FY20 Social Bond Impact Report

Social Bond Impact Report Financial Year 2020

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About IFC

IFC – a sister organization of the World Bank and member of the World Bank Group – is the largest global development institution focused on the private sector in emerging markets.We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities where they are needed most. In fiscal year 2020, we delivered $22 billion in long- term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity, visit www.ifc.org .

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Social Bond Impact Report Financial Year 2020

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Table of Contents

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FY20 Highlights Cumulative Highlights A Letter from the Treasurer 4 Your Information with the VP of Partnerships, Communication, and Outreach What is Eligible for IFC Social Bond Funding? IFC Social Bond ProgramOverview for FY20 From Pandemic to Systemic Action: How IFC’s Funding Program adapted to the crisis Views from the Funding Team: The Situation Room

8 9 10 11

Commitments and Disbursements by Region Commitments and Disbursements by Sector IFC Social Bond Market Engagement

12 15 16 19 20 22 24 34 38 40 40

Thought Leadership Feature COVID-19 : IFC's Relief Efforts

Spotlight on Microfinance Featured Project: Conclina Featured Project: KEP Trust Social Bond Eligible Project Commitments for FY20 Appendix A: IFC Social Bond Program Process Appendix B: Description of Adjustments to Commitments and Disbursements from previous years Authors and Contacts Legal Disclaimer

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IFC’s Social Bond Program FY20 Highlights

FY20 projects align with the following Sustainable Development Goals:

Over the next 5 years,

IFC's social bond eligible projects committed in FY20 are expected to:

Feed 3 million people

55 new projects committed across 10 sectors including:

Reach 703,610 farmers

Supply power to 1.9 million connections

$1.6 billion raised through 11 social bonds in 4 currencies 1

Provide 776,311 microloans

Agri- business

Provide 34,185 agrifinance loans

Provide 405,167 residential housing loans

Education

Gender Finance / Banking on Women

Directly employ 5,500 people

Food & Beverages

Housing Finance

Health

Distribute 48,147 loans to women

Reach 703,255 patients

Electric Power

Infra- structure

Support 18,035

COVID-19 facility impact

COVID-19 Response Finance

micro, small, and medium enterprises

Micro- finance

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1 Currencies: Australian Dollar, Swedish Krona, US Dollar, Peso Uruguayo

IFC’s Social Bond Program FY17 - FY20 Cumulative Highlights

4-year Impact Summary 3 Reach 2,637,591 farmers Feed 3 million people Supply power to 7.3 million people 4

Provide 442,558 residential housing loans Reach 43,060,000 people with telecoms, media, and technology services Treat 1,600,000 malnourished children Integrate 15,111 micro, small and medium enterprises into the value chain Provide 17,996,822 microfinance loans Provide 34,185 agrifinance loans Enroll 137,441 students Distribute 6,335,054 loans for women Expand access to medicine through 17,948 outlets Provide 832,000 hectoliters of water, equivalent to providing drinking water for 113,973 adults for a year 5

IFC launched its Social Bond Program in 2017 after merging the Banking onWomen and Inclusive Business Bond Programs.

39 social bonds raised $3.1 billion in 10 currencies 2

153 projects committed totaling $4.3 billion

Reach 703,255 patients Directly employ 5,500 people

2 These numbers specifically refer to bond issuances in the period FY17-FY19 and exclude $296 million issued in Inclusive Business bonds in FY15-FY16 and $268 million issued in Banking onWomen bonds in FY17-FY20. 3 The aggregate ex-ante figures include the targets from all commitments that were social bond eligible; some of these projects may have since closed. 4 Figure includes connection and number of customer served (i.e. one connection is one customer) 5  https://www.who.int/water_sanitation_health/dwq/nutrientsindw.pdf

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A Letter from the Treasurer

John Gandolfo IFCVice President and Treasurer

T he COVID-19 crisis has impacted the health and livelihoods of many millions of people across the planet, and it continues to impose an enormous toll on the poor. The ongoing global recession threatens decades of progress towards raising living standards in the developing world. TheWorld Bank estimates that as many as 150 million people could fall into poverty in 2021. More than ever, we need innovative solutions to bridge the estimated $2.5 trillion annual funding gap so that the world can meet the Sustainable Development Goals by 2030. That means dramatically scaling up investments in sustainable finance within the next decade. The good news is that social bonds can help us get there. This past year, as complex social issues arose directly from the turmoil of the pandemic, social bonds came to the fore of the sustainable bond market. This past year, 2020, saw $142 billion in global social bond issuances, a substantial increase from the $17.4 billion issued in 2019. We are proud to have played a role in the wave that brought social bonds to the menu of investors worldwide – helping women entrepreneurs and women-owned small businesses in need of access to credit, low-income families lacking quality health care and clean water, and smallholder farmers trying to take their crops to market. These underserved communities are among those most adversely affected by COVID-19. That’s why at IFC we are responding through what I call our “3R” approach: relief, restructuring and resilient recovery.With our focus firmly on

