In 2020, an external review on the Environmental and Social Accountability Framework of the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA), the private sector arms of the World Bank Group, prompted IFC and MIGA to develop policies on responsible exit and remedy. After five years, on April 3, 2025, the Boards of IFC and MIGA approved their long-awaited Interim Remedial Action Framework (RAF). The RAF, along with the Responsible Exit (RE) Principles, approved in 2024, outlines how the institution will deliver remedy to communities harmed by the projects it finances. It is encouraging that the IFC and MIGA is the first multilateral development bank (MDB) to develop frameworks on remedy and responsible exit. If well implemented, the RAF and the RE Principles will be a positive step forward to delivering remedy to communities harmed by IFC and MIGA investments, and preventing IFC and MIGA’s irresponsible exit from projects. However, significant gaps remain in both the RAF and RE Principles, and we have yet to see how the institutions will adapt their practice to apply the new frameworks. As the institution begins to test how the frameworks will apply in specific cases, we hope to see IFC interpreting them in a way that maximizes the benefits of increased transparency and accountability for affected communities.
Remedial Action Framework
The RAF includes “enabling activities” that IFC may take to address remedy, such as technical assistance, capacity building, and development community activities. The RAF avoids committing IFC and MIGA to providing financial contributions toward remedy due to perceived legal, operational, and reputational risks, despite acknowledging that remedy often requires financial resources. IFC’s lack of commitment to provide direct funding for remedy or develop strong client-side enforcement mechanisms limits the effectiveness of the RAF and the possibility that remedial actions will materialize with any consistency.
In addition, while the RAF references financial intermediaries (FIs) and sub-projects, it fails to provide clear guidance on how to operationalize remedial measures in these complex financial instruments, despite their prevalence in IFC/MIGA portfolios. The RAF also excludes projects that have already concluded or closed, even when harm has been documented. By refusing to address legacy harm the RAF denies meaningful access to remedy to many communities negatively impacted by their projects. Finally, the RAF fails to draw a connection to the RE Principles. These two frameworks should be implemented in tandem, as one holistic approach, to offer communities the best chance of seeing environmental and social harms corrected. Applying the RE Principles and RAF jointly would also help to disincentivize the use of early exit as a client strategy to avoid accountability when harm occurs in a project.
Responsible Exit Principles
IFC’s RE Principles are intended to guide how IFC exits investments, with the aim of preventing exit from contributing to additional environmental and social harm. The adoption of the RE Principles follows growing concern from civil society organizations, including BIC and partners, about a troubling pattern of IFC divestment and early exits that have left behind serious and lasting harm in project-affected communities with no access to remedy. In some of these cases where IFC has exited investments early, it has left communities in the middle of ongoing accountability processes, failed to inform stakeholders who will be affected by the divestment, and failed to work with its clients to follow through on action plans to reach compliance with environmental and social standards and commitments before exiting.
The RE Principles address many of the concerns that have been raised by civil society and affected communities. However, they lack sufficient operational guidance and procedures, leaving their application to the discretion of staff on a case-by-case basis. IFC staff may face conflicts of interest when applying the RE Principles, especially in cases where they are also responsible for determining whether to exit a project due to unresolved environmental and social issues. This discretionary approach undermines both the credibility of the RE Principles and communities’ ability to hold IFC accountable.
We welcome the greater transparency the RE Principles could bring to IFC’s decision-making process when exiting a project, as well as the recognition that exit has social and environmental consequences. But the impact of the RE Principles will ultimately depend on how rigorously they are applied, and whether IFC is willing to act in alignment with its stated commitments. Crucially, IFC must clarify how the RE Principles relate to the recently adopted RAF. Until this happens, it remains uncertain what responsibility IFC assumes for remediating environmental and social harms before or during exit.
Recommendations
In order to fully realize the objectives of the RAF and RE principles in their implementation, IFC should:
- Develop and disclose internal procedures and operational guidance for IFC staff on how to implement the RAF and RE principles, in consultation with civil society and project-affected communities.
- Pursue clearer integration between the RAF and the RE Principles, as well as with the Sustainability Framework. The existing frameworks are not explicit about the interlinkages between the two. In addition, IFC’s recently launched Sustainability Framework update presents an opportunity to integrate both frameworks in the Performance Standards and related guidance.
- Disclose the Responsible Principles Analysis as part of the exit process, and update IFC’s website promptly to reflect project status. As part of implementation of the RE Principles in relevant projects, IFC has shared that it will develop a Responsible Principles Analysis that will be incorporated into Project Completion Reports. However, we understand that IFC does not plan to disclose this analysis, either to affected communities or to the public.
- Involve affected communities throughout implementation of the RAF and RE principles. Communities who have faced the brunt of project impacts operating in their communities should be informed and involved in the process of exit. When communities find out about planned exit through the media or other sources, it breaks trust and creates resentment. IFC should disclose plans to exit early in the process, with enough time to involve communities in the design of exit plans and to consult with them on the creation of the Responsible Principles Analysis.