The World Meteorological Organization has confirmed 2024 as the warmest year on record, at about 1.55°C above pre-industrial levels. The past 10 years have all been in the top 10, in an extraordinary streak of record-breaking temperatures. This latest assessment of the #StateOfClimate finds that the long-term temperature goal of the #ParisAgreement is not yet dead but is in grave danger.
As AIIB looks to chart a course for 2025 alongside its peers and other international partners, it is useful to take stock of the progress made.
Over 2024, the Bank achieved significant milestones to tackle the impact of climate change.
Climate-Focused Policy-Based Financing
The Bank enhanced its available financing tools to better support clients in achieving their own climate goals.
Last June, the AIIB Board of Directors approved the introduction of Climate-Focused Policy-Based Financing (CPBF) for its sovereign-based financing clients. The new instrument will advance the implementation of AIIB’s Climate Action Plan, further its alignment with the Paris Agreement and build upon objectives in the Bank’s corporate strategy.
AIIB will prioritize climate policy-based programs with a strong focus on climate adaptation and on creating a conducive environment for attracting and mobilizing private capital. The instrument can be used either in co-financing arrangements or as a standalone financing.
Bangladesh’s Climate Resilient Inclusive Development Program was the first project to benefit from this new product. Bangladesh received co-financing worth USD400 million from AIIB and the Asian Development Bank (ADB) to implement climate objectives set out in its National Adaptation Plan.
Green Climate Fund Accreditation
Providing developing economies with access to finance to support their climate adaptation and mitigation efforts is a crucial step. This is why the Bank’s accreditation as an International Access Entity (Accredited Entity) of the Green Climate Fund (GCF) was an important AIIB 2024 milestone.
The GCF is the world’s largest climate fund, responsible for accelerating transformative climate action with a committed portfolio of USD15.9 billion across 133 developing countries. Through the accreditation, AIIB will gain access to GCF funds through a flexible combination of grants, concessional debt, guarantees and equity investments.
Gaining accreditation is also important in signaling AIIB’s commitment to working with international partners to alleviate the burden of low-carbon transition on emerging economies. The partnership will allow AIIB and GCF to leverage their resources to support AIIB members in achieving their targets for low-emission and climate-resilient development.
Resilience Taxonomy Advisory Group (RTAG) Membership
Following the successful launch of AIIB’s maiden climate adaptation bond issuance in 2023, the Bank was invited by the Climate Bond Initiative (CBI) to join its Resilience Taxonomy Advisory Group (RTAG).
Between February and July 2024, RTAG built on the work of an early white paper to produce the Climate Bonds Resilience Taxonomy (CBRT). The CBRT provides a classification system and interim screening criteria for climate adaptation and resilience investments.
The taxonomy aims to provide a consistent, transparent and systematic approach to defining sustainable investments. Providing clarity and assurance around sustainable finance is increasingly important with more scrutiny being afforded to this line of investment as the industry grows.
MDB Collaboration
Each year, the gathering of the Conference of the Parties (COP) is a key date in the climate calendar, and 2024 was no different. COP29, in Baku, was dubbed the “finance COP” with a key outcome being the New Collective Quantified Goal, which eventually reached USD300 billion.
For AIIB, it was a vital opportunity to connect with fellow MDBs, civil society and legislators to decide a way forward on climate commitments. At the event, AIIB issued a joint statement highlighting financial support and other measures to help members achieve ambitious climate goals.
AIIB and partners announced an update on the Common Approach to Measuring Climate Results, enabling MDBs to better evaluate the climate results of their financing.
The statement also highlighted the implementation of country-led platforms that AIIB is also supporting to foster collaboration between economies, MDBs, donors and the private sector.
Growing Our Climate Financing Commitments
2025 represents another step toward a low-carbon journey – and comes with increased expectations and pressure to make climate progress.
2025 is also the deadline for AIIB to ensure that 50% of all financing is climate finance. As with previous years, AIIB has once again surpassed this target earlier than expected, demonstrating the Bank’s focus on its climate-related work. This follows figures from 2023 which showed climate finance accounted for 60% of all financing, up from 56% in 2022.
Looking ahead to 2025, the Bank is determined to continue this trend as it looks to supply vital finance in support of members’ climate goals.