creating projects and generating investments in developing countries, in FY20 we committed $22 billion in long-term finance – an almost 15 percent year-on-year increase – including $11.1 billion invested for our own account. The poorest and most fragile countries accounted for 25 percent of IFC’s own account long-term finance commitments. IFC also committed $1.8 billion in long-term finance for financial institutions specifically targeting women. At the same time, we stepped up to help the world fight the effects of the pandemic.We worked with IFC’s Board to create an $8 billion- fast-track COVID-19 facility to provide liquidity to our existing clients, both for financial institutions to on-lend to small and medium-sized enterprises and women as well as for real sector clients. We have committed 50% of this facility in just six months. We also received approval for a $4 billion global health platform that allows us to invest in companies to increase the supply of critical medical supplies to developing countries, including face masks, ventilators, testing kits, and vaccines. IFC is leveraging its strategy and experience to bring the private sector back to emerging markets to create the economic growth and the jobs that we need to bring recovery.We are doing this in several ways, and social bonds have played a key role in mobilizing private capital towards sustainable development needs during the pandemic. As we work alongside investors looking for increased positive social impact, especially during COVID-19, we are pleased to present IFC’s new Social Bond Impact Report as a bid to uphold transparency and integrity in the growing market.

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4 Your Information A Chat with Karin Finkelston, the VP of Partnerships, Communication, and Outreach

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How is IFC working with partners to help developing countries rebuild from the COVID-19 crisis?

What is the role of donor partners in IFC’s Global Health Platform? IFC’s $4-billion Global Health Platform is supported by donor partners and forms an integral part of theWorld Bank Group’s response to COVID-19 by supporting the private sector’s ability to respond to the challenges. Efforts to improve production, supply, and delivery of critical health care products and services in developing countries to help fight pandemic received a boost when Norway committed NOK 72M (US$8.4M) to the platform, and the Government of Japan announced it would provide $10million. The partnership with Norway will help to create projects and open markets for increased local manufacturing of health care products and service capacities in developing countries; improve resource efficiency in the pharmaceutical sector while increasing access to safe and quality health care services. Japan’s contribution will be used to further boost health care quality services and scaling up API production globally.

Partnerships are critical to IFC’s mission, and today we’re working even more closely with governments, corporations, foundations, and other multilateral organizations and development institutions to foster innovative partnerships that help create markets and mobilize private sector investment for a resilient recovery. In FY20, our development partners committed $288 million for IFC’s upstream and advisory services and $22 million for blended finance initiatives to support private sector investments in countries most affected by fragility and conflict, as well as projects related to gender, climate, financial inclusion, sustainable infrastructure, agribusiness, and manufacturing.

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Which international institutions and global platforms is IFC partnering with currently?

To strengthen the role of the private sector in development finance, IFC engages with key international institutions and global platforms, including the United Nations, the Organization for Economic Co-operation and Development, Multilateral Development Banks, Development Finance Institutions (DFIs),World Economic Forum, and the G7 and the G20. Our 3.0 Creating Markets strategy is in line with the strong international call to work on a new financing approach focused on the mobilization of the private sector.Working with our partners, we are supporting policy and regulatory reforms that promote private investment, develop projects upstream, and introduce blended finance to de-risk projects and create markets. IFC and other DFIs are collaborating to develop innovative models to increase their impact in low-income, fragile, and conflict-affected countries. IFC has developed the Joint Collaboration Framework Agreement (JCFA) to provide a structure for increased collaboration among DFIs. Proparco, the private arm of the French Development Agency and DEG – Deutsche Investitions-und Entwicklungsgesellschaft – have signed the JCFA. The JCFA builds on existing partnership frameworks, to cover a range of new areas of collaboration, including on Upstream and on project co-financing. The agreement was expanded to facilitate cooperation on COVID-19 responses, and IFC has partnered on the DFI Collaboration Pilots at the country level with Proparco; the CDC Group, the United Kingdom’s development finance institution; the Swiss Investment Fund for Emerging Markets; the African Development Bank; and the Africa Finance Corporation.

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Can you tell us about IFC’s work with trust fund partners in the COVID-19 era?

IFC has reoriented its support from partners to focus on pandemic response along with a clear focus on our strategic priorities and 2030 goals to support a sustainable, inclusive and resilient recovery. In Egypt, with the support of partners, IFC is creating a business enabling environment for SMEs through a comprehensive approach which includes financing as well as advisory services to ensure sustainable growth for SMEs. Another example is the Facility for Investment Climate Advisory Services (FIAS), one of IFC’s largest and oldest trust funds. In Haiti, where the livelihoods of 50,000 garment industry workers are at risk, FIAS-supported teams are helping the sector redeploy capacity to produce personal protective equipment for health workers caring for COVID-19 patients. Lastly, with the help of partners, IFC is working through the Joint Capital Markets Program (J-CAP) to make longer term, local currency financing products available in Kenya to make it more affordable for people to buy homes.

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What is Eligible for IFC Social Bond Funding?

The Social Bond Program supports projects that aim to achieve positive social outcomes especially but not exclusively for a target population. Social project categories as indicated within the Social Bond Principles include, but are not limited to, providing and/or promoting: A  Affordable basic infrastructure (e.g. clean drinking water, sewers, sanitation, transport, energy) B  Access to essential services (e.g. education and vocational training, healthcare, financing and financial services) C  Affordable housing D  Employment generation including through the potential effect of SME financing and microfinance E Food security and sustainable food systems F  Socioeconomic advancement and empowerment

These include IFC-financed projects that meet the criteria as stated above, such as: IFC’s Banking on Women : Projects that lend to financial intermediaries with the requirement that IFC loan proceeds be on-lent to women-owned micro, small, and medium enterprises. IFC’s Inclusive Business : Projects with companies that integrate underserved people at the base of the pyramid into a company’s value chain. For example, projects that: • Provide health or education services • Develop affordable housing • Expand access to telecommunications, such as broadband or mobile phones • Provide electricity or water services • Source from small farmers • Offer access to finance for microentrepreneurs • Sell through small mom-and-pop retailers IFC’s COVID response projects : Projects selected from IFC’s COVID-19 Response Financing Facilities. This package makes available fast-track financing to existing IFC clients that demonstrate a clear impact on their businesses from the COVID-19 pandemic. Among other criteria, clients must be in good standing with IFC and compliant with environmental, social, and governance (ESG) requirements.

