A new publication by Recourse, NGO Forum on ADB and the Big Shift Global lists 10 ‘essentials’ that AIIB must address as it sets out to review its Energy Strategy in 2022. It also calls for AIIB to finally produce a climate change action plan to cover all policies, operations and activities.
When the Asian Infrastructure Investment Bank (AIIB) was launched in January 2016, only weeks after the birth of the Paris Agreement on climate change, it proudly declared one of its core values to be ‘green’. As a new multilateral development bank (MDB), without the dirty investment legacy of other MDBs, it had every opportunity to live up to this commitment. Yet only a year and a half later, it was clear that this bold statement was just empty words.
At the heart of contention sits AIIB’s Energy Sector Strategy (ESS), approved in June 2017. The ESS turned out to be far from ‘green’ – allowing AIIB to support all fossil fuels, including coal, thus undermining the very essence of the Paris Agreement. This matters, since the energy sector is responsible for around three quarters of the world’s greenhouse gas (GHG) emissions, holding the key to the battle against climate change.
AIIB’s portfolio shows the result: for every $1 spent on renewable energy, almost double goes to fossil fuels. This figure excludes indirect financing through financial intermediaries (FIs), like infrastructure funds and banks, so the true ratio is likely greater. While AIIB’s fossil fuel investments are largely for gas, not coal, funding through FIs has supported both coal mining and coal for industrial use.
2022 will be a crucial year to finally get AIIB on a ‘green’ pathway. After much pressure, the AIIB will finally review the ESS. The revised strategy must fully align with the Paris Agreement and its ambitions, most importantly efforts to limit the temperature increase to 1.5°C above pre-industrial levels. It must also support the Sustainable Development Goals (SDGs), particularly SDG 7 on ensuring affordable, reliable, sustainable and modern energy for all.
It must go further, too. IPCC’s latest report, dedicated specifically to the 1.5°C goal, warns that this threshold could already be breached within 20 years and calls for an immediate strengthened global response. AIIB is an outlier amongst MDBs in that it is yet to produce a clear strategy and roadmap for how it intends to align the whole institution with the Paris Agreement.
Read the full list and recommendations here.