Last week, the new Asian Infrastructure Investment Bank (AIIB) released its Environmental and Social Framework, which will help guide how the bank deals with its investments’ impacts on people and the environment. With authorized capital of $100 billion and promises to deliver aid with less bureaucracy, the AIIB could play a big role in re-shaping countries around the region. Negotiations over its formation have been punctuated by questions over what standards it would apply to govern its investments. For its part, the AIIB has committed to being “lean, clean and green” and to applying world-class standards.

So what can we see in the newly released Framework?

The Highs and Lows

First, the Framework does indeed send a signal that AIIB is acting on its commitment to meet the international standards used by development banks to consider impacts on people and the environment before committing funds to a development project. The Framework lays out a vision, a policy, and three supporting standards that are broadly similar in nature to those of the World Bank (WB), Asian Development Bank (ADB) and other established multilateral development banks.

On some issues, the AIIB has embraced more progressive positions than some of its peers. For example, the AIIB excludes financing for commercial logging operations in tropical or old-growth forests, which goes beyond the current commitment made by the World Bank. On other subjects, the AIIB’s commitments are not quite as strong. For example, the AIIB has not followed the lead of the ADB or International Finance Corporation (IFC) in giving Indigenous Peoples the right to consent to activities taking place on their lands.

In general, though, the Framework’s vision recognizes many of the issues such as climate change, gender, biodiversity and ecosystems, resettlement, labor practices and Indigenous Peoples that AIIB will encounter as it begins to make investments. It also makes very important commitments around transparency, information disclosure and public participation that exceed those of a number of national development banks, including key players such as the China Development Bank and the China Export-Import Bank. Following through on these commitments will be critical to building trust and confidence in the bank’s approach.

Looking Ahead: Going from Guidance to Implementation

Looking ahead, there are two key areas for next steps. First, policies are the starting point, but implementation requires as much—if not more—attention. The Framework contains the building blocks for a robust system, but leaves much room for interpretation. It states that requirements should be implemented “in proportion to the risk,” and allows for variation under certain circumstances. While these provisions are not unreasonable, interpretation of this language will require subjective, professional judgments, and will define how the Framework shapes engagement with clients in practice. The Framework will need to be supported by more detailed operating procedures and efficient consultation processes to help guide these judgments.

Equally important, sustainability will have to be socialized within the bank and built into the institutional culture such that it is truly accepted as “integrated.” It must be seen as part of the role of investment officers, and not just a compliance requirement overseen by a risk management team.

The second important area of work will be how the AIIB proactively guides investment priorities towards green and inclusive growth. If implemented correctly, the Framework document can help the AIIB reduce risks and mitigate negative impacts. However, particularly in a post-Paris world, banks need to go beyond avoiding risks to proactively assessing whether infrastructure projects place nations and the world on the right development track towards achieving global targets on climate, landscape restoration, inclusive growth and other goals. Research is increasingly showing that green growth may have winners and losers at the sectoral level (e.g., oil industry vs. solar industry), but that it does not present major trade-offs at the level of whole economies. For example, the New Climate Economy has found that the differential between business-as-usual and climate-friendly investment is only $270 billion per year globally, just 5 percent more.

To be fair, this is a challenge facing many MDBs, which means that the AIIB has an opportunity for leadership and leap-frogging as it builds its systems from the ground up. The Framework outlines a vision that includes “supporting green growth” and “assisting clients in achieving their nationally determined contributions” and “developing knowledge.” The question now lies in how to best do this such that performance targets around, for example, climate change mitigation and adaptation, natural capital enhancement, or gender equity are treated as equal in importance to metrics of GDP growth and the bank’s own financial performance.

The AIIB has put forward a good starting point for ensuring that its investments support sustainable infrastructure. But it also has an opportunity to take more pioneering approaches as it looks at what it means to help clients develop infrastructure that moves our economies and societies to a model of long-term, sustainable growth. As the AIIB moves forward, the next steps will be as important as the first in ultimately determining the nature of its contribution to development.