PREAMBLE
The Forum network thinks that this newly approved AIIB ESF, in general, has some improvements from the draft released in September 2020 but still has limitations in prioritizing real protections for project-affected communities, whose rights should be at the center of project design, operation, and implementation. The network calls out the material weaknesses in provisions of this ESF and urges the bank to exercise due diligence on community and environmental protection in its implementation of this framework. The Forum will highlight some of the problematic sections in the critique below to help guide AIIB towards a more responsible and binding ESF that holds clients accountable to both environment and communities.
CRITICAL ANALYSIS OF THE NEWLY APPROVED AIIB ESF
COMMENTS ON THE INTRODUCTION
According to a database published and maintained by German civil society organization, Urgewald, the AIIB has failed to meet its own ESF standards in its first five years of operation. The new ESF must uphold the highest level of protection for the environment and communities as its core objective. [1] To provide the highest protection for communities, the international human rights framework must be adopted by the AIIB as an overarching framework for the ESF and its implementation should be reconciled with international norms and best practices. AIIB needs to respect human rights and operationalize the international obligations of its member states to protect human rights. AIIB should also adopt a zero-no tolerance policy for threats and retaliation against affected communities, persons, and human rights defenders.
On ESF review and update, section 7.0 the AIIB indicates that ‘updates may be introduced to the framework’. How this update process will be undertaken is not articulated further in Section 7.0 and implies a ‘closed-door’ management-led process. This is problematic as issues such as client compliance measures, information disclosure timelines, categorization, and ESEL lists have tremendous significance on people's lives and environments. Updates without a full public consultation on proposed changes to the ESF threatens local communities directly. The AIIB continues to remain uncommitted to an inclusive and transparent review of the ESF and does not align its policy review to meaningful consultations with civil society and local communities. This is reflected in its adoption of interpretative language and terminologies which are not legally binding.
A LAGGARD VISION STATEMENT
The new AIIB ESF in the Vision section has removed the critical piece of the Project Affected Peoples Mechanism in its entirety from its Vision statement.
This lack of recognition in the Vision of the ESF undermines the role of the PPM and the critical importance of restitution from harm to communities from AIIB Operations. This is a glaring omission in the AIIB ESF Vision.
While the Bank continues to market itself as a ‘lean and green’ bank, this aspirational statement is not reflected in its Vision statement nor the ESF policy. Committing to a 2-degree margin of climate change rather than aiming to limit heating to 1.5C in line with IPCC Pathway 1 is unacceptable. The UN Secretary-General has stressed the ‘irrefutable evidence of human evidence’ and the United Nations High Commissioner for Refugees (UNHCR) released data showing that the number of people involuntarily displaced by climate change-related disasters since 2010 has risen to 21.5 million.[2] By choosing to adopt the unambitious threshold of 2 degrees Celsius, the AIIB has not shown a proactive approach or interest in safeguarding the lives and livelihood of climate-vulnerable people. This is also in contradiction with the commitment made by the AIIB along with other multilateral development banks to finance and support countries in achieving the Sustainable Development Goals by 2030. [3]
ASPIRATIONAL CLAIMS ON GENDER
The Forum is pleased to see the better language on Gender and Gender Equality, and specifically the noteworthy focus on Gender-based violence (GBV) and sexual exploitation and abuse (SEA) in Section 19. Yet, in isolation Section 19 remains an aspirational claim which is not underscored by an operational plan or a good practice note.
Gender-based violence (GBV) and sexual exploitation and abuse (SEA) continue to threaten 1 in 3 women [4]. This risk is exacerbated by the labour influx driven by the construction, maintenance, and upgrading of large infrastructure projects in transport, energy, water and sanitation, irrigation and urban infrastructure,3, etc, all of which are projects financed by the AIIB.
The AIIB lacks both a gender policy and the expertise needed to operationalize the vision statement outlined in Section 19 on gender equality. An analysis of 24 projects conducted by Gender Action on projects financed or co-financed by AIIB found that 87.5 percent of project documents have weak to moderate gender language and 75 percent of projects lack consideration and appropriate risk management on the susceptibility of women and girls to GBV in infrastructure projects.[5] This is a worrying trend, especially when the private and financial intermediary portfolio of the AIIB with its inadequate disclosure of the information is taken into account.
This form of ornamentalising[6] issues with no clear policy direction or operational manual is problematic because it leaves interpretative loopholes which are likely to be violated. While gender makes an appearance in the ESF policy 52 times, it is still not clear how the Bank intends to pay ‘special attention’ (p.17), identify ‘adverse gender-specific risk’ (p.55) and ‘manage risks of Project-related GBV’ (p.55) especially in the absence of the aforementioned and indispensable Gender Policy.
We implore The AIIB to ensure binding gender safeguards underpinned by international human rights declarations and texts including, the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), the Vienna Declaration and Programme of Action, the Programme of Action of the International Conference on Population and Development, the Beijing Declaration and Platform for Action, the Durban Declaration and Programme of Action, the Addis Ababa Financing for Development Conference.
