China's creation of the Asian Infrastructure Investment Bank (A.I.I.B.) is an important opportunity not only for spurring much needed infrastructure investment in Asia but also for ensuring that such investment incorporates robust environmental standards.
Most of Asia suffers from chart-topping levels of air pollution, water contamination and scarcity and land degradation, factors that must be accounted for in further development. Instead of opposing its creation, the U.S. should consider joining the bank as a means of guaranteeing that it matches world-class financing strength with world-class environmental practices.
Chinese officials have referenced their desire to address environmental and other governance issues through the A.I.I.B.The strength of their commitment, however, remains uncertain. Beijing has not made such concerns a priority in its overseas investment practices in the past, although growing demand for better environmental protection, labor and governance practices at home and abroad is pushing Chinese officials to take these issues more seriously. Prioritizing these issues within the A.I.I.B. can help ensure that bidding for investment projects is transparent and open only to firms that operate with high corporate social responsibility standards. The bank could establish an independent auditing process that insists that broader health, social welfare and environmental considerations are fully addressed. Such measures, however, are only likely to be adopted with guidance from other countries with much stronger corporate social responsibility histories than that of China, such as Singapore, Australia and South Korea — not to mention the United States.