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Re: Raising Critical Concerns on the Occasion of AIIB’s Annual Meeting 2022

26th October 2022


To: Mr. Jin Liqun, President, Asian Infrastructure Investment Bank (AIIB)

Mr. Ludger Schuknecht, V.P. and Corporate Secretary, AIIB

Sir Danny Alexander, V.P., Policy and Strategy, AIIB

Mr. Bob Pickard, D.G., Communications Department, AIIB

AIIB Board of Directors


– Via Email –


As the AIIB Annual Meeting 2022 opens, we are writing collectively – as civil society groups representing constituencies across the AIIB’s membership – to reiterate and follow up on a series of unresolved policy and project related concerns.


We acknowledge the scheduling of a 90 minute by-invitation-only meeting between CSOs with the CEIU on October 26th, and a 90 minute time slot for a Management-CSO discussion on October 27th. Though civil society organizations will be joining the sessions in good faith, we collectively assert that this format is far too constrained to enable meaningful engagement between senior Bank representatives and local, national, regional as well as international civil society groups on either specific project concerns or substantive policy related questions. We note that both sessions are scheduled in the evening for Asia time zones and that both will take place in English, leaving limited options available for joining, most especially for those who have after-hours caregiving duties, those who would require interpretation (including ASL), and those who do not have access to stable internet connections.


Indeed, over a year ago, last September, you received a letter signed by over 40 civil society organizations based in countries across the Bank’s membership, in the lead up to the Annual Meeting 2021, in which we called on senior management to take steps towards ”[e]nsuring that meaningful space and time is opened up for dialogue with CSOs and affected communities at all upcoming AGMs. This should include not only a free-flowing overarching dialogue with management, but also project-related meetings with staff, and meetings with senior management to discuss key policy revisions, with simultaneous translation.” At the time, the letter also called for “an autonomously organized civil society meeting with the Bank’s management” and for translation options to be made available for all public sessions. No substantive response to this letter was provided, nor were any of these issues proactively addressed last year. We would have hoped that one year on, such suggestions would have at least been taken into consideration by management in the planning and design of the 2022 Annual Meeting. Unfortunately, as per the schedule posted on the AIIB’s website, it does not appear this is the case.


We are therefore bringing to your attention the following points related to Bank policies, projects and processes, which we consider warrant a deeper, more meaningful exchange of perspectives than will be conceivably possible within the confines of the online sessions allocated for CSO engagement at this year’s Annual Meeting. We hope you will duly take note, and respond this year in a timely manner, so that we are not left having to raise precisely these same points again in 2023.

  • With regards to the Energy Sector Strategy Update, which we understand will be approved at the end of November, following COP 27:

    • We reiterate our call for the revised draft to be released publicly and open for a period of comment. This is standard practice from peer MDBs, such as the Asian Development Bank, which for example would typically release an initial ‘W’ Paper followed by an ‘R’ paper, with clearly defined parameters for public input on both versions, enabling a greater degree of engagement and transparency as well as channels for concerns to be addressed before the text is finalized.

    • We note that there is no indication how management intends to resolve concerns of civil society raised about the severely flawed consultation period in the future, including but not limited to the absence of time set aside to:

    • listen directly to people already affected by AIIB’s energy sector investments and consider their recommendations for moving forward,

    • enable CSO participants to engage with responsible staff on questions related to regional nuances in the AIIB’s energy sector portfolio, or to associated portfolios (e.g. water and urban sectors and those categorized as financial intermediary facilities), and

    • address specific questions on (i) the gendered implications of energy sector financing and future/planned projects in the pipeline, and (ii) the critical lack of attention to gender considerations in the overall energy sector portfolio of the AIIB to date (underscored by the fact that no time was allocated for dialogues with civil society on this issue as requested – nor was any gender specialist staff present during the ‘virtual consultations’).

    • We have reviewed the “Summary of the Consultations on the AIIB Energy Sector Strategy”. With all due respect, we do not agree that it accurately reflects or addresses critical aspects of CSO input, including, but not limited to:

    • widespread calls on the Bank to stop financing fossil fuel dependent projects (and associated facilities) as well as large-scale dams,

    • clarity on how the AIIB intends to use the MDB Just Transition High-Level Principles to guide energy financing, the need for all projects to incorporate gender indicators,

    • clarity on why the Strategy has retained the section on “Analysis of the Issues and Challenges in Asia”, while still suggesting that it applies to all members (i.e. rather than including details of specific regional approaches and priorities that take into consideration the vastly different energy situations, issues and challenges across its borrowing membership),

    • the need for a specific provision within the policy to address reprisal risks where projects are sited,

    • the call for incorporating a “No Go Policy” into the Environmental and Social Exclusion List--and referencing it explicitly in the updated Energy Sector Strategy (for more details, see: “The Banks and Biodiversity No Go Policy”), and

    • specific recognition that prior to site development as well as throughout the project cycle, the free, prior, informed and continuous consent of Indigenous Peoples and Local Communities must be ascertained.