In the absence of a Gender Policy, the AIIB should aim to develop a Good Practice Note on Addressing Gender-Based Violence in Infrastructure investment which outlines the approach and requirements for Borrowers (Country and Corporate) on identifying risks of GBV and in particular Sexual Exploitation and Abuse (SEA) and Sexual Harassment (SH). This should underscore the application of the ESF policy.
MORE CAN BE DONE ON PROTECTING AND EMPOWERING PERSONS WITH DISABILITIES (PWDS) [7]
The draft ESF must have clear and stringent safeguard provisions for PWDs against all forms of discrimination and barriers related to AIIB Operations; in accordance with the United Nations Commission on Human Rights and the United Nations Convention on the Rights of Persons with Disabilities. Further, the protection of PWDs’ access to customary rights and land ownership should be clearly stated in the document.
AIIB should also promote the employment of qualified persons with disabilities. The Bank should take affirmative action to ensure that there will be qualified persons with disabilities employed in the Operation.
WHAT OF THE INTERNATIONAL CORE LABOR STANDARDS FOR LABOR?
Section to 21 mentions the treatment of labor and articulates some key features on issues such as wage, non-discrimination, the abolition of forced and child labor. Yet the ESF does not underpin the ILO Core Labor Standards(CLS) as the highest standard for labor safeguards. Further down the document, the lack of CLS persists in the ESFand, therefore, must be included.
CRITIQUE OF THE ENVIRONMENTAL AND SOCIAL POLICY ESP
Within the context of Section 3.0 Approach for Environmental and Social Management, we note the positive inclusion of 3.10 language on the evaluation of the performance of safeguards in projects.
WEAKNESS IN THE SCOPE OF APPLICATION
Section 10.0 on co-financiers policies the ESP fails to introduce binding requirements, where AIIB must perform equivalency assessments. Consequently, the language is not clear on the implementation of the highest standards among the co-financiers. The arbitrary selection of lead financiers systems or that which is ‘materially consistent’ with ESF is still not abolished from this ESP and the overall ESF. This remains a glaring gap in the policy and will potentially threaten local communities and ecosystems on all co-financed AIIB operations.
ESF Exemptions
ON ESG APPROACHES
This ESF formalizes the derogation for capital market projects from applying the ESP under Section 12 of the ESP. Instead, these projects will adopt the ESG Frameworks of the Client. In most cases, widely-adopted ESG frameworks make no reference to information disclosure and provide limited detail on how potential portfolio investments will be assessed.
By operating outside of public oversight and scrutiny, ESG agencies have given the green light to damaging projects, according to analyses done by Inclusive Development International.[8] This level of opaqueness means that people can be negatively affected by these investments with no ability to raise grievances or know where the financing is coming from.
The ESF also states explicitly that the Project Affected Peoples Mechanism will not apply to AIIB capital market investments. The ESG Frameworks adopted by existing projects contain no grievance mechanism, leaving affected people with no path to recourse if they are negatively impacted.
ON RESULT-BASED FINANCING (RBF) AND CO-FINANCING
The same exemptions apply to Result Based Financing (RBF) which introduces the option for the Bank to “adopt its own self-contained policy framework to govern these operations” (Section 31). The apparent loophole in the ESF was not elaborated on or further defined beyond section 31. Questions remain on what ‘self-contained policy’ means for RBF and what it entails in terms of mitigating and preventing harm to communities and the environment. Further inclusions of policies about RBF should have been clearly included in the ESFP with adequate public consultation measures for feedback and review.
SECTION IV. ROLES AND RESPONSIBILITIES
Section 15.1 (d) discloses environmental and social documentation for the Project in a timely manner. Forum is deeply concerned about the vague use of interpretative terminologies such as ‘timely’ on disclosure of project information, especially environmental and social documentation as this leaves room for contravention and systematic failures. Instead, the Forum recommends the use of a strong time-bound manner substantiated by a number of days, for example, 30 days before project commencement.
In its project monitoring, the Forum noted that the environmental and social documentation were not released and publicized for Bhola IPP and Beijing Gas before project construction leading to direct harm to communities and the environment. At present, these are the two of the only standalone projects financed by AIIB which if continued posits further degradation to human rights and the environment experienced by communities. On the issue of non-compliance, we suggest the use of the word ‘will’ instead of ‘may’ in the language- ‘the Bank will exercise its available contractual remedies under the Legal Agreements governing the Project.’ Unfortunately, this has not been taken on board in this ESP, and the gap remains.