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IFC Social Bond ProgramOverview for FY20

I n financial year 2020, IFC’s Social Bond Program proved its significance more than ever. The program is a critical tool to raise and channel capital towards supporting low-income communities and private sector clients impacted by the socio-economic consequences of the pandemic. During the financial year from July 1, 2019 to June 30, 2020, IFC issued 11 social bonds totaling $1.6 billion through four currencies – a record volume since the program’s inception in 2017. This brings IFC’s cumulative social bond issuance to $3.1 billion across 39 bonds in 10 currencies. IFC was one of the first issuers to launch a USD public benchmark social bond on the same day that theWorld Health Organization declared the coronavirus outbreak a global pandemic on March 11, 2020. The 3-year $1 billion social bond pays a coupon of 0.5 per cent and is the largest bond under the program to date. It was issued subsequent to IFC's COVID-19 response package announcement and during a period of market turbulence. IFC worked with market participants to successfully establish the first benchmark social bond issued in this period. The trade attracted tremendous interest from investors with a final order book of over $3.4 billion, testament to investors keenly interested in supporting the alleviation of social issues.

The following week, on March 17, IFC issued a five-year 3 billion Swedish krona (SEK) social bond, equivalent to $301 million, the first social bond issued by IFC in this currency. It was placed with Alecta, Folksam, and LF Liv – three Swedish investors and early supporters of IFC’s sustainable bond programs – and demonstrated that investors in this currency were eager to invest in issuances related to COVID-19. Shortly after, on March 25, IFC returned to the SEK market to facilitate additional demand and upsized the bond by another SEK 450 million, or $44.3 million equivalent. As a result, IFC was able to raise over $1.3 billion for the Social Bond Program in March. The first week of April, IFC established the first new sustainable bond line in the Australian dollar (AUD) market of 2020, issuing a 15-year 200million AUD social bond, equivalent to $122.8 million. It also marked the first newAUD line by a supranational, sovereign or agency issuer in 2020. The bond was placed exclusively with Nippon Life and increased four more times in May and June to a total outstanding volume of AUD 405 million. Other social bonds issued in the first half of IFC’s fiscal year 2020, from July until December, include a trade with U.S. retail investors in the U.S. dollars and a private placement in a new emerging market currency for the program: Peso Uruguayo.

FY20 Social Bond Issuances Volume: $1.6 billion Number of social bond issues: 11

Cumulative Social Bond Issuances Volume: $3.1 billion Number of social bond issues: 39

FY20 Social Bond Issuance by Currency (percent)

Cumulative Social Bond Issuance by Currency (percent)

USD 62,3% SEK 21,4% AUD 16,1% UYU 0,2%

USD 57,7% AUD 25,5% SEK 11,2% MXN 2,6% BRL 1,9% RUB 0,3% TRY 0,3% JPY 0,3% UYU 0,1% ZAR 0,1%

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From Pandemic to Systemic Action How IFC’s Funding Program adapted to the crisis

Tom Ceusters Director, Treasury Market Operations

So, IFC led the market from the earliest stages. But did the issuance process result in changes to the transparency standards upheld by the Program? IFC’s Social Bond Program, which began in 2017, expanded dramatically in 2020. The program has supported projects within IFC’s COVID-19 response package as well as projects from IFC’s established Banking onWomen and Inclusive Business programs. The cumulative volume raised from the Social Bond Programmore than doubled, bringing the total to over $3 billion since the program’s founding. At the same time, transparency and standards remain key facets of the program, as IFC strives to uphold best practices with the program. In this edition of the report, we have presented a list of projects financed using the proceeds of the social bonds, making transparent the positive social outcomes that a COVID-19 bond is targeting across real and financial sectors, for example, farmers reached, direct employment, among others. Looking ahead, what do you think will boost the growth of the social bond market? Globally, corporations are actively aligning their policies, business models and supply chains behind the 2030 Sustainable Development Goals, and the investment community is also embracing the agenda. Social bonds have gained traction as a means of channeling funds toward SDG-related sectors and objectives. Compared with 2019, social bonds issuance was up 728% in 2020. Indeed, a majority of the social bonds issued in 2020 were related to funding aimed at mitigating issues stemming from the COVID-19 crisis, andwe continue to see a notable rise in social bond issuance in response to the pandemic. Social bond investing, as a form of responsible investing, is now a mainstream concept, but it is imperative that we continue to work even harder to meet the world’s ambitious development goals.With much of the global economy still facing challenges, our mission is more urgent than ever.

