IFC's Corporate Governance (CG) Methodology is used to evaluate risks associated with investment client corporate governance practices. The Methodology is recognized as the most advanced of its kind among development finance institutions (DFIs). In 2010, the DFI Working Group on Corporate Governance launched the DFI Toolkit on Corporate Governance, which is based on IFC's methodology.
The Methodology includes the following steps:
- Evaluating risks and opportunities. The IFC's priority is to improve an investee company's governance when the company's practices present a special risk to IFC's investment or an exceptional opportunity to improve the client's governance.
- Classifying IFC investee companies into five paradigms: listed companies, family companies, financial institutions, privatized transition economy companies, and state-owned enterprises.
- Implementing a six-step approach for improving a client's corporate governance practices. This approach begins with the investment staff's analysis of the client's governance practices. If necessary, IFC develops a corporate governance improvement program with the client.
In 2010, corporate governance analysis was mainstreamed into IFC's investment operations. There are now two levels of corporate governance analysis: a full Corporate Governance Assessment to be conducted by a member of IFC's Corporate Governance Unit as part of the appraisal team, and a Corporate Governance (CG) Review to be conducted by the investment officer (IO) as part of normal appraisal.
IFC also has several tools and resources available on its Corporate Governance portal.
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