Asian Infrastructure Investment Bank

Climate risk, resilience and adaptation

This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

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Paris alignmentReasoning
Some progress Risk management approach does not include assessing climate risk at project level. The AIIB uses ThinkHazard! Tool to enhance client climate resilience.
Project-level climate risk management proceduresScope of coverage of project-level climate risk managementEnhancing client climate resilience Adaptation  
finance 
A risk management hierarchy exists in general terms but does not extend to cover climate risk.Not all projects are screened for climate risk – only infrastructure projects.Evidence exists to enhance client resilience via ThinkHazard! Tool.AIIB has only recently begun operations and begun financing adaptation projects, but the proportion is relatively high.

Explanation

Under the draft AIIB Environment and Social Framework, “the Bank supports its Clients in their evaluation of both the potential impacts of the Project on climate change and the risks from climate change on the Project, as well as in their reporting on expected greenhouse gas emissions from the Project”. “To this end, the Bank seeks, where feasible, to prioritize investments promoting infrastructure that is greenhouse gas emission
neutral and climate resilient, including actions for reducing emissions, climate proofing and promotion of renewable energy”. This
 initial screening is done by AIIB; this determines the extent and type of environmental assessment that will be required. The client undertakes the assessment; AIIB then reviews and supports the client’s evaluation of the implications of climate change using the ThinkHazard! Tool. If a project is likely to have adverse environmental risks, further standards apply; AIIB has a general risk management hierarchy of avoid-minimise-mitigate-compensate/offset; and examination of project alternatives may be introduced.

Since 2019, AIIB has been using Acclimatise’s Aware for Projects tool to screen infrastructure projects against physical climate-related risks early on in the project cycle. For medium and high risk projects, guidance is provided to the project team on how to reduce the climate vulnerability of the project 

AIIB applies its Environmental and Social Framework if a project is likely to have adverse environmental risks and impacts or social risks. However, this only applies to AIIB-only finance projects. For co-financed, projects, the AIIB chooses to use frameworks from other MDBs. 

In regards to enhancing client climate resilience, the AIIB sector strategy for Sustainable Cities includes resilience as a key objective. 

Recommendation: The AIIB should include climate risk as part of its risk management process and extend this to all its projects. Also, the AIIB should grow its adaptation portfolio. AIIB should put in place a dedicated resilience strategy. 

 

Last Update: December 2020

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