AIIB Revises ESF to Strengthen Environmental and Social Standards

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  • AIIB Revises ESF to Strengthen Environmental and Social Standards

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    Asian Infrastructure Investment Bank’s (AIIB) Board of Directors approved a revised Environmental and Social Framework (ESF), reasserting its commitments to environmental and social standards on May 21, as reported by People’s Daily on May 27. The revisions mainly include further strengthening commitment to combating climate change, while enhancing transparency by clarifying deadlines of environmental and social disclosure documentation. Meanwhile, AIIB committed to improving new measures to promote ESG standards in capital market operations, as well as attaching importance to gender equality to address gender-based violence. Moreover, enhancing biodiversity and excluding asbestos from AIIB-financed projects are also the key changes in the revised ESF. According to AIIB, the revisions will take effect in October 2021.

    ESF, first adopted in February 2016, guides AIIB and its clients on the management of environmental and social risks and impact of AIIB-financed projects, as well as compensation for the inevitable impact. The current amendments followed a focused review that started in 2019, and integrated consultations with various stakeholders including member governments, development partners, clients, and civil society organizations. In addition, the latest ESF is fully in line with the relevant policies of the Asian Development Bank and the World Bank, only with slight differences in implementation of specific issues, according to Zheng Quan, director general for the strategy, policy, and budget department at the AIIB.

    As a multilateral development bank, AIIB aimed to provide international financing to developing member countries and clients. AIIB now has 103 members covering six continents, including China, India, Singapore, and 18 other founding members. The bank provided more than USD24bn in infrastructure financing to 28 members. In 2016, AIIB established the Project Preparation Special Fund, with the primary purpose of providing technical assistance grants in bankable infrastructure, especially for low-income members. After that, AIIB appointed Aberdeen Standard Investments to manage USD500m socially responsible Asia bond portfolio for emerging Asian infrastructure projects in 2018. In 2019, AIIB launched USD500m Asia climate bond portfolio with Amundi [AMUN:FP], Europe’s largest asset manager, aiming to accelerate climate action in the Bank’s members and address the underdevelopment of the climate bond market. At present, climate-related financing accounts for 41% of the total approved AIIB financing, laying a solid foundation for achieving the 50% target by 2025.

    Sources:

    http://world.people.com.cn/n1/2021/0528/c1002-32115500.html

    https://finance.caixin.com/2021-05-27/101718997.html

    https://www.163.com/dy/article/GBE865MV0514R9KD.html

    https://www.aiib.org/en/news-events/news/2021/AIIB-Strengthens-Its-Commitment-to-Environmental-and-Social-Standards.html

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