BAKU, Azerbaijan, November 25. The Asian Infrastructure Investment Bank (AIIB) is ramping up its efforts to address funding gaps in climate, nature, and health sectors through innovative financing mechanisms, said Seleha Lockwood, Senior Climate Strategy and Policy Specialist at AIIB, in an exclusive interview with Trend.
"At AIIB, we utilize various financing instruments to address gaps in funding for integrated activities related to climate, nature, and health," Lockwood stated. Highlighting a growing interest in innovative solutions, she noted, "As mentioned in the joint MDB nature and biodiversity session I recently participated in on November 21 within COP29, there is a growing interest in instruments like debt-for-nature swaps. AIIB is exploring such innovative financing approaches to address gaps and client needs".
One of the bank’s key strategies is co-financing and blended finance. This involves collaboration with philanthropic organizations and funds, alongside other financial entities, to reduce capital costs and amplify impact. "Many of our events include philanthropic organizations and funds offering grants or other instruments, which we blend with our financing to maximize impact," Lockwood explained.
AIIB is also leveraging capital markets to drive private sector participation. Lockwood cited the issuance of a 500 million Australian dollar adaptation bond as a prime example. "The projects underpinning this bond are aligned with climate finance tracking taxonomies for adaptation," she emphasized, noting the successful attraction of private sector interest.
The bank’s commitment extends to fostering regional partnerships. "We invest through local banks, as we have done, for instance, with TSKB in Türkiye," Lockwood noted. In 2022, AIIB signed a $200 million loan agreement with TSKB for climate change mitigation and adaptation projects, following a similar $200 million Sustainable Energy and Infrastructure loan in 2018. "Through this fund, and in line with the Paris Climate Agreement, TSKB will finance Türkiye’s investments in renewable energy, energy efficiency, and supporting industries," she added.
Another cornerstone of AIIB’s approach is its climate policy-based financing instrument, which facilitates direct collaboration with governments. "This involves identifying regional infrastructure financing gaps and determining appropriate tools - such as market incentives, carbon markets, or other mechanisms for climate action," Lockwood said. She emphasized that this strategy supports tailored solutions through upstream discussions with governments, ensuring that investments align with green infrastructure commitments.