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RwB Comment on AIIB Environmental and Social Framework (ESF)

  • Daursky Biosphere Reserve and School of Humanities & Social Sciences at UNSW Canberra

RwB Comment on AIIB Environmental and Social Framework (ESF)

Asian Infrastructure
Investment Bank (AIIB)
CC: AIIB Chief Negotiators
Comments on the Asian Infrastructure Investment Bank
Draft Environmental and Social Framework
October 21, 2015
After participating in video-conference consultations and not seeing its
results\records available at respective AIIB web-site, the Rivers without
Boundaries Coalition considers necessary to present brief written
comments on the draft AIIB ESF and related matters.
We commend the AIIB for its prompt attention to the need to adopt a set of
policies for dealing with the social and environmental impacts of its future
operations. The draft framework, in a number of respects incorporates
good standards compared with other MDBs. Yet, we have significant
concerns about the overall quality and operationalization of the draft and by
the AIIB’s failure to engage civil society and other stakeholders in an
adequate, transparent and meaningful consultation process. The
inadequate time period for the consultation has precluded RwB from
thoroughly reviewing the ESF and providing you with best possible
feedback. This comment is focused on limited number of aspects of ESF
and is not exhaustive of RwB opinion on this matter.
From: Eugene Simonov
Rivers without Boundaries
International Coalition Coordinator
. Tel. +86-13942868942
Coalition Coordinators:
Russia: Aleksandr Kolotov, Plotina.Net! 660017 Krasnoyarsk, P.O. Box 6066, Tel. +7-913-527-7440
China: Zhang Yadong, Green Longjiang Room 202, Flat 3, Building No. 14, Xin Xin Yi Yuan, Songbei District, Harbin 150028
Mongolia: D. Sukhgerel, OT Watch Apt 6, Bldg. 44, SBD, Baga Toiruu, Ulaanbaatar, Mongolia +976-98905828,
USA:Kristen McDonald, Pacific Environment, 369 Pine St,Suite 518, San Francisco,CA 94104,+1-415-399-8850
International: Eugene Simonov. Tel. 86-13942868942, email:
Public consultation and access to information inadequate.
The ESF states that “AIIB believes that meaningful consultation is essential
for the design and implementation of an Operation. Meaningful consultation
is a process that begins early and is ongoing throughout the Operation. It is
inclusive, timely and undertaken in an open manner. It conveys adequate
information that is understandable and readily accessible to stakeholders
and in turn, enables the incorporation of stakeholders’ views into decision-
making. It is conducted in a manner commensurate with the risks to, and
impacts on, those affected by the Operation.
"Consultations" on the Draft ESF undertaken now are violating most of
abovementioned requirements. The Consultation plan has not been
announced to the public, it has not been transparent at any stage and its
timing keeps changing at organizer's discretion. The language of
communication is English, which excludes most of the Eurasian
communities who will be directly impacted.
There is an imperative for a face-to-face dialogue with the diverse ethnic
and language groups across Eurasia. Considering that the draft ESF has a
vast diversity and complexity of issues, a handful of Video Conferences in
English would hardly suffice in extracting input and reflections from
stakeholders in AIIB’s proposed areas of operation. Furthermore, there was
a lack of due process in these consultations as no participant list, meeting
minutes or agenda were provided for these dialogues which are operating
practices of communication and consultation among all other multilateral
development banks (MDBs).
We expect the AIIB to function as a professional institution with leading
standards. We believe that such first malpractice of inclusivity will seriously
undermine the legitimacy of the AIIB as a development finance institution in
the region, and will make many stakeholders question and challenge
participation of their countries in this new MDB, if it is less open and
inclusive than pre-existing MDB, which mistakes its was supposed to learn
We strongly recommend to redesign and extend consultation process
in multiple Asian languages, including actual meetings in countries.
Consultation records\intermediate outcomes should be presented at
AIIB web-site to inform on-going discussion and facilitate
We also suggest that Access to Information and Compliance,
Effectiveness, and Integrity Unit Policies to be released to the public for
feedback. We need clarity how civil society groups should engage with the
AIIB how does the AIIB expect to engage with NGOs? Do they expect
member countries to manage their own NGOs, and what about in cases
when there is corruption or weak governance in the member group and
local civil society groups are repressed or discouraged?
Scope of the Draft ESF is too narrow
Despite highly raised expectations and promises of "better MDB" the AIIB
ESF simply mimics ESF scope common for WB and ADB, not taking into
account obvious inadequacy of existing MDB practices.
Thus AIIB is about to fall into a trap common for all pre-existing MDB's - too
narrow focus on specific "Projects" without profound evaluation of broader
context, available options and policy environment in advance of project
identification. Even if such evaluation took place in existing MDBs it was
normally conducted in the context of already identified specific project, that
already encountered unforeseen problems, and therefore little could be
done to prevent harm and improve sustainability of investment. Historically
this led to MDBs' providing support for suboptimal projects with serious
social and environmental risks.
