Beijing-led Asian Infrastructure Development Bank (AIIB) commended the proposal of the Department of Finance (DOF) for multilateral development banks (MDBs) to work together in incentivizing private capital flows for climate projects of developing countries.
In a letter to Finance Secretary Carlos G. Dominguez III dated Nov. 30, 2021, AIIB President Jin Liqun expressed his “sincere appreciation” to Dominguez for the latter’s “active leadership in bringing together a collective proposal amongst Multilateral Development Banks (MDBs) to incentivize capital flows to achieve climate change goals in developing countries.”
“I commend your endeavors in improving our global approach towards tailored climate finance investments in order to make a significant impact on local communities and to pursue climate change objectives,” Jin said.
The AIIB chief also said that the bank recognizes that “a lot more needs to be done” to mobilize private sector investments in climate adaptation and mitigation projects.
But Jin has assured that the AIIB is committed to “vigorously support” its members, including the Philippines, in achieving their respective low-carbon energy transition commitments.
For this reason, Jin said the AIIB plans “to further scaling up and pivoting private investments for climate through public-private partnerships and the use of innovative financial instruments including blended finance.”
“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,” he added.
The letter was in response to Dominguez’s proposal for the World Bank Group, Asian Development Bank and the AIIB to catalyze the flow of private sector capital that developing countries need to meet their objectives on fighting planet warming.
MDBs can also set the standards for transparency and accountability in monitoring the climate change initiatives of developing countries to further assure private investors on the prudent use of the funds they have invested in these projects, said Dominguez.
In his letter, Jin said he “look[s] forward to benefitting further from your [Dominguez’s] guidance as we continue to build on the strong relationship between AIIB and the Philippines as one of our key shareholders.”
Jin outlined some of the AIIB’s key initiatives in helping its members fight climate change, among them, is its commitment to ensure that at least 50 percent of its overall approved financing by 2025 will be directed toward climate finance.
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.