FY21 Social Bond Impact Report

Social Bond Impact Report Financial Year 2021

About IFC

Social Bond Impact Report Financial Year 2021

IFC – a member of the World Bank Group – is the largest global development institution focused on the private sector in emerging markets.We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021 (running from July 1, 2020, to June 30, 2021), IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information visit www.ifc.org .

Table of Contents

2 3 4 5 6 7

FY21 Highlights Cumulative Highlights A Letter from the Treasurer 4 Your Information with the VP of Economics and Private Sector Development

What is Eligible for IFC’s Social Bond Funding? IFC Social Bond ProgramOverview for FY21

8 9 10 12 14 16 18 20 22 32 36 36 38

Social Bond Eligible Projects: Commitments and Disbursements by Region Social Bond Eligible Projects: Commitments and Disbursements by Sector A Quick Update on IFC’s $8 billion Fast-Track COVID-19 Facility Featured Project: ElCat Sustainable Bonds: Bridging the Gap for Gender Equality Featured Project: Nobel İlaç Spotlight on IFC’s ESG Performance Indicators for Capital Markets Featured Project: LAPOMicrofinance Bank Social Bond Eligible Project Commitments for FY21 Appendix A: IFC Social Bond Program Process Appendix B: Description of Adjustments to Commitments and Disbursements from Previous Years Appendix C: Update onWorld Bank Group’s Operations in Russia and Belarus Authors and Disclaimer

Evelio Vasallo, owns a store in Bogota, Colombia. Photo: Luis Angel

FY21 Social Bonds Issuances FY21 Highlights

IFC’s Social Bond Program FY17 - FY21 Cumulative Highlights

FY21 projects align with the following Sustainable Development Goals:

5-year Impact Summary 4 Reach 2,450,631 farmers Feed 3 million people Supply power to 7.3 million people 5

Provide 792,651 residential housing loans Reach 43,114,750 people with telecoms, media, and technology services Treat 1,600,000 malnourished children Integrate 102,361 micro, small and medium enterprises into the value chain Provide 19,971,162 microfinance loans Provide 34,185 agri-finance loans Enroll 137,441 students Distribute 6,470,579 loans for women and women entrepreneurs Expand access to medicine through 22,448 outlets Provide 832,000 hectoliters of water, equivalent to providing drinking water for 113,973 adults for a year 6 Reach 703,255 patients

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

$762.4 million raised through 24 social bonds in 6 currencies 1

Over the next 5 years, IFC’s

Support 1,130 ride-hailing drivers to own vehicles

social bond eligible projects committed in FY21 are expected to:

42 new projects committed across 10 sectors including:

194 projects committed totaling $5.8 billion

Reach 13,040 farmers

$3.8 billion raised through 63 social bonds 3 in 11 currencies

Open 4,500 pharmaceutical stores

Provide 1,962,011 microfinance loans

Provide internet access to 54,750 people in rural households 2

Housing Finance

Gender Finance / Banking on Women

Infra- structure

Agri- business

Distribute 135,525 loans to women and women entrepreneurs

Provide 350,093 residential housing loans

Food & Beverages

COVID-19 Response Finance

Directly employ 5,500 people Support 1,130 ride-hailing drivers to own vehicles

Micro- finance

Health

Support 87,250

Provide 272,000 metric tons of poultry products

micro, small, and medium enterprises

Information and Communications Technology (ICT)

Education

3 These numbers specifically refer to bond issuances in the period FY17-FY21 and exclude $296 million issued in Inclusive Business bonds in FY15-FY16 and $268 million issued in Banking onWomen bonds in FY14-FY16. 4 The aggregate ex-ante figures include the targets from all commitments that were social bond eligible; some of these projects may have since closed 5 Figure includes connection and number of customer served (i.e. one connection is one customer) 6 https://www.who.int/water_sanitation_health/dwq/nutrientsindw.pdf

Provide 272,000 metric tons of poultry products to improve access to protein and micronutrients

1 Currencies: Australian dollar, Brazilian real, Chinese yuan, Russian ruble, South African rand, and US dollar 2 Assuming that one connection provides internet to a family of 5

A Letter from the Treasurer

What is your role at IFC? I joined IFC in October 2021 as Vice President, Economics and Private Sector Development, where I lead a large staff of economists that provide economic analysis to support IFC investments. I am also responsible for the Anticipated Impact Measurement and Monitoring framework (AIMM) to assess the development impact of IFC investments; identifying opportunities to use blended concessional finance to enable investments in the lowest-income and fragile nations; and overseeing IFC’s research and thought leadership. What is your global outlook for 2022? We’re seeing a two-track global recovery with the world’s richest countries powering ahead, and emerging and developing economies being left behind. Overall emerging economies posted a strong recovery of 6.3 percent in 2021, but growth is projected to slow to 4.6 percent in 2022 and 4.4 in 2023 7 . This pace of growth is insufficient for countries to reverse the economic losses of the pandemic and to rejoin pre-COVID development paths.When you look at many low-income countries, they’re barely growing and output and investment will remain markedly below pre-pandemic levels, particularly in small states and fragile and conflict-affected countries. A lot of that is because of the unequal access to vaccines, tighter fiscal and monetary policies, and more persistent scarring from the pandemic. What are downside risks that cloud the outlook for emerging markets and developed economies? Various factors cloud the outlook, including more COVID-19 related disruptions, further supply chain bottlenecks, and higher than expected inflation and rising interest rates – all compounded by high levels of debt in many countries. Global debt levels have skyrocketed. At 263 percent of GDP, total global debt has reached its highest level in 50 years. More than half of the poorest countries are already in debt distress or at high risk of it. Rising inflation also remains a threat. In emerging markets we’ve seen increases in inflation across countries – and four 3 4 Your Information A Chat with Susan Lund, VP of Economics and Private Sector Development 1 2

