Outsourcing Development: Campaigning for transparency and accountability in financial intermediary lending

Financial Intermediary Lending

Development banks have safeguards meant to protect human rights and the environment. What happens when they outsource billions of dollars to the private financial sector, where transparency and accountability are weak?

For decades, development banks loaned money directly to their clients, mostly companies and large projects like power plants and mines. This allowed them to monitor – and be held accountable for – adverse impacts on human rights and the environment. But following the global financial crisis of 2008, development banks have increasingly outsourced their money to commercial banks and private investment funds, which then lend it onward to end users.

Proponents argue that this approach reduces poverty by increasing access to financial markets in developing countries. But because the money is difficult to track – even for the development banks themselves – it can end up harming the very people it is supposed to help. Concealed by banking secrecy laws and funneled to end users through complex, multi-layered transactions, this money quietly bankrolls human rights abuses and environmental destruction in all corners of the globe.

The International Finance Corporation, the private-sector arm of the World Bank, has spearheaded this change. It invested $50 billion in financial intermediaries such as commercial banks, private equity funds and hedge funds between 2010 and 2015 alone. That’s more than three times what the rest of the World Bank Group invested in education. Other development banks, such as the African Development Bank and the European Investment Bank, have followed suit.

Stemming the Tide

IDI works with a coalition of partners around the world to investigate, expose and stem the tide of IFC’s hidden investments in destructive projects.  

Working with our coalition partners from Recourse, Oxfam, Urgewald, the Philippine Movement for Climate Justice and others, we have shone a light on the problem – and stemmed the tide of the IFC’s hidden investments in destructive projects. When we began following the money in 2016, there were only a handful of cases in which the IFC was known to have channeled money to harmful projects. Our investigation uncovered nearly 150, including hydropower dams that displaced tens of thousands of people and power plants that threatened entire ecosystems. We published our findings in a searchable database.

Based on this evidence, we released a series of investigative reports, entitled Outsourcing Development: Lifting the Veil on the IFC’s Harmful Private-Sector Lending, which looks at how these investments impact people on the ground. We then worked with affected people to file complaints to the IFC’s accountability office, the Compliance Advisor Ombudsman, including an historic class action-style complaint in the Philippines against 19 coal plants that the IFC  indirectly bankrolled.

Outsourcing Development Series

Digging Deeper

Digging Deeper

Can the IFC's New Green Equity Strategy Help End Indonesia's Dirty Coal Mines?
Read the report
Broken Promises

Broken Promises

The World Bank, International Investors and the Fight for Climate Justice in the Philippines
Read the report
Time to Come Clean

Time to Come Clean

How the World Bank Group and International Investors Can Stop the World's Most Dangerous Coal Plant
Read the report
Unjust Enrichment- How the IFC Profits from Land Grabbing in Africa

Unjust Enrichment

How the IFC Profits from Land Grabbing in Africa - Outsourcing Development, Part 4
Read the report
Reckless Development- The IFC’s Dodgy Deals in Southeast Asia

Reckless Development

The IFC's Dodgy Deals in Southeast Asia - Outsourcing Development, Part 3
Read the report
Bankrolling India’s Dirty Dozen

Bankrolling India's Dirty Dozen

Outsourcing Development, Part 2
Read the report

"Disaster for Us and the Planet"

How the IFC is Quietly Funding a Coal Boom - Outsourcing Development, Part 1
Read the report
OUTSOURCING DEVELOPMENT- Lifting the Veil on the World Bank Group’s Lending Through Financial Intermediaries

Outsourcing Development

Lifting the Veil on the World Bank Group's Lending Through Financial Intermediaries
Read the report

Lifting the Veil on the IFC’s Harmful Private-Sector Lending

Faced with the evidence and a steady stream of complaints, the IFC committed to weaning its clients away from investment in coal.


Facing a large body of evidence and relentless pressure from our campaign, the IFC has begun implementing a number of key reforms that we been advocating for over the past decade.

  • It has improved its due diligence and supervision of financial intermediary projects, scaling back new investments in financial institutions engaged in high-risk activities and divesting from clients that have continuously failed to abide by the IFC’s environmental and social requirements.
  • It has begun “ring-fencing,” or legally restricting, 95% of its investments in commercial banks for targeted purposes, such as lending to small businesses or renewable energy projects, while explicitly excluding harmful projects such as coal or large-scale hydropower.
  • It has committed to require new financial intermediary clients to disclose basic project information (project name, sector, location) for higher risk sub-projects funded by the proceeds of the IFC’s investments.
  • In 2020 the IFC unveiled its so-called Green Equity Approach, which sets climate targets for all banks in which it holds shares – including zero lending to coal by 2030.
  • Most recently, in April 2023 IFC updated its Green Equity Approach to explicitly state that it would require a commitment from financial intermediary clients to not originate and finance any new coal projects.


We continue to work with our coalition partners to ensure these commitments are met – and that when harm occurs, affected communities can access justice.  We will also continue to push the IFC to codify these reforms in IFC’s Sustainability Policy and take them further, including by expanding the scope of the Green Equity Approach to cover all fossil fuels and all types of financial sector investments.


Further Reading

News & Updates


Other Campaigns

Sign Up!

Hey, you seem interested in our work.  Why not sign up to our mailing list for occasional updates, alerts and actions?