23 November 2020

Recommendations on the AIIB’s Environmental and Social Framework

Earlier this month, Accountability Counsel joined over 50 partners in the Asia region and elsewhere in a submission on the Environmental and Social Framework (ESF) of the Asian Infrastructure Investment Bank (AIIB). The ESF, which has been in effect since 2016, prescribes for the AIIB and its clients a range of environmental and social due diligence and risk management standards. The review of the ESF, which commenced in January, is an important opportunity to make the ESF more responsive to the needs of local communities affected by AIIB-financed projects.

The submission marked the end of the second consultation phase following the release of a new draft ESF. Spearheaded by our regional partner NGO Forum on ADB, the submission makes recommendations on various parts of the ESF, such as risk categorization, financial intermediaries, and information disclosure. It also includes recommendations on those provisions related to the AIIB’s accountability mechanism, the Project-affected People’s Mechanism (PPM). While the new draft ESF takes a step forward in requiring clients to disclose to local communities information about the PPM, there are a number of other issues with it that would, if unaddressed, restrict local communities’ ability to access the PPM. Most notably, the draft ESF still provides bank management with far too much discretion in excluding co-financed projects from the remit of the PPM. In practice, this accountability end-around has been used to foreclose the possibility of complaints regarding a significant portion of AIIB projects, leaving the communities affected by those projects with little means to raise concerns to the AIIB.

The submission recommends ameliorating this accessibility restriction by removing management’s ability to exclude co-financed projects from the scope of the PPM. At the very least, the ESF should delineate a much narrower set of circumstances, such as where the AIIB is providing a minuscule percentage of a project’s total financing, under which co-financed projects can be excluded.

A final version of the new ESF is expected around February 2021. Accountability Counsel will continue to work with our partners in the region to push for greater environmental and social sustainability at the AIIB.