  • With regards to the AIIB’s Commitment to Paris Alignment:

    • We continue to seek clarity on if and how the Bank will ensure its guidance for aligning investments with the Paris Agreement by July 2023 will adhere to the imperatives of climate science as per the IPCC’s P1 scenario. We also urge the AIIB to publicly disclose corresponding institutional guidance materials in draft format, open to a period of meaningful public input (as outlined, for example, in a letter sent by over 30 organizations to the AIIB in August 2022).


  • With regards to AIIB’s (lack of) response to the risk of reprisals:

    • Despite the May 2022 “Statement on Retaliation,” disturbingly:

      • information brought to the attention of the AIIB Management and the Board in August regarding the specific case of reprisals against a community rights advocate in Mongolia has been met with silence. We are still awaiting a response.

      • There remains no clarity on what actions will be taken by AIIB Management and staff to prevent and react to cases in the future, nor on who within AIIB senior staff is specifically tasked as a point of contact to respond when CSOs raise such concerns. We await clarificatory measures to be taken and posted accordingly on the AIIB’s website.


  • With regards to AIIB’s project investments:

    • We have repeatedly witnessed a lack of management response, due diligence and monitoring when concerns are raised directly by project affected people as well as by groups working in - and with - these communities. Concerningly, in cases where the AIIB is co-financier, it appears that the Bank consistently delegates responsibility for addressing grievances of project affected people to partner institutions.

  • Specifically, we urge the AIIB to withdraw the following projects from its proposed list of investments:


This high risk gas project is expected to become operational in 2026, and would undermine the AIIB’s own stated pursuit of Paris alignment as well as joint MDB climate commitments: construction for new fossil gas infrastructure is incompatible with the action required to meet the Paris Agreement goals of limiting global heating to 1.5C. We also note the absence of any calculation for estimated methane emissions (CO4), a potent GHG that would be produced by the project and should be accounted for through scientifically sound measures.


The project site is located alongside the 10km2 Uchkizil irrigation reservoir. Construction has already been announced. It is therefore unclear what assurances AIIB can provide that all other options for non-fossil fuel dependent energy generation were duly considered nor how the Bank will ensure adherence to its own Environmental and Social Framework in light of the project developments already getting underway.


This Category A fossil gas power project is being built on land that has been usurped from local communities, without providing due compensation, let alone seeking their consent. This means that if approved for a loan of US$ 75 million from the AIIB, the Bank would be shouldering a project where violations of its ESF have already been reported and documented by local community organizations.


GHG accounting appears to have been limited to carbon dioxide calculations, without any indicative information about expected methane emissions, leaving a serious gap in the information provided about the actual carbon footprint of the project. In addition, the reliance on LNG imports means that it fails to heed not only climate science (i.e. undermining possibilities for Bangladesh - and for the Bank’s investments - to align with a credible 1.5C pathway), but also to even be practical in economic terms, given the current context of gas price volatility.


This Category A hydropower dam site is located in a geologically unstable area, yet the risk of avalanches, mudflows and landslides has not been adequately assessed. If built, the project not only would create major fiscal risks to Georgia’s state budget, but also would dispossess Svan communities of ancestral land relied upon not for livelihood sustenance and also the survival of their culture. They have not given consent for the project to proceed.


Already investigations carried out by the European Investment Bank’s Complaints Mechanism and European Bank for Reconstruction and Development’s Independent Project Accountability Mechanism found the project non-compliant with a significant number of environmental and social policy requirements related to the protection of cultural heritage, gender impacts, the assessment and management of environmental and social impacts, labor influx, information disclosure, and participation of local communities and other stakeholders. Moreover, both mechanisms found that their policy requirements regarding Indigenous Peoples would be violated if the project were to go ahead as planned.


In light of these serious issues already on the record, and the range of unaddressed construction-related concerns, AIIB should withdraw any further consideration of the Nenskra Hydropower dam, removing it from its project pipeline altogether.

  • We also urge the AIIB to address concerns of civil society groups raised in regards to the following already approved projects:

This financial intermediary loan to the largest energy and infrastructure financing company in Bangladesh, Infrastructure Development Co. Ltd (IDCOL), is intended to support the development of infrastructure subprojects in the power, ICT and transport sector among others, and expected by the AIIB to “promote sustainable infrastructure development”. Yet to date, this investment is beset by major questions surrounding transparency and accountability. Despite the fact that civil society groups have filed official right to information requests with the Government of Bangladesh to gain clarity on its investments, responses have failed to be forthcoming. There are also several pending cases of land grabbing in connection with the LNG projects in which IDCOL is involved. In addition, the sheer size of its fossil gas related portfolio far overshadows its involvement in renewable energy infrastructure developments.


