Global community is ‘ill-equipped’ to tackle climate change, says AIIB VP

The AIIB’s Danny Alexander says the multilateral development bank will approve $50bn of climate finance by 2030.

The world is not ready to address climate mitigation and adaptation without nature-based solutions, says Danny Alexander, the Asian Infrastructure Investment Bank’s vice-president for policy and strategy, while strongly refuting allegations that the bank is an arm of the Chinese government.

“As a global community, we are ill-equipped to deal with the scale of the consequences of climate change and biodiversity is an area we need to rapidly learn more about,” he says.

“[Our] biggest priority is therefore green infrastructure, especially infrastructure that supports the climate transition and is resilient to the likely consequences of climate change in the coming decades.”

Nature and infrastructure

The AIIB, China’s answer to the World Bank, was first established in 2016. China is the biggest shareholder and holds 26.6 per cent of voting rights — the highest of any country, followed by India and Russia.

The bank estimates that the cumulative value of its climate finance approvals will total $50bn by 2030. It previously targeted at least 50 per cent of its financing by 2025 to be climate finance — a goal it has already achieved. The AIIB, which provides support to governments and private companies, is capitalised at $100bn, of which 20 per cent is paid-in capital. As of July 25, the bank has only committed roughly $36.8bn to climate finance, according to its website.

“Though $100bn of capital sounds large, it’s a drop in the ocean compared to the multi-trillion dollars of need,” Alexander adds.

His comments come as parts of Asia, Europe and North America have been experiencing their highest temperatures on record. The UN’s World Meteorological Organization has said that preliminary data showed that the first week in July was the hottest on record, following the hottest June on record.

“Nature is the infrastructure of our lives,” Alexander says. “Many of the things that we build infrastructure for are actually provided already by nature. So why shouldn’t an institution like ours invest in protecting nature as a way of delivering some of the infrastructure services that people need?”

He cites one of the AIIB’s upcoming projects in China, where the bank is helping a coastal community that is vulnerable to climate change to restore mangroves as part of its natural defences against flooding and severe weather.

Megaphone for China?

The AIIB was in the headlines in June when its former head of global communications, Bob Pickard, resigned from his post, stating on Twitter on June 14 that the bank “was dominated by Communist party members and also has one of the most toxic cultures imaginable”.

Pickard, who is a Canadian national, does not believe his “country’s interests [were] served by its AIIB membership”. Canada has since suspended its involvement with the bank while it conducts its own review.

I have tendered my resignation as the global comms chief of @AIIB_Official. As a patriotic Canadian, this was my only course. The Bank is dominated by Communist Party members and also has one of the most toxic cultures imaginable. I don’t believe that my country’s interests are…

— Bob Pickard (@BobPickard) June 14, 2023

Alexander says there was “no truth to the allegations”. The bank published an internal review on July 7, which “found no evidence that staff membership in any political party from any country has interfered with bank personnel’s discharge of official duties”. It concluded that Pickard’s claims lacked “concrete evidence”.

However, questions are now surfacing over whether other members might also vote with their feet. “I’m not [concerned], because the support of our members is very strong,” Alexander says.

Among its members, India has been the biggest beneficiary of the AIIB’s financial commitments and has received more than a quarter of its total committed finance between 2016 and March 2023.

“Given its size and given the scale of its development needs, I think it’s quite natural that India is and will remain the largest borrower from the AIIB,” Alexander says.

Since its founding, the bank has made inroads into non-Asian countries too, such as Egypt, Rwanda and Brazil, but retains a limit on its non-regional financing to no more than 15 per cent of its financing on a rolling three-year basis.

This article first appeared on fDi Intelligence