IFC’s engagement is expected to deliver a sustainable development impact by strengthening ESG practices of Tunisian banks and companies in the manufacturing and agribusiness sectors, thereby making a significant contribution to strengthening the resilience of the Tunisian private sector and to improving access to finance through resilient/modernized financial institutions. In addressing identified ESG gaps, the program will focus on: (1) providing support to the development of Tunisia’s Sustainable Finance Roadmap to become the starting point in developing the E&S regulatory framework for the banking sector; (2) building the capacities of the Tunis Stock Exchange (BVMT) to effectively monitor the implementation of ESG reporting and disclosure based on the voluntary framework in place since 2021; (3) providing guidance on ESG to professional associations and intermediaries, the lack of which has been identified as one of the main challenges of banks in strengthening ESG practices; (4) building the capacities of at least one local market intermediary to help enhance and diversify ESG training offerings in Tunisia; (5) promoting uptake of ESG practices among banks and real-sector companies that still remains significantly low in Tunisia; and (6) improving gender diversity in corporate leadership in Tunisia where only 11% of directors of listed companies are women and, unlike peer countries (Morocco and Egypt), there has been no endeavor by policy makers to promote same. The overall goal of this program is to build the business case for better ESG practices, enhance ESG risk management standards in the banking sector, and improve ESG performance of select financial institutions, agribusiness and manufacturing corporates for demonstration effect. This overall goal will be achieved through three objectives: Objective 1 – (Regulatory Level) – Support the integration of ESG standards into national frameworks applicable to the banking sector and capital markets: The project will provide support to two key regulators: (a) Central Bank of Tunisia (CBT) in developing Tunisia’s Sustainable Finance Roadmap; (b) Tunis Stock Exchange (BVMT), in developing an ESG reporting Scorecard, a regulatory mechanism to assess and monitor ESG reports that are submitted by listed companies and encourage implementation of the ESG reporting guidelines issued by BVMT. At the end of project implementation, at least one recommended code/regulation/policy will be adopted. Objective 2 (market-level) – Building ESG market demand and local capacity. The project will build the capacity of at least one local market intermediary – primarily the Tunisian Institute of Directors (ITA) – to help ITA enhance and diversify its ESG training offerings, ultimately, making ESG resources and expertise for board directors/senior management available in the market. In parallel, the project will also support other market intermediaries through trainings directly building capacity of their members and member companies (no institutional capacity building for the intermediaries themselves) – primarily the Tunisian Women on Boards Observatory (Honoris) and Tunisian Business Associations (CBF, ATIC and IACE) – on how to strengthen and implement ESG practices, with a focus on the banking, agribusiness and manufacturing sectors. At the end of implementation, it is targeted that ITA will generate 5,000 USD in sales revenue and continue to deliver ESG training within one year of project closure. Objective 3 (Firm Level) – Enhancing the ESG performance of upstream, pipeline and portfolio clients: The project will provide targeted support to IFC’s clients in FIG and MAS, and, whenever possible, to upstream clients, focusing on building their capacities and improving ESG practices. Through in-depth firm level ESG AS support, the project will help improve the ESG performance of two entities, at least one by project completion and one by the end of project post-implementation.

Indicator	Cumulative
Number of entities accessing investment/financing	0
Number of entities reporting improved performance (e.g., improvements in productivity, accountability, operations, loan terms, valuations)	0
Value of financing facilitated (US$)	0
Value of IFC financing facilitated (US$)	0
Number of entities that implemented recommended changes	null
Number of entities receiving advisory services	null

Performance Standard	Description and Potential Impact	Mitigation
PS 1. Assessment and Management of Environmental and Social Risks and Impacts	As part of its Due Diligence, and as mandated by IFC Sustainability Policy, IFC team has screened this project to assess consistency with IFC's Performance standards. Environmental and social risks will be further reviewed throughout the life-cycle of the project.	IFC advice will be provided in a manner consistent with the principles of the relevant Performance Standards. The IFC team will assist the client, as final decision maker, in gaining a good understanding of IFC's Performance Standards, and provide recommendations for appropriate mitigation measures whenever warranted.