John Gandolfo IFCVice President and Treasurer

T he need for innovative financial solutions to to theWorld Bank, the poorest 40 percent of countries have not yet begun to recover from the pandemic, reversing years of progress to reduce poverty. Meanwhile, the Russian invasion of Ukraine will have far-reaching impacts on energy prices, grain markets, and food insecurity – with serious spillovers in developing countries. Against this background there has been growing investor appetite for socially conscious financial instruments, and the market for bonds geared towards environmental and social issues has gained momentum since the start of the pandemic. Social bonds have been the fastest growing segment of this market. Social bonds raised $206 billion in funding in 2021 and are forecast to bring in $300 billion in 2022. address poverty in developing countries is greater than ever. Conflicts and the pandemic continue to threaten people’s jobs and livelihoods. According We are proud of the role that IFC has played to bring social bonds to the fore – leading the dialogue on standards and supporting efforts to channel investor capital into the market. In 2021, we continued to grow our social bond program apace. These issuances funded projects that helped women- owned enterprises and smallholder farmers get back on their feet, supported affordable housing and healthcare, and were integral to IFC’s efforts to shore- up businesses and preserve jobs. Throughout 2021, IFC stepped-up to meet the challenges of the moment and help developing countries build toward a green and inclusive recovery.

We continued to use the $8 billion Fast-Track COVID-19 Facility that we launched in March 2020 to provide liquidity to existing clients. By the end of the calendar year 2021, we had committed $6.2 billion of the facility – with about 43 percent expected to benefit the poorest countries and fragile and conflict affected states. We also continued to support our clients through a $4 billion health platform to increase the supply of medical equipment and improve local manufacturing and distribution of medical supplies. IFC also recently unveiled a $2-billion Sustainable Emerging Economy Debt (SEED) bond fund to help support pandemic relief efforts. The fund, managed by Amundi, Europe’s largest asset manager, is expected to catalyze up to $13 billion of capital from institutional investors in advanced economies into sustainable bonds issued in emerging markets. Bond proceeds will go towards projects that provide clean drinking water, affordable healthcare and housing, strengthen food security, and help build a green and inclusive recovery.We hope the fund will further strengthen the sustainable bond market and steer more resources towards projects that help the disadvantaged. One area where we would like to see more growth is in the market for gender- focused bonds. The pandemic has forced countless women out of the labor market. Yet only a small fraction of the sustainable bond market is aimed specifically at projects to help women. Together with UNWomen and the International Capital Market Association we recently developed a guide to help borrowers, underwriters, and bond issuers integrate gender equality into their sustainable debt products. The need for financial solutions that alleviate poverty is vast and it is heartening to see the growth of this market during such difficult times. Through this report, we present a list of projects eligible to be financed using the proceeds of our social bonds andmaking transparent their anticipated outcomes.

fifths of these countries saw an uptick in 2021, with about one third experiencing double-digit food inflation. Inflation in advanced economies is even more of a threat, as rising interest rates in those countries are causing global investors to turn away fromemergingmarkets.We can already see a sharp decline in private capital flows to emerging markets in January 2022 compared to the previous year in the expectation of the Federal Reserve increasing US interest rates. What longer-term opportunities are there in emerging markets? Despite the downsides, there are bright spots.We are seeing the outlines of a new development model where low-income countries have opportunities to develop in ways that previous generations of countries that moved up the income ladder didn’t. 4 One of those is manufacturing for a domestic market. Two years ago, nobody was talking about manufacturing vaccines in Africa. And now two years later, we realize each region has got to be able to produce its own essential critical goods. So, this has opened the door to manufacturing opportunities. Another bright spot is digital transformation.We arewitnessing a remarkablewave of digital innovation across the developing world. FinTech and mobile payments are the most notable. Sub-Saharan Africa has emerged as a leader in mobile money, accounting for almost half of mobilemoney accounts worldwide. Another example is e-logistics that help connect farmers to distributors andwholesalers. One of the biggest obstacles to nurturing the private sector in these countries is the lack of projects with enough financial backing and business promise to be considered“bankable“ by international investors. To address this, IFC is working proactively to help create conditions to stimulate the flow of private capital into productive investment in developing countries. We’re also creating more platforms for funding and broadening the pool of institutions that co-invest with us and we are aiming to mobilize two dollars for every one that we invest.We need to flush more capital into private-sector opportunities that help the poorest and most vulnerable in emerging markets.