This has been a crisis year and required urgent action. Can you tell us how IFC’s Social Bond Program responded to the COVID-19 pandemic? Over the past year, our world has changed irrevocably. In the realm of sustainable finance, the roles of issuers, investors, underwriters and data providers have become even more critical. The COVID-19 pandemic roiled financial markets, disrupted the businesses of many of IFC’s clients, and severely impacted the private sector globally. IFC responded quickly to cushion the blow, announcing a $8 billion package of fast-track financing. Amid this challenging environment, we also issued a USD $1 billion social bond.We issued this landmark bond—our largest to date—under our existing social bond framework, which fully aligns with the Social Bond Principles, as published by the International Capital Markets Association. Proceeds from the bonds go toward projects that provide or increase access to essential services such as healthcare, water, finance and infrastructure for the underserved across the developing world. The challenge was to get the timing right amid extreme market volatility. Ultimately, we executed the trade after the worst day in the financial markets since the 2008 crisis. Nevertheless, the deal garnered exceptional investor interest, with demand of over USD $3.4 billion, owing largely to a proactive execution strategy and investor engagement. The impressive demand is a testament to the fact that investors are keenly interested in supporting the alleviation of social challenges in developing countries. Subsequently, the social bond market saw an increasing variety of issuers and larger volume transactions.

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Views from the Funding Team

The Situation Room Reliving IFC’s $1 billion social bond issuance

Zauresh Kezheneva Associate Funding Officer

I n March 2020, following the day theWorld Health Organization officially declared the coronavirus a pandemic, IFC issued its largest-ever social bond. This made IFC the first issuer to come to the market with a social bond linked to the institution’s COVID-19 relief measures. IFC’s global funding teammanaged to successfully execute the $1 billion transaction in extremely challenging and uncertain market conditions. From the planning to the execution of the bond, the teamwas committed to maintaining a strategic vision for the unprecedented trade.

“The bookbuild was remarkable. Despite the short bookbuild window, we received orders in excess of $3.4 billion from over 80 investors across the world. It proved that IFC can access funding even during the most turbulent times. Also, for the first time, we allocated to investors based on their commitment to ESG investing, which added an additional sustainability aspect to the trade.”

Elena Panomarenko Head of Funding, Europe

Flora Chao Global Head of Funding

“We put together a syndicate group consisting of Bank of America, Barclays, Crédit Agricole and DZ Bank and opened the books on March 11 at 17 basis points over mid-swaps. The flow of investor orders proved there was abundant support for social bonds. For me that is the pandemic’s silver lining: the acceleration of building social values into the fabric of finance.”

“The precipitous drop in swap spreads that occurred while we were pricing the transaction caused one banker to say to me, “This will be one you will remember on your death bed.” Yet at the end of the trade, we were grateful that our investors remained in the transaction, supporting our social and COVID- related projects.”

Yuri Kuroki Funding Officer

Marcin Bill Head of Funding, Asia-Pacific “I have vivid memories of this issuance. We decided to opt for an expedited, intraday execution because of pre-launch uncertainties and unprecedented swap spread volatility. This must have been the trickiest bond we have ever issued. It was quintessential funding for purpose at a difficult time – the sort of transaction that makes a difference.”

“The overwhelming investor support allowed us to tighten the spread and eventually price at a spread of 13 basis points over mid-swaps which translated to 4.4 basis points over US Treasuries. I think that our direct engagement with investors on the use of proceeds of a social bond like this really benefitted the trade. It was a light of encouragement to see that investors are keen to join us to support those affected by the pandemic.”

Hiro Hiroyasu Associate Funding Officer

“Prior to the launch of the trade, we worked together with our Investor Relations team members and proactively reached out to investors to get a sense of their appetite for a social bond. It turned out that in spite of the market crisis, investors were interested in supporting social issues so demand was aplenty, and this gave us a final push to go ahead as soon as the economic conditions lined up.”

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Social Bond Eligible Projects: Commitments and Disbursements by Region

(USD millions)

As of June 30, 2020, IFC has committed 153 projects eligible for support from social bond proceeds. The total committed amount for these projects is $4.3 billion.

Multi-Region

FY17 FY18

FY19 FY20

Commitments Disbursements

- -

- -

- 120 - 120

Europe and Central Asia FY17 FY18

FY19 FY20 20 166

Commitments 109

177

Disbursements 107 154

41

76

Middle East and North Africa FY17 FY18

FY19 FY20

Latin America and the Caribbean

Commitments Disbursements

12 106

7

116

South Asia

FY17 FY18

FY19 FY20

7

5 108

21

FY17 FY18

FY19 FY20

Commitments 165 Disbursements 100

151 320

317

Commitments Disbursements

42 108 205

319

122

383 146

8

86

237 227

East Asia and the Pacific FY17 FY18

FY19 FY20 141 586 53 279

Sub-Saharan Africa

Commitments Disbursements

137

71

FY17 FY18

FY19 FY20 130 532

33 168

Commitments 155 104

Disbursements 109

79

22

97

Disbursements for FY17 and FY18 are corrected from the FY17 and FY18 reports to include the disbursements made from projects committed in FY14-FY16 under the Banking onWomen and Inclusive Business Bond Programs.

