Why global development banks need to invest in sustainability

Recent news that the U.K. and other Western European countries will join the China-led Asian Infrastructure Investment Bank (AIIB) has prompted aflurry的discussionabout how the U.S. — which has been reserved about the new institution — should respond. The Chinese-led AIIB is a new international financial institution (IFI) that will finance infrastructure projects in Asia.

Whatever Washington decides, it’s clear that the AIIB and other new multilateral institutions are becoming an important part of the development finance landscape.

These banks can support much-needed infrastructure improvements in the developing world, but they’ll also need to ensure that their investmentsdo not come at the expense当地社区或环境。

In terms of economic power and population, emerging economies are underrepresented in existing IFIs such as the World Bank and Asian Development Bank.

Brazil, Russia, India, China and South Africa (BRICS countries) togethercomprise 21 percent的the world economy and 43 percent of the world’s population, yet their voting power at more traditional IFIs does not match their size. For example, they collectively hold14% (PDF)和11 percent的voting shares in the International Bank for Reconstruction and Development and International Monetary Fund, respectively.

At the same time, today’s infrastructure investment needs far exceed the amount of finance currently available. In Asia alone, the overall need for national infrastructure investment is estimated to be about$8.22 trillion (PDF)for the period between 2010 and 2020.

现有可用人均l will not meet this financial need. New financial institutions such as AIIB and the New Development Bank (NDB), a bank initiated by the BRICS countries, are stepping in to fill the gap.

In October, 21 countries signed an MOU to create the $100 billion AIIB. As of April, 35 countries had signed up to be prospective founding members — including a number of European countries such as the U.K., Germany and Switzerland — and dozens more have applied.

The bank is expected to be formally established by the end of 2015. Also in 2014, the BRICS signed an agreement to create a $100 billion NDB. These banks usher in a new wave of increased development and financial cooperation between developing countries, emerging markets and developed economies.

5 key questions for new development banks

发展金融中的这些新演员具有学习现有的IFIS的经验和建立新的国际标准的优势。

As they move forward with their operations, they’ll need to ensure that the infrastructure projects they fund do not generate pollution, damage health or否则伤害人或地球.

There are a number of questions they should consider, such as:

1. Voice and vote: How will the banks structure governance?

If the intention is for these institutions to address the needs of emerging economies, will emerging economies retain a combined majority voting power?

2. Climate risks: How will they factor climate into investments?

What will be the balance between green investments, such as those in renewable energy and efficiency projects, and brown investments, such as those in extractives? How will they fund climate change adaptation and mitigation projects? Will they rule out investments in high-carbon infrastructure such as coal-fired power plants?

3. Environmental and social risk: What role will environmental and social safeguards play?

Will the banks createenvironmental和social safeguards确保基础设施项目不会产生意外后果，例如污染或社会动荡？它们将如何纳入现有IFIS的经验和经验？他们将采取哪些措施来确保彻底和强大的实施？

4.透明度和问责制：如何处理信息和数据？

Will information regarding investment decisions be publicly available? Will there be a grievance mechanism and an independent accountability mechanism? What are the expectations for stakeholder engagement policies, and how will theyconsult stakeholders (PDF)?

5.国家系统和基于原则的系统：新机构将如何达到平衡？

How will institutionsbalance国家级保障措施的内部保障政策？在什么情况下，如果有的话，国家系统将独立运作？

It’s clear that the world needs development banks led by emerging economies, both to scale up the level of investment and to give developing countries better representation in the world of development finance.

Yet these new banks also will need to play another role: championing sustainability as they usher in more development.

This article originally was published by theWorld Resources Institute.