7 World Bank Global Economic Prospects, 2022

What is Eligible for IFC Social Bond Funding?

IFC Social Bond ProgramOverview for FY21

In financial year 2021, IFC sustained a steady pace of social bond issuances, achieving its second highest issuance volume since the launch of the Social Bond Program in 2017. IFC issued 24 social bonds – the largest number since the program’s inception – totaling $762.4 million in six currencies during FY21. This brought IFC’s cumulative social bond issuance to $3.8 billion across 63 bonds in 11 currencies as of June 30, 2021. The Kangaroo market offered exceptionally strong demand with the Australian dollar being the largest issuing currency for IFC social bonds in FY21, representing 65.5 percent of total issued volume for the year, followed by issuance in US dollars with 21.1 percent of total volume. In early February, IFC issued its first bond swapped from fixed rate to the Secured Overnight Financing Rate (SOFR) benchmark interest rate. The swap was executed for a ‘tap’ or reopening of IFC’s 155 million Australian dollar Kangaroo social bond that matures in April 2035, for which there was strong demand from Japanese investors, particularly life insurance companies. This reopening of the bond represented IFC's debut trade swapped to SOFR and is the first of a kind in the Kangaroo bond market.

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 F Socioeconomic advancement and empowerment

These include projects financed by IFC 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 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

To meet continued demand from Japanese and U.S. life insurance companies and asset managers, the Kangaroo social bond was tapped eleven more times during the fiscal year, increasing the total

Cumulative Social Bond Issuances Volume: $3.8 billion Number of social bond issues: 63

raised by $451.9 million USD equivalent. Throughout the year, IFC executed private

FY21 Social Bond Issuance by Currency

placements predominantly with U.S. and Japanese investors, including official institutions, life insurers, and individuals, by issuing eight social bonds for a total amount of $233.8 million, providing market diversity in Australian dollars, Brazilian reals, Russian rubles, South African rands and U.S dollars. IFC issued two social bonds in Uridashi format for a total amount of $16.7 million in Brazilian reals and Chinese yuan, which is a new emerging market currency for the program. As a result of continued and active support of the Uridashi market, IFC was awarded“Best Uridashi Issuer” in the 2022 Leaders in Debt Capital Markets Awards issued by CMDportal . As in previous years, IFC continues to stimulate positive social impacts in developing countries while providing investors with a financial return on their investment alongside a path to support the sustainable development goals.

AUD 65.5% USD 21.1% BRL 7.6% RUB 3.3% ZAR 1.8% CNY 0.7%

• Provide electricity or water services • Source from smallholder farmers • Offer access to finance • Sell through small mom-and-pop retailers

Cumulative Social Bond Issuance by Currency

IFC’s COVID response projects : Projects selected from IFC’s $8 billion Fast-Track COVID-19 Facility. This package makes available fast-track financing to existing IFC clients who demonstrate a clear impact on their business due to the COVID-19 pandemic. Among other criteria, clients must be in good standing with IFC and compliant with environmental, social, and governance (ESG) requirements.

USD 50.4% AUD 33.4% SEK 9.0% BRL 3.0% MXN 2.1% RUB 0.9% ZAR 0.4% TRY 0.3% JPY 0.2% CNY 0.1% UYU 0.1%

Social Bond Eligible Projects: Commitments and Disbursements by Region

Social Bond Eligible Projects: Commitments and Disbursements by Sector

(USD millions)

As of June 30, 2021, IFC has committed 194 projects eligible for support from social bond proceeds. The total committed amount for these projects is $5.6 billion.

Information and Communications Technology

Agribusiness

Infrastructure

FY17 FY18 FY19 FY20 FY21

Commitments 119 Disbursements 104

56 41

75 273

Commitments 20 Disbursements 13

- -

28 20

Commitments Disbursements

- 137

Multi-Region

Commitments and Disbursements by Region FY17 FY18 FY19 FY20

FY17 FY18

FY19 FY20 FY21

31 168 129

31 105

FY21

Commitments Disbursements

- -

- 120 - 120

- -

Europe and Central Asia FY17 FY18

Commitments 620 717 823 2,156 1,501 Disbursements 364 614 844 966 1,868

FY19 FY20 FY21 20 166 232

Commitments 109

177

Education

Gender Finance

Other Finance

Disbursements 107 154

76 224

FY17 FY18 FY19 FY20 FY21

Commitments Disbursements

- -

- 106

Commitments - 241 253 407 130 Disbursements 40 189 215 326 212

Commitments Disbursements

- 1

Middle East and North Africa FY17 FY18

FY19 FY20 FY21

Latin America and the Caribbean

South Asia

Commitments Disbursements

12 106

116

FY17 FY18

FY19 FY20 FY21

5 108

21 107

FY17 FY18

FY19 FY20

FY21

Commitments 165 Disbursements 100

151 320

317 345

Food & Beverages

Housing Finance

COVID-19 Response Financing

Commitments Disbursements

42 108 205

319 395 227 285

FY17 FY18 FY19 FY20 FY21

122

383 146 239

237

Commitments 29

37 15

18 29

56 20

31 76

Commitments Disbursements

- -

20 20

- 248 275

Commitments Disbursements

- -

- 763 434

Disbursements

- 248

50 881

East Asia and the Pacific FY17 FY18

FY19 FY20 FY21

Sub-Saharan Africa

Commitments Disbursements

137

141 586 53 279

321 511

FY17 FY18

FY19 FY20 130 532

FY21

33 168

Health

Microfinance

Commitments 155 104

181

FY17 FY18 FY19 FY20 FY21

FY17 FY18 FY19 FY20 FY21 Commitments 449 150 424 179 333 Disbursements 205 316 405 125 343

