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 5-year bond raised AUD500 million, and the proceeds will be allocated to projects that have an estimated climate adaptation finance portion of 20 percent or greater of the total project financing.

The purpose of the Climate Adaptation Bond is to raise awareness about climate-resilient and adaptive infrastructure investments. In 2015, the Paris Agreement established the global goal of adaptation and AIIB has committed to be fully aligned with the Paris Agreement by July 1, 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 in the long-term.

Asia, as a region, is already experiencing the effects of climate change. In the past 20 years, Asia has six of the top 10 countries globally worst affected by climate-related disasters. Increasingly, AIIB’s members are paying more attention to the impact of climate change and the need for resilient infrastructure. With this Climate Adaptation Bond, AIIB fulfilled its commitment at COP27 in Sharm el-Sheik to issue a bond focusing on climate resilience and has successfully engaged investors in mobilizing finance for climate adaptation, which is critical to achieve the necessary scale of investment required to support vulnerable members in the region.

AIIB’s definition of climate adaptation is based on the harmonized principles from the multilateral development banks’ Joint Methodology for Tracking Adaptation Finance, and the Common Principles for Climate Change Adaptation Finance Tracking. Examples of adaptation projects eligible for allocation under the AIIB Climate Adaptation bond include the Punjab Municipal Services Improvement Project and the Henan Flood Emergency Rehabilitation and Recovery Project.

AIIB has a target to reach 50 percent climate finance by 2025, which in 2022 the Bank exceeded by approving 56 percent, or USD2.39 billion, in climate finance (including both climate mitigation and adaptation)[1]. By 2030, AIIB expects that its cumulative climate finance will reach USD50 billion. AIIB’s investments in climate adaptation finance is comprised of projects in water, urban development, transportation and energy, including stand-alone projects, co-financed projects, and sub-components of projects.

“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 USD1.5 billion. 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,” said Sir Danny Alexander, AIIB Vice President for Strategy and Policy.

Key Transaction Terms:

Investor Distribution