Climate finance and new multilateral development banks: approaching co-productive dynamics?

Weishen Zeng

Climate Policy, 2025, vol. 25, issue 8, 1117-1130

Abstract: Multilateral development banks (MDBs) play a key role in directing private capital and public resources to finance climate action. Different from the mainstream literature that focuses on the role of new MDBs in promoting climate finance, this paper provides novel evidence on how and why they can also be reshaped by climate finance. It takes as a case study the Asian Infrastructure Investment Bank (AIIB), a newly established yet now the world’s second largest MDB by membership, drawing on the bank’s climate trajectory since 2016, and 57 in-depth interviews with its officials and experts in Beijing, China. While initially created as an infrastructure-focused MDB, AIIB has been substantially shaped and reshaped into a climate-oriented bank. The shift is explained by the bank’s (1) financial considerations, (2) strategic considerations, and (3) organizational culture. The co-productive interaction entails two long-term effects. First, despite its geostrategic intentions and institutional setbacks, AIIB carved out an extra space for itself to grow. Second, there is an increasing risk of AIIB’s unique developmental identities being weakened as it leans towards climate finance.Climate finance can reshape new MDBs by altering their (1) identity, (2) lending, and (3) culture.For policymakers in MDB, especially in new MDBs, climate finance offers leverage to enhance growth and influence.Policy discussions, such as those around the New Collective Quantified Goal, should recognize the potential of newer institutions like AIIB and NDB.AIIB should integrate climate finance while preserving its core focus on infrastructure development.

Date: 2025
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DOI: 10.1080/14693062.2024.2442004

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