Disbursements 109

97 502

Commitments Disbursements

- -

37 85

9 159 - 160

A Quick Update on IFC’s $8 billion Fast-Track COVID-19 Facility

IFC’s $8 billion Fast-Track COVID-19 Facility

Envelope (USD millions)

Commitments (USD millions)*

Envelope (USD millions) Commitments (USD millions)* 4,000 1,200

R einvigorating the private sector in emerging markets and IFC is working to address the systemic healthcare vulnerabilities exposed by the pandemic. Developing countries need equitable access to vaccines and medical supplies to fight COVID-19 and other diseases. IFC is addressing market gaps, improving local manufacturing and distribution capacity, and supporting public-private partnerships to strengthen health system resilience. Access to capital is the biggest constraint on business growth in developing countries, with pre-pandemic data pointing to a nearly $8 trillion financing deficit. That gap has likely grown, with enterprises that were already credit constrained having little buffer to weather the disruptions caused by COVID-19. IFC is working to shore up the micro, small, and medium enterprises (MSMEs) that are still struggling in the wake of the pandemic. These businesses are the economic foundation for our client countries – delivering essential services, creating jobs, and lifting families out of poverty to ensure their long-term survival. IIn FY21, IFC committed an additional $8.5 billion in financing outside of the $8 billion Fast-Track COVID-19 Facility to support clients in response to the crisis. developing economies is critical for the post-COVID economic recovery. IFC has stepped up to meet the moment, helping developing countries weather the health crisis, preserve jobs, and build toward a green, resilient, and inclusive recovery.

2,000 1,161

Real Sector (Crisis Response) Envelope

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

Global Health Platform (GHP) Providing financing solutions to manufacturers, suppliers, and service providers for capacity expansion and working capital requirements to increase the supply of affordable health care products and services in developing countries.

2,000 1,483

Working Capital Solutions

Funding to emergingmarket 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.

2,000 1,075

Global Trade Liquidity Program (GTLP), the Critical Commodities Finance Program (CCFP)

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

400 93

Provides financing to microfinance institutions, non- bank financial institutions, and banks that are focused on micro, small, and medium enterprises (MSMEs).

Newly launched Base of the Pyramid

2,000 2,000

Global Trade Finance Program

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

8,400 5,812

Kerem Elibol, Production Engineer, Nobel Ilac, Duzce, Turkey. Photo: Pınar Gediközer

Total

*Commitments as of June 3oth, 2021

Featured Project

ElCat Information and Communications Technology (ICT), Kyrgyz Republic

Boosting Internet Connectivity in the Kyrgyz Republic When COVID-19 shut downmuch of her village in the Kyrgyz Republic last year, MeereimArunova was left having tomanage her children’s on-line schoolingwithout a computer or internet connectivity. Using her mobile phone and a fewoptions accessible via television, Arunova did her best to keep her girls up-to-date on schoolwork. It was a heavy load for her family and for many others, said Arunova. “The lack of necessary equipment for each child and a reliable internet connection has become a serious problem for many families in the Kyrgyz Republic,“ Arunova said. “Many families get by with one smartphone for all children.“ The pandemic has highlighted why broadband is critical to economic growth, job creation and how the lack of it impacts almost every aspect of daily life. A 2016World Bank study concluded that a 10 percent increase in fixed broadband penetration would increase GDP growth by 1.38% in developing economies.

Connectivity and broadband speeds in the Kyrgyz Republic are well below the global average, with little or no internet in some remote areas. Broadband infrastructure is needed to deliver faster, more reliable internet connectivity to homes, businesses, and public institutions. This infrastructure is vital to creating digitally enabled opportunities for employment, increasing the use of e-government services such as health and education, and facilitating e-payments to unbanked communities. By providing a $3 million loan to ElCat, the Kyrgyz Republic’s largest private, wholesale broadband operator, IFC helps the company expand its telecommunications infrastructure and spur network deployment by other operators in the sector. As such, this investment is expected to increase access to affordable high speed internet services throughout the country – including in underserved and unconnected regions. IFC’s intervention grew out of a jointWorld Bank-IFC effort to develop private- sector solutions to address the connectivity gap in target countries with low internet penetration rates.

