It is impossible for IFC project teams to conduct a proper appraisal without examining and making critical judgments in the areas of financial stakeholder rights; accountability and the board of directors; the internal control environment; and auditing, transparency and disclosure practices. All project teams must do this to a greater or lesser extent, so understanding the central issues of corporate governance in investor protection needs to be a core competency of investment staff.

But at that same time that IFC regards corporate governance as a mainstreamed product, we recognize that our ability to effectively deliver corporate governance input to structure investments and add value for clients is greatly enhanced by having an up-to-date and well-tailored set of analytical tools (the IFC CG Methodology) and a team of specialists (the Corporate Governance Unit) who can provide project teams with the guidance and support they need.

All projects do not require the same degree of application of the Methodology or the same amount of staff commitment from the Corporate Governance Unit. Depending on the particular client and project characteristics a Full Corporate Governance Assessment (FGA) in accordance with the comprehensive IFC CG Methodology will ordinarily be conducted during appraisal. For other projects, the simpler Due Diligence Review (DDR) is more appropriate.

For a FGA, the CG work ordinarily will be conducted by the Corporate Governance Unit staff serving directly as members of the project team and participating in appraisal visits. However, in appropriate cases, consultants or non-COACG staff, in each case closely supervised by COACG, may conduct the Assessment. A Full Assessment Report (including a Corporate Governance Improvement Program) will ordinarily be prepared and shared with the client. Such Report will include analysis and recommendations in all five areas of the IFC CG Methodology.

In the DDR, the CG work ordinarily will be conducted as part of appraisal by non-COACG project team members, using the IFC CG Methodology (DDR version). COACG staff will support the project team in preparing for the appraisal and in analyzing the company’s responses. COACG staff will also comment on the discussion of governance issues included in the project documentation. The results of the Review will ordinarily be presented in a memorandum of the project team, setting out the persons at the company who were interviewed, the materials collected and discussions held, and the project team’s views on the types and level of governance risks/opportunities presented by the client. This memorandum (with any updates) would be included in all materials circulated at decision meetings and CIC conducted post-appraisal.

Accordingly, the Corporation provides managers and project teams with the following guidelines on the type of corporate governance analysis that is required in different types of investment operations.

See current internal IFC policy on projects which are subject to DDR vs. FGA. (This link is restricted to IFC staff)