SECTION V. ENVIRONMENTAL AND SOCIAL SCREENING, CATEGORIZATION AND DUE DILIGENCE BY THE BANK
Section 17.2 articulates that ‘As an element of the categorization process, the Bank may conduct a field-based review of the Project to provide….”. In the ESF, this is one of the first mentions of field-based reviews, and the language allows flexibility on doing field-based reviews as part of categorization using the word ‘may’. There is no substitute for field-based reviews in assessing environmental and social risk as project sites are mostly in remote areas and directly affect communities and ecological systems. We strongly urge replacing the word ‘may’ with ‘must’ when it comes to the Bank conducting field-based reviews as part of its environmental and social due diligence. Unfortunately, the recommendation was not taken on board, and therefore there is no binding requirement for AIIB to do field-based reviews on ESP issues.
CATEGORY A
For Cat A in Section 18.1 (b), the requirements articulated are ESIA, ESMP, and ESMPF. We demanded the caveat ‘or other similar Bank-approved documentation’ must be removed from the draft ESF as replacing a comprehensive ESMPF with arbitrarily Bank-endorsed documentation undermines the severity of Cat A risk. This recommendation has NOT been taken into Cat A language in this ESF.
This is a clear dilution to Cat A risk assessments and binding requirements. In the same Section, we had recommended that the bank must introduce language that explicitly ensures that affected communities will be restored to pre-project levels if not better as per ESIA and ESP application. Furthermore, we recommended that CAT A must remove the provision of ‘offsets’ when it comes to projects with high risk. Neither of the critical recommendations from civil society for CAT A was adopted in this new ESP.
CATEGORY B
Section 18.2 point (b) allows loose interpretation of risk through the language ‘The Bank may determine that an environmental and social assessment or another similar instrument is appropriate for the project’. We urged that this sentence be removed from this section entirely. For Category B projects a strict procedural Initial Environmental Examination IEE must be made mandatory to assess the environmental and social risk. On many occasions, Cat B does not anticipate seasonal variations in local livelihoods, migratory shifts in flora and fauna which lead to unanticipated harms due to lack of proper environmental and social assessment. To be proactive in safeguarding all projects deemed Category B, the Bank must mandate IEEs without exception (NOT cases by case basis). The Bank must also ensure that seasonal and environmental variations that affect communities and the environment are factored into the IEE methodology. Furthermore, CAT B must remove the provision of ‘offsets’ when it comes to projects with medium risk. All mitigation and preventive measures must be ensured at the project site.
The above recommendations from NGO Forum on ADB for CAT B had NOT been incorporated into this new ESP.
CATEGORY FI
We recommended that all Category FI projects identified in section 18.4 must ensure that the FIs identified have ESMS which are assessed in equivalency to the ESP. Furthermore, the ESF must include language which identifies high-risk CAT A sub-projects amalgamated under the CAT FIs and ensure the risk assessment follows Cat A risk assessments and policies as recommended above. This recommendation was also NOT taken into this policy.
It needs to be noted that in the Draft ESF Section 5.10.1 the Bank allowed too much flexibility to FI clients by allowing future lending approval based on FI ESMS track record. This section 5.10.1 was a dangerous loophole in the draft ESF which allowed FIs to do future subprojects anywhere in the world without any form of environmental and social assessments on environmental and social impacts. The NGO Forum on ADB recognizes this problematic provision has been rightfully removed from the approved AIIB ESF.
ON REVIEW OF INFORMATION
The Forum strongly suggests that the Bank has to assess all risk assessment documentation as per the given category of a project-
CAT A: ESIA, ESMP, ESMPF, LARP, LARPF, IPP, IPPF
CATB: IEE, lARP, LARPF, IPP, IPPF
CAT FI: ESMS equivalency assessment to ESP, Subproject CAT A: ESIA, ESMP, ESMPF, LARP, LARPF
We recommended –
“The NGO Forum on ADB urges AIIB to pay heed to the above assessments per category and urges the bank to leave no room for exceptions. The Bank must be diligent in assessing all risk related information regardless of category status before project approval to ensure that communities and environment are ensured safeguarding from any AIIB investment. The due diligence of risk assessment should also go through multiple checks by key AIIB officials at different levels of AIIB management safeguard machinery to ensure that risks have been assessed in compliance with the ESP and the highest standards of safeguards are met.”
Some recognition of the above recommendations have been reflected in sections 24.2- 24.4 yet we have to see how this is implemented on a project-by-project basis. The Forum also recognizes the improvement in information requirements on Clients by AIIB in sections 25.1 and 25.2.
MANAGEMENT ENGAGEMENT ON CONCERNS RAISED
The new AIIB ESF provides little guidance to Management on how to meaningfully engage with project-affected people who have raised concerns. Project-affected people will be reluctant to raise concerns with Management unless they trust in the safety of the process and believe there will be a meaningful response. The ESF should provide a process for responding to concerns in a safe and meaningful way. At a minimum, the ESF should have established a timeline for Management’s response, to ensure predictability for project-affected people. It should also have provided for disclosure of concerns raised while respecting any confidentiality sought by project-affected people, and actions taken by Management in response.
SECTION VI ENVIRONMENTAL AND SOCIAL ASSESSMENT BY THE CLIENT
Section 28 still allows the flexibility for Clients to avoid or bypass integrated environmental and social assessment. Once again we see the AIIB ESF favoring the Client and putting more risk on the environment and the communities.
