Key Activities

IFC’s Integrated Environmental, Social, and Governance Project supports the financial sector by helping the market regulator, the Central Bank of Iraq (CBI), develop and mandate the environmental, social, and governance (ESG) code, which was the first of its kind to be enacted in a fragile and conflict-affected country. 

Regulatory Level 

To continue building the foundation of the regulatory environment, IFC has supported CBI to develop an integrated ESG scorecard to conduct industry-specific scoring across the three ESG dimensions and provide a standardized integrated ESG reporting mechanism. 

IFC helped CBI develop its first integrated ESG scorecard report, which aims to encourage changes beyond compliance, identify red flags and areas for improvement that will help attract investment, improve Iraqi bank performance, and position Iraq on the path to a strong and sustainable financial sector.

IFC supports CBI jointly with the Sustainable Banking and Financing Network to develop an Iraqi sustainable finance road map. The Sustainable Finance Road Map aims to align the financial system with national and global sustainable development priorities. 

The project is planning the steps in the Sustainable Finance Road Map with CBI, including assessing the current sustainable finance landscape in the country and identifying gaps, barriers, and areas that require further intervention and action. Other steps include identifying opportunities to leverage existing actions and channel increased financial flows to priority sectors that represent the largest financing need, and setting a vision and target to accelerate the development of a more sustainable financial system.

Market Level

IFC is collaborating with the local market intermediary, the Governance Institute for Directors, which provides services and trainings on integrated ESG based on IFC’s long-standing global and regional leadership in the field.

IFC supports the Iraq Stock Exchange in organizing the annual Ring the Bell for Gender Equality events, which promote Sustainable Development Goal 5 related to gender equality.

Firm Level

IFC provides governance for sustainability assessments and tailored advice for companies in Iraq.

Major Achievements

IFC worked with the CBI to develop a mandatory ESG code, adopted in 2018. The code introduced sustainability standards in Iraq for the first time. The CBI binding ESG code for all banks operating in the Iraqi market introduced various new, strong ESG principles, such as the following:

  • One-third of board members to be independent;
  • One board member to represent the minority shareholders;
  • A maximum of four other directorships of companies;
  • Six board meetings per year;
  • Active board committees (audit, risk, nomination, and governance);
  • At least one woman director at the board level;
  • Cumulative voting mechanism to protect minority shareholders’ rights;
  • Environmental and social sustainability standards.

Based on IFC’s support to CBI to develop the ESG mandatory code, IFC also supported the development of the integrated ESG scorecard, leading the way in the region to develop the first banking integrated ESG scorecard report to help CBI make decisions based on results and analysis.

The new integrated ESG scorecard report provided sector information in the areas of sustainability, inclusion, and governance. It analyzed data results and provided recommendations for both the regulator and the Iraqi banks, along with the next steps for progress. 

The project supported CBI in joining the Sustainable Banking and Financing Network, and it became a member in 2019. As a result of the work with IFC, CBI made a leap in the network’s progression matrix, moving from the commitment phase in the preparation stage (2019) to the developing phase in the implementation stage (2021), preceding many middle-income and more stable countries in the region and beyond. Other regions are replicating the Iraqi scorecard initiative.

Our Development Partners

This project is implemented in partnership with the government of the Netherland (the Dutch Middle East and North Africa Private Sector Development Fund).

This project is implemented in partnership with the government of the Netherland (the Dutch Middle East and North Africa Private Sector Development Fund).

Our Local Partners

Governance Institute for Directors
Mahmoud Raoof Kareem