AIIB issues first climate adaptation bond


New five-year bond raises AUD500m for projects with a significant climate-resilience and adaptive infrastructure aspect. 

The Asian Infrastructure Investment Bank (AIIB) has successfully priced its first Climate Adaptation Bond, a thematic bond issued under the AIIB Sustainable Development Bond Framework. The proceeds will be allocated to projects that have an estimated climate adaptation finance portion of 20% or greater of the total project financing.

In 2015, the Paris Agreement established the global goal of adaptation and the AIIB has committed to be fully aligned with the Paris Agreement by 1 July 2023. Climate adaptation financing is about investing now to make infrastructure assets more resilient so that as the effects of climate change intensify, infrastructure is able to protect vulnerable communities.

Asia is already experiencing the effects of climate change. In the past 20 years, Asia has six of the worst affected ten countries for climate-related disasters. Increasingly, AIIB’s members are paying more attention to the impact of climate change and the need for resilient infrastructure.

AIIB made a commitment at COP27 in Sharm el-Sheik to issue a bond focusing on climate resilience and has now successfully engaged investors in mobilising finance for climate adaptation, which is critical to achieve the necessary scale of investment required to support vulnerable nations in the region.

Sir Danny Alexander, AIIB vice president for strategy and policy, said: “AIIB is committed to fund infrastructure investments that promote climate adaptation. This can be seen in our growing pipeline of climate adaptation projects, currently estimated to be approximately $1.5bn. This bond contributes to AIIB’s targets of increasing financing for adaptation from capital markets, delivers on our commitment made at COP27 to promote climate-resilient solutions through issuance of bonds and shows our strong focus of making all our infrastructure investments climate resilient.”

AIIB treasurer Domenico Nardelli added: “We are happy to be back in the Australian dollar market for the third time since 2021. Australia was one of the first domestic markets that the bank strategically targeted and we are happy to maintain a continued presence there. It is a great milestone for AIIB to issue a Climate Adaptation Bond to highlight the critical importance of climate adaptation in financing a sustainable future for Asia and beyond.”