The board of directors at the Asian Infrastructure Investment Bank (AIIB) has given the green light for a $500 million managed credit portfolio.
The goal is 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,” the AIIB said in a statement.
The AIIB Asia ESG Enhanced Credit Managed Portfolio will concentrate on infrastructure-related bonds as an asset class. It will consist of corporate bonds issued by infrastructure-related issuers, including quasi-sovereign bonds and green bonds, the AIIB said.
Bonds that are bought under the managed credit portfolio are set to be screened, managed and amassed in accordance with ESG principles derived from the AIIB’s environmental and social framework.
Globally, ESG integration is increasingly becoming a core element of the investment strategy but more remains to be done in Asia, where it is still in its early stages. With more than 1,950 PRI signatories, only 90 are from Asia.
DJ Pandian, vice-president and chief investment officer at AIIB, said: “We can unlock the greatest potential to mobilise private capital for infrastructure from institutional investors by developing infrastructure as an asset class and deepening the sustainable debt capital market in Asia.”
He added: “Integrating ESG standards into capital markets in emerging Asia will help build capacity for and interest in responsible investing, which is necessary if we are going to build a sustainable future.”
In order to build an ESG market, the AIIB plans to partner with an asset manager to produce research on the topic from the application its own framework.
Headquartered in China’s capital the AIIB has been described as Beijing’s answer to the World Bank. The AIIB has 93 approved members around the world.
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