With no high speed internet connection, Meerim Arunova and her daughters work on remote lessons using only a mobile phone. Photo: Courtesy of Kymbat Ybyshova

Sustainable Bonds: Bridging the Gap for Gender Equality

IFC hosted a virtual event to launch the publication. Here’s what the panelists had to say:

In November 2021, IFC, UNWomen, and the International Capital Market Association (ICMA) launched Bonds to Bridge the Gender Gap: A Practitioner’s Guide to Using Sustainable Debt for Gender Equality- a new practical guide on how to use sustainable bond issuances to advance gender equality. It provides guidance on how sustainable bonds can be used to access financing for projects and strategies that advance gender equality objectives. The guide offers examples that illustrate how to identify gender-related use of proceeds and establish gender-related commitments. In doing so, this guide builds on existing global frameworks – the Social Bond Principles (SBP), the Sustainability Bond Guidelines (SBG), and the Sustainability-linked Bond Principles (SLBP) – and should be considered alongside these documents.

Anita Bhatia Assistant Secretary-General and Deputy Executive Director, UNWomen “Governments and the private sector need to work collectively to make it possible for women to step back into the economic system. That’s where capital markets have a real role to play. We have seen a huge rise in sustainable bonds, but when you look at howmany of those sustainable bonds actually have a gender lens, the number is really small.We think that there is a role for capital markets to help drive the allocation of resources to solving problems related to gender.“

Audrey Choi Chief Sustainability Officer, Morgan Stanley “We are not thinking about gender issues because it’s a problem area but because it’s fundamentally material to business – it drives returns.We cannot get the economy back if we don’t get the female economy back.“

Julie Monaco Managing Director, Global Head Public Sector, Banking, Capital Markets and Advisory Division, Citi

“My advice to new issuers is that they need to understand the potential impacts on gender equality that they are trying to achieve either through a gender specific bond or a sustainability-linked bond or social bond and have all the right metrics in place in order to attract investors.“

Bonds to Bridge the Gender Gap: A Practitioner’s Guide to Using Sustainable Debt for Gender Equality

Denise Odaro Head of Investor Relations, IFC “We intend for this guidance to be a game changer in supporting the allocation of capital to this vital need. The rise of sustainable finance offers distinct paths to direct capital at scale to reducing the gender gap. The spirit of this guide is aimed at market practitioners. The Bonds to Bridge the Gender Gap provides guidelines based on existing frameworks.“

Bryan Pascoe Chief Executive, ICMA

“Social bond issuance per se has been very targeted at other elements of social bond and capital markets raising rather than through a gender lens specifically. There is a huge untapped demand in the social bond market because of that structural imbalance, and that should mean that gender bonds will have a strong run into the capital markets.“

Marta Lucia Ramirez Vice President and Minister of Foreign Affairs of the Republic of Colombia “I really believe that we cannot talk about inclusion if we don’t prioritize resources for women to become serious entrepreneurs. That is why we need to have more access to the financial sector along with technical assistance to women. The publication of this guide will surely be a recommendation tool to us in the process of issuing a sovereign bond with a gender chapter.“

Stephanie von Friedeburg Senior Vice President of Operations, IFC

“This guide is a great place for all issuers to start. For emerging markets, there’s just not enough bonds out there. At IFC, we’re trying to increase both the supply and the demand.We’re getting ready to roll out our BEST bond fund which will be the first sustainability-linked bond fund for emerging markets coming out of the crisis, with a very strong focus on gender.“

Featured Project

Nobel İlaç Healthcare, Turkey

Supporting Pharmaceutical Production in Turkey COVID-19 wreaked havoc on supply chains across the globe. Nowhere was this felt more acutely than in the pharmaceutical sector where curbs on exports of essential ingredients to produce drugs delayed shipments and disrupted supplies of life-saving drugs. An investment by IFC in Nobel İlaç, one of Turkey’s leading pharmaceutical manufacturers, is helping the company sustain operations and continue to supply medicines at home and abroad. An IFC client since 2017, Nobel İlaç manufactures pharmaceuticals, including hard-to-make injectables, that are distributed to 50 countries around the world – predominantly to Central Asia and Eastern Europe, including Kazakhstan, Uzbekistan, Kosovo, and Ukraine. The company is working on developing bio-technology products to treat cancer and cardiovascular diseases and has also partnered with the leading Middle East Technical University and Bilkent University in Turkey to contribute to one of the national COVID-19 vaccine development efforts with its cutting-edge research and development lab.

At the height of the pandemic, Nobel İlaç experienced difficulties in importing active pharmaceutical ingredients that are key to producing final generic drugs. Prolonged border closures coupled with rolling lockdowns within Turkey triggered additional supply problems that impacted manufacturing and distribution and had a knock-on effect on the company’s cash-flow. IFC’s €10million loan provided much needed working capital to support the company’s funding needs and free up cash for investments in addition to research and development. Since Nobel İlaç sells its drugs to many countries where there are no local pharmaceutical production facilities, the investment helped ensure a steady supply of generic drugs at affordable prices. The loan is funded through IFC’s $8 billion Fast-Track COVID-19 Facility to support private companies and their employees hurt by the economic downturn caused by the spread of COVID-19.

Nobel’s facility in Düzce, a small, industrialized city in the Black Sea region between Ankara and Istanbul.

