An NGO is suing the US Treasury for failing to disclose the environmental analysis that allowed the International Finance Corp to finance 13 projects in developing countries that it says will cause high greenhouse gas emissions.
The legally innovative suit by Bank Climate Advocates was filed on Friday in the federal US District Court for the Northern District of California.
The NGO wants to highlight what it sees as the IFC’s failure to fulfil its commitment to align its investments with the Paris Agreement’s target of limiting global warming to 1.5°C.
The IFC has said that by July 1 this year, 100% of its new financial flows will be Paris-aligned. It is also a major green bond issuer, having issued $10.3bn of the securities in the past 10 years according to Dealogic, 8.6% of its total bond sales.
Bank Climate Advocates is suing the US Treasury, as the IFC’s largest shareholder, under the US Freedom of Information Act.
“The Intergovernmental Panel on Climate Change and the International Energy Agency have both demonstrated that financing liquefied natural gas terminals, natural gas power plants and other types of fossil fuel projects will cause the 1.5°C global warming objective to be exceeded,” said Jason Weiner, executive director of Bank Climate Advocates, which is based in California.
“The IFC continuing to finance them — when there are alternatives, in the case of natural gas, or mitigations for other projects, that can feasibly achieve the project purpose while avoiding [much of] the emissions — is irresponsible and harmful to the communities that are supposed to be benefiting [from IFC financing], which are suffering from catastrophic climate change harms.”
GlobalCapital has contacted the IFC and US Treasury for comment and will report any given as we receive it.
Habit of non-disclosure
Bank Climate Advocates alleges the IFC regularly keeps confidential, without valid justification, the documents about its projects’ climate impacts that are prepared when it is deciding whether to finance a project.
In this case, BCA has focused on nine natural gas plants and four projects in the cement and livestock industries that are “some examples of the most egregious and problematic projects the IFC has funded,” Weiner said.
Nine of the projects were approved by the IFC between 2015 and 2021, before it introduced its Paris Alignment Methodology. For these, BCA has asked for the climate change due diligence assessments.
Four — the Syrdarya combined cycle gas turbine plant in Uzbekistan, a cement plant and a dairy in Brazil and a pig farm in China — were approved in 2023, after the IFC had adopted the Paris methodology. For these, BCA has also asked for the Paris methodology assessments.
“Until 2012, the IFC’s policies were considered to be amongst the best among MDBs, but it’s 2025 and their policies are now severely outdated, so that is clearly no longer the case,” said Weiner. “We have focused on the climate crisis but there are other things to consider. There are over 150 financial institutions that currently adopt the IFC’s Performance Standards, or use them to evaluate whether to proceed on investments. So what happens at IFC has a lot of significance throughout the financial sector.”
BCA focused on IFC because it realised it "was systematically failing to adhere to its board-adopted climate change requirements,” said Weiner.
Due diligence required
Under its Environmental and Social Framework and Performance Standards, adopted in 2012, the IFC is committed to conducting — or ensuring that its borrower clients conduct — Environmental Impact Assessments before agreeing to provide a loan.
The IFC’s Framework and Performance Standards require, BCA argues, that it conduct EIAs according to Good International Industry Practice (GIIP), meaning to a high standard.
BCA argues that GIIP should include disclosing the impact assessments, so other stakeholders can be informed about projects.
The IFC says its climate due diligence includes quantifying the expected greenhouse gas emissions of a project, analysing what alternatives there could be to the proposed technology, and considering ways to mitigate the emissions.
Although the IFC says it fulfils these requirements, it rarely discloses the studies that support its conclusions.
For the Syrdarya plant in Uzbekistan, Weiner said, “they didn’t even look at whether renewables were feasible at all, they just looked at different configurations of the natural gas plant. But in Uzbekistan, there are 320 sunny days a year, and when another power plant was approved a year later by MIGA for a guarantee, the EIA estimated solar energy could provide 51bn tonnes of oil-equivalent a year in Uzbekistan, and they even stated that was a risk to the natural gas plant going forward. All this flies in the face of Uzbekistan’s 2030 energy strategy… and development strategy for 2017 to 2021 which stress the importance of the country moving to greater… use of renewables.”
Long process
BCA has been engaging with IFC since 2023 to ask it to disclose its climate due diligence on projects, sending multiple requests.
