Even before COVID-19, baseline projections suggested that 6 per cent of the global population would still be living in extreme poverty in 2030, missing the target of ending poverty altogether. The fallout from the pandemic threatens to push over 70 million people into extreme poverty. The triple threat of COVID-19, conflict and climate change makes the global goal of ending poverty by 2030 beyond reach unless immediate and substantial policy actions are implemented with due earnest. The COVID-19 crisis has demonstrated the importance of social protection systems to protect people’s health, jobs, and income. As a result, many new social protection measures have been introduced in 2020. But, 4 billion people worldwide are still left without any social protection, the majority of whom are the poor and the vulnerable in the developing world.

To share a scenario from a community of our project beneficiaries in a developing country, CFC came to experience that many smallholders were living on the brink, and then they went into an abyss when the pandemic hit. CFC, with its Emergency Liquidity Facility (ELF), tried to get them something for the dual purpose of putting food on their table, while their children’s education remained minimally disturbed up to certain time. With inputs from these smallholders, businesses and SMEs eventually proceeded towards upgradation of their value chain or productivity growth with resources from CFC. The CFC, therefore, contributes to SDG 1 by investing in businesses that improve people’s livelihoods throughout the supply chain through enhanced income and help them alleviate poverty eventually.

Even before the pandemic, the number of people going hungry and suffering from food insecurity had been gradually rising since 2014. The COVID-19 pandemic has intensified the vulnerabilities and inadequacies of global food systems, which could add hundreds of millions more people to the chronically undernourished, making the goal of ending hunger a more distant reach. The COVID-19 pandemic might have pushed an additional 83-132 million into chronic hunger in 2020. In addition, countries around the world continue to struggle with multiple forms of malnutrition.

The world can produce sufficient food to feed everyone adequately. Agriculture, forestry, and fisheries can provide nutritious food for all and generate decent incomes, while supporting people-centered rural development and protecting the environment. The CFC supports projects that work to increase smallholder’s productivity, through technical assistance, access to proper inputs, improved infrastructure, and access to credit. CFC also supports projects that build farmer’s resilience to external risks. In these ways, the Fund helps to ensure that people get access to safe, nutritious, and sufficient food all year round.

Women and girls, everywhere, must have equal rights and opportunity, and be able to live free of violence and discrimination. Gender equality by 2030 requires urgent action to eliminate the many root causes of discrimination that still curtail women’s rights in private and public spheres.

Women play a crucial role in agriculture, especially in developing countries, where they comprise around 43 per cent of the agricultural labor force. The situation is far more precarious in Africa, where CFC have invested the most. Gender disparities, however, are evident in unequal access to productive resources. By prioritizing the support of projects promoting gender equality (e.g. women-led enterprises, high percentage of women among the beneficiaries of the project, creation of employment for women, high number of women in senior positions, among others), the CFC contributes to the advancement of SDG 5.

In many countries, having a job does not guarantee the ability to escape from poverty. According to the ILO, almost 1.4 billion workers are estimated to be in vulnerable forms of employment. Those workers are more likely to be informally employed, have fewer chances to engage in social dialogue and are less likely to benefit from job security, regular incomes, and access to social protection. The CFC supports projects that generate employment with decent working conditions. By investing in small and medium-sized enterprises, the Fund helps to create several quality jobs, promoting inclusive and sustainable growth, in the world’s most vulnerable regions.

Inequality is a multiheaded monster that cripples the humanity from inside out. Inequality promotes corruption, perpetuates poverty, ignites popular strife, heightens xenophobia, deepens personal hopelessness and undermines public faith in the market and governance. Inequality persists in its various forms, whether income, wealth, opportunities, or other dimensions. Economic marginalization has led to a strengthening of chauvinist and supremacist identities and other social problems such as the opioid epidemic. Now, due to COVID-19 pandemic, this anomaly only exacerbating existing inequalities within and among countries and hitting the most vulnerable people and the poorest countries hardest and is projected to push back the poorest countries a full 10 years on their SDG progress. The real GDP of LDCs increased by 4.8% in 2019 and is estimated to decline by 1.3% in 2020 because of the disruption unleashed by the COVID-19 pandemic. The CFC invests in projects in the world’s most vulnerable regions, helping people to earn a fair share of the global value created from commodities, thereby reducing inequality. Addressing inequality is a matter of utmost important in both developing and developed world. Mere economic growth is not enough to address inequality, the pie has to be shared in a manner which is fair as well.

Climate change is a pervasive, multifaceted crisis that threatens humanity's existence. It exacerbates resource scarcity, magnifies social inequality, fuels political instability, accelerates biodiversity loss, intensifies natural disasters, and disrupts economies on a global scale. Climate change remains a constant specter in all aspects of life, whether related to commodities, food security, infrastructure, or social systems. Irrespective of geographic location or economic status, no one is immune to the impacts of a changing climate. In the wake of the COVID-19 pandemic, the climate crisis has only been underscored as existing vulnerabilities and inequalities have been amplified, particularly in the most susceptible populations and countries.

By the year 2050, the world’s agricultural landscape could look very different than it looks now. Around 10 billion people will need to be fed, up from the nearly 8 billion on Earth today, and climate change will alter where that food and other agri-comodities comes from.

