The Asian Infrastructure Investment Bank (AIIB), a Regional Development Bank established in 2015 and promoted by China, aims to support sustainable economic development in Asia through infrastructure investments. Surprisingly, a considerable number of European countries joined as founding members despite the Bank's initial focus being strictly regional. Their primary goals were not only to increase financial flows towards Asian infrastructure but also to ensure that the AIIB adhered to internationally recognised financial, environmental and social standards. This paper analyses the European states’ ability to impact specific institutional policies concerning the energy sector. It unpacks the Bank's decision-making processes by analysing statements made at the Board of Governors level through a qualitative discourse analysis methodology and triangulating results with the analysis of Annual Reports, official documents approved by the AIIB and its operations. The analysis revealed that the primary influence of European countries can be found in the alignment of the AIIB Energy Sector Strategy with the Paris Agreement and its increase in green finance. However, the resistance of certain developing countries and members of the Bank also led to an ambiguous approach of the AIIB towards sustainable finance.
Policy Implications
- The main interests of European countries are highlighted in the Corporate Strategy approved in 2020, which sets a goal to achieve 50% ‘climate financing’ by 2025. To ensure that the AIIB's commitments to climate alignment and sustainable finance are effectively implemented, European policymakers and civil society actors should advocate for greater transparency in project-level decision-making and for the development of robust monitoring mechanisms.
- The AIIB's method for checking alignment with the Paris Agreement was created in partnership with other multilateral development banks (MDBs), showing a commitment to adopting common standards. To ensure coherence and maintain high environmental standards, directors and technical staff from other MDBs should continue engaging with the AIIB through joint working groups and shared reporting frameworks.
- Recent crises, like the COVID-19 pandemic and the energy crisis caused by Russia's invasion of Ukraine, have led some countries to push for a rethink of the energy sector strategy. European directors and policymakers should pay particular attention to what changed and how to respond to future crises.
- As the second energy sector strategy review is expected before 2027, it is crucial for European stakeholders to mobilise early and ensure that their interests regarding climate goals and energy transition are well represented.
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