For example the Draft AIIB ESF does not contain provisions for formal
assessment procedures (and public consultations) even for AIIB own
policies, which is exemplified by haphazard, non-transparent and
inadequate evaluation\consultation procedure for Draft ESF itself.
In the context of specific project assessment the Draft ESF mentions
strategic environmental assessments (SEAs) and regional assessments
without specification in which cases these tools should be used, but likely
too late into the investment process to facilitate optimal decision-making.
Unless AIIB itself implements serious strategic assessments of
sectors\regions and screening of available alternatives, the idea of
relegating major responsibility for due diligence and safeguards to the client
becomes truly dangerous due to limited capacity and incentives for
potential clients to identify sustainable low-impact projects. We recommend
AIIB to make mandatory use of SEAs and other means to proactively pre-
select projects and work priorities, including assessments\comparison of
available alternatives. SEA should be at least used for refining country and
regional strategies and sectoral plans.
Implementation requirements for safeguards are inadequate
There is a significant risk that AIIB will fund projects that lead to significant
and unacceptable environmental and social impacts due to lack of clear
ESF language pertaining to categorization, sequencing, due diligence,
accountability, supervision, and access to information. Unless thoroughly
revised and augmented, the proposed ESF would fail to ensure that AIIB-
financed operations do no harm. Instead, the AIIB may quickly find itself
complicit in forced evictions, violations of the rights of indigenous peoples
and environmental degradation, and facing attendant reputational, financial
and legal liabilities. ESF is written in a manner that makes many of such
consequences more likely to occur.
ESF does not clearly emphasize any oversight mechanism on the Clients
with legally binding requirements with checks and balances for due diligent
ESF implementation by AIIB (not subcontracted commercial entities). Client
performance is solely measured against “obligations set forth in the legal
agreement” instead of against all safeguards. Furthermore "phased
approach" explicitly allows AIIB to approve operation, even if client has not
demonstrated ability to meet all safeguard requirements.
Most progressive clauses found in ESF are practically disabled by
requirements that clients must only be “broadly consistent” with the ESSs
and not compliant with ESSs,) and, despite promises to meet the highest
international standards, the draft safeguards are far weaker and less
specific than those of other MDBs. The draft states, for example, “AIIB
requires the Client to assess and prepare its Operation so that it meets the
requirements of the applicable ESSs in a manner and a reasonable time
frame acceptable to AIIB.” This lack of precision and broad discretion vastly
diminishes the accountability of both the client and the AIIB for compliance
with the standards and realization of the objectives.
The “Use of Country and Corporate Systems” section represents a massive
dilution of current MDB approaches to the use of national systems/borrower
systems/country systems. It appears to allow the use of “safeguard
systems” even of private sector clients, without a clear public review of
client track record i.e. dependence on Client self-reporting and self-
evaluation; lack of precautionary approach; lack of adherence to “do no
harm” standard, etc.
In cases of co-financing with multiple institutional policies related to social
and environmental impacts, there is currently no requirement that AIIB
apply the more protective standard where there is a conflict, either at the
country or institutional level. More than that, despite clear assessment
standard language, the document makes clear that an EIA is not
necessarily required: “AIIB recognizes that in some countries the
legislation and procedures concerning the structure of environmental and
social assessment documents makes the preparation of integrated
environmental and social assessments difficult to achieve. In such cases,
AIIB reviews the Client’s documentation to ascertain whether or not it
provides for balanced assessment of both environmental and social risks
and impacts.”. This creates potential opportunity for major violation of
safeguards given that in many Eurasia countries, for example in Russia,
mandatory EIA process is drastically reduced in scope and does not meet
international standards and social assessment is even less mature.
There is clear lack of commitment to “do no harm” and precautionary
approach in objectives/goals although some of this briefly mentioned in the
Annexes. Despite safeguards, the draft seems to expect “significant
adverse impacts” from AIIB activities meaning that the mitigation
hierarchy is not designed to prevent significant adverse impacts.
At the same time the Draft ESF recognizes the importance of supervision
and on “effective implementation of environmental and social safeguards.”.
It appears that the challenge is in finding the appropriate language to
operationalize this, as the current language is inadequate throughout the
document. We recommend that ESF should clearly state
- The requirement that the AIIB conducts due diligence and ensures
client compliance with environmental and social requirements;
-The absolute requirement for clear, transparent, robust, mandatory
and time-bound safeguard requirements, to be implemented prior to
- That any deviation from written safeguards (like softening EIA
requirements) is permissible only through transparent assessment of
needed performed by third party with public review;
- That in first 3 years of operation to make up for lacking guidelines
how to implement ESF AIIB will use specific acceptable
guidelines\procedures developed and documented by certain MDBs.
