IFC and SocGen’s Romania deal marks a milestone in sustainable finance

Under the agreement, signed at the World Economic Forum’s annual meeting in January, IFC and SocGen will provide project co-financing and risk-sharing arrangements, supporting private sector mobilization around climate change.

Crucially, the agreement focuses on sustainable financing projects that improve access to clean energy and water, support a sustainable agricultural industry and empower women in small and medium-sized enterprises (SMEs).

On April 4, IFC’s Romanian subsidiary and SocGen announced the first transaction since the deal was signed – a synthetic “significant risk transfer” to free up capital for sustainable projects.

The SRT was a first for IFC in Romania and the first SRT for SocGen in an emerging market. As part of the transaction, IFC will guarantee up to 105 million euros for a BRD portfolio of SME and corporate loans worth up to 700 million euros. The capital released by the SRT will be used to finance climate initiatives and women-led businesses up to €315 million.

Slawomir Krupa, CEO of Societe Generale, commented: “By collaborating with IFC, our aim is to increase our contribution to sustainable projects in developing countries related to the United Nations SDGs.” As part of our strategic plan and our ESG Commitments, developing partnerships with key stakeholders will help us develop the best solutions to address the challenges of ecological transition and the need for sustainable infrastructure in developing countries.”

Makhtar Diop, Managing Director of IFC, commented: “This agreement will enable IFC and SocGen to work together to implement scalable private sector investments in emerging markets. We look forward to a strengthened partnership to provide the critical funding needed for projects with transformative impact on people and local economies.”

According to S&P Global Market Intelligence, SRT activity is currently increasing as banks seek regulatory capital relief and want to manage their risk exposures.

Over the last decade, IFC and SocGen have co-financed around 60 transactions with partners – representing $20 billion in investment flows in developing countries.