The AIIB and Sustainable Infrastructure: A Hybrid Layered Approach
| Author | Gregory T. Chin,Karin Costa Vazquez |
| DOI | http://doi.org/10.1111/1758-5899.12771 |
| Published date | 01 November 2019 |
| Date | 01 November 2019 |
The AIIB and Sustainable Infrastructure:
A Hybrid Layered Approach
Karin Costa Vazquez
Fudan University, and
Jindal Global University
Gregory T. Chin
York University
Abstract
This essay examines the AIIB’s approach to investing in sustainable infrastructure (SI). The main argument is that the AIIB is
taking a hybrid layered approach to SI investment. On the one hand, the Bank is following the ‘do no harm’pathway of the
traditional MDBs, of using safeguards to avoid and compensate adverse social and environmental impacts. On the other hand,
it is pursuing innovation, and a more transformative agenda, that encourages investment in SI projects that generate broader,
positive developmental spillovers. In pursuing its hybrid agenda, the AIIB is developing its own multi-layered safeguards
regime to ensure smooth and strong SI investment, and alignment between the Bank’s overarching strategic policy, its ESF,
sector and thematic strategies, and projects. The analysis also details three ways in which the AIIB stands out from other MDBs
for how it is ‘trying new things’with its approach to SI investment: first, is how ‘economic sustainability’is one of the main
considerations for project selection alongside environmental, social and governance sustainability; second, how the Bank has
integrated social and indigenous and oversight safeguards into its ‘environmental and social framework’(ESF); third, its cre-
ation of large-scale public-private Funds for green finance and climate finance.
Infrastructure is in the name of the Asian Infrastructure
Investment Bank. ‘Sustainable infrastructure’is listed as one
of the Bank’s three main priorities, along with ‘cross-border
connectivity’and ‘private capital mobilization’(AIIB, 2016b,
p. 5). On its official webpage ("About AIIB - Introduc-
tion, Who We Are"), the Asian Infrastructure Investment
Bank (AIIB) states that ‘by investing in sustainable infrastruc-
ture and other productive sectors in Asia and beyond, we
will better connect people, services and markets that over
time will impact the lives of billions and build a better
future’. There is no missing the centrality of sustainable
infrastructure for the AIIB. But what is sustainable infrastruc-
ture? How is the AIIB approaching investing in sustainable
infrastructure? How is the AIIB performing in meeting its
own sustainable infrastructure goals or promises? How does
the AIIB’s approach to investing in sustainable infrastructure
compare to other multilateral development banks (MDBs)?
This essay examines the AIIB’s approach to investing in
sustainable infrastructure (SI). The main empirical and con-
ceptual argument is that the AIIB is taking a hybrid layered
approach to investing in SI. On the one hand, the Bank is
following the ‘do no harm’pathway of the traditional MDBs,
of using safeguards to avoid and compensate adverse social
and environmental impacts. On the other hand, it is explor-
ing new ways of doing things, pursuing innovation, and a
more transformative agenda, that encourages investment in
SI projects that consciously aim to generate other, broader,
positive developmental spillovers. In pursuing its hybrid
agenda, the AIIB is developing its own multi-layered safe-
guards regime to ensure smooth and strong SI investment,
and for ensuring that the Bank’s investments, its projects,
align with the Bank’s overarching strategic policy, its ’Envi-
ronmental and Social Framework’(ESF), and sector and the-
matic strategies.
The AIIB looks similar to other MDBs in supporting the
UN’s Sustainable Development Goals (SDGs) and the Paris
Climate Agreement; however the AIIB is unique within the
so-called ’global family of MDBs’for its focus on infrastruc-
ture investment. The AIIB’s emphasis on investing in SI is
shared by the BRICS-led New Development Bank, but
also increasingly by the traditional MDBs, including the
World Bank, Asian Development Bank, and Inter-American
Development Bank (’inclusive and sustainable infrastruc-
ture’). There are, however, some significant differences in
how each of the MDBs approaches SI. The analysis
below details three ways in which the AIIB is unique or
stands out from other MDBs for how it is ‘trying new things’
with its approach to investing in SI: first, is how ‘economic
sustainability’is one of the main considerations for project
selection alongside environmental, social and governance
sustainability; second, how the Bank has integrated social
and indigenous safeguards, and information disclosure and
oversight safeguards into its ESF; third, its creation of large-
scale public-private funds for green finance and climate
Global Policy (2019) 10:4 doi: 10.1111/1758-5899.12771 ©2019 University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 10 . Issue 4 . November 2019 593
Special Section Article
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