Friday 13 September 2019: Today over 50 civil society groups from around the world wrote to the Asian Infrastructure Investment Bank’s President and senior management, calling for urgent reforms to the highly risky investment model of lending through intermediaries. Financial Intermediary (FI) lending through third parties such as private equity or infrastructure funds increases risks of harms to communities and the environment due to its hands-off nature.
The AIIB already invests around 10% of its total portfolio this way. But civil society groups argue that the bank does not yet have the standards or the capacity in place to ensure FI investments do no harm. The letter points to a total lack of transparency and disclosure of projects supported by FIs, the high risk of FI investments backing fossil fuels, and FI clients’ failure to uphold AIIB’s environmental and social protections.
The letter recommends that AIIB learn lessons from peer institutions and at least ensure its standards match best practice when it reforms its Environmental and Social Framework early next year.