Corporate Governance Ifc

Corporate Governance

The IFC has been a leader in advancing the practice of good corporate governance for decades. In 2011, the IFC was able to secure the adoption of standards, based on IFC’s standards, by a working group of more than 30 development financial institutions (DFIs). They are currently working with leading development finance institutions to help set a standard for governance for the companies that they work with.

The Corporate Governance Methodology consists of six steps :

1. First Impressions: Assign a governance paradigm to the company they are working with based on the specific issues that are the main concerns based on the first impressions of their corporate governance.

2. Client Self-Adjustment: Introduce IFC’s corporate governance methodology and then allow companies to assess their company against the expectations.

3. Corporate Governance Review: A checklist is sent to the company at least 3 weeks in advance of the on-sight appraisal of their corporate governance; this is done so that companies can get all of the background information collected. During this step the IFC is accessing the risk, opportunity and necessary improvements that the company needs to make to be in compliance with IFC’s standards.

4. Corporate Governance Improvement Program: Identify the areas that the company needs to improve upon and work with them on a timeline for the issues to be resolved.

5. Documentation and Implementation: Outline the operational documentation including for both parties to sign. The draft should also state any additional assistance that IFC needs to supply. The timeline will include what steps need to be implemented before disbursement of funds from the IFC and what penalties will be enforced for failure to reach expectations after the disbursement of funds.

6. Supervision: Oversee the adherence to the negotiated improvement program. The IFC staff assigned to this task must understand the company’s improvement program in order to be able to ascertain any additional assistance needed for the company to be successful.

The Corporate Governance Methodology was created by the IFC as a way to evaluate corporate risks and opportunities. It is widely viewed as the most progressive in the industry. DFIs will use these guidelines to evaluate the quality of corporate governance for companies that they invest in as well as push for the practice to be used by global financial institutions.

IFC does a great job of not only enforcing their Corporate Governance but also of making a clear statement as to what is expected of companies they invest in and assisting them in meeting those benchmarks.

Management System Grade: 9 out of 10

In 2007 the IFC Ethics Committee approved an in depth Code