This section should have held the highest standard for Clients (both public and private) in ensuring integrated environmental and social risk assessments without any form of exception.
It's important to note the Client delivers the ESP on the ground, therefore the integration of risk assessments must be done by the client, not the bank. The NGO Forum on ADB recognizes that AIIB has NOT retained our previous submission on binding integrated environmental and social assessment.
SECTION 29.1 TO 29.3 SHOULD ALSO STRICTLY APPLY TO CATEGORY B PROJECTS
We strongly urge that Section 29.1 to 29.3 applied to Cat FI subprojects in implementation For all Category A, B, and FI subprojects the Bank and Client must ensure that Land Acquisition and Resettlement Plans (LARP) and Land Acquisition Resettlement Frameworks as well as Indigenous Peoples Plans (IPP) are shared with the communities for public comment with adequate time before project approval. The LARP, LARPF, and IPP, IPPFs should also be translated into local languages and explained to local communities through meaningful consultations using culturally and socially appropriate methods to ensure that risks and plans have been clearly understood.
In application of the articles 29.1-29.3 the AIIB must ensure there are no exceptions to the ESP application on Associated Facilities. The Forum recognizes the provisions on Associated Facilities from section 34.1 -34.2 a) and b) as welcome additions and hopes that policy implementation will ensure the strictest compliance to the AIIB ESF and ESP by clients on this.
The Forum also recognizes and commends the addition of Section 32 and all articles in the subsection ‘Addressing Land Acquisition and Involuntary Resettlement. In practice, AIIB Operations in the Bhola IPP project had demonstrated the problems which came up in land titling, and land acquisition. The Forum and its members had raised the issues from local landowners in Bhola to the AIIB multiple times, but due to the omission of this issue in the old AIIB ESF, the concerns on the ground remain unmitigated and partially addressed. The inclusion of these standards in the new ESF should therefore be ensured in policy implementation.
ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN
NGO Forum on ADB is gravely concerned with Section 39.0 as it still allows Clients with poor to zero ESMS to gain AIIB finance to do risky projects that directly threaten people and the environment. Under no circumstances should a Client be qualifying for AIIB funding without having an ESMS in equivalency to the ESP standards. The Forum’s had recommended immediate removal of this provision and urged the bank to ensure that until Clients have achieved equivalency to ESP they should not qualify to apply for AIIB loans to do projects. This recommendation was NOT taken into policy by AIIB in this new ESF.
SECTION 7 INFORMATION DISCLOSURE
The Forum recognizes the explicit mention of 60 days CAT A and 30 days CAT B release of project info as essential time frames for the public release of documents, such as environmental and social impact assessments. While the number of days has been explicitly set, it is still not adequate as project information, ESIA documentation needs to be translated in a language that is easily understood by local communities. We as NGO Forum on ADB do not consider this to be a meaningfully adequate time for local communities to assess and comprehend the risk for both CAT A and CAT B scale projects.
Instead, the ESF further allows exceptions in article 66.0 for Clients to defer the release of critical project information further jeopardizing local communities to face environmental and social impacts. The AIIB ESF framework remains strikingly weak in addressing the lack of information disclosure within the growing trend of channeling investments through financial intermediaries such as commercial banks and private-equity funds. Even when these entities finance high-risk activities with AIIB support, they are not required to publish specific information regarding environmental and social impact. To prevent and alleviate harm, the AIIB should have ensured full disclosure of environmental and social impact assessments, including plans for land acquisition and resettlement, before project approval, when there is still a chance to influence the outcome. But the ESF demonstrates the bank’s intention to delegate the responsibility for accountability to its future clients. The broader risk is that the bank’s approach encourages weaker environmental and social standards across the board as international financial institutions compete for investment opportunities.
The AIIB current ESF has some improvement on meaningful consultation with stakeholders in section 68.0 – 68.4 we hope these provisions will be duly implemented in order to explain project risks in a meaningful manner to local communities using appropriate cultural and language tools.
RETALIATION
AIIB’s acknowledgment of retaliation as a major concern is welcome but not enough to address this serious problem against affected communities. AIIB needs to take direct responsibility undertaking robust and comprehensive human rights due diligence to avoid adverse impacts, screening projects for reprisal risk prior to approval, developing protocols, contractual requirements, and other necessary leverage to identify, prevent, and mitigate risks for defenders, and conditioning investment decisions and disbursements on the ability to prevent abuses, ensure an enabling environment for defenders, and adequately address human rights impacts.
The Bank, not the clients, should be mainly responsible for developing measures against retaliation including mitigation measures that include proactive engagement with communities to be affected by the project, proactive monitoring of the situation, and speaking out if and when retaliation against affected communities/persons/human rights defenders happen.
