The AIIB’s Sustainable Markets Initiative will invest in hard currency bonds issued to finance sustainable infrastructure across major Asia-Pacific markets like China, India, Indonesia and Malaysia. Jacopo Dettoni reports. 

The Asian Infrastructure Investment Bank (AIIB) has earmarked $500m to invest in a portfolio of bonds issued to finance sustainable infrastructure amid calls for the bank to raise its green finance profile. 

The so-called Sustainable Markets Initiative will focus on promoting investments in corporate, green and quasi-sovereign hard currency bonds in infrastructure-related sectors, the bank said as its annual meeting kicks off in Luxembourg. The bonds will be screened according to environmental, social and governance principles the bank is elaborating. 

The initiative aims at building up debt capital markets for sustainable infrastructure in Asia, beginning with some of the region’s most advanced financial markets such as China, India, Indonesia and Malaysia. 

The bank’s annual meeting is attracting the attention of environmentalists from all over the globe, for whom the bank is falling short in financing green energy projects. Since its inception in 2016, the bank has invested about $1.6bn in gas-powered energy plants and related transmission infrastructure, compared with the $672m invested in renewable energy facilities (including  large scale hydro-power), according to official figures. 

“We want to invest in renewable energy,” AIIB vice president of policy and strategy Joachim von Amsberg said in Luxembourg, highlighting that, among other projects, the bank is financing Egypt’s first solar power plant. “At the same time, hundreds of millions of Asians lack access to power. We have to strike a balance between guaranteeing this access, and promoting lower-carbon technologies. From this perspective, gas-powered plants, which produce half the carbon emissions of the cleanest coal technologies, make sense.” 

The bank is also coming up with a strategy to develop an investment approach in line with the Paris agreement. In its first three and a half years of operations, the bank has approved 45 projects, worth $8.45bn, particularly in the energy, transport and water sectors across its 17 countries of operation. The bank has focused on financing projects from the private sector, as opposed to the concessional finance more typical of other multilateral development banks operating in the region such as the Asian Development Bank. 

This article is sourced from fDi Magazine
fDi Magazine

Global greenfield investment trends

Crossborder investment monitor

fDi Markets is the only online database tracking crossborder greenfield investment covering all sectors and countries worldwide. It provides real-time monitoring of investment projects, capital investment and job creation with powerful tools to track and profile companies investing overseas.

Click here to find out more about fDi Markets

Corporate location benchmarking tool

fDi Benchmark is the only online tool to benchmark the competitiveness of countries and cities in over 50 sectors. Its comprehensive location data series covers the main cost and quality competitiveness indicators for over 300 locations around the world.

Click here to find out more about fDi Benchmark

Research report

fDi Intelligence provides customised reports and data research which deliver vital business intelligence to corporations, investment promotion agencies, economic development organisations, consulting firms and research institutions.

Find out more.