Indigenous Peoples and the International Finance Corporation (IFC)

Written By Shannon Jowett

The International Finance Corporation (IFC) is the private sector arm of the World Bank Group, which comprises over 189 member countries and holds more than $400 billion in assets. The IFC finances companies, financial institutions, and projects in emerging markets through loans, equity loans, and advisory services.

Unlike the public lending arms of the World Bank, IFC investments directly support private sector activities, including sectors such as mining, infrastructure, agribusiness, and energy–many of which operate on or near Indigenous Peoples’ lands and territories. In FY 2025, the IFC committed $71.7 billion to private companies and financial institutions.

Beyond lending activities, the IFC shapes how global private finance approaches environmental and social risks.

Indigenous Peoples and the IFC

IFC-financed projects are often located in regions with significant Indigenous populations, including Latin America, Africa, and Asia. These projects frequently intersect with Indigenous lands and territories, natural resource governance, cultural heritage, and livelihoods. As such, Indigenous Peoples’ rights, including rights to land, self-determination, and decision-making in development pathways must be integral to project design and risk assessment. 

In many cases, IFC-supported investments are introduced into already complex political and legal environments where Indigenous land rights may be weakly recognized or actively contested. Because of this, IFC standards often become the de facto baseline for how companies engage or fail to engage with Indigenous Peoples globally. Many commercial banks, export credit agencies, and investors rely on IFC standards as a proxy for good, rights-based development. As such, the approach taken by the IFC can influence behavior far beyond its own portfolio.

When IFC standards are strongly and clearly applied, they can help prevent harm and support more equitable outcomes. When they are weakly or inconsistently implemented, they can normalize practices that sideline Indigenous Peoples’ decision-making while still being presented as “responsible” investment.

IFC Performance Standard 7 and FPIC

The IFC uses eight Performance Standards to manage  environmental and social risks in its investments. Performance Standard 7 (PS7) specifically focuses onIndigenous Peoples, and requires clients to:

  • Identify and assess impacts on Indigenous Peoples.

  • Undertake meaningful consultation and participation and establish an ongoing relationship with affected communities.

  • Obtain free, prior, and informed consent (FPIC) in limited high-risk circumstances.

PS7 also requires clients to carry out environmental and social assessment to identify potential impacts, both positive and adverse, on Indigenous Peoples, and to engage with affected communities through consultation and participation during project design and implementation. These processes are intended to inform project planning and risk management, and their effectiveness correlates directly to how well they are carried out.

For IFC-funded projects, FPIC applies only when projects affect Indigenous lands and natural resources, cultural heritage, or involve relocation or significant impacts on livelihoods. While it requires IFC clients to obtain FPIC in some circumstances, it does not state a clear rule that a project cannot proceed when consent is withheld.

PS7 does not operate in isolation. It interacts with other IFC standards, particularly those on environmental and social risk management (Performance Standard 1), land acquisition (Performance Standard 5), and cultural heritage (Performance Standard 8), which together shape how projects are designed and implemented. How these standards are interpreted and applied in practice determines whether FPIC functions as a meaningful safeguard or is reduced to a procedural step.

IFC Sustainability Framework Review and Key Issues

The  IFC is reviewing its Sustainability Framework and will update the Performance Standards for the first time since they were published in 2012. As part of this review, Indigenous Peoples have identified areas where further clarity and strengthening are needed. These include how FPIC is applied in practice, the conditions under which consent is required, and how outcomes are assessed beyond procedural compliance.

This review provides an opportunity to address these issues, improve accountability, and better align IFC standards with evolving international norms on Indigenous Peoples’ rights. The updated standards will shape how billions of dollars in private finance interact with Indigenous lands and communities over the next decades.

Concerned parties may visit the IFC’s Sustainability Framework review portal for further details on the review process and timelines, as well as the IFC’s Approach Paper and stakeholder engagement materials. The discussion phase of the review is expected to conclude in 2026, with subsequent consultations completing in 2028.

Engaging with the IFC to Improve Standards

In response to the review, Indigenous Peoples’ organizations formally submitted a joint letter to the IFC with two significant requests: 

  1. Conduct a dedicated consultation process for Indigenous Peoples beyond general stakeholder engagement, and 

  2. Establish an Indigenous Peoples Advisory Group (IPAG).

A dedicated consultation process alleviates concerns when consultation approaches are tied to global forums or limited participation spaces that do not reach many of the communities most affected by IFC-financed projects. The proposed IPAG model would provide sustained and structured engagement beyond this review process to bring in expertise grounded in lived experience, and help ensure that Indigenous Peoples are engaged as rights-holders rather than treated only as stakeholders.

A separate joint submission from Indigenous-led organizations recommended the IFC:

  • Clarify FPIC as a substantive safeguard,

  • Establish clear pause and no-go triggers,

  • Strengthen protection of customary land systems,

  • Close the PS7–PS5 gap,

  • Require independent verification,

  • Clarify limits of government-led processes,

  • Address coercion and reprisals explicitly, and

  • Safeguard continuity through ownership changes.

Strengthening the IFC framework requires moving beyond procedural fixes. In practice, this means ensuring that FPIC operates as a decision-making right rather than only a process requirement, clarifying that projects must pause or not proceed where consent is not achieved, involving Indigenous Peoples in governance and oversight and not only consultation, and strengthening monitoring and accountability so that commitments translate into positive outcomes on the ground.

IFC’s review of their Sustainability Framework must address the current imbalance where decisions affecting Indigenous lands are made without Indigenous decision-making authority. Rights-holders such Indigenous Peoples impacted by IFC-financed projects, along with investors and other relevant actors are encouraged to engage in the ongoing review of the IFC framework and contribute to shaping outcomes that respect Indigenous Peoples and their right to self-determination. 

Additional Resources

Updated 5/13/26.

Shannon Jowett
Next

Poor Indigenous Peoples’ Rights Due Diligence Still Impedes the Auto Industry’s Rights-respecting Potential