GREEN INFRASTRUCTURE
Current funding levels fall far short of what is required to keep the 1.5°C goal within reach, and they are not increasing at the pace needed to meet estimated annual needs. Public resources, including those of MDBs, are insufficient and face exceptional challenges due to recent global macroeconomic conditions. Yet, sufficient capital does exist. AIIB has a track record in driving green finance initiatives within the environmental, social and governance (ESG) ecosystem and climate ecosystem. The Bank’s decision-making is guided by its Climate Action Plan (CAP), which consolidates commitments outlined in AIIB’s key strategies and policies, defines the principles of our climate financing, and identifies key actions to direct investments that our Members. More than a testament to AIIB’s engagement, the CAP demonstrates our steadfast dedication to collaborating with our Members in pooling resources and expertise for common objectives and shared benefits.
BTG Green On-lending Facility for Climate Change Mitigation in Brazil
AIIB has extended a USD200-million loan to Banco BTG Pactual S.A. to establish a specialized Green On-lending Facility, dedicated to investing in renewable energy projects, with a primary focus on wind and solar energy. By directing these funds towards renewable energy capacity expansion, the project aims to make a substantial impact on climate change mitigation in Brazil. The facility will play a vital role in helping Brazil meet its climate commitments and its target of reducing GHG emissions by 37% in 2025 and by 43% in 2030 (both compared to 2005 levels). Upon successful completion, it is estimated that 2.5 GW of renewable energy capacity will be installed in Brazil, leading to the avoidance of approximately 565,089 tonnes of CO2 emissions. Overall, the BTG Green On-lending Facility demonstrates an effective financial intermediary approach, enabling strategic investment in renewable energy projects. By combining AIIB’s financial strength with the expertise of Banco BTG Pactual S.A., this initiative serves as a model for leveraging private sector resources to accelerate climate action.
AIIB issued Asia’s first-ever Climate Adaptation Bond in 2023, marking a significant milestone in adaptation financing. This five-year bond, issued under AIIB’s Sustainable Development Bond Framework, successfully raised AUD500 million, with the proceeds directed towards investments that strengthen adaptation and long-term resilience. The Climate Adaptation Bond has two primary objectives: mobilizing additional private sector financing for climate adaptation and raising awareness of the importance of building climate-resilient infrastructure and communities. This aligns with AIIB’s mission of mobilizing private capital and promoting investment in resilient infrastructure through the capital markets. AIIB applies rigorous standards in defining climate adaptation. The Bank adheres to harmonized principles from the MDBs’ Joint Methodology for Tracking Adaptation Finance and the Common Principles for Climate Change Adaptation Finance Tracking of the International Development Finance Club (IDFC). The methodology ensures that only those project activities directly linked to reducing climate change vulnerability are considered eligible. This rigorous selection process guarantees investors that the projects funded through the Climate Adaptation Bond are genuinely impactful in reducing climate vulnerabilities. Measuring the impact of the allocated proceeds is of utmost importance to AIIB. To ensure transparency and accountability, appropriate reporting metrics are set for individual projects which are tailored to each project’s unique objectives and expected results. By doing so, AIIB guarantees that the outcomes of these climate adaptation initiatives are continually evaluated and communicated effectively to stakeholders. The Climate Adaptation Bond represents AIIB’s commitment to pioneering sustainable solutions and leading the charge in climate-conscious finance. With this landmark initiative, the Bank empowers investors to contribute significantly to climate adaptation and resilience.
The Asia Green Partnership Fund
AIIB is partnering with Bloomberg Philanthropies to develop an innovative financing initiative aimed at accelerating climate change mitigation efforts in Asia. This much-needed initiative responds to the urgent demand for greater climate financing to combat the climate crisis, especially in lower-rated Asian economies where private institutional capital has historically been hesitant to invest in green infrastructure due to perceived credit risks. The collaborative endeavor will establish the Asia Green Partnership Fund, an investment vehicle designed to leverage the financial strength of MDBs and philanthropic resources. The fund will offer a blended finance structure to attract investments into climate change mitigation projects that were previously deemed too risky for institutional investors, including Sovereign Wealth Funds (SWFs). This initiative also aligns with the growing interest among SWFs in allocating capital towards climate and energy-transition-related investments, while expanding their operations in emerging and developing markets across Asia. By leading this pioneering effort, AIIB seeks to inspire other institutions to replicate similar impactful initiatives, ultimately fostering greater momentum in the global fight against climate change.
