Report on the AIIB-TKYB Climate and Digital Transition On-Lending Facility

Executive Summary

The Asian Infrastructure Investment Bank (AIIB) and the Development and Investment Bank of Türkiye (TKYB) have established a USD 200 million equivalent on-lending facility to advance Türkiye’s national objectives for climate action and digital transformation. This 15.5-year sovereign-backed agreement is designed to catalyze private-sector investment, directly contributing to the achievement of several United Nations Sustainable Development Goals (SDGs), particularly SDG 7, SDG 9, SDG 13, and SDG 17.

Facility Overview and Strategic Objectives

Financial Details

• Total Amount: USD 200 million equivalent
• Term: 15.5 years
• Structure: Sovereign-backed on-lending facility with separate USD and EUR tranches.
• Purpose: To channel long-term resources into private-sector sub-projects aligned with climate and digital infrastructure priorities.

Alignment with Sustainable Development Goals (SDGs)

The facility is strategically structured to support Türkiye’s progress towards key SDGs:

1. SDG 7 (Affordable and Clean Energy) & SDG 13 (Climate Action): The primary focus is on financing climate mitigation and adaptation projects. At least 90% of the facility is dedicated to climate finance, supporting Türkiye’s commitments under the Paris Climate Agreement. This includes investments in renewable energy, energy efficiency, and decarbonization, directly addressing the need for clean energy and robust climate action.
2. SDG 9 (Industry, Innovation and Infrastructure): A significant portion of the funding is allocated to expanding Türkiye’s digital infrastructure. This promotes resilient infrastructure and fosters innovation, which are critical for sustainable industrialization and economic competitiveness.
3. SDG 17 (Partnerships for the Goals): The agreement itself exemplifies a strong partnership between a multilateral development bank (AIIB) and a national development bank (TKYB) to mobilize financial resources for sustainable development.

Scope of Financed Sub-Projects

The on-lending facility will target private-sector investments across three main categories, each contributing to specific SDGs:

Climate Mitigation (SDG 7, SDG 13)

• Renewable energy generation, including wind and solar power projects.
• Energy efficiency enhancements in industrial companies.
• Battery energy storage systems to support grid stability.
• Decarbonization initiatives within energy-intensive industries.

Climate Adaptation (SDG 13)

• Projects aimed at strengthening the climate resilience of businesses and infrastructure.

Digital Infrastructure (SDG 9)

• Investments to expand and modernize Türkiye’s digital infrastructure, in line with national digital transformation goals.

Institutional Commitment and Vision

Both institutions have affirmed that the facility aligns with their core strategic priorities. AIIB’s Chief Investment Officer, Kim-See Lim, highlighted the Bank’s commitment to supporting members’ climate goals and digital transformation, emphasizing the mobilization of private capital. İbrahim Öztop, CEO of TKYB, noted that the financing will directly contribute to Türkiye’s clean energy transition and sustainable growth, enhancing the global competitiveness and climate resilience of its industrial sector. The project is consistent with AIIB’s thematic priorities of green infrastructure, private capital mobilization, and technology-enabled infrastructure.

Analysis of SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article highlights issues and initiatives that are directly connected to several Sustainable Development Goals. The primary focus on climate action, clean energy, technological infrastructure, and international partnerships links the project to the following SDGs:

• SDG 7: Affordable and Clean Energy
• SDG 9: Industry, Innovation and Infrastructure
• SDG 13: Climate Action
• SDG 17: Partnerships for the Goals

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the specific actions and goals described in the article, the following targets can be identified for each relevant SDG:

1. SDG 7: Affordable and Clean Energy

   • Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix. The article directly supports this by stating the facility will finance “renewable energy such as wind and solar.”
   • Target 7.3: By 2030, double the global rate of improvement in energy efficiency. This is addressed through the facility’s support for “energy efficiency” projects and “supporting industrial companies in enhancing their energy efficiency.”
   • Target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology… and promote investment in energy infrastructure and clean energy technology. The USD200-million facility provided by AIIB to TKYB is a clear example of promoting investment in “green energy investments” and “clean energy.”

2. SDG 9: Industry, Innovation and Infrastructure

   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure… to support economic development and human well-being. The project’s aim to finance “climate-aligned infrastructure,” “digital infrastructure,” and “battery energy storage systems” directly contributes to this target.
   • Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable… and greater adoption of clean and environmentally sound technologies. The facility’s focus on “decarbonization in energy-intensive industries” and enhancing “energy efficiency” in industrial companies aligns perfectly with this target.
   • Target 9.a: Facilitate sustainable and resilient infrastructure development in developing countries through enhanced financial, technological and technical support. The AIIB’s financial facility to Türkiye is a direct implementation of this target, aimed at “scaling climate-aligned infrastructure and technological innovation.”

3. SDG 13: Climate Action

   • Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries. The facility supports “climate adaptation” and helps “businesses strengthen their climate resilience.”
   • Target 13.2: Integrate climate change measures into national policies, strategies and planning. The article explicitly states that the facility “aligns with Türkiye’s commitments under the Paris Climate Agreement and its updated Nationally Determined Contributions,” demonstrating the integration of climate measures into national strategy.
   • Target 13.a: Implement the commitment… to a goal of mobilizing jointly $100 billion annually… to address the needs of developing countries in the context of meaningful mitigation actions. The USD200-million facility from a multilateral development bank like AIIB is a form of climate finance mobilization to support “climate mitigation” and “reduce greenhouse gas emissions.”

4. SDG 17: Partnerships for the Goals

   • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources. The partnership between the multilateral AIIB and the national TKYB to provide a “USD200-million” facility and “catalyze private-sector investment” is a direct example of mobilizing financial resources.
   • Target 17.17: Encourage and promote effective public, public-private and civil society partnerships. The agreement between AIIB and TKYB, a state-owned bank, to on-lend to private sector projects represents a multi-stakeholder, public-private partnership model.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

The article mentions several quantitative and qualitative indicators that can be used to measure progress:

1. For SDG 7 (Affordable and Clean Energy)

   • Implied Indicator: Investment in renewable energy and energy efficiency projects, measured by the amount of the USD200-million facility allocated to these sectors.
   • Implied Indicator: Increase in renewable energy generation capacity (e.g., megawatts from new wind and solar projects financed).

2. For SDG 9 (Industry, Innovation and Infrastructure)

   • Implied Indicator: Total investment in sustainable and digital infrastructure, measured by the funds disbursed for these purposes.
   • Implied Indicator: Number of industrial companies that receive financing for decarbonization and energy efficiency upgrades.

3. For SDG 13 (Climate Action)

   • Direct Indicator: The proportion of the facility dedicated to climate finance, which the article explicitly states is “at least 90% of the facility.”
   • Implied Indicator: The total amount of greenhouse gas emissions reduced as a result of the financed projects.
   • Qualitative Indicator: Alignment with Türkiye’s Nationally Determined Contributions (NDCs), confirming policy integration.

4. For SDG 17 (Partnerships for the Goals)

   • Direct Indicator: The total value of the financial facility, which is “USD200-million.” This represents the financial resources mobilized through the partnership.
   • Implied Indicator: The amount of private-sector investment catalyzed by the on-lending facility.

4. Summary Table of SDGs, Targets, and Indicators

Source: aiib.org