(this is already stated but only on one occasion).
- Clear sector-specific safeguards and due diligence procedures for
most impactful sectors (hydropower and water infrastructure, mining,
port infrastructure, etc.)
Inadequate language on Biodiversity and complete absence
thereof on Ecosystem Services\Functions.
ESF imply that the AIIB in its assessment "considers" rather than "avoids
and prevents" impacts on biodiversity and has very weak language on
mitigation hierarchy. ESF does not identify “no go” zones, which means
that all areas, protected areas, critical habitat, natural habitat, can be
destroyed; protected areas, including those nationally or internationally
designated can be harmed as long as “mitigated".
ESF completely omits the assessment and preservation of ecosystem
services\functions provided by natural and semi-natural ecosystems. This
is a very serious caveat given that great part of artificial human
infrastructure, that AIIB is going to support, is built replacing or degrading
natural ecosystems, that provide similar services (e.g. floodplains
destroyed by dykes as "flood-prevention measure"). Therefore ESF and
other AIIB policy documents should recognize importance of "green
infrastructure" and tools for protection and enhancement of ecosystem
services. AIIB should have clear policy on sustaining green infrastructure
and enhancing\restoring ecosystem services where appropriate.
We recommend that AIIB prioritizes funding projects that preserve
green infrastructure, ecological functions and facilitate ecosystem-
based adaptation measures.
We also recommend that sections on biodiversity and critical habitats
are rewritten and expanded to reflect clear hierarchy of "no-go zones"
and measures to identify them. As for ecosystem services\functions
we recommend to adopt zoning approach already piloted in China,
with identification of areas providing such functions and prioritizing
projects to preserve and enhance them.
Exclusion list should be expanded with clear and
unambiguous prohibitions.
ESF Draft says "AIIB won’t knowingly finance anything on exclusion list". It
means if someone fails in due diligence, there is no remedy; funding won’t
be pulled. Given that most of responsibility due diligence is outsources to
"client" and "consultants" this makes such regular mistakes very likely in
AIIB operations. Withdrawal or freezing of funding should be
mandatory for any violation related to Exclusion List.
Exclusion List is very narrow and allows to fund project types that
historically are associated with great controversy and high environmental
and social risks (large hydropower dams being classic example). AIIB in
first 3 years of operation will have little capacity to handle such
controversial projects. At the same time plenty of such project designs are
sitting in drawers of national governments in Eurasia region, but have not
been funded by old MDBs and other financial agencies due to their
unsustainable nature. Those "ready to go" projects are likely to be
submitted to AIIB attention in near future. To ensure smooth start of AIIB
and avoid conflicts in the initial period we would suggest to put on
the exclusion list new large hydro, greenfield projects in coal
industry, nuclear power.
AIIB Should Prioritize Green Development
It is very encouraging that a whole paragraph is devoted to " Support for
Green Economic Growth" but is has no follow-up in the remaining text. "
Planning, investment and capacity building measures that AIIB supports
help to “green” both infrastructure and interconnectivity" - meaning of this
statement is unclear and no further explanation provided. Meanwhile, if
properly developed, mainstreaming "Green Economy" could be most
significant and valuable innovation in AIIB mission in comparison with
other MDBs.
Although paragraph on "Environmental coverage" in ESA section there is
some mentioning of "pollution prevention and control technologies and
practices consistent with international good practice as reflected in
internationally recognized standards" it falls short of systemic criteria and
process to identify and prioritize most sustainable and environmentally
friendly solutions.
As some examples, the following priorities (supported by Civil 20 ) could be
pursued by AIIB as "green growth":
-help countries meet requirements of ‘green economy with
considerable reductions of traditional fuel sources like coal, oil,
nuclear, large hydroelectric dams;
- assist shift in energy policy from large centralized power systems
(that are insufficient in poverty eradication) towards the
decentralization of energy systems and infrastructure based on
renewable energy and principles of inclusive economic growth
- Prioritize demand-side and supply-side energy efficiency before any
new projects on production of primary energy;
-prioritize alternative methods of production of electricity, based on
genuine renewable energy sources;
- always perform Analysis of alternatives to prioritize best available
technologies and solutions not later than at project identification
We suggest that ESF is complemented by detailed parts on "green
economy" to describe specific objectives, priorities, evaluation procedures
and institutional mechanisms for promoting green development and its
place in overall AIIB priorities and operations portfolio. As a supplement to
that it is also probably useful to compile an annex with proactive "Inclusion
List" to exemplify desired projects that promote green development and
We hope our comments can help to improve ESF and consultation
process. We kindly request that you provide us with information on the
outcomes of consultations.
Eugene Simonov
RwB International Coordinator

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