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March 6, 2024

Study Report

AIIB’S Climate Finance: Gender blind and fossil friendly

AIIB’S Climate Finance: Gender blind and fossil friendly

The Asian Infrastructure Investment Bank (AIIB), the world’s youngest MDB, came into operation in early 2016, just weeks after world leaders signed the Paris Agreement on climate change and a few months after the Sustainable Development Goals (SDGs) were born. In its first Corporate Strategy, launched in 2020, the AIIB committed to enhance its contribution to SDG 5 on gender equality. It also introduced an ambitious new target - that by 2025 at least 50% of the AIIB’s financing approvals would be for climate finance. Only two years later, the AIIB announced that it had already exceeded this target. 


On the surface, this looks like a major victory and a blueprint for how MDBs can shift their operating models towards greener goals within a very short timeframe. It fulfills the calls from COP28 and others who want the MDBs to play a bigger part in providing finance to address the climate challenge, such as the G20. But it also raises questions how the AIIB could exceed its ambitious target so quickly, while at the same time continuing to invest in fossil fuels. In the same year as the AIIB claimed to have met its climate finance target, the bank approved investment in a new greenfield gas power project in Bangladesh. It also reported a reduction in projects contributing to SDG 5 compared to the year before.


The answer lies in how ‘climate finance’ is defined and accounted for. The COP28 outcome document notes a “diversity of definitions of climate finance”, and a COP subcommittee is reviewing the implications of this. A group of MDBs, including the AIIB, has developed its own principles for how to assess and account for climate finance, one for mitigation and one for adaptation. The AIIB’s Climate finance assessments build on these principles, but with its own modification of what counts. Shockingly gender is not mentioned once and financing for fossil fuels is far from fully excluded.

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