Kerem Elibol, Production Engineer, Nobel Ilac, Duzce, Turkey. Photo © Pınar Gediközer

Gamze Erkan, Quality Operations Specialist, Nobel Ilac, Duzce, Turkey. Photo © Pınar Gediközer

Spotlight on IFC’s ESG Performance Indicators for Capital Markets

T he availability of reliable environmental, social, and governance (ESG) data to capital market participants is essential to attract and efficiently allocate capital to support sustainable private sector- led economic development in emerging markets. However, there is considerable variability in the amount and quality of ESG data disclosed by emerging market issuers. This makes it difficult for investors to consider the potential materiality of ESG issues to long-term financial results. To address this gap, IFC has developed the ESG Performance Indicators for Capital Markets , a sustainability data framework to ease the reporting burden on issuers and boost sustainability reporting in emerging markets. The performance indicators leverage IFC’s decades of experience promoting best practice ESG standards in investments across emerging markets and replicate IFC’s ESG due diligence for capital markets. They extract the most material issues from IFC’s globally recognized Environmental and Social Performance Standards and Corporate Governance Methodology . The indicators consist of 13 Environmental and Social and 20 Corporate Governance indicators for financial institutions and 43 Environmental and Social and 20 Corporate Governance indicators for corporates. These indicators can be used on publicly available information, including annual, sustainability and integrated reports, bond prospectuses, and news reports.

The performance indicators have inspired disclosure requirements and enhanced reporting in emerging markets. For instance, they have influenced listing rules and regulations in Peru. In 2019, Programa de Inversión Responsible (PIR), a consortium of private sector investors, intermediaries, and regulators promoting responsible investment policies in the Peruvian financial system, developed ESG factors for companies to report based on the performance indicators. These factors were later incorporated into reporting requirements by the Peruvian securities regulator, the National Commission on the Supervision of Companies and Securities (CONASEV). The Performance Indicators form part of IFC’s Disclosure and Transparency Toolkit: Beyond the Balance Sheet and were used to develop disclosure requirements in Kazakhstan, the Philippines, and Ukraine. To encourage bond issuers in emerging markets to disclose material ESG information, IFC has partnered with Arabesque, a global financial technology company combining artificial intelligence, analytics, and big data to assess the performance and sustainability of corporations. It is collecting and making available ESG information, using the performance indicators, on their ESG Book platform launched in December 2021. ESG Book is a new and innovative central source to access digital corporate sustainability information. This initiative helps issuers disclose ESG data, benchmark and compare themselves to peers, and informs investors on their ESG practices. The ESG data collected using the performance indicators on ESG Book is available as a public good for the financial community and other stakeholders. IFC continues working with institutional investors and asset managers to use the performance indicators to screen issuer disclosure and to assess ESG risks and performance.

Featured Project

LAPOMicrofinance Bank Microfinance, Nigeria

HelpingWomen-Owned Businesses in Nigeria Microbusinesses have been particularly hard hit by the economic effects of COVID-19. Many such businesses were credit constrained before the pandemic. They have since had to face even greater risks and uncertainty. This has increased the relevance of the specialized financial institutions that serve them, such as Nigeria’s LAPOMicrofinance Bank (LAPOMFB). The bank is the country’s largest microlender with 800,000 borrowers, mostly women entrepreneurs working in the informal sector who take out loans often on a group basis averaging $230. Soon after the first case of COVID-19 was detected in Nigeria, the government introduced a lockdown in most states and LAPOMFB closed its operations for six weeks. Loan officers were unable to collect repayments, leading to a decline in revenues, and an increased number of non-performing loans.

IIFC provided an $8 million-equivalent local currency loan to help borrowers overcome liquidity constraints.While LAPOMFB has tapped into local and international markets, medium-term unsecured local currency financing is not readily available in the market. A long term IFC client, LAPOMFB’s mission is to improve the lives of low- income households by providing easy access to micro loans, as well as support through their health, education, and other social interventions. The bank’s wide network of loan agents has enabled it to provide services to remote areas with few other financial institutions.When the lockdowns hit households’ ability to earn, LAPOMFB distributed rice, tomato paste and other food items to its clients. Despite different lockdown models in different states across Nigeria, LAPO MFB has been able to return to full operations and lending has bounced back.

Social Bond Eligible Project Commitments for FY21

Inclusion Projects

Impact Highlights Indicators Drivers on a drive-to-own scheme (#) Farmers reached (#) Rural Households with fiber at home (#) Stores opened in frontier provinces Sales equivalent to : Meat (MT) Egg (MT)

Baseline 0

Target 1,130

7,000 450

13,000 10,950

T he impact assessment table lists expected outcomes from projects eligible for funding from IFC social bond proceeds in FY21. Organized by sector, the projects eligible for funding aim to improve access to finance and other essential services for underserved target populations. Eligible categories include those stated within the Social Bond Principles. Projects committed in FY21 align with the following SDGs:

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 FY21 include: • Smallholder farmers who often lack access to key inputs, technologies, and financial resources and are typically very poor with limited access to market for their products • People who lack sufficient access to broadband and other information and communication technology services, often residing in rural areas • Patients who lack sufficient access to quality, affordable health products and/or services, including those who are low-income • Microentrepreneurs who often have limited access to assets, services, and/or market opportunities • Youth with limited options for quality and affordable education/training that will lead to employment opportunities Real Sector

