IFC and SocGen’s Romania deal marks sustainable finance milestone

Societe Generale (SocGen) and the International Finance Corporation (IFC) have signed a Collaboration Framework Agreement to bolster sustainable finance in developing countries.

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IFC and SocGen’s Romania deal marks sustainable finance milestone

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As part of the agreement, signed at the World Economic Forum's annual meeting in in January, IFC and SocGen will provide project co-financings and risk sharing agreements, assisting in the private sector’s mobilisation around the climate transition.

Crucially, the deal will tend to sustainable finance projects that boost access to clean energy and water, support sustainable agribusiness, and empower women in small and medium sized enterprises (SMEs).

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

The SRT proved a first for the IFC in Romania, and the first SRT for SocGen in any emerging market. Under the transaction, the IFC guarantees up to €105 million on an up to €700 million BRD portfolio of SME and corporate loans. Capital freed up by the SRT will be used to lend up to €315 million to fund climate-related initiatives and women-owned businesses.

Slawomir Krupa, CEO of Societe Generale, commented: “By joining forces with IFC, our ambition is to increase our contribution to sustainable projects in developing countries, in relation with the UN’s SDGs. As part of our strategic plan and ESG commitments, developing partnerships with the most relevant stakeholders helps us design the best solutions to address the challenges of the environmental transition and the need for sustainable infrastructures in developing countries.”

Makhtar Diop, managing director, IFC, commented: “This agreement will allow IFC and SocGen to work together to deploy scalable private sector investments in emerging markets. We look forward to an enhanced partnership to provide the critical financing needed for projects with a transformative impact on people and local economies."

According to S&P Global Market Intelligence, SRT activity currently on the up, as banks look to obtain regulatory capital relief and manage their risk exposures.

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

Learn more about the latest innovations in the sustainable finance sector at Finextra's annual Sustainable Finance Live conference, taking place on 8 October 2024.

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