Search Climate Insights Directory

The document outlines systemic failures in the IFC's environmental and social due diligence, highlighting an overreliance on unverified client data and inadequate project categorization. It calls for the explicit integration of international human rights standards, including the right to free, prior and informed consent for indigenous peoples, and a strategic shift away from fossil fuel investments toward renewable energy. The authors also criticize the 'loophole' created by financial intermediaries and demand greater transparency in extractive industry contracts.

The document examines the expansion of captive coal power on Obi Island, Indonesia, used to fuel nickel refineries for the electric vehicle battery supply chain. It highlights how the International Finance Corporation (IFC) is indirectly linked to these projects through financial intermediaries like Hana Bank Indonesia and OCBC NISP. The author argues that the IFC's 'Green Equity Approach' contains a loophole that explicitly excludes 'captive coal-fired power plants' from its definition of coal-related projects, allowing continued funding. The report details severe environmental and social impacts on Obi Island, including toxic waste from High-Pressure Acid Leaching (HPAL) refineries, respiratory illnesses, and increased structural poverty for women, while calling for the World Bank Group to close these policy gaps.

The document argues that while development finance institutions (DFIs) have focused on aligning direct project financing with the Paris Agreement, they must also address the substantial portions of finance channeled through financial intermediaries to fully meet global climate goals.