By Simon Jessop
LONDON, Sept 9 (Reuters) - The Asian Infrastructure Investment Bank plans to set a target of investing 50% of its annual direct financing into projects linked to climate change mitigation by 2025, its president said on Wednesday.
Over the last four years the China-backed multi-lateral development bank has lent $20 billion to a variety of projects. Climate finance accounted for 39% of total financing approved in 2019, up from 35% over the previous three years combined.
"We have increased substantially investment to deal with climate change," AIIB President Jin Liqun told the Climate Bonds Initiative Conference. "We aim at achieving 50% direct investment for climate change mitigation by 2025."
The new target, which AIIB Vice President and Corporate Secretary Danny Alexander said is expected to be approved by the bank's members later this month, would form part of the bank's new 10-year strategy, set to go live in January 2021.
The target would bring the AIIB into line with the European Investment Bank.
The AIIB on Wednesday also announced the launch of a new Climate Change Investment Framework with French asset manager Amundi AMUN.PA, which aims to help speed up the transition to a low-carbon economy.
The framework allows investors to analyse climate risks and opportunities of individual issuers by translating the three aims of the Paris climate agreement - mitigation, adaptation and transition - into fundamental metrics, they said.
They said currently investors were largely buying into thematic equity funds, which do not cover all sectors, or low-carbon index funds, which focus on mitigation.
Debt investors meanwhile were focused on Green Bonds, which do not take into account an issuer's whole balance sheet, they added.
Grading issuers and only investing in those who are aligned with all three aims of the Paris agreement, or which are moving closer to full alignment, would incentivise more companies to go green, they said.
(Reporting by Simon Jessop; Editing by Jan Harvey)
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