Court aligned the regime for IO immunity with that of foreign state immunity, except in cases where the IO's founding charter provides a different rule or where the executive branch has explicitly limited immunity. It remains to be seen what IO activities are deemed “commercial” under this regime and what types of transactions are found to have a sufficient nexus to the United States to fall within the FSIA's commercial-activity exception.

МАРКЕТИНГОВІ ДОСЛІДЖЕННЯ ПЕРСПЕКТИВ РОЗВИТКУ ВЕЛО-ІНФРАСТРУКТУРИ НА ОСНОВІ СТРАТЕГІЇ «ОДЕСА-5Т»

МАРКЕТИНГОВІ ДОСЛІДЖЕННЯ ПЕРСПЕКТИВ РОЗВИТКУ ВЕЛО-ІНФРАСТРУКТУРИ НА ОСНОВІ СТРАТЕГІЇ «ОДЕСА-5Т»

Global Financial Crisis and State’s Social-Economic Differences – a Deterrent to Corporate Governance Convergence?

Various socio-economic incidences have placed a strain on the abilities of global organization to effectively implement a corporate convergence, the challenge that continues to have impact on the cross-border business transactions. Couple with the Enron, World-Com, Pamlat, Nortel Networks and many other financial scandals that plagued multinationals, each nation has kept mum on the convergence of corporate governance systems rather, they have implemented a divergent approach that encourages individualism over collectivism. The actions of the European Union through the International Financial Corporation has focused on establishing directives to enhance transparency, for greater shareholder engagement and to support company growth and competitiveness. Other programs and institutions were launched to further support effective corporate governance across European union countries. Organization of Economic and Community Development (OECD), Basel Committee for Banking (BCBS), EU developments, Investor developments, Accounting, Audit, and Ethics Standards developments are some of the recent developments across Europe. In America, programs like Sarbanes Oxley (SOX), Dodd Franklin were important legislation aimed at curbing financial misappropriation and lack of transparency in publicly traded companies. In Ontario Canada, Bill 198 was implemented to protect investors against fraud. For the purpose of this project, emphasis will be laid on the convergence of the corporate governance. Can it be achieved, and under what circumstances can there be a global convergence of corporate governance. What are the constraints, and the possible solutions? The pace at which the globalization is connecting the world together on a common market place called cyberspace, the need to have a convergent corporate governance that will outlaw divergent, and or, the peculiarities of divergence over convergence. Can the two work together, yet able to address the concerns of differences in legal, cultural, ownership, actors and other structural differences. In the end, recommendations will be proposed on the best strategy to unite the global organizations around common corporate governance systems.

Досвід використання Міжнародною фінансовою корпорацією національної валюти для підтримки проектів в Україні

Досвід використання Міжнародною фінансовою корпорацією національної валюти для підтримки проектів в Україні

Does partnering with the World Bank shield investors from political risks in less developed countries?

This study explores whether partnering with the World Bank’s International Finance Corporation (IFC) protects foreign investors from aggressive actions by host countries’ governments. Building on the obsolescing bargaining model, we theorize that host states fear that hostile actions towards IFC-supported investments will damage their relationships with the World Bank. Within this context IFC support deters host government aggression towards investments. We assess our argument using country-level panel data as well as interviews with a sample of high-level managers. Findings suggest that IFC-support helps to reduce host state aggression against investing firms.

Securing human rights through risk-management methods: Breakthrough or misalignment?

AbstractThis is a study of three authoritative instruments that promote a common idea: economic activities and development should be conducted with respect for human rights. The World Bank Framework, the International Financial Corporation Performance Standards and the UN Guiding Principles on business and human rights are examined to get clarity on how human rights risk management differs from more conventional management approaches. The focus here is on prevention of human rights impacts. Do the three instruments employ approaches adequate for handling human rights risks? To understand prevention, one needs to reflect on what makes human rights a particular type of impact and account for the regulatory context of protecting human rights transnationally. The analysis identifies four ‘offsets’ through which economic decision-makers can distort their human rights performance and place causal observers at a disadvantage. Prevention becomes an issue of how to relate to ‘residual impacts’ on human rights. This article finds that the ‘hierarchy or mitigation’ and even ‘human rights due diligence’ under illuminate the challenge. The proposal here is to add ‘reduction at source’ as a parameter of human rights risk management. The sources for this analysis are the three instruments, and the practice of implementing organizations, particularly IFC projects, CAO cases, impact assessments, and CSR reports. In conclusion, the potential for cross-fertilization among instruments is genuine. Increased clarity on prevention of human rights impacts should assist economic decision-makers in their risk management task and casual observers in assessing their performance.

Sustainable Investment and its Relationship to Political Risk Reduction

This article explains the relationship between an investor proposing an investment which is considered “sustainable” to a potential host state and the reduction in political risk if the investment is accepted because of its sustainability. Also, if the investment is sustainable, within the concepts developed by such organizations as OECD, UNCTAD, Global Compact and International Finance Corporation of World Bank, there will be greater likelihood that such investment will be accepted by the proposed host state. The article then discusses assistance that home states often provide for outward foreign direct investment by their nationals, and why home states see this activity as beneficial to the home state. Host states that want to encourage inward foreign direct investment also have Investment Promotion Agencies whose role is to work with potential foreign investors to bring in desirable FDI. Investment facilitation as a global matter and the efforts of WTO to encourage FDI. The article also refers to the OECD Quality FDI Toolkit and its ongoing development.

The political economy of International Finance Corporation lending

Much of the International Finance Corporation's (IFC) lending benefits private companies from rich countries and supports projects in middle-income countries. Large corporations such as Lidl or Mövenpick have received its loans for highly profitable investments. This contrasts to some extent with the IFC's official mandate, which is to finance poverty-reducing projects for which private capital is not available on reasonable terms. Investigating a potential driver of this mismatch, we argue that some governments can influence the allocation of IFC loans to the benefit of private companies in their countries. Using new data for more than 3000 IFC projects over the 1995–2015 period we show that (joint) IFC Board membership of countries where borrowing companies are based and of countries where the projects are implemented increases the likelihood that these countries receive IFC loans. This has implications for the debate on leveraging private-sector investments for development.

Analyst coverage and forecast accuracy when CSR reports improve stakeholder engagement: The Global Reporting Initiative‐International Finance Corporation disclosure strategy

AbstractAware of the information needs of stakeholders, and of the important deficiencies often present in corporate social responsibility (CSR) reports on economic, social, and environmental issues, companies leading in sustainability have initiated a new communication strategy in which their CSR reports take into account both the Global Reporting Initiative (GRI) guidelines and the International Finance Corporation (IFC) Performance Standards, in an approach termed the GRI‐IFC disclosure strategy. We examine whether this innovative practice provides a better reflection of a firm's social and environmental dimensions and therefore improves the forecasts made by financial analysts, who are significant stakeholders in this respect. Our analysis of an unbalanced sample of 750 international companies, located in 19 countries and operating in 22 business sectors during the years 2011–2016, in which a logistic regression is applied to the panel data, reveals the existence of a two‐way relationship between the adoption of the GRI‐IFC disclosure strategy and the level of analyst coverage. Moreover, the use of this strategy, and the resulting increase in coverage, has a positive impact on the accuracy of analysts' forecasts.