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Concerns relating to the AIIB standalone Beijing Air Quality Improvement Project

Green Watershed, China CEE Bankwatch, Europe and Eurasia

NGO Forum on ADB, Philippines

Currently, over 70% of the projects funded by the AIIB have been co-financed with other international financial institutions. In keeping with the ‘lean’ ambition and a relatively small number of staff, the AIIB relies heavily on safeguards and monitoring of other co-financiers. Beijing Air Quality Improvement Project is the Bank’s first standalone project in China. The AIIB acquired Board’s consent for the project on December 8, 2017, and claimed that upon project implementation, both rural and urban Beijing’s most vulnerable would experience improved ambient air quality and health as a result.

While the AIIB formalized the Environmental and Social Framework (ESF) during its early operation back in February 2016, the Bank has to this date approved and financed category A and B projects with very sporadic information disclosure – both proactive and by request – and accountability (the so-called ‘People-affected Processing Mechanism’) practices.

Both the proposed and interim public policy on information indicates a principle-based approach, which is at odds with AIIB’s ESF that specifically - with respect to information disclosure - requires a range of documents relevant to the environmental and social risks and impacts of AIIB-assisted projects to be disclosed by the client and the Bank. The documentation includes:

  • Draft environmental and social assessment reports, Environmental and Social Management Plans (ESMPs), Environmental and Social Management Plan Frameworks (ESMPFs), Resettlement Plans, Resettlement Planning and Frameworks (IPPF), or other approved forms of documentation;Frameworks (RPFs), Indigenous Peoples Plans and Indigenous Peoples Plans

  • Final or updated environmental and social assessment reports, ESMPs, ESMFs resettlement plans, RPFs, Indigenous Peoples plans and IPPFs, or other approved forms of documentation; and;

  • ESMPS, resettlement plans, Indigenous Peoples plans and monitoring reports required to be prepared by Clients during Project implementation under ESMPFs, RPFs, IPPFs, or other approved forms of documentation.’’

Lack of meaningful information disclosure

While the Environmental and Social Management Plan of the Project (ESMP) is available on the websites of the Bank2 and of Beijing Gas3, the information related to 1) the convening of an assembly for villagers in an unspecified location on the coal-to-gas construction work, 2) the promotion of gas safety, and 3) the promotion of a ‘gas safe’ community in an unspecified auditorium. In not disclosing the details of public consultations, the listed activities bear more characteristics with public awareness raising and on risk contingency plan, which raises questions about the quality of information disclosure, including whether project-affected members of the unnamed villagers have had their say.

Furthermore, the Bank and the Client have failed to disclose Environmental and Social Assessments, reports of public consultations, and project monitoring reports. Both the Bank and the Client have not disclosed a list and the location of the 510 villages affected by the ESMP-Beijing Project; the ESMP in fact also omits disclosing a map of households and roads affected by the construction, as well as the project’s associated facilities.

Meaningful public consultations? The AIIB’s ESF and Environmental and Social Policy have very particular language about the importance of Stakeholder Engagement, and on providing a mechanism for public consultation and disclosure of information on environmental and social risks and impacts of projects AIIB finances. Instead of meeting international best practices, the Project’s ESMP lists pictures taken from at 5 villages and some other unspecified locations were noted as evidence of public consultations with an affected villager. Upon closer examination, picture 6.3 is, in fact, the minutes from an unnamed village committee meeting dated August 5, 2016, with a summary of the financial expenditure budget for the 3rd and 4th quarters of (2016), Pictures 6.4 to 6.6 relate to gas safety promotion activities. In comparison, for a gas project in the same sector in China, the World Bank discloses the EIA which contains a ‘Schematic Diagram’ (map) of the design and impacts, along with detailed geographical location and noise and construction monitoring points.

The ‘Information Disclosure Measures’ publicized by the Client in the ESMP5 refers exclusively to the information relating to the safety of using gas, along with safety measures, and not on how Project-affected peoples can further obtain information that relates to the design, construction, and operation of the Project.

The bottom line is, there has been no proactive disclosure on where and when the public consultations were held, and the number of project-affected communities took part in them. In the absence of disclosure of where the affected 510 villages are located, and the failure of the Bank and the Client in disclosing consultation transcripts along with a summary of main concerns raised by the Project-affected people, it is thus not possible to determine meaningful public consultations were carried out prior to the Board of Directors approving the project.

Limiting grievances by PAPs to the Client’s Grievance Redress Mechanism (GRM) In the Project Summary Information (PSI), the Bank contends that the Client’s GRM is sufficient for responding to ‘any grievances that are raised in relation to the Project,’ and that there will be a GRM handling and reporting system to ensure transparency of all complaints processed. The AIIB and the Client, however, have not disclosed information on how the GRM can be accessed by the people.

In the meanwhile, the complaints handling mechanism of the AIIB is still under negotiation, nascent in its first months of development. This means it would not be possible for project affected people to address their grievances with the Bank directly.

Lack of meaningful response by AIIB to civil society’s information request Green Watershed applied for the information of the project since the ESMP omits the key pieces of information relating to the areas of impact, consultations and other key pieces of information pertinent to the Project. See below the request:

Bank’s response as follows:

Conclusion: Kicking the can of responsibility when it comes to information disclosure practices

The reply from Bank is unduly vague and does not answer the questions raised in the request. It demonstrates in our view the failure of the Bank in carrying out due diligence as per ESF and the Public Information Requests Processing Directive,6 which stipulates in instances where requested information should not be disclosed, the response by the Bank should be accompanied by a written explanation, together with information on the right to submit an appeal to the Vice President, Corporate Secretary.

In the response to the information request filed by Green Watershed, the Bank merely refers to ‘the standards and approaches used in ESMP are deemed to be appropriate and in line with international standards and practices of multilateral development banks.’ And for standards and approaches of ‘similar projects,’ wrote the Bank, ‘please refer to the IFC’s and ADB’s (private sector operation) websites.’ As the Beijing Air Quality Improvement Project is a standalone project by the AIIB, it hardly makes any sense to contact the IFC and ADB, which according to the Project PSI were and are still not financiers to the Project.

In ensuring the Bank complies with its own ESF and policies, it shall at a minimum screen the extent and quality of information provided by its Client during a project appraisal due diligence screening phase, before the Project goes to the Board for approval. Failure in committing to disclosing important environmental and social information puts the Bank’s competency in question, and its reputation at risk, especially if the official response to a request avoids answering the necessary questions while bouncing the can of responsibility to its Client, over which the Bank should have maintained supervision and other banks that are not involved in the Project.

Further, the official response from the Bank points to gaps of due diligence practices that, if not corrected, are in fact non-compliances with the ESF. The current information disclosure and consultation are quite insufficient, and the project-level Grievance Mechanism is also not established yet.



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