In order to undertake due diligence on it’s claim that this financing is for ‘green’ and ‘sustainable’ infrastructure, it is incumbent upon the AIIB to require IDCOL to publicly disclose all subprojects proposed to be financed via this on-lending facility with corresponding environmental and social impact assessments and other key project details ninety days prior to approval. It is also critical that AIIB verify that none of its financing is exposed to IDCOL’s investments in LNG developments, given the imperative to align financing with a credible 1.5C pathway and concerns related to violations of the rights of affected communities.


Bangladesh: Bhola IPP

Communities affected by this 220MW combined cycle gas turbine project have officially filed a complaint under the AIIB’s Project Affected Peoples’ Mechanism. Key concerns include: (i) coercion and intimidation faced by local communities, (ii) land acquisition practices in violation of national laws (including grabbing of lands relied upon by communities without payment), (iii) siltation of the local canal due to negligent construction practices, and (iv) loss of ability to use land for farming, grazing of livestock, and for household purposes due to water-logging, effluent and waste discharged into surrounding areas.


However, in mid-2022, existing project financing provided by AIIB was replaced by commercial bank debt provided by a syndicate of multinational banks. We urge the AIIB to provide assurances that it will duly follow through with addressing the concerns raised by affected communities, given that the grievances are ones which have arisen since project inception.


This financial intermediary on-lending investment has no clear definition of the parameters guiding what kind of renewable energy and connectivity-related infrastructure will be developed, instead delegating full responsibility of information disclosure as well as selecting and managing subprojects to Banco de Desenvolvimento de Minas Gerais (BDMG). To date, there is also no indication on BDMG’s website about the nature of the subprojects to be financed through this facility. Although senior AIIB staff have suggested in exchanges with concerned civil society groups that the focus would be limited to Variable Renewable Energy (VRE) projects like solar and wind, to date these remain verbal commitments.


In light of this situation, civil society groups are still waiting to hear how the AIIB will provide due diligence assurances that subprojects will not undermine its own ESF nor how standards outlined in regionally specific environmental and human rights treaties such as the Escazu Agreement (“Regional Agreement on Access to Information, Public Participation and Justice in Environmental Matters in Latin America and the Caribbean”), to which Brazil is a state signatory, will be upheld. We also await clarity on how the Bank will ensure clear channels are opened for affected communities to avail of the AIIB’s Project Affected Peoples’ mechanism if / when grievances arise at the subproject level.


We understand the AIIB management dispatched a recent due diligence mission to Cambodia in response to concerns brought to their and Board members’ attention by civil society groups about severe and adverse social and economic impacts related to the microfinance sector. Concerningly, the mission did not reach out to any civil society organizations to inform them of the visit, let alone seek their input. There is also no clarity on what provisions the AIIB has in place to protect those who spoke to the mission from reprisals. We request clarity on both of these critical oversights, and for a report on the mission to be made public.


India: Bangalore Metrorail-Line R6 (co-financed with the European Investment Bank)

In November 2019, the Technical Training Centre for the Deaf (TTCD) in Bangalore was demolished to make way for Line R6. The plans to close and demolish the school without practical alternative options in place meant that from 2018 onwards, 43 students faced an abrupt end to their progress towards Industrial Training Institute certification and eventual job placement. As most of them belong to socially and financially marginalized families, the job opportunities they could have pursued after the two year program were considered as a key to greater financial security and a dignified future. In effect, then, the students have fallen through the cracks created by this project, as from the outset there was no practical social impact assessment conducted and a complete disregard for safeguard standards.


Over a year ago, this situation was brought to the attention of the AIIB as well as EIB in order for the Banks to duly step in and address the safeguard violations accordingly. However, to date, we are uncertain if anyone at the AIIB has taken any concrete action despite several email communications and online meetings on this matter.


Now, nearly three long years since the demolition of the Training Centre, the Bangalore Metrorail Project has yet to adequately address the rehabilitation needs of these students. As a result, the students and their families are now seeking to have their grievances addressed through the EIB Complaints Mechanism’s mediation process. As Bank Management, it remains incumbent on you to clarify how and who at the AIIB is monitoring this process as a responsible co-financier.


Among the demands being advanced by the students, their families and allied civil society organizations, is the call for reparations for the time lost as well as mental and emotional anguish experienced. It remains an open question whether the AIIB is prepared to take due responsibility while the process of redressal on behalf of the impacted students proceeds. We urge you to provide decisive information about how the AIIB will keep tabs on the situation and clear responses to questions raised by the students, families and civil society advocates.