PROJECT LEVEL GRIEVANCE REDRESS MECHANISM
While the ESF provides guidance on GRM functionality, there is little indication of how information on concerns and overall GRM effectiveness is reported to the AIIB. This has led to a lack of information about GRMs generally and only anecdotal evidence of GRM functionality, some of it worrisome. The ESF should prescribe a systematic process for relaying GRM information from the project level to the AIIB and detail how the AIIB will correct issues where individual GRMs are shown to be ineffectual [9]. Civil society project site observations reveal that GRMs are not clearly visible. In cases of their use, the risk of retaliation from local authorities and project developers acts as a barrier to the issue of access. There is an oversight mechanism from AIIB which allows GRMs to mitigate retaliation risk. Consequently, project impact communities are not aware that the AIIB Accountability Mechanism/PPM is a viable option for addressing grievance issues in cases of GRMs not functioning.
DISCLOSURE
We commend the inclusion of language instructing clients to provide project-affected people with information about the PPM, in addition to the project’s GRM. By utilizing clients' logistical advantages for stakeholder engagement, the ESF will enhance awareness of the full accountability framework for AIIB-supported projects. This will increase access for project-affected people, ultimately bolstering accountability and fostering continuous institutional improvement.
ESS1 – GHG, CLIMATE, & BIODIVERSITY
AIIB continues to market itself as a ‘green and lean’ bank and yet the ESF review process failed at clarifying AIIB’s commitment to address the climate emergency and spearhead carbon-neutral development. While there is some positive language on climate change, it is disappointing to see the quantification of greenhouse gas emissions rendered as an optional stipulation left to the Client’s discretion. Additionally, Clause 42.2 outlines that “If the Bank determines that the Project is expected to produce or currently produces significant (emphasis added) levels of GHG emissions..” There is no clear, set target or threshold as to what constitutes as significant. This decision to use weak and noncommittal language is concerning and an indication of greenwashing rather than a commitment to climate change mitigation and adaptation as outlined by the Bank.
Additionally, the language used on climate change throughout the policy is indicative of an approach that seeks to evaluate and mitigate climate change-related risks TO the project rather than how projects can aggravate and perpetuate climate change-related risks. The AIIB should go beyond just financing projects which are more adaptable to climate-related disasters and instead should take a proactive role in NOT financing projects which will contribute to severe environmental and climate-related impact. This will send a clear signal in the international fora that AIIB is truly a ‘green and lean’ bank.
ON BIODIVERSITY CONSIDERATION
We urged AIIB to consider direct and indirect, aggregated and cumulative Project-related impacts on biodiversity, ecosystems, and landscape, for example, habitat loss, degradation and fragmentation, invasive species, overexploitation, hydrological changes, nutrient loading, pollution, and incidental take, as well as projected climate change impacts. Consider the incremental impact of the action, when added to other past, present, and future actions. Any attention to project-specific impact should be immediately contextualized in terms of other anthropogenic stresses on the chosen valued ecosystem components. Focus on valued ecosystem components (VECs) that are likely to be subject to cumulative impacts against a threshold level of acceptable condition, if known, or in reference to a past baseline. Also, take into account the different values attached to biodiversity by affected communities and other relevant stakeholders.
ON BIODIVERSITY IMPACTS
Avoid adverse Project impacts on biodiversity. When avoidance of adverse impacts is not feasible, implement measures to minimize adverse impacts and restore biodiversity, including, as a last resort, biodiversity offsets. Offsets for adverse impacts in critical habitats only when the parameters for which the area is classified as critical are not involved. We recommend the use of suitably qualified and experienced biodiversity specialists to conduct the environmental and social assessment, to assist in the development of a mitigation hierarchy and to verify the implementation of mitigation measures. Address biodiversity as an element of the ESMP or ESMPF (or both, as applicable). In the case of complex situations, to prepare as appropriate, a biodiversity management plan and/or landscape analysis, which may be included in the ESMP or ESMPF or be self-standing. If the Project is located within a legally protected area, we urge AIIB to implement additional programs to promote and enhance the conservation objectives of the protected area. Take all measures required so that the Project also complies with any applicable national laws and regulations.
ON NATURAL HABITATS
If the project must be implemented in an area of natural habitats, refrain from any activity that would result in significant conversion or degradation; and if feasible alternatives are not available, take all measures required so that: (a) the Project’s overall benefits substantially outweigh the environmental costs, and (b) any conversion or degradation is appropriately mitigated through measures acceptable to the Bank. Apply these criteria when proposed actions under the Project could potentially cause deforestation or conversion of naturally regenerating forests.
ON PROTECTED AREAS
Where the Project occurs within or has the potential to adversely affect an area that is legally protected or internationally recognized or designated for protection, identify and assess these potentially adverse impacts and apply the mitigation hierarchy so as to avoid, or when avoidance is not feasible, to mitigate those adverse impacts that would compromise the integrity, conservation objectives or biodiversity importance of the area. Take all measures required so that the Project also complies with any applicable national laws and regulations relating to protected areas. On Regional and local spillover impacts of Operations nearby critical habitat and protected areas demand protected buffer zones, to minimize the impact of economic activity[10].
