Asian Infrastructure Investment Bank (AIIB) has exceeded its 50% climate financing target for 2025, with several deals being Shariah compliant as they were deployed in collaboration with the IsDB, IFN Investor has learned.
In an interview, Rajat Misra, acting CIO, Public Sector (Region 1) & Financial Institutions and Funds (Global) Clients, shared that AIIB’s climate financing currently has surpassed 60% of total financing deployed in 2024.
“Our two focus areas on climate policy-based lending are climate adaptation and private capital mobilization. The reason for that is very clear because we understand that multilateral development banks (MDBs) by themselves may not be able to fulfill the climate requirements.”
This focus has also brought about an evolution in AIIB’s lending policy, explained Rajat, noting the limited impact of MDB initiatives if not supported by other collaborations. Hence the shift to get more private capital participation.
“Our mandate is that we should be able to catalyze private capital, not crowd it out.” This means the AIIB financing is constructed such that it would be taking on a little more risk, but essentially the commercial terms have to be viable for the private sector to come in as well.
Another shift by AIIB, again working in partnership with other MDBs, is taking on the social thrust rather than focusing mainly on infrastructure-based initiatives.
“After the pandemic, we decided that the social aspect was equally important and health forms a very large part of the mandate. We have also done projects in education, in both the public and private sectors. This is how we are changing.”
This evolution means AIIB will also look at post-disaster projects and help ensure societies can withstand future shocks. Rajat said AIIB could help as it had been involved in funding Turkiye’s efforts to reinforce key buildings to be quake-resistant while stocking on emergency provisions like generators and related supplies.
Among the major players that AIIB has collaborated with for such projects include the World Bank, OPEC Fund and also sovereign wealth funds.
“We have worked in a number of projects where our counterparties are Shariah compliant. Our success would be bringing together everybody to work on a project which meets everybody’s objectives.”
Noting that all these efforts have provided adequate returns with around US$60 billion deployed in over 300 projects since AIIB began operations in 2016, and posting a net profit of around US$1 billion in the past two years, Rajat said AIIB remains committed to exploring new financing and fundraising options.
“Our treasury unit is always looking at innovative ways to raise financing.” While there has been no specific Shariah aspect funding directly by AIIB – except when mandated by its partners – Rajat said there are no immediate plans to pursue Islamic funding options. “But there is nothing stopping us from doing it.”
