COVID-19 forced the Asian Infrastructure Investment Bank to pivot in 2020, but the five-year-old bank has defined its focus moving forward as prioritizing green infrastructure, which includes a new climate finance target, according to bank President Jin Liqun.
“AIIB’s investments should also evolve and should not copy what has already been done. We will chart a new path we call the infrastructure for tomorrow. This is green infrastructure with sustainability, innovation, and connectivity all intricately intertwined at its core. This is our new mission,” he said at an online event this week.
While in 2020 the bank focused on providing budget support and policy lending to its client members as they worked to control the pandemic, AIIB has also increased efforts to prepare for a return of its mainstream business post-COVID-19, he said.
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AIIB allocated $13 billion to COVID-19 response efforts, reducing lending for its mainstream business to address the challenge, Jin said. While the board was initially hesitant to provide policy lending and budget support, once AIIB explained it would do so in cooperation with the World Bank and the Asian Development Bank — which both have considerable experience in the area — the move was approved, he said.
The COVID-19 crisis has made clear that “health care is the weakest link in the global economy,” Jin said.
Multilateral development banks and stakeholders need to invest more in people and health care and AIIB “will gradually expand its role in social infrastructure to meet this demand,” even after the pandemic, he said.
The COVID-19 pandemic has also shown that climate change and health care cannot be addressed in isolation, he said.
“We will chart a new path we call the infrastructure for tomorrow. This is green infrastructure with sustainability, innovation, and connectivity all intricately intertwined at its core.”— Jin Liqun, president, AIIB
Climate change mitigation demands enhanced investment and while global momentum is growing around investments in green infrastructure, the total volume of deals is below desired targets, Jin said.
“What is critical is phasing out fossil fuel and phasing in renewable energy to ensure that growth and livelihoods will not be adversely affected,” he said.
To that end, AIIB has recently set a climate-related target, committing to have 50% of its approved financing by 2025 directed to climate investments.
Jin defined AIIB’s role as uncovering new financial and risk sharing models that will “entice more private sector organizations” to invest in emerging markets and said that the bank’s goal is to have 50% of approved financing in the private sector by 2030.
While there were initial concerns about how the bank would be accepted, it has worked to build strong ties to and work closely with other MDBs, Jin said. It has also worked with U.S. banks, financial institutions, and businesses, even though the U.S. is not a member, he said.
Jin said he looks forward to working with the new U.S. administration in a number of international institutions and said that it was “encouraging and welcome” that President Joe Biden, who he met when they were both part of high-level U.S. China economic dialogues, has decided to return to the Paris Agreement on climate change.
Rejoining the Paris Agreement also creates common ground for the U.S. to work with China, Jin said. The U.S. and China should engage in dialogue, despite differences, and look to find common ground on some of the challenges facing the world, Jin said.
“I remain optimistic. I don’t think they should be held back by hurdles or mistrust. Misunderstandings are inevitable but misunderstandings can be dispelled,” he said.