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Social Bond Eligible Projects: Commitments and Disbursements by Sector (USD millions)

Agribusiness

ICT

Infrastructure

FY17 FY18

FY19 FY20

FY17 FY18

FY19 FY20

FY17 FY18

FY19 FY20

Commitments 119 Disbursements 104

56 41

75 31

273

Commitments Disbursements

- -

137

15

-

Commitments Disbursements

20

- -

- -

28 20

68

31

105

9

13

Education

Gender Finance

Other Finance

FY17 FY18

FY19 FY20

FY17 FY18

FY19 FY20 253 407 215 326

FY17 FY18

FY19 FY20

Commitments Disbursements

- -

5

- 106

Commitments

- 241

Commitments Disbursements

3

4

- 1

- 1

1

1

-

Disbursements 40 189

-

1

Food & Beverages

Housing Finance

COVID-19 Response Financing FY17 FY18

FY17 FY18

FY19 FY20

FY17 FY18

FY19 FY20

FY19 FY20

Commitments Disbursements

29

37 15

18 29

56 20

Commitments Disbursements

- -

20 20

- 248 - 248

Commitments Disbursements

- -

- -

- 763

3

-

50

Health

Microfinance

FY17 FY18

FY19 FY20

FY17 FY18

FY19 FY20

Commitments Disbursements

- -

68

37 85

9

Commitments 449 150 424

179 125

-

-

Disbursements 205

316 405

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IFC Social Bond Market Engagement

Beyond the Bonds: Stewardship, Partnerships and Thought Leadership

Esohe Denise Odaro IFC Head of Investor Relations

In 2020, IFC was elected Chair of the Executive Committee of The Green, Social and Sustainability-Linked Bond Principles (referred to as The Principles). This was a culmination of IFC’s role chairing the Social Bond Working Group (SBWG) since its founding in 2016. Esohe Denise Odaro, IFC’s Head of Investor Relations, had served on the Executive Committee of The Principles since 2014 and as chair of the SBWG. Denise reflects on the journey so far. T he introduction of the Social Bond Principles (SBP) in 2017 was amilestone in the development of themarket and a culmination of the work of the SBWG, which included 30members. It has been extremely beneficial that market practitioners draft and govern the Principles before the frameworks go out the door, with the content passing the feasibility test of issuers, investors, underwriters and other related bodies. From the onset of the initial Guidelines in June 2016, we defined social bonds as bonds that exclusively finance social projects. Over the last few years, we worked on elaborating the guidance the Principles provide around eligible projects, target populations, alignment with the Sustainable Development Goals and the ever-topical issue of impact reporting. One of the evident impacts of the publication of the SBP has been the increase in issuance volume that correlates with its initial publication. The year 2020 was an annus horribilis for many and social bonds played a fundamental role in shifting much needed capital to address the dire needs the coronavirus pandemic brought. IFC led the SBWG toward delivering a timely update of the SBP to address its utilization for COVID-19 relief efforts.

Social bonds related to COVID-19 boosted issuance volumes in 2020, making it a record year. Proceeds from social bonds have supported new medical equipment, medical research, SME loans that support employment generation in affected small businesses, and projects that prevent unemployment stemming from the pandemic. Essentially, the product lived up to its objective of attracting capital to address social issues, as the epidemic emerged as an enormous social issue affecting the global population. This was evidenced by the social bond market producing the largest ever orderbook in history as seen with the European Union’s first offering of social bonds which drew orders of more than 233 billion euros, or $275 billion. To illustrate the application of social bonds in the context of the epidemic, IFC published case studies to highlight how issuers from various industries can use social bonds to raise financing that address social issues raised by the COVID-19 pandemic. For the rest of our term chairing the Executive Committee, IFC is committed to continuing to accelerate the development of the social bond market through the consolidation and promotion of the SBP, as well leading the path to harmonizing reporting practices.

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IFC Social Bond Market Engagement

IFC Treasury remains active in market engagement, thought leadership, and promoting best practices in the issuance and investment of sustainable bonds

Esohe Denise Odaro, IFC Head of Investor Relations, spoke at the ICMA U.S.-focused event on sustainable bonds, October 2020

Zauresh Kezheneva, IFC Associate Funding Officer, discussed IFC’s social bond efforts at Bloomberg’s 2020 Canadian Fixed Income Conference, October 2020

John Gandolfo, IFC VP and Treasurer, gave a keynote speech at the NASDAQ ESG Summit, September 2020

Esohe Denise Odaro, IFC Head of Investor Relations, discussed the social contract between issuers, investors, companies, and society at the NASDAQ ESG Summit, September 2020

Maki Yasui, IFC Senior Investor Relations Officer, joined the Social Bond Issuer Roundtable hosted by GlobalCapital, March 2020

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IFC Social Bond Market Engagement

In June 2020, IFC joined the newly launched Nasdaq Sustainable Bond Network, a global platform that aims to increase transparency, comparability and accessibility to environmental, social, and sustainability bonds

IFC was re-elected to the Executive Committee of the Green, Social and Sustainability-Linked Bond Principles during the Annual General Meeting, held virtually for the first time, June 2020

Elena Panomarenko, IFC Senior Funding Officer, joined the Coronabonds event held by Environmental Finance to discuss COVID-19 Bonds and the renewed spotlight on the “S” in Environmental, Social, and Governance, June 2020.

