“Have the cake & eat it” Monika Weber-Fahr Business Line Leader & General Manager Sustainability Business Innovator Business Solutions to Sustainability Challenges

2 Environmental and Social Sustainability Business Enabling Environment Access to Finance Corporate Advice PP Interface… …for Infrastructure Advisory Services: Support Private Sector Development Firms need 3 things to flourish The right laws and structures | Money | Knowledge to succeed

3 What if… … Privately run and financed firms could build their profitability around the promise to protect natural resources; (  Whole Foods, Patagonia) … their market size around affordable products and services; (  Walmart, IKEA) … their operational efficiency around low-carbon energy solutions… (  Amazon.com, eBay) What if such solutions would become the norm?

4 Think about it… “When a well-run business applies its vast resources, expertise and management talent to problems it understands and in which it has a stake, it can have a greater impact on social good than any other institution or philanthropic organization.” Michael Porter and Mark Kramer Harvard Business Review, 2006

5 “Sustainability”: Complementary Approaches IFC’s Advisory Work Design, test, refine & replicate business models and technologies that promise to deliver social and environmental benefits while also increasing firm value. Sustainability ….. as “good management” … as an (up-) market niche.. to identify new markets to re-organize markets?

6 Making the Private Sector Work for Climate Change Energy inefficiency Small firms are one of the largest consumer of energy and drive the economy in most emerging markets They use energy least efficiently. They don’t invest in efficiency improvements. Creating markets for EE lending Train small firms on energy efficiency Explain to banks the credit risk of such lending Use guarantees to share the risk Provide a dedicated credit line Donors have funded: Training and outreach efforts and the partial credit guarantee Markets changed: Russia, China, Southern Europe The Problem A Solution

The Problem A Solution 7 Making the Private Sector Work for Workers in a Globalizing Economy Labor standards… are a concern for many international buyers – particularly in consumer goods (e.g. textiles) are assessed and enforced through many individual firm audits No time for change or dialogue. Creating market-based solutions Buyers roundtable: One standard Standard enterprise assessments linked to immediate training on how to change things Tripartite dialogue with employers, employees, government Donors have funded: ILO/IFC’s training and outreach efforts and the design of global tools Markets changed: Cambodia – Beginning: Vietnam

The Problem A Solution 8 Making the Private Sector Work for Biodiversity Protection Biodiversity depletion… can happen because of large- scale agriculture of commodities. is sometimes inevitable around a specific project. Creating market-based solutions Showcase and reward better management practices Encourage adoption by large players. Reward the offset of biodiversity loss in a different location. Donors have funded: Global program to reward & showcase better management practices Markets to change: Palm oil, soya, cocoa, sugarcane

9 Business Solutions to Sustainable Development Efficiencies for the Real Sector Long-term solutions instead of short-term risk management Labor standards – Community investment Natural resources management standards Resource efficiencies Cleaner production Sustainable energy Efficiencies for the Financial Sector Long-term solutions as new markets Gender-specific credit lines Access to finance for energy Mobilizing “innovative” capital Sustainability indices Innovative financial instruments Clean tech investments International Development Priorities Climate Change | Food Security | Millennium Development Goals | Frontier Countries

Portfolio of Projects By Practice Area as of June 30, $138,132,535

Portfolio of Projects By Region as of June 30, $138,132,535

12 Innovation Efforts Are Starting to Show Results* Scope and Design Test and Refine Replicate Labor Standards NRM Standards Cleaner Production Gender Entrepreneurship Gender Entrepreneurship Energy Finance “Sustainability” Investing Human Rights maturity # projects * Indicative examples shown here. In total, there are over 12 innovation efforts in the Innovator portfolio.

Financial Partners - Commitments 13 $75.3 million 18 financial partners Average contribution: $3.6 million per donor GEF contributions: $215.8 million Data as of November 12, 2008 Cumulative since 1997

Budget: Expenditures FY08 ($25 million) 14 NON-PROJECT RELATED EXPENSES (9%) PROJECT RELATED EXPENSES (91%)

“Have the cake & eat it” Monika Weber-Fahr Business Line Leader & General Manager Sustainability Business Innovator Business Solutions to Sustainability Challenges