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.
Asian Infrastructure Investment Development Bank
Institutional leadership and information sharing
| Paris alignment | Reasoning |
|---|---|
| Some progress | The Bank has the potential to introduce transformational practices amongst the MDBs, but there has not yet been enough time to judge the effect of their efforts. |
Explanation
The AIIB has innovated in the field of infrastructure financing. Noting the difficulty of keeping up with demand in infrastructure funding, the Bank announced that it, with Clifford Capital, would begin buying and repackaging infrastructure loans for sale in tranches through the Bayfront Infrastructure venture. Backers include Amundi, DBS Bank, John Hancock Life Insurance and Prudential Insurance Singapore, in what the has been called a creative concept to benefit from financial flows in the realm of infrastructure.
In addition to this, the AIIB and Amundi have announced the launch of their Climate Change Investment Framework, backed by the Climate Bonds Initiative, which translates the goals of the Paris Agreements into metrics that investments can be held against. The framework is taking “a holistic approach that current private capital mobilization efforts lack” by addressing climate mitigation, climate adaptation and contribution equally in the metrics and adjusting a portfolio or issuer’s response as time goes on.
Recommendation: Given the AIIB’s focus on infrastructure and current work with MDB working groups, there is potential for the AIIB to be a leader amongst public development banks for climate-friendly and sustainable infrastructure metrics and definitions, particularly in its key infrastructure strategy areas (cities, water, energy and digital).
The AIIB has also stated the importance of assessing possible stranded assets, meaning any new projects may be subject to stringent ESG regulations to ensure they will not have to be written off due to environmental or societal degradation.
Recommendation: The AIIB should engage further with other public development banks to exchange approaches to assessing the risk of stranded assets.
Last Update: November 2020