THE Asian Infrastructure Investment Bank (AIIB) vowed to support its members, including the Philippines, in achieving their respective low-carbon energy transition commitments.
In a letter to Finance Secretary Carlos G. Dominguez III, AIIB President Jin Liqun acknowledged that “a lot more needs to be done” to mobilize private sector investments in climate adaptation and mitigation projects.” Jin said in the letter that the AIIB is committed to “further scaling up and pivoting private investments for climate through public-private partnerships and the use of innovative financial instruments including blended finance.”
Dominguez said the letter dated November 30 was in response to his earlier proposal for the World Bank Group (WBG), the Asian Development Bank (ADB) and the AIIB to catalyze the flow of private sector capital that developing countries need to meet their objectives on fighting global warming.
Dominguez, who serves as a governor for the Philippines in the boards of AIIB, the WBG and the ADB, said this could be done by adopting a harmonized set of guidelines for vetting climate adaptation and mitigation projects. The finance chief also said multilateral development banks (MDBs) can also set the standards of transparency and accountability in monitoring the climate change initiatives of developing countries to further assure private investors of the prudent use of the funds they have invested in these projects.
As its Nationally-Determined Contribution (NDC) to the Paris Agreement, the Philippines has committed to a projected greenhouse gas emission reduction and avoidance of 75 percent from 2020 to 2030 for the sectors of agriculture, wastes, industry, transport and energy despite being among the countries with the smallest carbon footprints.
Jin expressed his “sincere appreciation” to Dominguez’s “active leadership in bringing together a collective proposal among MDBs to incentivize capital flows to achieve climate change goals in developing countries.”
“[The] AIIB is committed to positioning itself as Asia’s Climate Finance Partner to support its members in achieving their respective low-carbon energy transition and climate pledges made in both domestic and international fora including the Paris Agreement,” Jin said.
The AIIB official added he looks forward “to benefitting further from Dominguez’s guidance” as the China-led MDB and the Philippines “continue to build on their strong ties.”
He also noted that the AIIB has undertaken several key initiatives in helping its members fight climate change, including its commitment to ensure that at least 50 percent of its overall approved financing by 2025 will be directed toward climate finance and its operations aligned with the goals of the Paris Agreement by July 1, 2023; and its pioneered approaches to demonstrate proof-of-concept of climate investments in bonds, private equity and other segments of the financial markets in Asia.
The AIIB has also been actively participating in the joint MDB climate working groups to address several issues, including developing the common definition on climate mitigation and adaptation finance and its annual reporting, among other concerns, Jin said.
He estimates that AIIB’s cumulative climate finance approvals would be $50 billion by 2030.