3,726

4,500

46,000 111,000

79,000 193,000

Eligible Loan Commitment (USD millions)

Institution Name

Project ID

Country or Region

Sustainable Development Goals

Sector

Description

ICT

ElCat LLC

42532

Kyrgyz Republic

ElCat is a private, wholesale broadband operator. The project will promote digital inclusion and improve the quality of internet access to individuals by expanding ElCat’s high-speed broadband network to a significant number of users, including subscribers without internet access in underserved areas. Laobaixing Pharmacy Chain Joint Stock Company (LBX) is a pharmaceutical retailer with a network of over 5,000 stores spanning 22 provinces. The project will support LBX’s expansion of its stores and logistics network in the frontier regions of China, improving access to affordable and quality pharmaceutical products for customers in these regions.

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

Health

LBX Pharmacy Chain JSC

43672

China

146.91

Inclusion Projects

Eligible Loan Commitment (USD millions)

Impact Highlights Indicators Outstanding housing loans (#) Outstanding microfinance loans (#) Outstanding microfinance loans ($ million) Outstanding MSME loans (#) OutstandingWSME loans ($ million) Outstanding microfinance loans to women (#) OutstandingWSME loans (#) Outstanding MSME loans ($ million)

Institution Name

Project ID

Country or Region

Sustainable Development Goals

Sector

Description

Baseline 157,628 535,451

Target 350,093 679,747

Agribusiness

ETC Group

43692

Africa Region

ETC Group is an agricultural supply chain manager involved in the origination, procurement, warehousing, and logistics of multiple agricultural commodities and processing of consumer products in Africa. The project will help strengthen financial and value-chain integration and provide working capital financing for the smallholder farmers in its supply chain. IFC will provide advisory services to improve productivity and reduce post-harvest losses of smallholder farmers. CHO Group is a leading olive oil producer in Tunisia. The project will support the company’s working capital and capex needs, preserving its linkages with farmers and maintaining jobs. EthioChicken Group is the leading producer of day-old chicks and poultry feed in Ethiopia. The company sells these products to agents who then sell them to rural farmers. The project will help the company expand capacity by building new farms and improve consumer access to affordable poultry products in a market where access to protein and micronutrients is limited. It will also increase income opportunities for poultry agents. IFC will provide advisory services alongside the project to improve the skills and capacity of female farmers. Moove Africa B.V. is leading a project to source, operate, and maintain a fleet of vehicles for ride-hailing drivers in Sub-Saharan Africa. The project will help Moove run a flexible rental and lease model, partnering with drivers so that they can own the vehicles after agreed tenures. The project will demonstrate a replicable model for ride-hailing with high participation of women in a male-dominated industry. In addition to piloting hybrid vehicles, the project is a strong contributor to the shared economy and will enable the shift from private car use. Ser Educacional S.A. is a higher education company providing affordable undergraduate, graduate, and technical education to primarily middle- and low-income students in north and northeast Brazil. IFC’s investment will support the company’s response to the effects of COVID-19. It will support digital platform upgrades and product portfolio development, strengthen the education model, and allow for the incorporation of new students, acquired via mergers and acquisitions, into its academic platform.

220

457.6

Financial Sector

Agribusiness

CHO Company S.A.

44266

Tunisia

26.64

7,744 1,571

11,979 2,262

Social bond eligible projects in the financial sector focus on improving low-cost access and availability of financial products and services. Sub-sectors include gender finance, housing finance, and microfinance. Target populations in FY21 include: • Women-owned small and medium enterprises (SMEs) • Micro-loan borrowers who lack access to affordable financial services from traditional banks

5,545

21,374

Agribusiness

EthioChicken Group

44471

Ethiopia

or lending institutions, often low-income or living in remote areas • Underserved individuals lacking access to affordable housing finance

78,854 281.7

114,151 426.4

Infrastructure

Moove Africa B.V.

44596

Nigeria

Eligible Loan Commitment (USD millions)

Institution Name

Project ID

Country or Region

Sustainable Development Goals

Sector

Description

Gender Finance/ Banking on Women

Banco Agricola S.A.

43239

El Salvador

Banco Agrícola, the largest bank in El Salvador, is a pioneer in retail banking, offering a complete range of products and services through the nation’s largest distribution network. It has a growing portfolio financing MSMEs and other high impact sectors. The project will increase access to finance for SMEs, including women-owned SMEs, as well as housing and green finance. SeABank provides a full range of banking services across all consumer groups including retail, SME, corporate, and institutional. The project aims to improve access to finance for climate businesses and local SMEs, particularly women-owned SMEs, promote capacity building, reduce GHG emissions, and promote international standards and best practices in gender, climate financing, and ESG. ACLEDA is a systemic bank with the largest branch network in Cambodia serving MSMEs. The project will enable ACLEDA to increase financial services for SMEs including women owned SMEs and expedite post- pandemic recovery. It will also increase lending to agricultural SMEs and support the use of digital delivery channels.

37.5

Education

Ser Educacional S.A.

