Chinese led AIIB green finance revolution
(20 November 2019 - China) The Asian Infrastructure Investment Bank (AIIB) is moving closer to launching an investment framework designed to ‘mobilise capital for climate-friendly infrastructure projects’.
Launched by the Chinese government in 2015 including 75 nation members, the Bank states that the framework will identify projects that specifically help developing nations meet their Paris Agreement goals. The bank has allocated US$500 million for the initiative in a joint venture with French fund management group Amundi for investment in green bonds issued by infrastructure companies. The core criteria of the fund is to finance projects that help the nation in which they are based meet their commitments under the United Nations Paris Agreement 2015.
The AIIB's focus on climate change puts it in line with the European Union (EU) lending operation, the European Investment Bank (EIB), which recently announced it would end financing of all fossil fuel projects by 2021 and align all financing activities with the goals of the Paris Agreement from the end of 2020. China is the biggest stakeholder in the AIIB, contributing almost 25 percent of the capital, and holding a similar proportion of shares. India is the second-biggest shareholder, with 7.6 percent, followed by Russia with six percent. The bank has so far raised almost US$20 billion in paid-in equity from members along with up to US$100 billion in subscribed equity. US$10 billion has been invested and most major nations have joined including the United Kingdom, Australia, Canada, Israel, Germany and France while the United States is notably not a member.
"There is no clear way to align an investment portfolio with the Paris Agreement. We want to take a leadership role in this. We saw a gap, and so what we’re trying to do is address the gap we see in terms of leveraging capital markets to unlock the private sector capital. If the markets are investing in climate-aligned infrastructure investors, now those infrastructure issuers are getting more access to capital so they should be able to invest and build more infrastructure" said AIIB Head of Communications Laurel Ostfield.
"Climate is the top issue on the political agenda of our time. Scientists estimate that we are currently heading for 3°C to 4°C of temperature increase by the end of the century. If that happens, large portions of our planet will become uninhabitable, with disastrous consequences for people around the world” stated EIB President Werner Hoyer.
"It is a welcome and extremely necessary step. With the growth of cities in Asia, the need to lock in low carbon infrastructure is so important now, because once it's built, it's set and forget for 25 to 30-plus years” stated Asia Investor Group on Climate Change Director Rebecca Wright.
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