At the Sustainable Europe conference, IFC addressed the question of social bonds financing socio-economic crises, July 2020

Flora Chao, IFC Global Head of Funding, offered views on how new issuances of COVID- related bonds could propel social bonds into the ESG spotlight, September 2020

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Thought Leadership Feature IFC Social Bond Market Engagement

A Fresh Look at Social Bonds and COVID-19 “Social bonds have become an increasingly popular fixed income product since the Social Bond Principles were published in 2017. The onset of the pandemic has only accelerated its growth and popularity. Since the corona virus outbreak, the IFC Investor Relations team has received an increasing number of requests from potential issuers and other market participants for advice on how to set up Social Bond Programs and corresponding frameworks. Social bonds present a good funding avenue to address not only the socio-economic disruptions caused by the pandemic but also the UN Sustainable Development Goals. We are hopeful that the growing use and interest in these bonds will be sustained post-crisis.”

An IFC Compass Note issued in 2020 gives a fresh look on themarket development of social bonds, the impact of the pandemic on issuances, including in emerging markets, and the challenges for further growth of the

social bondmarket. Read the paper here

Sophie Peeters Investor Relations Analyst

Bridging the Gender Gap The COVID-19 pandemic has worsened existing gender inequalities, exposed fundamental flaws in economic and social systems, and posed a serious threat to the gains made on gender equality. The pandemic has led to increased unemployment, increased unpaid care work, and unprecedented levels of domestic violence and school dropouts. The pandemic has had a particularly strong impact on women, who, prior to COVID-19, held insecure employment, living close to the poverty line. In some sectors, women have experienced disproportionate job losses and economic insecurity as a result of the pandemic.With school and care facility closures, women around the world are taking on additional care responsibilities, and the crisis has amplified society’s reliance on women and girls in informal and formal care structures. As COVID-19 widens global gender gaps, IFC and UNWomen partnered to showcase a growing number of companies and organizations around the world that are taking action to ensure the economic inclusion

and social well-being of their employees, customers, and suppliers, as well as local communities. The report aims to inform companies around the world on emerging practices and initiatives for supporting women employees, entrepreneurs and workers in value chains amid the pandemic. Read the full report here

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COVID-19: IFC’s Relief Efforts

T he novel coronavirus pandemic has created a prodigious global health crisis, threatening lives and livelihoods across the world. The virus outbreak has dealt an extraordinary setback to the worldwide effort to end extreme poverty, raise median incomes, and create shared prosperity. Based onWorld Bank Group projections, an additional 110 to 150million people will have fallen into extreme poverty by 2021. This is a pandemic of inequality. Sustainable recoveries will require growth that benefits all people. Supporting the private sector, the main engine of job creation in developing countries, will be key to reversing this trend. Beyond its short-term impact, the COVID-19 pandemic is likely to leave lasting scars through lower investment, erosion of human capital among the unemployed and those deprived of education, and a retreat from global trade and supply linkages. Supporting the private sector is key to saving jobs, themain route out of poverty for many poor people. IFC has stepped up to respond to this unparalleled crisis, working to sustain businesses and preserve jobs with an $8 billion fast-track COVID-19 facility set up to help sustain businesses and preserve jobs by providing liquidity to existing client companies and financial institutions.

$2 billion Real Sector Crisis Response Facility:

Support existing clients in the infrastructure, manufacturing, agriculture, services, and healthcare sectors.

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$2 billion Global Trade Liquidity Program, and the Critical Commodities Finance Program:

Cover payment risks of financial institutions so they can provide trade financing to companies that import and export goods.

$2 billion from the existing Global Trade Finance Program:

$2 billion Working Capital

Solutions Program:

Funding and risk-sharing support to local banks so they can continue to finance companies in emerging markets.

Funding to emerging- market banks to extend credit to help businesses shore up their working capital, the pool of funds that firms use to pay their bills and employee salaries.

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COVID-19: IFC's Relief Efforts

IFC's new Global Health Platform will boost supply of face masks, ventilators and, eventually, vaccines.

Global Health Platform I FC’s Global Health Platform helps address the severe shortage of medical supplies in developing countries, by financing healthcare product manufacturers, critical rawmaterial suppliers, and healthcare service providers so they can expand capacity for products and services to developing countries.With over 100million confirmed cases of COVID-19 6 , the United Nations is calling the pandemic the world's ‘most challenging crisis’ since WorldWar II. Developing countries are being hit hard given their already vulnerable health systems, underfunded or non-existent social safety nets, heavy dependence on imports for the most critical healthcare products and consumables, and inadequate access to health services. The surge in global demand for healthcare products and services caused by COVID-19 far exceeds the supply in developed and developing countries. According to some estimates, the private sector would need to invest more than 60 billion to increase manufacturing and delivery capacities for health products in order

to meet the demand created by the fight against the pandemic. To mobilize private investment in closing the massive healthcare supply gaps faced by developing countries, IFC’s Global Health Platform is designed as a critical private sector pillar of theWorld Bank Group’s response to COVID-19. The $4 billion Global Health Platform is helping developing countries gain access to healthcare supplies, including face masks, ventilators, testing kits and, ultimately, vaccines. IFC will contribute $2 billion from its own account while mobilizing an additional $2 billion from its partners. IFC is working to encourage ramped-up production of COVID-19 vaccines and therapeutics in advanced and developing economies, and it is working to ensure that emerging markets gain access to available doses. IFC is also partnering with the Coalition for Epidemic Preparedness Innovations to map vaccine manufacturing capacity and address potential bottlenecks.

