The Asian Infrastructure Investment Bank (AIIB) and Aberdeen Standard Investments (ASI) have forged a strategic partnership that aims to develop debt capital markets for infrastructure, drive responsible investing in fixed income and build a sustainable environmental, social and governance (ESG) ecosystem in emerging markets in Asia.  

The partnership entails the US$500-million AIIB Asia ESG Enhanced Credit Managed Portfolio managed by ASI on behalf of AIIB, which will comprise primarily of Asian infrastructure related bonds including both green and unlabelled issuances, with ESG factors fully integrated in the investment process and portfolio management.

In addition, through bespoke research and active engagement, ASI will work closely with AIIB on the launch of the Sustainable Capital Markets Initiative, which aims to catalyze ESG investing strategies, act as an engine of change to improve ESG standards and build capacity around responsible investing with various market participants including corporate bond issuers, rating agencies and index providers to improve disclosure and expand ESG rating coverage in Emerging Asia.  

Over the next few decades, institutional investors are expected to play an integral role in financing Asia’s growing infrastructure investment needs. As the region is facing some of the most pressing sustainability challenges, integrating environmental and social factors into investment decisions is critical, along with governance.

In close alignment with AIIB’s objectives and ASI’s investment philosophy, the project aims to unlock the potential of ESG investing and mobilize private capital to support the region’s sustainable development. 

The Asia ESG Enhanced Credit Managed Portfolio was approved by the AIIB Board of Directors in December 2018. ASI was awarded the contract to manage the portfolio through a competitive bidding process.

AIIB vice president and chief investment officer D.J. Pandian says, “We believe that institutional investors are a key part of the solution to finance Asia’s infrastructure investment needs over the coming decades. Integrating ESG standards into capital markets in Emerging Asia will be important to achieving long-term sustainable development goals.”

Standard Life Aberdeen Chairman Sir Douglas Flint, CBE, says, “The significant need for more infrastructure investment in Asia offers a real opportunity to embed ESG principles, while countries and communities accrue the long-term social and economic value that comes from the asset class.”

The portfolio will be managed by ASI’s Asian fixed income team based in Singapore, which has a long-term track record in emerging markets investing. To support AIIB’s mission to improve social and economic outcomes in Asia, the portfolio has a strong emphasis on ESG.

All bonds will be screened, assessed and managed in accordance with both AIIB and ASI’s ESG investing principles. ASI will also leverage its global ESG team’s deep insights and proprietary thematic research to inform investment decisions and further develop industry knowledge with AIIB.

Aberdeen Standard Investments is the asset management business of Standard Life Aberdeen plc, one of the world’s largest investment companies.