Institutional leadership and information sharing

Explanation

Beginning operations in 2016, the AIIB initially focused on bridging Asia’s infrastructure financing gap but has since expanded its mandate to prioritise “green infrastructure with sustainability, innovation, and connectivity at its core.” Since its establishment, the AIIB has placed an emphasis on pursuing operational leanness and agility compared to traditional MDBs. Although a relatively recent entrant into the MDB landscape, the AIIB has rapidly positioned itself as the second largest MDB by membership, and an emerging, innovative leader in sustainable infrastructure finance.

The AIIB has illustrated its intention to play a leading role and foster collaboration within the broader Public Development Bank (PDB) ecosystem, such as by co-hosting the 2025 Finance in Common summit in South Africa (alongside the Development Bank of Southern Africa DBSA). Operationally, the Bank has embraced a model that emphasises collaboration with both public and private sector entities to advance climate and infrastructure financing. Consequently, co-financing forms a significant component of its portfolio, with approximately 50% of its projects implemented in partnership with other MDBs. These collaborations enable the AIIB to leverage shared resources, enhance project oversight, and foster alignment in sustainability standards.

The AIIB’s commitment to collaboration has also been evidenced through the Bank’s thought leadership and information sharing. For example, its Asian Infrastructure Finance (AIF) Reports, first launched in 2019, aim to provide publicly accessible analysis of trends and pertinent issues in the infrastructure financing market in Asia. Notably, the 2023 AIF report focuses on Nature as Infrastructure, developing the approach of categorising nature as a form of asset class to scale up investments. While it is yet unclear what impact this flagship study will have on the current outlook on investments in nature based solutions (NBS), the report undoubtedly provides useful (and previously under-discussed) insights and data on quantifying nature as an asset class, as well as on the broader state of play on NBS in Asia. Separately, the AIIB has signed a memorandum of understanding with the World Bank to deepen cooperation on infrastructure development and the SDGs. Moreover, the Bank has initiated collaborations with organisations such as the Food and Agricultural Organization (FAO) to explore synergies in sustainable rural infrastructure development, and the Global Centre on Adaptation (GCA) to mainstream climate adaptation and resilience in infrastructure projects.

The AIIB has also exhibited leadership in mobilising private sector investment for green infrastructure. For example, through the Bayfront Infrastructure Venture, the AIIB (alongside private sector players) repackages infrastructure loans for sale in tranches. This is a creative model designed to attract private sector capital and expand funding options for long-tenor infrastructure projects and has been regarded by industry experts as an innovative initiative to unlock financial flows for infrastructure.[1] More broadly, the AIIB has sought to engage private capital in climate mainstreaming through the AIIB-Amundi Climate Change Investment Framework (CCIF), a practical tool for investors to align their portfolios with the Paris Agreement.[2] These initiatives have helped to establish the AIIB as a regional bridge between traditional MDBs and private sector stakeholders in the infrastructure financing landscape.

Despite its strong leadership on key focus areas within its mandate and laudable collaborative intent, the AIIB currently lags behind peer institutions in key aspects of institutional climate mainstreaming. For example, the 2023 DFI Transparency Index ranks the AIIB 6^th (of 9 assessed institutions) for its sovereign operations, and 9^th (of 21 institutions) for non-sovereign operations in terms of overall portfolio transparency.[3] Moreover, it remains one of the few MDBs without an exclusion on upstream oil financing.[4]

More broadly, the AIIB has not made comparable progress on key aspects of MDB reform required by leading institutions to meet the financing needs of the climate crisis. The MDB Reform Tracker reveals the Bank has not yet taken concrete steps to implement any of the recommendations on efficient use of capital drawn from the G20 Capital Adequacy Report. So far, the AIIB has announced its intention to implement reforms in several areas, such as aligning risk appetite definitions to shareholder limits, increasing leverage ratios, and reflecting the value of preferred creditor treatment in capital adequacy frameworks. However, in contrast to peer institutions, this has yet to result in tangible actions. According to CGD’s analysis, the Bank also continues to lag behind in other areas of reform, such as on “add[ing] new forms of capital”, “transforming country engagement”, and “achieving a major expansion in private finance mobilisation”.

A Paris aligned level of institutional leadership would involve the AIIB matching the efforts of peer institutions across the full MDB reform agenda, and strengthening key aspects of its institutional climate mainstreaming to bring them closer in line with best practice.

Recommendations: 

• Given the AIIB’s mandate and current work with MDB working groups, there is potential for the Bank to be a leader among PDBs on developing robust metrics and definitions for climate-friendly and sustainable infrastructure. This would be particularly relevant across its key strategic focus areas (cities, water, energy and digital). A positive step in this direction is the recent launch of the report on Nature as Infrastructure. Building on this, the AIIB could look to expand its analytical frameworks for identifying, defining, and quantifying nature-based infrastructure investments. Subsequently, the Bank could look to socialise relevant tools and metrics among regional financial institutions, to build the common understanding and shared standards that can underpin scaled up investments in nature based solutions for infrastructure.
• While the AIIB has developed a number of partnerships and high-level reports outlining recommendations for best practice in areas of its operations (such as on Nature as Infrastructure, and the AIIB-Amundi Climate Change Investment Framework), it could further clarify how and to what extent these recommendations are translated into the Bank’s own operations. Going forward, the Bank should aim to consistently set out how its knowledge products and external collaborations will be tangibly reflected in Bank policies.
• Building on its collaborations with other MDBs and global knowledge base, the AIIB should look to further increase its information sharing and capacity building work in its region of operations to facilitate access to growing sustainable finance markets. In particular, this could involve a focus on building the capacities and capabilities needed for market participants to access high-integrity transition finance and undertake transition planning and climate risk management. This could involve building on initiatives such as the CCIF and considering an expansion of work under the Multilateral Cooperation Center for Development (MCDF) in this area.
• To match the strong leadership shown on key focus areas within its mandate, as well as through laudable collaborative intent, the AIIB should aim to strengthen key aspects of its institutional climate mainstreaming.[5] Similarly, the AIIB should take more concrete steps to fulfil its intention to implement the recommendations on efficient use of capital drawn from the G20 Capital Adequacy Report, closing the gaps to leading peer institutions outlined by the MDB Reform Tracker.

[1] For further coverage, refer to the “Promotion of green finance” metric.

[2] Ibid.

[3] For further detail, refer to the “Transparency of climate finance” metric.

[4] For further detail, refer to the “Fossil fuel exclusion policies” metric.

[5] For further detail, refer to the recommendations throughout AIIB’s assessment on the E3G Matrix.