IFC's Corporate Governance Methodology breaks down the broad universe of IFC investee companies into five paradigms:

• Listed companies
• Family companies
• Financial institutions
• Privatized Transition Economy Companies
• State-owned enterprises

In practice, many investee companies will not fit any one paradigm perfectly, but it would be impossible to develop different corporate governance tools for every conceivable type of company. In those cases where an investee company has characteristics of two paradigms (for example, listed companies with a family as the controlling shareholder), corporate governance tools from both paradigms could be used in tandem.

The corporate governance progression matrices for each of the five paradigms provide the conceptual framework for IFC's corporate governance methodology. These matrices emphasize the evolutionary nature of a company's governance practices. The matrices allow IFC investment staff - and the company's owners and managers - to assess which of four levels the company achieves in five key areas of corporate governance. These levels parallel the four levels that IFC uses to evaluate the other pillars of sustainability (environmental and social issues).

Sample Progression Matrix

	Level 1	Level 2	Level 3	Level 4
Commitment to Good Corporate Governance
Shareholder Rights
Control Environment and Processes
Transparency and Disclosure
The Board of Directors

Although there are situations where governance is so poor that IFC cannot move forward with a potential investment, IFC does not impose rigid minimum standards for corporate governance on clients. In contrast, the progression matrices are designed to help investment staff add value to companies in which IFC is making an investment, rather than to serve as a rating exercise. The "levels" are not archived nor used to make comparisons with alternative potential investments.