2018 AIIB Annual Report and Financials


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Strategic Programming

Our project financing decisions are based on a systematic investment planning approach. We review proposals from clients, partners and other stakeholders to achieve an appropriate balance among borrowers, sectors and sovereign/nonsovereign projects. Projects that meet the preliminary screening criteria are included in the rolling investment program which are then discussed and approved on a regular basis. This approach considers our shareholders, stakeholders, clients, financial capacity, risk-bearing capacity and staff capacity. We continue to calibrate our approach so our strategic programming matches clients’ needs with our thematic priorities.

Climate Change and Green Finance

We strengthen our green investment profile through strategic programming, project preparation and monitoring. Green infrastructure accounts for the largest share of our project pipeline, expected to increase to 66 percent in the next few years.

We support our members in achieving their nationally determined contributions under the Paris Agreement and targets under the Sustainable Development Goals (SDGs). We are working with our peer MDBs to determine how we can further support our members meet these international targets and fight climate change together.

We have begun examining how innovative financing could catalyze investment in sustainable infrastructure through the announcement of the AIIB Asia ESG Enhanced Credit Managed Portfolio. AIIB can play a key role through this project to promote the integration of ESG principles in fixed-income investments in Emerging Asia.

Our Thematic Priorities

We approach investment, developing our business lines and selecting our projects based on three thematic priorities:

  • Sustainable Infrastructure. We prioritize sustainable infrastructure with a focus on green investments. Along with other international financial institutions, we adopt a common approach in defining green financing. This includes investments for climate mitigation, climate adaptation and environmental protection. Green infrastructure accounts for the largest share of the Bank’s approved projects, comprising around 50 percent of all projects up to 2018.

  • Cross-Border Connectivity. Investing in cross-border infrastructure is one of our priorities because we believe it is key to Asia’s success. Several initiatives and networks across Asia promote greater cross-border connectivity. AIIB will consider funding projects only if they follow our standards for fiscal sustainability, environmental protection and community engagement.

  • Private Capital Mobilization. We seek to make investing in sustainable infrastructure in emerging markets more attractive to institutional investors. We are devising innovative solutions that pool private capital in collaboration with MDBs, governments, the private sector and other partners. Private capital has the potential to be a key part of the solution to finance Asia’s infrastructure investment needs over the coming decades.

These three priorities form the foundation on which we create our sector strategies, enhance our core competencies and sharpen our focus. Client demand and stakeholder engagement validate the original rationale for our creation of these thematic priorities and will continue to guide us in the years to come.

Our New Strategies

Our strategies guide our decision-making when financing our clients’ infrastructure projects. In 2018, our Board of Directors approved four such strategies.
Strategy on Financing Operations in Non-Regional Members
We prioritize investments in the region but also consider projects elsewhere if they offer significant benefits to Asia. Our Strategy on Financing Operations in Non-Regional Members proposes three principles for determining the eligibility of investments in nonregional members. Proposed projects aligned with any of these principles may be considered for financing. These principles provide that the investment should (1) support trade and connectivity with Asia, (2) promote global public goods and (3) be geographically near to and economically integrated with Asia.
Strategy on Mobilizing Private Capital for Infrastructure
The infrastructure financing gap in Asia is significant and growing. Private capital sources, specially from institutional investors, are a key part of the solution in bridging this gap. We aim to catalyze these funding sources through our Strategy on Mobilizing Private Capital for Infrastructure. The strategy further defines our approach to making investments in emerging market infrastructure more attractive to private investors. It also identifies and sequences short- and medium-term priority activities.
Transport Sector Strategy
The investment needed for transport infrastructure to support trade and economic growth in Asia is estimated at USD500 billion to USD900 billion a year. Multilaterals and bilaterals account for only around USD20 billion to USD25 billion in transport project investments per year. Our Transport Sector Strategy outlines the Bank’s vision to develop sustainable and integrated transport systems that promote trade and economic growth in Asia. Priority will be placed on trunk linkages, cross-border connectivity, projects that result in transport integration and upgrading existing transport infrastructure.
Sustainable Cities Strategy
The United Nations estimates that by 2050, 1.2 billion more people will live in Asian cities. By then, Asia’s urban population will account for more than 50 percent of the world’s urban population. Natural resources are being strained, new cities and urban districts need to be developed and existing cities need to be retooled to improve people’s quality of life. Our Sustainable Cities Strategy outlines AIIB’s vision of realizing economically, environmentally and socially sustainable Asian cities that are green, resilient, efficient, accessible and thriving.