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6 https://coronavirus.jhu.edu/map.html

COVID-19: IFC's Relief Efforts

Spotlight on Microfinance

A s a result of the global crisis, microfinance institutions and other financial providers serving micro, small, and medium enterprises and informal segments are experiencing severe disruptions to their operations. IFC has taken critical actions to support the microfinance sector including gathering insights on the impact of the crisis on the sector and our portfolio clients, coordinating with other development financial institutions and impact investment managers on crisis response approaches, and providing working capital and liquidity lines to financial institution clients serving the base of the pyramid with a focus on IDA countries. Access to finance is a key element of economic development and foundational to achieving theWorld Bank Group’s twin goals: end extreme poverty and promote shared prosperity. Despite progress, 1.7 billion adults lack access to basic transaction accounts and there is an estimated $5.2 trillion financing gap for formal micro, small and medium enterprises (MSMEs) and an additional $2.9 trillion for informal MSMEs. People without access are largely concentrated in Asia and Sub-Saharan Africa, and they are disproportionately poor and female. Through its Financial Institutions Group (FIG), IFC helps to increase the availability and affordability of financial services, particularly to MSMEs. IIFC's microfinance strategy focuses on building sustainable financial service providers that serve the un(der)served, scaling up support for innovative digital solutions that responsibly expand access, and reaching persistently un(der)served and vulnerable populations – particularly in countries that identified as members of the International Development Association (IDA) and list of countries in fragile and conflict-affected Situations.

Over 20 years, IFC's microfinance has delivered significant global impact with more than 650 investments totaling $6.1 billion and 190 advisory projects. Historically, 42 percent of microfinance investment projects focus on IDA countries, with 11 percent in fragile and conflict-affected situations. As of CY19, IFC’s financial institution clients reach an estimated 59.6 million micro, small, and medium enterprises, of which 48.9 million are microenterprises.

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Featured Project

Conclina Healthcare, Ecuador

At the onset of the COVID-19 pandemic, Ecuador witnessed one of the world’s worst outbreaks. Strugglingwith its fragmented and segmented healthcare system, COVID-19 wreaked havoc in the country, resulting in one of the highest infection andmortality rates in LatinAmerica, with more than 250,000 infections and 14,000 deaths among a population of over 17 million inhabitants as of January 2021. T he macro-economic situation quickly deteriorated. Ecuador recorded 12.4 percent decline in the economy coupled with 13 percent increase in unemployment 7 , making local commercial banks more hesitant to provide funding. Making matters worse, many residents in major cities that needed immediate attention, especially in the poorer neighborhoods, struggled to find public and private hospitals and beds where they can be given urgent medical care. Around the same time, IFC set up an $8 billion fast-track financing fund to help existing clients cope with the pandemic. One of its first investments was to provide $9 million to Conjunto Clinico Nacional CA, Conclina – a healthcare group based in Ecuador – to bolster Conclina’s liquidity and its capacity to

provide high-quality medical services and weather the financial impact of the COVID-19 pandemic. The rapid financing provided by IFC helped the company face the crisis with firm footing and focused on tackling the operational challenges brought by the pandemic. Previously in 2015, IFC had provided Conclina a $15 million loan to support an expansion in its medical services and diagnostics capacity. The company operates a 150-bed high-complexity facility, Hospital Metropolitano, in Quito, a pre-paid health plan company with close to 200,000members, and a network of six outpatient clinics. Hospital Metropolitano has split its facilities into two parts in response to the pandemic, one for COVID-19 patients and one for non-COVID-19 patients, to lower the infection risk. It is the only hospital in Ecuador accredited by the Joint Commission International (JCI), a certification of global leadership in health care quality and patient safety. Even before the COVID-19 facility was set up, IFC has been supporting the real sector companies in Ecuador to increase their liquidity and build resilience through financing and technical advice. Ensuring that Conclina and other companies are able to sustain operations during this crisis and weather the shock of pandemics such as COVID-19 will better equip the private sector to contribute to Ecuador’s recovery.

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7  https://www.imf.org/en/News/Articles/2020/10/05/na100520-helping-ecuador-confront-the- pandemic#:~:text=The%20pandemic%20and%20the%20sharp,decline%20in%20the%20first%20quarter.

Conclina facility, Ecuador

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Featured Project

KEP Trust Microfinance, Kosovo

Kofi Annan wisely said, “Extreme poverty anywhere is a threat to human security everywhere.” K osovo is currently the third poorest country in Europe with 20 percent of its 1.8 million people living below the poverty line. The dire living situation is further compounded by the marginalization of rural communities, where 60 percent of Kosovans live, with 40 percent of them unemployed. Kosovo’s agriculture sector is critical to its economy, accounting for 30 percent of the country’s total employment and 13 percent of its GDP 8 . Despite that, this sector has had limited access to finance with total debt accounting for a mere four percent of the country’s formal sectors. This has not improved despite rapid growth in Kosovo over the last decade, at a rate even higher than the average rate in theWestern Balkans. Small agribusinesses and farmers are largely unbanked and continue to have limited access to essential loans for much-needed inputs, such as fertilizers, seedlings, animal feed, and barns, among other items. This is mainly due to a lack of collateral, little or no credit history and very limited financial knowledge, coupled with the high costs of originating and servicing loans in rural areas. KEP Trust is an institution that is

working to overcome these challenges. Established in the 1990s, the company has grown rapidly to become the largest microfinance institution in Kosovo, and it offers financial services to marginalized and underprivileged groups in rural communities. In 2019, IFC invested $4.4 million in KEP Trust, half of which was contributed by the Private SectorWindowof the Global Agriculture and Food Security Program. The investment was designed to expand access to finance to micro and small enterprises, with a focus on reaching over 4,000 agribusiness borrowers. The IFC investment was particularly timely in the wake of the COVID-19 pandemic because it enabled KEP Trust to lend to people and businesses in vulnerable and underserved segments most severely affected by the crisis. The additional funding allowed KEP Trust to expand its services beyond the 3,900 farmers that already receive access to finance at reasonable costs. As farmers use the income to make decisive changes – whether it’s enlarging a stable, bringing in modern technology, or buying more cattle – the strategy of KEP Trust is working and will help better shape the future of Kosovo and its people.

