The Asian Infrastructure Investment Bank (AIIB) and Amundi have partnered to launch a new climate change investment framework which aims to help Asian investors meet Paris Agreement objectives through their portfolios.
The AIIB-Amundi Climate Change Investment Framework is a benchmark investor tool aiming to holistically assess climate change risks and opportunities at the issuer level in line with the three Paris Agreement objectives.
The framework, which is also endorsed by the Climate Bond Initiative, translates the three objectives of the Paris Agreement into fundamental metrics, helping investors assess an issuer’s alignment with climate change mitigation, adaptation and low-carbon transition objectives.
According to the two firms, such a “holistic” approach has been lacking in the industry so far, with equity assets in the space primarily focused in thematic funds that have strong sector biases, while green bond funds don’t tend to “consider exposure to climate investment risks and opportunities from the viewpoint of an issuer’s entire balance sheet”.
Jin Liqun, AIIB President, said: “In launching this framework today, we and our partners show our commitment to playing an important role in the battle against climate change, by contributing to strengthening market capacity and driving the green agenda in Asia.”
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The framework will allow investors to include A- and B-list issuers into their portfolios – those already performing well on all three Paris Agreement objectives and those moving in the right direction – which is expected to bring a “potential financial impact” in the long run, making the portfolio more resilient to climate change risk.
The framework also targets the engagement of B-list issuers to help them transition to A-list credentials, thereby encouraging the integration of climate change risks and opportunities into business practices.
Yves Perrier (pictured), CEO of Amundi, said: “Mobilizing key stakeholders in supporting the Paris Agreement in Asia is in line with Amundi’s commitment to ESG investing and reflects our extensive commitment to the region.
“This new framework will further help the investment community address climate change through the mobilization of capital to emerging markets where it is much needed.”
Sean Kidney, CEO, Climate Bonds Initiative, added: “Action on climate means action on investment and private sector involvement to create green capital markets. With this framework, AIIB and Amundi are laying a new foundation for the development and growth of climate finance and transition investment in the region.”
Both firms have already been active in the field of climate finance. For example, AIIB launched the $500m (£384m) AIIB Asia Climate Bond Portfolio last year, while Amundi is involved in flagship initiative such as the Portfolio Decarbonization Coalition an runs €19bn (£17.3bn) in climate finance solutions (as of June 2020).
