IFC Adopts First-Ever Remedy Framework to Address Harm

Credit: CIEL

The World Bank’s private sector arm has raised the bar — and others may follow. On April 15, the International Finance Corporation (IFC) became the first development finance institution to adopt a formal remedy policy, publishing its Remedial Action Framework (RAF) to address environmental and social harm caused by IFC-supported investment projects.

The move sets a precedent and ramps up pressure on other development banks — including the Inter-American Development Bank — which are expected to release their own remedy frameworks.

Development institutions such as IFC finance projects meant to improve lives worldwide. Yet too often, these projects have caused environmental harm, displaced communities, and led to reprisals. This new framework is a milestone — both a leap forward for IFC and a sign of hope for communities harmed by development projects.

On April 15, 2025, the International Finance Corporation (IFC) adopted a Remedial Action Framework (RAF), an explicit policy on remedy, formalising a commitment to address environmental and social harms caused by IFC-supported investment projects.

The IFC/Multilateral Investment Guarantee Agency (MIGA) RAF is a cornerstone at a time when the World Bank Group is reviewing accountability systems on both its public and private sides. This framework sets a precedent, signalling a profound institution-wide commitment to avoid harm. It acknowledges that remedy is not only possible but essential — and that it must be part of a broader cultural shift across the entire institution.

The remedy framework is the result of years of advocacy by stakeholders both outside and inside the institution, and strenuous efforts from civil society organisations and project-affected people worldwide. Their contributions — grounded in firsthand experience of harm and technical recommendations — have centred remedy on the rights and needs of those harmed.

Carla García Zendejas of CIEL moderated a panel after a screening of the film “The Fisherman and the Banker” in April 2024 in Washington, D.C. The film, produced by Sheena Sumaria over ten years, follows the fishing community of Gujarat, India, as they sued the IFC, the lending arm of the World Bank, for funding a power plant that harmed the community’s ecology.

Cases like Alto Maipo, Titan Cement, and Tata Tea revealed how inadequate existing complaint systems were in responding to and remedying environmental and social harm to communities. The momentum needed was created with the Tata Mundra case and the landmark Jam v. IFC litigation by Indian fisherfolk, when IFC again dismissed findings reported by its own accountability mechanism.

With the RAF, IFC now acknowledges a core tenet of international law: institutions should avoid infringing on human rights and should address adverse human rights impacts when they have contributed to harm.

The framework introduces a structured approach to addressing environmental and social harms based on three pillars: Prevention and Preparedness, Access to Remedy, and Contribution to Remedial Action. While it still distinguishes between the roles of IFC/MIGA and their clients, it no longer denies responsibility.

Prevention remains key. IFC has reiterated the value of its existing sustainability policies to identify and manage environmental and social risks early — something civil society has long demanded: avoiding harm rather than managing its aftermath.

Still, given the numerous and disturbing failed past projects under existing policies, real change will depend on applying an environmental and social lens across all operations. A human rights-based approach must guide this shift.

The RAF also acknowledges the central role of grievance mechanisms. Effective, reliable, and independent grievance mechanisms and systems are essential for project-affected people to raise complaints and seek remedy when things go wrong. Considering IFC’s history with its own accountability mechanism — the Compliance Advisor Ombudsman — this is a significant step.

IFC/MIGA has restated its commitment to using its influence to push its clients to take remedial action and will also provide support for enabling activities, such as fact-finding, technical assistance, and community development efforts. But the effectiveness of these contributions will depend on how meaningfully they engage with communities seeking remedy.

Importantly, the RAF applies to all IFC-supported investment projects and to all investment projects covered by MIGA political risk insurance guarantees — an encouraging decision.

Under IFC’s Sustainability Framework, clients have long been responsible for managing environmental and social risks. Now, they are also expected to fund and implement remedy. This is not as straightforward as it seems: development finance institutions’ operations are at the centre of an often nebulous division of roles.

If IFC fails to properly supervise and monitor its clients, performs weak due diligence, or neglects to notice a low-capacity client, the risk of harm increases — and so does the institution’s responsibility. One of the thorniest issues during the creation of the framework was the cost of providing remedy.

Remarkably, private sector clients did not oppose remedy in principle — they questioned how to deliver it and how costs would be shared. They accepted responsibility for harms caused by construction or operations but needed clarity on implementation.

Notably, the RAF instructs IFC to use its own financial resources — whether from project funds, donor trust funds, internal budgets, or operational risk capital — to support remedy. That is a major shift, one that could influence other development finance institutions and open a door to systemic change. Already, discussions on remedy are well underway at institutions such as the Inter-American Development Bank.

The RAF was approved on an interim basis, with a three-year piloting phase. The challenge ahead is turning policy into practice. Harm is harm — regardless of how it is funded or who caused it. As environmental and climate crises grow globally, and financial institutions multiply funds in search of solutions, we can point to the first remedial action framework as a standard to follow — and as a way forward.

Now there is a way to address harms and provide remedy, the commitment to do so has been set, and many are ready to make this happen — as challenging as it will undoubtedly be. Remedy must be more than a principle. It must be a reality.

Carla García Zendejas is People, Land, and Resources Program Director at the Center for International Environmental Law (CIEL)