JEJU (South Korea) • Leaders of the China-backed Asian Infrastructure Investment Bank (AIIB) touted its growing membership and commitment to sustainable development at its annual meeting, even as environmental groups were disappointed by its openness to investing in coal projects.
The AIIB, which has 80 member countries, was set up to help meet the estimated US$26 trillion (S$36 trillion) needed for infrastructure spending in Asia till 2030, while also demonstrating that a China- led institution can meet international standards for best practice.
The United States and Japan, both members of the Manila- based Asian Development Bank (ADB), have not joined the AIIB.
The AIIB has pledged to use its investments to help members fulfil their commitments to the Paris climate accord, which the US is withdrawing from under President Donald Trump.
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"We will not consider proposals if we are concerned about the environmental and reputational impact," AIIB president Jin Liqun, a former vice-president at the ADB, said at the opening ceremony last Friday.
But the bank did get adverse reactions from environmental groups about its commitment to being green, with several non-governmental organisations (NGOs) saying they were disappointed that its new energy industry strategy, adopted last Thursday, left the door open for coal-sector investment.
"I have a hard time reconciling in the energy strategy a statement that says up front the purpose of the energy strategy is to help countries meet their commitments under the Paris agreement, with 'we're going to finance coal projects'," said Mr Andrew Deutz of the Nature Conservancy.
Mr Jin said that, after many rounds of discussion on the bank's energy policy, "this is the best we can achieve", adding that there are no new coal projects in its pipeline of investments.
Other groups saw improvement over the last year in how the bank engages with NGOs.
"We thought this was a really interesting opportunity to see if this new institution can foster a race to the top in terms of creating strong sustainable credit practices, or foster a race to the bottom," said Ms Katherine Lu of Friends of the Earth.
"I think the jury is still out," she said.
The AIIB, China's first effort to launch a multilateral development organisation, has been careful publicly to put distance between itself and Chinese government policy as it looks to placate concerns it will be a tool of Beijing's foreign policy.
The bank began operations 18 months ago and has approved US$2.5 billion in loans. It expects that to reach about US$4 billion by the end of this year.
By comparison, the ADB made US$17.74 billion in commitments last year.