Dr. Jim Yong Kim's Dilemma: International Finance Corporation and the Tata Mundra Power Plant
| Case Code: FINC097 Case Length: 21 Pages Period: 2012-2015 Pub Date: 2015 Teaching Note: Available |
Price: Rs.600 Organization: International Finance Corporation Industry: Banking Countries: India Themes: Sustainable Finance, Sustainability, Banking |
Abstract Case Intro 1 Case Intro 2 Excerpts
World Bank Group and International Finance Corporation
The World Bank Group (WBG) was a group of five closely associated international organizations - The International Bank for Reconstruction and Development (IBRD), The International Development Association (IDA), The International Finance Corporation (IFC), The Multilateral Investment Guarantee Agency (MIGA), and The International Center for Settlement of Investment Disputes (ICSID). These five organizations came into existence between 1945 and 1988 and were owned by member countries. All these five organizations or WBG worked for a common mission – to reduce extreme poverty and boost shared prosperity. The WBG provided leveraged loans, insurance against various risks, and technical assistance to developing and under developed countries.
IFC was established in 1956 to promote economic development in the private sector. It supported for-profit private sector projects in developing countries through its investment, advice, and assets management services. IFC provided about one third of its total funds to the private sector in developing countries. In 2014, after more than five decade of its establishment, it supported almost all major industries and touched the lives of millions of people in more than 100 countries. IFC helped in creating jobs, improving living standards, and building a better future. In FY2014, IFC invested US$17.2 billion in around 600 projects and mobilized more than US$5 billion to support the private sector in developing countries in different industries through its investment services.
In the energy sector, WBG's core focus areas included expanding access to energy, accelerating energy efficiency, and promoting renewable energy. Kim was the first scientist to head WBG. Under his leadership, the group had made climate change a priority as Kim believed that it was impossible to tackle poverty without dealing with this environmental problem. WBG was facing criticism for funding coal-fired power plants as these were seen as one of the main causes for the rising pollution from heat-trapping gases. In July 2013, WBG's board agreed to a new energy strategy that would limit financing of coal-fired power plants to "rare circumstances" - restricting financial support to countries that had "no feasible alternatives" to coal, as it sought to balance environmental efforts with the energy needs of poor countries.
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