Civil Society Groups Bring Urgent Calls for Transparency, Accountability, and Redress for Harm Done to the
Annual Meeting of the AIIB
Sharm El Sheikh, Egypt (26 September 2023) - Members of civil society and community groups have come from across Asia and beyond to join this year’s Annual Meeting of the Asian Infrastructure Investment Bank (AIIB) at the Sharm el-Sheikh International Congress Center to call attention to the Bank’s systematic lack of proactive responses to project-level grievances as well as failure to take steps towards improving transparency or public accountability. Together, they are urging shareholder governments and Bank management to address these concerns, which are grounded in the lived experiences of those affected by the Bank’s project loans and the insights of allied social, economic, environmental and gender justice advocates.
As Hasan Mehedi, from CLEAN (Coastal Livelihood and Environmental Action Network) in Bangladesh, emphasized: "Transparent communication is the lifeblood of any institution's relationship with civil society. Unfortunately, the AIIB's absence of a Head of Communications has left a void in its day-to-day engagement with external stakeholders. We emphasize the need for robust, transparent communication channels to facilitate meaningful dialogue and address pressing concerns."
Rayyan Hassan, Executive Director of NGO Forum on ADB network, elaborated: "The expanded use of the 'Accountability Framework' (AF) is a profound concern. While the AF enables expedited project approvals, questions loom over risk assessments, transparency, and accountability. It's imperative to reintroduce clarity, transparency, and rationale into the AF's utilization, in line with AIIB's commitment to multilateralism, due diligence, and transparency."
Another critical concern civil society groups are bringing to this year’s Annual Meeting is the review of the Project-Affected People's Mechanism (PPM). As Vidya Dinker of Growthwatch asserted: "In the face of the AIIB's increasing investments in large-scale infrastructure and financial intermediary facilities, we must ensure that the review of the Project-Affected People's Mechanism (PPM) is transparent and inclusive. Civil society organizations demand a comprehensive, gender-sensitive process of assessment scrutinizing its effectiveness since inception. For the concerns of project-affected communities worldwide and their demands for effective, meaningful and safe channels for redress to be genuinely addressed, open and accessible consultation processes are essential."
Annabel Perreras of NGO Forum on ADB emphasized that: “AIIB should ensure that the upcoming review of the PPM should address the fundamental gaps in the policy. The scope on the applicability of the PPM limiting it primarily to stand alone AIIB – financed projects only and the difficulty in satisfying good faith efforts remain to be barriers in PPM’s accessibility to name a few. Communities harmed by AIIB – backed projects should ultimately have meaningful access to remedy and justice.”
Civil society organizations are also highlighting several specific projects that have received support from the AIIB where social and environmental harms remain unaddressed, requiring the urgent attention of the Bank:
Tajikistan: The proposed 3600MW Rogun Hydropower Development Project is being built on a transboundary watershed with no appropriate mechanism for responding to cross-border impacts downstream. It is also associated with a range of violations of the rights of those being dispossessed of their lands and livelihoods to make way for its construction. The AIIB has already provided an initial preparatory grant for the project and is being called upon to unequivocally refrain from committing any further financing.
Bangladesh: The Unique Meghnaghat LNG Power Plant is associated with violations of the rights of small-scale farming communities during the land acquisition process, questionable assertions of gas availability, and heavy greenhouse gas emissions. Meanwhile, communities affected by the Bhola IPP formally filed a complaint under the AIIB’s Project Affected People’s Mechanism. Although the case was initially dismissed, civil society groups continue to urge the AIIB to reassess the injustices done and complaint filed and proceed with ensuring justice due to the affected communities. In addition, an AIIB/World Bank co-financed Rural Water, Sanitation and Hygiene Project is expected to reduce accessibility and affordability of water for communities that are already struggling to meet their daily needs, increase household indebtedness as well as exacerbate desertification due to the level of groundwater extraction required.
Cambodia: Financing for Cambodia's Microfinance Institutions (MFIs) and Micro, Small and Medium Enterprises (MSME) loan market was approved by the AIIB Board despite serious concerns about the complicity in human rights violations connected to widespread and systematic predatory lending and abusive collection practices. Accordingly, civil society groups have been calling on the AIIB to be prepared to respond if/when grievances arise and to commit to no further approval of any additional financing flows to Cambodia’s MFIs and MSME loan market.
India: The Bangalore Metro Rail Project has led to the demolition of a hearing-impaired training center. Affected students and their families continue to seek redress. It remains an open question whether AIIB is prepared to take due responsibility.
As Sarita Kumari, one of the mothers of the students formerly attending the training centre that was demolished to make way for the Bangalore Metro Rail Project, passionately stated: “In the heart of every development decision lies the fate of countless communities. It is the moral duty of AIIB to ensure their voices are heard, their concerns addressed, and their well-being prioritized.”
Concerns regarding AIIB's increasing use of financial intermediary modalities and opaque capital market financing have also prompted calls from civil society groups for enhanced transparency, portfolio disclosure, along with comprehensive, applicable and effective grievance redress mechanisms.
Kate Geary from Recourse said: “This year, fully a third of AIIB’s investments have been through financial intermediaries, like private equity funds and banks. This ‘hands-off’ form of lending brings with it high risks, and is more difficult to find where the money ends up. Simply put, if people don’t know the AIIB is investing in a project harming them, how can they access redress?”
As the AIIB announced its first Climate Action Plan in Sharm el Sheikh, civil society groups took this opportunity to raise concerns about the lack of any indication as to when it will be formally opened up for revision and public review, while specifically expressing alarm at its focus on commodification of the commons (for example, turning forests into carbon markets), leveraging support for de-risking private financing (meaning the risks will be borne by the public), and on techno-fixes, rather than pursuing clear, evidence based pathways for rapid, direct, managed and equitable just transitions.
To be fit for the purpose of providing support for infrastructure that would avert overshooting heating thresholds of 1.5C, civil society groups reiterated that a credible action plan would be one which would require AIIB to ensure its direct and indirect financing is targeted towards enabling – not detailing – an urgent, managed phasing out of dependency on fossil fuels in regional and non-regional member countries, while staying away from promoting false solutions that would exacerbate environmental and social harms or sovereign indebtedness. Dwi Sawung, from the Indonesian Forum for Environment (WALHI), explained: "While we appreciate AIIB's Climate Action Plan, it must evolve into an unwavering commitment to safeguard our planetary commons. We demand tangible actions by the AIIB to urgently and rapidly phase out fossil fuels from its portfolio, and avoid resorting to false solutions, including any further support for the damming of rivers or incinerating waste in the name of energy transition."
Civil society and community groups from countries across AIIB’s membership from member countries will be closely monitoring and evaluating the response of the Bank’s management and shareholder governments to the policy and project-related concerns and questions raised.