Advancing climate governance in emerging markets

Genesis’ Climate Finance and Economics (CFE) team was contracted by the International Finance Corporation (IFC) to enhance sustainability practices and risk management strategies within financial institutions in emerging markets and developing economies (EMDEs).

Despite growing emphasis on climate governance, gaps in knowledge and implementation persist, especially in EMDEs. The IFC initiative aims to address these gaps by developing solutions to improve the adoption of climate governance practices.

The CFE’s primary challenge was to integrate the latest international standards, taxonomies and best practices related to Environmental, Social and Governance (ESG), sustainability and climate-related risks into existing governance framework tools of financial institutions. This involved adjusting several governance structure charters, such as assessment tools used by boards and committees.

We also developed new instruments, such as an Ownership Policy for Assets under Management and a Climate Governance Assessment tool. These will enhance the advisory capabilities of the IFC’s corporate governance team and further embed climate governance in financial institutions.

We used a variety of tools and methodologies, including research and analysis, desk reviews, stocktake and gap analysis. The team conducted a comprehensive desk review of IFC specimen documents, identifying gaps and mapping the needs of financial institutions in EMDEs. Subsequently, we highlighted areas for improvement and integration based on relevant ESG, sustainability and climate standards, taxonomies and best practices where applicable.

The collaboration between Genesis and IFC has laid a strong foundation for advancing climate governance in financial institutions operating in EMDEs. By building on the pre-existing frameworks such as the IFC’s Climate Governance Progression Matrix, which was published in FY23 to help boards of directors identify and manage climate-related risks and opportunities, Genesis has added significant value.

Our work has not only reinforced the IFC’s position as a thought leader in addressing climate risk management but has also equipped it with the tools and knowledge necessary to integrate and champion sustainable practices effectively.