ESS3 – INDIGENOUS PEOPLES AND FREE PRIOR INFORMED CONSENT (FPIC) [11]
We are deeply concerned that the ESF continues to require merely Free, Prior and Informed Consultation (FPICon) with the affected Indigenous Peoples against the international human rights standards of Indigenous Peoples requiring to obtain their Free, Prior and Informed Consent (FPIC) as embodied and agreed by nations in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). Furthermore, the FPICon is narrowly defined and invalidates collective consensus and unanimous FPIC by hinting towards disagreements within the Indigenous communities to still validate individual FPICs to represent the consent of the community. This is a clear manipulation of the usage of FPIC into FPICon and needs to be redrafted. Requirement of FPICon and FPIC only if the laws of the country where the Project is located is also inconsistent with the policies of other international financial institutions.
FPIC is the only available self-determined tool for IPs that allows them to protect their land and resources from MDBs and other private and government operations, which do not fulfill their own development pathways. FPIC is a self-driven process that does not need the approval of the Client or any other body. It is vitally important to ensure a robust and direct consultation with Indigenous Peoples representatives on the design of ESF safeguards for Indigenous Peoples. The AIIB must adopt the FPIC definition as per the UNDRIP with no exceptions. There is a token mention of FPIC in the AIIB new ESF but it is NOT a binding requirement.
The inclusion of a requirement for obtaining the FPIC is fundamentally important as it achieves the objective of ensuring that Indigenous Peoples can exercise their right to self-determination and are full partners in the development process. However, there is a need to ensure that the provisions for FPIC are consistent with the principle in the UNDRIP. It should be clear that the right to FPIC gives the affected community the right to give or withhold their consent to any program and project to be implemented in their territories. The process of decision-making and agreements reached with Indigenous Peoples based on their FPIC must be described and verified by the AIIB together with the Indigenous Peoples and independent experts. Further, any conditions made by Indigenous Peoples as part of their FPIC shall be clearly stated in the terms of the agreement, including time-bound actions and clear budget allocations necessary to ensure that agreements are met.
Disclosure of information must be required to be in a language and inappropriate forms understood by the affected Indigenous Peoples. The involvement of Indigenous Peoples’ representative bodies and organizations must specifically include women, youth, and other community members in addition to councils of elders, village councils, or chieftains.
Respect for the decision-making processes of Indigenous Peoples should be mandatory (and not where applicable) and must ensure respect for the independent and collective decision-making processes free from intimidation, manipulation, and any form of undue pressure.
Further, with regards to the requirement of unanimity or disagreement within or among Indigenous Peoples affected for FPIC, the draft ESF should be revised as Customary decision-making processes of Indigenous Peoples respect and recognize the collective decision of the community resulting in an independent decision free from coercion or manipulation. Conflicting views shall be resolved by community members and the AIIB and the Client shall adhere to the final outcome of the decision-making process taking into account the legitimate views and issues raised by community members as bases for their decision.
Finally, if AIIB is unable to ascertain that FPIC is obtained in conjunction with the concerned and affected Indigenous Peoples, it should require the Client not to proceed further with the aspects of the Operation that are relevant to those Indigenous Peoples, or the entire operation and not merely require that the Client ensures the Operation will not have adverse impacts on such Indigenous Peoples.
PROJECT AFFECTED GRIEVANCE & PEOPLE MECHANISMS
Access to a fair and impartial grievance redress mechanism (GRM) is of utmost importance in ensuring the appropriate checks and balances are in place and providing access to remedy to the most vulnerable. This draft of the ESF outlines enhanced access to GRM in Sections 71- 73. The policy even goes beyond in including provisions on protecting “complainants from retaliation” (Section 71.2.d.i) These are welcome additions to the policy.
Nonetheless, the reliance on the co-financer’s Independent Accountability Mechanism (IAMs) excludes an entire class of complaints. The ability to choose which mechanism is most appropriate should be left to the complaint to determine on the basis of their case. As is the case with other international financial institutions (IFIs), when complaints are filed in more than one mechanism, IAMs coordinate to assess the cases and drive them towards a mutually agreed positive outcome, as well as establish institutional learning and accountability. Accountability should follow the investment trail. AIIB capital has been disbursed to finance large infrastructure projects with detrimental effects on people and the environment, and yet not once has it been held accountable for the project outcome. Hiding behind this veil of inaccessibility is truly a missed opportunity for the AIIB to enhance its institutional memory and learning process.
There is also a lack of clear standards regarding the design of a GRM. Statements such as: “The GRM is scaled to the risks and impacts of the Project” ( Section 71.2), “may utilize existing formal or informal complaint-handling mechanisms” (Section 71.2), “and deemed by the Bank to be suitable for the Project” (Section 71.2). It is not clear whether the Bank intends for the GRM to supersede access to the PPM or rather to completely incapacitate affected people from accessing the PPM.