44072

Brazil

Gender Finance/ Banking on Women

Southeast Asia Commercial Joint Stock Bank

44792

Vietnam

Gender Finance/ Banking on Women

ACLEDA Bank

44882

Cambodia

Eligible Loan Commitment (USD millions)

Institution Name

Project ID

Country or Region

Sustainable Development Goals

Institution Name

Project ID

Country or Region

Sustainable Development Goals

Sector

Description

Sector

Description

Gender Finance/ Banking on Women

Banco Daycoval

45006

Brazil

Banco Daycoval SA, is a Brazil-based commercial bank that provides personal and corporate banking services and aims to increase access to finance for SMEs, including women-owned SMEs and SMEs in underserved regions. The project will encourage other banks to increase their exposure to SMEs in underserved regions. HDFC Limited is the first specialized housing finance company in India. The project supports the Government of India’s “Housing for All by 2022“ initiative by increasing access to finance for affordable housing for lower and middle-income populations. The project will also support HDFC to gradually grow its nascent green affordable housing portfolio. La Hipotecaria Holdings Inc. is a financial services group specialized in originating, servicing, and securitizing residential mortgages with a focus on low-to middle income individuals in Colombia, El Salvador, and Panama. The project will support residential mortgage lending to low- and-middle-income populations in Panama and El Salvador, particularly households where the head is a woman. Fondo Esperanza is a non-banking financial institution in Chile with more than 17 years of experience focused on social development by supporting entrepreneurs from vulnerable sectors. The project will expand its microfinance portfolio to low-income microentrepreneurs who are currently underserved by the traditional banking sector. Transcapital NBFI LLC is the largest microfinance institution in Mongolia. The project will help increase access to finance for underserved segments in the country, namely micro-enterprises and individuals, especially focusing on women and those in rural and semi-urban areas. Federación de Cajas de Crédito y de Bancos de los Trabajadores, SC de RL is a co-operative society. The project will provide access to finance to MSMEs, as well as women-owned or -led very small and small enterprises and lower income individuals in El Salvador. Kyrgyz Investment and Credit Bank is a systemically important bank in the country. IFC’s project will help increase access to finance for underserved individuals, and micro enterprises, focusing on affordable housing finance for low-income individuals (50%) and financing to women-owned micro enterprises (50%). Thirty percent of IFC’s loan proceeds will be used directly by the bank to reach end-clients. The remaining 70% will be channeled through local micro-MFIs.

32.5

Microfinance

Union des Mutuelles

43641

Senegal

Union des Mutuelles Alliance de Crédit et d’Epargne pour la Production is a union of local cooperatives, currently consisting of 11 individual credit and savings cooperatives. The project aims to expand financial access to MSMEs, including agribusinesses in rural areas.* DenizBank A.S is a private bank. The project will provide access to finance to MSMEs in the agriculture sector, with partial proceeds serving underdeveloped provinces of Turkey which have received a lot of refugees. CD Finance Management Co. Ltd focuses on inclusive finance in rural areas. CD Finance has operations in 20 provinces across China. The project will support the company’s lending to underserved micro and small enterprises in rural areas that have been adversely impacted by the pandemic. PT KB Finansia Multi Finance is a non-banking financial institution that focuses on providing financing to micro and small entrepreneurs/businesses with motorcycles and cars as collateral. The project will support FMF’s lending program and support the recovery of Indonesia’s middle and low- income households, as well as MSMEs. Kaebauk Investimentu no Finansas is the largest microfinance institution in Timor-Leste. The project will improve access to finance for micro-borrowers, farmers, and other participants in agriculture supply chains, prioritizing women borrowers. AFK is a microfinance institution focusing on micro and small enterprises. The project will expand access to finance to these enterprises, focusing on agribusinesses and small holder farmers in rural and semi-urban areas underserved by banks. Opportunity Bank a.d. Novi Sad (OBS) is the largest lender to micro enterprises in Serbia and has a network of 30 branches across the country. The project will support the bank’s lending program to Serbian enterprises, including SMEs, whose cash flows have been disrupted by the pandemic.

Alliance de Crédit et d’Epargne pour la Production

Housing Finance

HDFC Limited

44139

India

250

Microfinance

DenizBank A.S

43903

Turkey

150

Microfinance

CD Finance Management Co. Ltd

44430

China

Housing Finance

La Hipotecaria Holdings Inc

44536

Central America Region

Microfinance

PT KB Finansia Multi Finance

44494

Indonesia

Microfinance

Fondo Esperanza SPA

42684

Chile

Microfinance

Kaebauk Investimentu no Finansas

44883 45413

Timor-Leste

0.5

Microfinance

Transcapital NBFI LLC

43012

Mongolia

11.79

Microfinance

Agency For Finance In Kosovo

44909

Kosovo

0.61

Microfinance

Opportunity Bank Serbia

44087

Serbia

10.9

Microfinance

Federacion de Cajas de Credito y de Bancos de los Trabajadores SC de RL Kyrgyz Investment and Credit Bank CJSC

43051

El Salvador

Microfinance

43414

Kyrgyz Republic

* As this is a repeat client, indicators for this project have been referenced in previous impact reports.

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