IFC’s new ‘responsible exit’ policy: Milestone or a missed opportunity?

The International Finance Corporation, the World Bank’s private sector arm, has released a new policy on how it exits investments; guidelines civil society organizations have sought for years to ensure the organization does not leave communities in the lurch when it leaves a project.

Exiting is a natural part of the investment cycle, but the timing and manner of the IFC exit can have a significant bearing on the potential impact of a project, including the resolution of any environmental or social problems that arise. IFC has come under scrutiny in the past for exiting investments after complaints were filed, seeming to shirk responsibility, and then claiming it no longer had leverage over the project, civil society organizations said.

The responsible exit principles only apply to investments where IFC leaves, but not if the client pulls out early or prepays its loan. That limits the policy, Stephanie Amoako, policy director at Accountability Counsel, told Devex.

The approach to risk management is also flawed and could undermine IFC’s ability to make informed decisions about how to divest, Megan Pearson, a policy associate at Accountability Counsel, told Devex.

Read the full article featuring Accountability Counsel on Devex here.