India: OSE InvIT (co-financed with IFC)

Although this Category A private sector transport project was approved in 2018, project information disclosure was made only in March 2020. In 2019, Oriental InfraTrust (InvIT) acquired 5 highway road projects which were already built and operational at the time of acquiring. Under this infrastructure investment trust model, the IFC and AIIB only became involved after the projects were already built, meaning the shareholders must believe that the standards to which the IFIs are committed can be applied in retrospect, including seeking and obtaining Indigenous Peoples’ free, prior and informed consent both before and during construction.


Given that civil society research has uncovered glaring violations of IFC’s performance standards at the time of building the 5 road projects, including carving up biodiverse forests, flawed consultations, the displacement of Indigenous Peoples(Adivasis), safety risks, obstruction of access to public services, problems with land acquisition and compensation, and wholly inadequate Environment and Social Due Diligence reports, the question remains: how will these environmental and social standards be applied retroactively especially when the construction and acquisition of land took place over a decade ago? Despite these critical questions remaining unanswered and without a full investigation into this financing model, AIIB recently approved another InVIT project, the Kotak Infrastructure Investment Fund, for energy, transport, digital infrastructure and water sector infrastructure projects, all of which could potentially have devastating impacts on the rights of local communities and local ecologies. The AIIB should urgently:

  • Suspend any further IFI investments into InvITs while concerns about application of standards, the balance of risks and benefits in ‘public-private partnerships’, and wider social and economic impacts are addressed,

  • Launch an immediate investigation into the harms caused by the five road projects of OSE InvIT, identifying where gaps exist between the Performance Standards and impacts on the ground, specifically through conducting extensive consultations with affected communities, and publish the resulting report in full;

  • Ensure full and fair redress for affected communities who have suffered harm as a result of the construction of projects, and

  • Develop a compendium of lessons learned to inform future investments, in consultations with civil society.

While the above list of projects is not exhaustive, it is intended to highlight key project related concerns that we would have hoped to discuss further at this year’s Annual Meeting. Many other projects, including the Greater Malé Waste-to-Energy Project in the Maldives (co-financed with ADB) and the Multi-country Everbright Infrastructure Investment Fund II – both of which involve the development of waste-to-energy incinerators – also raise serious concerns related to irreparable damage to peoples’ health as well as the environment, and have remained unaddressed by the Bank to date.


In closing, we urge the AIIB Management to:

  • be accountable and responsive to the concerns of project-affected communities and broader civil society actors across the Bank’s membership - starting with responding to pending CSO letters as referenced above,

  • increase transparency in policy revision processes and project-related matters (including for financial intermediary facilities and capital market investments), and

  • engage in heightened due diligence prior to project and policy approval to avoid systematic complicity in human rights violations and locking borrowing members into reliance on resource-intensive infrastructure that is neither ecologically nor economically sustainable.

We look forward to hearing from you.


Respectfully,


BRICS Feminist Watch | Global

Building and Wood Workers International | Global (Switzerland)

Gender Action | Global

IBON International | Global

International Accountability Project | Global

International Rivers | Global

Programme on Women’s Economic, Social and Cultural Rights | Global

Asian Peoples' Movement on Debt and Development | Asia Regional

CEE Bankwatch | Regional (Czechia)

Global Alliance for Incinerator Alternatives – Asia Pacific | Regional

Latinoamérica Sustentable | Latin America Regional (Ecuador)

NGO Forum on ADB | Asia Regional

Rivers without Boundaries International Coalition | Regional

Aksi! for Gender, Social and Ecological Justice | Indonesia

Amazon Watch | Ecuador

Asociación Ambiente y Sociedad | Colombia

Bangladesh Working Group on External Debt | Bangladesh

Both ENDS | Netherlands

Cambodian League for the Promotion and Defense of Human Rights | Cambodia

Centre for Financial Accountability | India

Centre for Human Rights and Development | Mongolia

Coastal Livelihood and Environmental Action Network | Bangladesh

CooperAcción | Perú

Confederación de Nacionalidades Indígenas de la Amazonía Ecuatoriana | Ecuador

Coordinadora Ecuatoriana de Organizaciones para la Defensa de la naturaleza y el medio ambiente| Ecuador

Equitable Cambodia| Cambodia

Environmental Public Society | Armenia

Environics Trust | India

Foundation for the Development of Sustainable Policies| Argentina

Fundación Ambiente y Recursos Naturales | Argentina

Fundación Banco de Bosques | Argentina

Green Alternative | Georgia

Growthwatch | India

Indian Social Action Forum | India

Initiative for Right View| Bangladesh

Oil Workers' Rights Protection Organization Public Union | Azerbaijan

Oyu Tolgoi Watch | Mongolia

Pakistan Fisherfolk Forum | Pakistan

Protection International Mesoamérica | Guatemala

Pueblo Indígena Shuar Arutam | Ecuador

Recourse | The Netherlands

Sustentarse| Chile

urgewald e.V. | Germany

We Women lanka | Sri Lanka

WomanHealth Philippines | Philippines


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