ESEL EXCLUSION LIST
The AIIB should explicitly exclude all projects that are misaligned with the Paris Agreement’s 1.5C goal to limit global warming, and add these to the Environmental and Social Exclusion List (ESEL, p73). This should include coal, as well as oil and gas – upstream and downstream. Most MDBs include specific exclusions of fossil fuels in their policies, including in the ESF. For example, the European Investment Bank (EIB) has announced that it will no longer support fossil fuel energy from the end of 2021, and other MDBs such as the Inter-American Development Bank (IDB), have included specific exclusions on thermal coal mining or coal-fired power generation, and upstream oil and gas exploration development projects.
AIIB management has argued that such issues should be dealt with in the Energy Sector Strategy, but this is not sufficient: other sectors are highly relevant to climate change and so should be addressed in the overarching ESF. In addition, associated facilities and fossil fuels for industrial use should be excluded, such as coal for cement production. Other environmentally damaging projects, such as greenfield large-scale hydropower plants should also be excluded[12].
NO TO NUCLEAR
The AIIB Exclusion List fails to have clear and unambiguous prohibitions on support for nuclear-related facilities. In fact, in its current Energy Sector Strategy, the provision on nuclear power generation includes the following caveat, “Should demand to arise for very special cases of support for safety improvement, the Bank could possibly consider engagement” (para 39). Financing for any nuclear facilities should be unequivocally placed on the Bank’s exclusion list.
Meanwhile, the ADB states clearly, “The following do not qualify for Asian Development Bank financing...” Whereas the International Finance Corporation (IFC) states clearly that, “The IFC Exclusion List defines the types of projects that IFC does not finance. IFC does not finance the following projects...” On the other hand, the World Bank has “excluded expenditures” and prohibitions.
In the case of AIIB, it states: “AIIB does not knowingly finance Operations involving the following:” In sharp contrast to the other MDBs, the AIIB list makes no prohibition on support for:
“production of or trade in radioactive materials, including nuclear reactors and components thereof;”
“production or activities involving harmful or exploitative forms of forced labor or child labor” (This is notwithstanding the discussion of prohibition of certain types of labor in the body of the AIIB safeguards but not in the exclusion list.)
In addition, IFC also prohibits support for Financial Intermediaries engaged in “production or trade-in wood or other forestry products other than from sustainably managed forests” while the AIIB does not. IFC also prohibits (apparently only for microfinance projects) “production or activities that impinge on the lands owned, or claimed under adjudication, by Indigenous Peoples, without full documented consent of such peoples.”
NO TO COAL
The current AIIB exclusion list does not prohibit the development or use of coal-based energy[13], despite the fact that President Jin Liqun has already made public commitments to rule out coal going forward beyond 2021. Consistent with the most recent climate science outlined in the latest Intergovernmental Panel on Climate Change Assessment Report (AR 6), published in August 2021, the IEA’s Net Zero by 2050 Roadmap for the Global Energy Sector (May 2021), as well as current coal financing restrictions established by other multilateral development banks and member country governments, including most recently China[14], the AIIB’s Environmental and Social Framework must explicitly elaborate exclusions for finances implicated in the upgrading, retrofitting or expanding of facilities that rely on coal (including co-fired plants and captive coal power for industrial processes), ensuring no projects receive financing unless they meet a GHG emissions performance standard (EPS) set according to accepted international standards that by default excludes coal financing. As coal project developments are also facilitated by the expansion of associated infrastructure upon which a coal plant depends, including ports, rail links, and transmission and distribution networks, the AIIB must clearly and unequivocally avoid financing associated facilities that may end up supporting any aspects of coal-related value chains.
NO TO FINANCING PROJECTS IN CONFLICT ZONES [15]
Similarly, financing projects in conflict zones must be included in the AIIB Exclusion List. As it is evident, there is hardly an established rule of law in conflict areas. Thus, investments on procurement, personnel, natural resources, land, labor or infrastructure may all lead to further divisions between the various factions and exacerbate the imbalances in the power dynamics of the proposed project area. Any provision for human rights, environmental standards, labor standards, public participation would hardly bear relevance or traction within the conflict zone context. Since establishing peace and democracy becomes the highest priority; we urge AIIB to set a precedent through absolute disinvestments in conflict zones thereby setting an example for responsible development financing.
BAN ASBESTOS
AIIB, which purports itself as a clean, green, and post-Paris Bank, should ban deadly asbestos in all its projects and should no longer hide behind other MDBs in the name of co-financing and alignment[16].
ADDITIONAL CONCERNS OVER DIGITAL INFRASTRUCTURE ON LABOR, CLIMATE AND PRIVACY
Regional cooperation, digital Infrastructure, and transboundary projects were key themes being pushed during the AIIB 5th Annual Meeting yet there was no mention of it in the proposed ESF. On the digital infrastructure front, themes discussed included – artificial intelligence (AI), internet of things (IoT), transport, and automation not so much on their impact on the environment, employment, and energy demand. It is being feared that automation in storage and transport will have a direct impact on the unemployment of large masses of human labor, which requires further research and thorough social risk assessment by AIIB.