In April 2024 BCA even gave a presentation about it at a panel discussion in the civil society stream of the World Bank Group Spring Meetings. But the IFC has not agreed to its requests.
BCA had also been in contact with the US Treasury about the issue, as the US is the IFC’s largest shareholder and the IFC’s board signs off all its projects.
The NGO told the Treasury it had got nowhere with the IFC and was contemplating filing a request to the Treasury for the same information under the Freedom of Information Act.
The Treasury asked it to try IFC one more time, which it did in December, but this request was denied.
In a letter rejecting disclosure, the IFC argued it could not release the analyses because to do so would reveal confidential information about its clients, or would violate the IFC’s “deliberative privilege”, which means the right to keep private internal discussions before it makes a decision.
The IFC’s appeal board rejected an appeal in January, and the IFC’s advisor on its Access to Information Policy turned down an appeal in March.
IFC's Ombudsman finds 'weaknesses'In October a study by the Office of the Compliance Advisor Ombudsman, an official body which independently reviews complaints about the IFC and its sister Multilateral Investment Guarantee Agency, reporting to their boards, found “weaknesses” in IFC due diligence. That showed it agreed with some of the criticisms made by BCA. The CAO reviewed 35 projects that required an Analysis of Alternatives, in which a client borrowing from the IFC is supposed to consider whether alternative technologies might be better. The clients conducted AoAs in 27 cases, and the Ombudsman found that “critical elements of established good international industry practice were missing from 21 of the 27 AoAs reviewed”. Specifically, the CAO said, “clients did not provide a detailed discussion of each alternative presented to IFC or specify proposed GHG mitigation measures to address [environmental and social] risks for each alternative. In addition, these clients failed to provide a solid justification/rationale for the alternative they chose. As a result, the alternatives analysis for these IFC investments was limited in its utility to inform decision making on lower-carbon alternatives and the mitigation of project greenhouse gases.” |
Freedom of information tested
Having failed to extract the due diligence reports from the IFC, BCA filed its freedom of information request to the Treasury on January 23.
As a shareholder, the US Treasury has had access to the Environmental Impact Assessments for all IFC projects, so BCA asked it to provide these.
The Treasury has not responded to BCA’s request, so on Friday July 11 it filed its suit in California.
It alleged that the Treasury has “failed to issue a final determination on the FOIA Request in compliance with FOIA’s mandatory timelines; improperly withheld agency records that are responsive to the FOIA Request; failed to conduct an adequate search for records that are responsive to the FOIA Request; failed to properly utilize a FOIA tracking system to provide information on its processing of the FOIA Request; and failed to provide a required estimated date of completion for the FOIA Request.”
The suit demands that the Treasury release the information and pay BCA’s legal costs. Christopher Sproul at law firm Environmental Advocates is lead counsel for BCA.
The suit said the information, once published, would “assist BCA, other concerned entities, and affected communities in demonstrating that the United States government’s and IFC’s claims are false that with regard to IFC’s investments in natural gas power plants, renewable energy sources were neither economically and technically feasible nor of least cost to communities”.
Weiner said BCA was suing the Treasury instead of the IFC because it was much simpler and quicker, as the FOIA imposes clear duties on the US government, and there is plenty of case law that establishes precedent for what the government must disclose.
Chance of changing MDB practices
The suit may prove well timed, as the IFC is in the process of reviewing and updating its sustainability framework.
“Receiving this additional analysis that the IFC claims is satisfying its policy requirements would be very insightful to [help in] securing specific needed improvements in their policy updates,” Weiner said.
He added: “Release of these documents for public review and comment, including to affected communities, governments and the public, prior to financing decisions, is we believe an essential step to help prevent harmful fossil fuel lock-in projects that will cause the global warming objective to be exceeded.”
Not only were IFC policies inadequate, he argued, but the IFC was failing to implement its own standards properly.
Rectifying this could raise the level of due diligence and transparency at the IFC and possibly influence practices at other MDBs and commercial lenders.
“If IFC is saying they are 100% Paris-aligned starting on July 1, but they are not disclosing these analyses, they are not being accountable or transparent about their climate policies or public commitments,” said Weiner. “The IFC seem to be serving their private sector clients as a first priority, and losing sight of the fact that they are a taxpayer-funded organisation whose mission is to help people in the Global South, not harm them.”