After receiving approval from the AIIB board of directors, the AIIB Asia ESG Enhanced Credit Managed Portfolio will focus on infrastructure-related bonds and compliment the bank's green values. The concept of ESG investment is, according to the AIIB, “still in its infancy” in emerging Asian markets. The focus on sustainability and responsible investing will be important for securing long-term funding, with investors typically wary of putting money into infrastructure projects in emerging markets. Bonds purchased through the new fund will be screened and assessed under the AIIB's own environmental and social framework. According to the Global Sustainable Investment Alliance, only 0.8 percent of assets in Asia (excluding Japan) comply with ESG standards, compared to 53 percent of assets in Europe. However, China has rapidly expanded green investment, issuing 36 billion U.S. dollars' worth of green bonds in 2016, more than anywhere else in the world.

Posted by

ECNS