SINGAPORE – The International Finance Corporation (IFC) expects its commitments in Singapore to exceed US$1 billion (S$1.36 billion) for the second consecutive year in fiscal 2024, as companies here continue to back businesses active on the environmental, social and governance (ESG) front in emerging markets, said its new Singapore head.
A member of the World Bank Group, IFC works with the private sector in emerging and developing countries to help businesses undertake development projects. It provides capital through firm-level partnerships and direct investments, as well as expertise and influence to make projects that might otherwise be challenging to fund more viable.
Partnering with Singapore-based companies to provide businesses in such markets with climate financing and help them lower their carbon emissions has emerged as a top priority for the development institution over the past year.
“All our investments are made through an ESG lens. Now, 85 per cent of all our new projects and investments must be Paris-aligned, and climate-focused projects have consequently become a bigger focus for our engagements,” said Ms Katia Daude Goncalves, IFC’s country manager for Singapore, Malaysia and Brunei, referring to the Paris Agreement.
The Paris Agreement is an international treaty aimed at limiting the global average temperature to 1.5 deg C above pre-industrial levels.
Ms Daude Goncalves was appointed to her role on Tuesday, replacing Mr Nicolas Marquier, who had held the position since 2019.
She told The Straits Times that there is a growing appetite from companies based here for investments that help to address development challenges such as climate change, food and energy security, and infrastructure gaps.
“This interest is likely to drive our commitments here above the US$1 billion mark again this fiscal year.”
During the 2023 fiscal year that ended on June 30, IFC committed a record US$1.2 billion across 18 projects with Singapore-linked companies looking to expand in emerging and developing economies.
These include being the sole subscriber for Singapore Exchange-listed CapitaLand Ascott Trust’s 16.5 billion yen (S$148 million) sustainability-linked bond for the hospitality sector, which will help serviced residences in Indonesia and the Phillippines decarbonise, among others.
It also provided a US$32.5 million loan to Singapore-based agricultural commodity trading company Agrocorp International to buy and deliver grains to Bangladesh.
IFC also signed an agreement with Enterprise Singapore to draw project, trade and supply-chain financing for Singapore enterprises in emerging and developing markets.
Since 2011, IFC, whose funds come from its member countries, has committed over US$7.5 billion across more than 150 deals by Singapore-linked clients. For the rest of this fiscal year, it is also weighing potential investments in areas such as renewable energy, agriculture and infrastructure, Ms Daude Goncalves said.
If deployed, the funds could support Singapore-based companies looking to invest in these sectors in markets like Malaysia, where IFC sees opportunities to back development and foster private-sector growth.
“We have been working with Singapore-based companies on cross-border investment, knowledge sharing, and partnership opportunities with Malaysian companies,” Ms Daude Goncalves said.
IFC will prioritise Malaysian projects that promote and accelerate climate conservation, financial inclusion, and innovation and digitalisation.
Supporting trade flows is another big theme for IFC in the year ahead. It wants to work with partners in Singapore to design options that will enable them to provide more trade finance for companies in emerging and developing economies.
“We also see opportunities in blended finance to make climate-smart projects more bankable and investable,” Ms Daude Goncalves added.
Blended financing combines public- and private-sector resources to address development challenges.