Consequently, the digital infrastructure projects, such as mobile towers, server warehouses, and automated service points, will all need to be powered and maintained from an energy point of view. The issue of energy systems powering digital technology and infrastructure has to be done in line with the Paris Agreement of 1.5 and therefore requires a much deeper questioning. There is a high probability that without the right energy framework, the digital future strategy may further embed existing fossil fuel pathways. Digital technology issues also have a direct impact on privacy and security. With rising authoritarianism, the use of digital surveillance through digital technology will have a direct impact on democratic freedoms. We are deeply concerned that without ensuring privacy and protection of constitutional freedoms, digital technology will have a detrimental role in increasing further censorship of the press, suppression of critical voices who are seeking to uphold accountability and transparency.
Endorsed by the following organizations –
ARTICLE 19, UK
Asian Peoples' Movement on Debt and Development (APMDD), Regional
Asociación Ambiente y Sociedad (Environment and Society Association) – AAS (Colombia)
Bangladesh NGOs Network for Radio and Communication, Bangladesh
Center for Environmental Justice, Sri Lanka
Centre for Human Rights and Development, Mongolia
Center for International Environmental Law (CIEL)
CLEAN (Coastal Livelihood and Environmental Action Network), Bangladesh
Committee for the Abolition of Illegitimate Debt, India
consumer NGO, Mongolia
Derecho Ambiente y Recursos Naturales DAR, Peru
Environics Trust, India
Environmental public society, Armenia
Equitable Cambodia, Cambodia
Foundation for Environmental Management and Campaign Against Poverty (FEMAPO), Tanzania
Fresh Eyes, United Kingdom
Global Rights, Nigeria
GrowthWatch, India
Grupo Regional de monitoreo sobre Financiamiento e Infraestructura (Latin America/regional)
Healthy Public Policy Foundation, Thailand
Indian Social Action Forum, India
Initiative for Right View, Bangladesh
Latinoamérica Sustentable (LAS), Ecuador
Movement for Advancing Understanding on Sustainability And Mutuality MAUSAM, India
Narasha Community Development Group, Kenya
Nash Vek, Kyrgyzstan
National Fisheries Solidarity Movement, Sri Lanka
Oil Change International, United States
Oil Workers' Rights Protection Organization Public Union, Azerbaijan,
Oyu Tolgoi Watch, Mongolia
Plantation Workers' Union (PWU), India
Program on Alternative Development, University of the Philippines Center for Integrative & Development Studies, Philippines
Protección Internacional Mesoamérica, Mesoamérica
Rivers without Boundaries, Russia and International
Universal Peace Federation, Myanmar
urgewald e.V. (Germany), Germany
WomanHealth Philippines, Philippines
Youth Group on Protection of Environment, Tajikistan
[1]Urgewald had also published their own input which can be accessed here: https://urgewald.org/sites/default/files/media-files/2021-06%20urgewald%20critical%20brief%20AIIB%20ESF%20review%20.pdf [2] https://storymaps.arcgis.com/stories/065d18218b654c798ae9f360a626d903 [3]https://www.aiib.org/en/news-events/news/2020/AIIB-Joins-MDBs-to-Launch-the-First-Join-Report-on-Financing-the-Sustainable-Development-Goals.html [4] https://www.who.int/en/news-room/fact-sheets/detail/violence-against-women [5] Gender Action 2018, Gender Scorecard and Analysis of AIIB Projects: A Documentary Review, p.8 [6] Please note that a formal letter from 44 civil society organizations requesting that the Bank improve how it handles gender issues and their critical intersection with the global climate crisis was sent by Gender Action on October 25, 2021, to President Liqun Jin and other senior staff. [7] With inputs from Life Haven, Inc. (Philippines)
[8] https://www.inclusivedevelopment.net/ [9] Inputs from Accountability Counsel [10] Inputs from BothENDS [11] Inputs from Community Empowerment and Social Justice Network (CEMSOJ) based on the comments of the Asia Indigenous Peoples Pact (AIPP) for the AIIB’s first ESF review available at the link https://www.business-humanrights.org/en/latest-news/asia-indigenous-peoples-pact-aipp-comments-on-draft-of-aiib-framework/ [12] Inputs from Recourse. [13] In August of this year, President Jin Liqun was quoted in reference to the Bank's Energy Sector Strategy, as saying: in the "updated strategy, coal definitely would be out" See: https://www.chinadaily.com.cn/a/202108/06/WS610c7517a310efa1bd666fa6.html [14] At the UN General Assembly in September, President Xi Jinpeng affirmed that no new financing for coal abroad would be approved. (“China headed towards carbon neutrality by 2060; President Xi Jinping vows to halt new coal plants abroad”: 21 Sept 2021). [15] With inputs from North East Peoples Alliance (India). [16] Inputs from Environics Trust.
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