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8  https://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+events/news/impact-stories/ kosovo-ag-insurance#:~:text=Agriculture%20accounts%20for%20more%20than,one%2Dthird%20of%20its%20population.

One Farmer’s Story U ntil three years ago, Remzi Bala had a small family homestead in central Kosovo. However, with just one old tractor and no livestock, he struggled tomake the farmproductive, let alone profitable. That all changed in 2017 after he received his first loan fromKEP Trust. His initial loan of 1,000 euros helped himpurchase a few young cows, while a second loan he received a year later enabled him to buy a more reliable tractor. His most recent loan came in spring 2020, as the COVID-19 pandemic raged and it enabled him to withstand a cash flow crisis. Bala now boasts a herd size of nine cattle – seven dairy cows and two for beef.With an output of 100 liters of milk a day, and double the income he had just last year, Bala says his business now has ability to withstandmore market disruptions, such as when the price of milk dipped at the peak of pandemic. “I can buy books and clothes for my four children and not worry,” he said recently from KEP Trust offices in Pristina, Kosovo. Bala is one of an estimated 3,900 farmers who now receive loans fromKEP Trust. These loans help people like Bala build financial knowledge, along with a credit history and collateral that will enable them to eventually reach the formal banking sector. Thanks to partners like KEP Trust, Kosovo can look forward to a stronger microfinance sector and an even better future.

Remzi Bala on his farm in central Kosovo. Photo: KEP Trust

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Social Bond Eligible Project Commitments for FY20

T he Impact Assessment table lists expected outcomes from projects eligible for funding from IFC Social Bond proceeds in FY20. Organized by sector, the projects eligible for IFC’s Social Bond aim to improve access to finance and other essential services for target populations such as those who are underserved. Eligible categories include those stated within the Social Bond Principles. Projects committed in FY20 align with the following SDGs:

Reporting is based on ex-ante estimates at the time of project appraisal. Because the Impact Assessment table includes the estimated results of projects still in the construction or implementation phase, there is no guarantee these results will materialize. Thus, the reporting is not intended to provide actual results achieved in a specific year or reporting period.

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Inclusion Projects

Eligible projects in the real sector include a focus on increasing access to goods, services and markets for people who are low-income and/or underserved. Target populations in FY20 include: • Smallholder farmers who often lack access to key inputs, technologies and financial resources, typically very poor with limited access to market for their products • Vulnerable individuals suffering frommalnutrition and those in food insecure regions • Individuals receiving access to safe and reliable electricity Real Sector

Impact Highlights Indicators Farmers reached (#) Number of people fed (#) Total connections (#) 9

Baseline 323,536 11,400,000 1,292,000

Target 671,610

3,000,000 1,900,000

Eligible Loan Commitment (USD millions)

Institution Name

Project ID

Country or Region

Sustainable Development Goals

Sector

Description

Agribusiness

ETC Agro Processing India Pvt. Ltd.

43027

India

ETC Agro Processing Private Limited is one of the top processors of pulses – dried, edible seeds of legume plants. To address India's challenges related to food security and diet diversity, the project will enable increased production of calorie-rich, nutritious pulses at prices affordable for low-income consumers in India. The project will also result in increased purchases of pulses sourced from local farmers. Netafim is a global leader in technology-advanced smart irrigation solutions and the largest provider of micro irrigation systems. The project is expected to generate better yields for local farmers and strengthen their resilience to climate shocks. Sugana is one of the leading poultry integrators in India with operations covering all areas of the poultry sector. The project will support the company's expansion, thereby improving incomes of poultry farmers through contract farming and increasing consumer access to affordable and high quality food products. VACPA is a Tunisian date processing company. The project will support the company's operations during the COVID-19 crisis, upgrade its processing and supply chain program, and establish a new production line. The project will lead to a reduction in the volume of water used to irrigate a hectare of date palms and increase the number of smallholder farmers who receive offtake contracts, pre-harvest financing, and training. Olam International is a leading global agribusiness with direct sourcing and processing presence in most major producing countries. Olam focuses on niche commodities and businesses, buying from growers and village-level agents at the farm gate, and providing value-added solutions and services to customers, such as traceability guarantees. The project will support Olam's sourcing of crops primarily grown by smallholder farmers in several countries, including Timor Leste, PNG, and Uganda, as well as Vietnam and Indonesia – with positive implications for farmers on yield enhancement, optimal inputs usage and increased income.

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Agribusiness

Netafim Ltd.

42908

China

6.07

Agribusiness

Suguna Foods Private Limited

44040

India

38.81

Agribusiness

Boudjebel S.A. VACPA

42698

Tunisia

6.12

Agribusiness

Olam International Limited

40675

World Region

120.00

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9 Total connections represent estimated actual connections. A previous year report estimated # of customers based on a typical household size.

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