AIIB SUSTAINABLE DEVELOPMENT BONDS

IMPACT REPORT 2020

Executive Summary

The Asian Infrastructure Investment Bank (AIIB or the Bank) is a multilateral development bank (MDB) whose mandate is to (i) foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors and (ii) promote regional cooperation and partnership in addressing development challenges by working in close collaboration with other multilateral and bilateral development institutions.

AIIB published its Sustainable Development Bond Framework (the Framework) in April 2021. The Framework presents a summary of the policies, strategies, processes, and mechanisms that govern AIIB’s commitment to sustainable financing activities within its purpose—including supporting its members’ efforts in meeting their nationally determined contributions (NDCs) under the Paris Agreement and to achieve their targets under the UN Sustainable Development Goals (SDGs).

Under the Framework, AIIB has committed to annual impact reporting on the Bank’s overall portfolio and project level results reflecting environmental and social benefits generated by its financing. AIIB’s inaugural Impact Report covers its first five years of operations from 2016 to 2020.

This report presents data on AIIB’s portfolio volume, alignment with thematic priorities, portfolio performance, as well as selected project impact stories chosen to illustrate how AIIB is addressing clients’ needs while also making an impact among its members in Asia and beyond.

AIIB aims to continuously enhance its approach and respond to changes in industry best practice and market expectations. AIIB’s Sustainable Development Bond Framework and Impact Report approach will be reviewed over time to reflect the evolution of the green, social and sustainable bond markets as well as changes in AIIB’s strategies, policies and processes. AIIB welcomes feedback from investors, stakeholders and market participants. Please email your comments to: funding@aiib.org.

Forewords

From the President
Board-of-Governors
ENLARGE
We are experiencing a rare moment in human existence when, as a global community, we are collectively facing not one but two great challenges. Catastrophes, pandemics and extreme weather events are usually localized to one country or region. But today, the entire world is facing off against two disasters – COVID-19 and climate change. Now more than ever, a sense of unity is necessary if we are going to win these separate but inter-linked battles. Multilateral cooperation is how we can succeed because together we are stronger than when we work in silos.

AIIB is mandated, as a multilateral development bank, to do its part. Since launching in 2016, AIIB has been actively supporting and accelerating member transitions toward low-carbon and climate-resilient development pathways through climate financing and the mobilization of private capital for climate objectives. In particular, we have set a target of achieving 50% of approved financing in climate change financing by 2025 and our ambition is to go beyond that.

In 2020, a new challenge emerged. The coronavirus caused significant disruptions to everyone's life and wreaked havoc on the global economy. To help our members deal with the economic, financial and public health pressures arising from COVID-19, AIIB responded quickly to establish the COVID-19 Crisis Recovery Facility (CRF), mobilized support beyond our existing capacity and acted adaptively to put our resources to work in areas most in need of help. This financing is playing a significant role in improving health systems and promoting social protection and economic resilience, thus preventing long-term damage to productive capacity (including human capital) and sustainable development in member countries.

We will continue to proactively support our members, many of which are developing countries where these issues are especially urgent and serious, as they pursue economic, social and environmental sustainability. It is the Bank's mission to finance Infrastructure for Tomorrow and empower regions and their people with access to physical, digital, commercial, medical, educational and other services. Our commitment to sustainability is rooted in our corporate strategy, which sets our thematic priorities: (1) green infrastructure, (2) connectivity and regional cooperation, (3) private capital mobilization, and (4) technology-based infrastructure.

While there is much work ahead, we have begun to have an impact through the projects financed during our first five years of operation. To demonstrate our contributions, we are introducing AIIB’s inaugural Impact Report to offer a detailed view of the results we have achieved. As the Bank develops its capabilities and gains experience, our impacts will grow proportionally. This, and subsequent reports in years to come, will serve as transparent records of what AIIB is achieving on behalf of its members. Now is not the time for pretty words; now is the time for action. It is our intention for this Impact Report to demonstrate that AIIB is committed to actionable results as we support our clients to build the Infrastructure for Tomorrow, with sustainability, innovation and connectivity at its core.

Jin Liqun
President and Chair of the Board of Directors
From the Treasurer
Board-of-Governors
ENLARGE
From AIIB’s inaugural bond issuance in May 2019 onward, we have pursued our approach of issuing Sustainable Development Bonds. This institution was built with sustainability at the core of its mandate and commits to boosting economic growth and productivity, addressing environmental challenges including climate change, and providing inclusive access to essential infrastructure services for people in need via its financings. We are unique at AIIB as the Bank’s Environmental and Social Framework (ESF) was put in place at the beginning of the organization and all projects have been assessed and managed in accordance with the vision and spirit of the ESF. Therefore, we chose to reflect our sustainable mandate in the ‘use of proceeds’ language of all of our bonds across all of our programs.

The Bank’s operations had reached 28 countries in five continents by the end of 2020, with approved projects spanning transport, energy, water services, digital infrastructure, and other productive sectors. To better inform our investors of AIIB’s commitments to and actions on sustainable development issues, we published our Sustainable Development Bond Framework in April this year. The Framework increased the transparency of environmental and social impacts generated by AIIB’s financing. Rather than earmarking the use of proceeds, the Framework applies to all debt issued by AIIB in all markets and currencies, reflecting AIIB’s holistic approach towards promoting sustainable development through all its sovereign and nonsovereign investment operations.

We are very pleased that AIIB’s Sustainable Development Bonds have received great support from investors across the globe. This Impact Report is intended to help investors understand AIIB’s areas of focus and demonstrate the sustainable nature of our projects. We understand that impact investing is developing rapidly, and we will respond by continuing to enhance our approach to impact reporting. As a young and growing institution, we aim to improve the way we collect and maintain data, monitor results, and aggregate impacts.

Domenico Nardelli
Treasurer

AIIB’s Sustainable Development Bonds

As a triple-A rated MDB, AIIB has established itself as a prime and frequent issuer in the international markets over the past two years. The Bank began its funding program in May 2019 with a USD2.5 billion five-year SEC-registered global benchmark. Prior to this inaugural issuance, AIIB carried out considerable debt investor marketing with over 200 investors across the globe. AIIB’s funding activities increased significantly in 2020, due to the financing needs under its COID-19 Crisis Recovery Facility. The Bank raised USD8.8 billion last year through a combination of public benchmarks and reverse inquiries in 27 transactions and nine currencies.

Our core objective is to be viewed as a flexible, transparent and responsive issuer providing liquid public offerings and reverse inquiry and tailor-made investment solutions. We aim to diversify our borrowing portfolio in terms of currencies, tenors and structures. We are also committed to continuously engaging with the global investor community and providing impact results regarding AIIB’s Sustainable Development Bonds through our annual Impact Report. Access the full report.


Sustainable Development Bonds



Portfolio-level Reporting

Portfolio Alignment
Portfolio Alignment

In its Corporate Strategy, AIIB set its first climate finance target of reaching or surpassing by 2025 a 50-percent share in actual financing approvals. On par with peer MDBs, this target represents a milestone in the Bank’s commitment to combating climate change and to helping members achieve their domestic and international climate commitments, notably their Nationally Determined Contributions (NDCs) under the Paris Agreement, by providing financial support for climate change mitigation and adaptation.

Download Report
Portfolio Alignment


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