Global warming of 1.2 up to 3.0°C by 2050 is estimated by the Intergovernmental Panel on Climate Change depending on different greenhouse gas emission pathways. Such changes in temperature will directly affect the climate suitability of growing regions for ccommodities and can therefore cause shifts in production regions or call for adaptation measures in agricultural management, such as more heat or drought tolerant varieties. Recent estimates suggest that the global GDP could decrease by 7.2% by 2100 without collective action to address climate change. The poorest commodity dependent nations, already struggling with the devastating effects of climate change, are predicted to bear the brunt of these economic losses, potentially reversing years of progress toward achieving sustainable development goals. In response to this, the CFC is committed to incorporating climate action into its investment strategies, focusing on the most vulnerable regions. The CFC's projects are designed to foster climate resilience and promote low-carbon development pathways. By investing in sustainable commodity value chains, CFC is not only contributing to the mitigation of greenhouse gas emissions but also enabling communities to adapt to changing climate conditions and secure their livelihoods.

Addressing climate change is of the utmost importance, in both the developed and developing world. Merely pursuing economic growth is insufficient; we must ensure that this growth is sustainable and resilient to the impacts of climate change. The challenge is significant, but with coordinated, collective action, we can turn the tide and ensure a sustainable future for all.

Measuring CFC impact across its portfolio

Despite its broad scope, it can be challenging to report Impact Measurement using the SDG framework. Since the monitoring of the targets is done on a national and on a global level, it may be challenging to attribute the contribution of a particular enterprise/business/organization in advancing specific goals. Currently, there is no official guideline for the private sector and the civil society to report on their work related to the SDGs.

To overcome these difficulties, it is necessary to convert the SDG framework in specific indicators. Having considered the different options available, the CFC decided to adopt the Impact Reporting and Investment Standards (IRIS+) as its main reporting tool.

IRIS+ is a catalogue that pulls together the most useful metrics from across the impact investing industry, making it easier to create a system to measure performance. It is managed by the Global Impact Investing Network (GIIN) and is the most used tool for impact investor to report on their impact.

After an in-depth assessment, the CFC has mapped the most relevant IRIS+ metrics with its core SDGs. As result, the CFC has determined the main indicators to be monitored by its projects in line with its mission.

Implementing the impact strategy

The development impact is one of the major criteria for selection of interventions receiving CFC support. Each project, received through the Open Call for Proposals, is expected to provide indicators of its intended impacts. Starting with the 13th Call for Proposals in 2018, the CFC asks all proponents to present the estimated impact of their projects using the SDGs framework. More specifically, they are required to describe how their project would contribute to the advancement of the core CFC SDGs. The proponents need to express the target impact indicators for each year of their projects and their baseline values using the IRIS+ metrics. They are also expected to provide details of how project activities contribute to the core SDGs targeted by the CFC. Projects which are unable to provide such information are normally not recommended for further consideration during the screening stage.

The impact indicators are checked by the CFC at the due diligence stage and are included in the project agreement between the CFC and the project proponent. The project agreement assures that the project will aim to achieve the intended outcomes and will report specific impact indicators, as agreed with the CFC. This information is provided to the CFC on an annual basis. Consistent and regular impact reporting alongside with financial indicators is a distinguishing feature of the CFC Impact Strategy.

The CFC collects diverse information regarding the impact of its projects over their life cycle while seeking to minimize the overhead burden on the operational, organizational, and human resources. The CFC follows a robust approach covering impact indicators and impact-measurements requiring project proposals to include:

• Target Indicators: The indicators should clearly demonstrate the intended level of achievements for each year of the project. The CFC expects that these will be systemically assessed and reported by the proponent, demonstrating that the implementation plans are feasible and not based on unrealistic assumptions;
• Baselines: Baseline levels for impact indicators should be included in the proposals. The CFC reviews and compares baseline data with other sources, e.g. similar projects;
• Data on achievements: The CFC systematically follows up the achievements of its supported projects to ensure timely and accurate reporting of the progress and impact. The follow up procedures are introduced, and project proponents are informed of the consequences of incomplete or late reporting on the implementation and eventual success of the project;
• Monitoring and Evaluation: Selective monitoring and evaluation for individual projects may be included but is generally constrained by the financial and human resources made available by the project proponents. The current focus of the CFC is on developing a practical approach for monitoring and evaluation across the entire CFC project portfolio ecosystem;
• Co-financing of Project: Projects receiving CFC support frequently include larger financial institutions as co-financiers. Combining resources and technical facilities of the CFC with co-financiers enables more intense and detailed impact monitoring. This concept of co-financing not only make the implementation a shared journey in its truest sense, it also help CFC to punch way above its height.

CFC and ILO join hands to devise a system of Social and Environmental Management System

Besides measuring the positive impact its projects help to create, the CFC understands the importance of also consideringthe potential social and environmental risks of its operations. For this reason, CFC partnered with the International Labor Organization to develop its Social and Environmental Management System (SEMS). Such systems are designed to enable a financial service provider to identify social and environmental risks associated with a particular transaction and take this into account when deciding whether or not to provide financing as well as identifying opportunities to improve social and environmental performance.