The Asian Infrastructure Investment Bank (AIIB) has announced that its Board of Directors has approved US$500 million for a managed credit portfolio that aims to develop infrastructure as an asset class, develop debt capital markets for infrastructure and promote the integration of Environmental, Social and Governance (ESG) principles in fixed income investments in Emerging Asia. 

Focused on infrastructure-related bonds as an asset class, the AIIB Asia ESG Enhanced Credit Managed Portfolio will be comprised of corporate bonds issued by infrastructure-related issuers, including quasi-sovereign bonds and green bonds where proceeds are directed to sustainable infrastructure and other productive sectors. 

Aligned with the Bank’s "Green" value, the AIIB Asia ESG Enhanced Credit Managed Portfolio will include a strong ESG component. Bonds purchased under this portfolio will be screened, assessed and managed based on ESG investing principles that have been informed by AIIB’s Environmental and Social Framework. 

ESG investing is still in its infancy in Emerging Asia. Only a few AIIB members who pledge support for the United Nations-supported Principles for Responsible Investment come from the region. To help build an ESG market, AIIB will partner with an asset manager to build capacity around responsible investing by producing research on ESG investing based on knowledge gained from applying AIIB’s ESG framework. In the long-term, AIIB will engage with market participants—including corporates and data providers—to improve disclosure, share knowledge and expand ESG rating coverage in Emerging Asia. 

At the outset, AIIB will lead by example by deploying its own capital as it builds awareness for the benefits of ESG investing in Asia. Over time, it will support other investors to set up similar platforms or participate in AIIB initiatives, with the ultimate goal of establishing a robust ESG market in the region.