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Definition

A formal (written) document that defines the terms and covenants of agreement between stakeholders. Project financing agreements may be between financiers, developers, and contractors. Agreements to contract or subcontract work could involve developers, contractors, and subcontractors. Insurers may negotiate insurance agreements with financiers, developers, contractors, or subcontractors. 

Source(s)

Adapted from Asian Development Bank (ADB), "Project Glossary," accessed in 2022, View the Website.

Definition

A recipient or beneficiary of project financing from a Chinese policy bank, Chinese commercial bank, Chinese investment fund, multilateral development bank (MDB), or other financial institution.

Source(s)

Adapted from Asian Infrastructure Investment Bank (AIIB), "Enhancing AIIB's Accountability: The Project-Affected People's Mechanism," 2018, View the PDF.

Definition

An existing and operational project that is being modified to comply with legal and technological developments or expanded to increase capacity or production.

Source(s)

Adapted from Thomson Reuters Practical Law Canada, "Project Finance, Overview," accessed in 2022, View the Website.

Definition

An itemized summary of estimated or intended expenditures for a given period, along with proposals for financing these measures or activities; a systematic plan for the expenditure of money or time, during a given period; and the total sum of money allocated for a particular project for a period of time.

Source(s)

Adapted from United Nations (UN) Terminology Database, "Budget," accessed in 2022, View the Website.

Definition

A project for which several Chinese policy banks, investment funds, commercial banks, other financial institutions, developers, and/or governments collectively provide funding.

Source(s)

Adapted from Inclusive Development International (IDI), "Community Guide to the Asian Infrastructure Investment Bank," 2020, View the PDF

Definition

A legal arrangement in which a firm — typically a private company — obtains the right from the host country government to provide a particular service. Concessions can be used to create competition for the market. Examples of concessions include Build-Operate-Transfer (BOT) contracts and leases.

Source(s)

Adapted from Michael Gray Kerf et al., “Concessions for Infrastructure : A Guide to Their Design and Award,” World Bank, 1998, View the Website.

Definition

Loans that are extended on substantially more generous terms than market loans, which are also known as non-concessional loans. The concessionality of these loans is achieved through interest rates below those available on the market and/or longer grace periods.

Source(s)

Adapted from International Monetary Fund (IMF), "External Debt Statistics: Guide for Compilers and Users," 2003, View the PDF.

Definition

A strategic management concept whereby companies and financial institutions integrate social and environmental concerns in their business operations and interactions with their stakeholders. Companies and financial institutions will try to balance economic, environmental, and social imperatives, while addressing the expectations of their shareholders and stakeholders. CSR goes beyond charity, though both types of activities can contribute to poverty reduction, enhance a company’s or an institution's reputation, and strengthen its brand.

It is also a goal of Chinese companies engaged in overseas infrastructure projects to safeguard stakeholders’ rights and interests, promote community living standards and sustainability, boost local employment, mitigate adverse social impacts of their projects, strengthen the preservation of cultural heritage and natural scenery, enhance quality management, and shoulder their due responsibilities to stakeholders for the sake of harmonious coexistence and co-development.

Source(s)

Adapted from United Nations Industrial Development Organization (UNIDO), "What is CSR," accessed in 2022, View the Website; China International Contractors Association (CHINCA), "Sustainable Infrastructure Guidelines for Overseas Chinese Enterprises," 2016, View the PDF.

Definition

An amount for which there is a specific obligation of repayment. Types of credit include loans, trade credits, bonds, bills, and other agreements that need to be repaid over a period of time — usually, but not always, with interest.

Source(s)

Adapted from International Monetary Fund (IMF), "External Debt Statistics: Guide for Compilers and Users," 2003, View the PDF.

Definition

The intentional act of moving money and investments out of a particular industry for ethical, financial, or political reasons. Companies, policy banks, commercial banks, and investment funds that sell or get rid of fossil fuel stocks and investments, for example, can invest in renewable energy and other environmentally friendly initiatives.

Source(s)

Adapted from Cassie Burke, “What Is Fossil Fuel Divestment?,” Unity College, 2022, View the Website.

Definition

The process for developers and contractors to identify, prevent, mitigate, and account for potential financial, environmental, and social risks. It serves as an integral part of decision-making and environmental and social risk management (ESRM) systems. Alternatively, the process for financiers to review and analyze risks before entering into a project financing agreement with developers, contractors, and other stakeholders.

Source(s)

Adapted from World Bank, "World Bank Environmental and Social Framework," Washington, DC, 2016, View the PDF.

Definition

As part of their initial review of environmental and social risks and impacts of proposed projects, financiers use this process to reflect the magnitude of risks and impacts. Based on preliminary assessments, the resulting category often determines financiers’ internal requirements for the environmental and social impact assessment (ESIA) and information disclosure. See Project Categorization for more information about this process.

Source(s)

Adapted from International Finance Corporation (IFC), “Environmental and Social Categorization,” accessed in 2022, View the Website.

Definition

The amount that shareholders own, in the form of common or preferred stock, in a publicly quoted or privately owned company.

Source(s)

Adapted from Sustainable Finance Advisory, "Environmental and Social Risk Due Diligence in the Financial Sector: Current Approaches and Practices," 2013, View the PDF.

Definition

When a financier invests money in a company and, in turn, receives an ownership stake in that company. It entitles investors to a share of a company’s profits and value.

Source(s)

Adapted from Inclusive Development International (IDI), "Community Guide to the Asian Infrastructure Investment Bank," 2020, View the PDF; Thomson Reuters Practical Law, “Equity,” accessed in 2022, View the Website.

Definition

An insurance, guarantee, or financing arrangement that enables a foreign buyer of exported goods and/or services to defer payment over a period of time. These credits are generally divided into short-term repayments, medium-term repayments (usually two to five years), and long-term repayments (usually more than five years).

Source(s)

Adapted from Equator Principles Association (EPA), "The Equator Principles 4," 2020, View the PDF.

Definition

When a financier provides a loan, an equity investment, a grant, or another form of capital for a specific project or a component of a project.

Source(s)

Adapted from Inclusive Development International (IDI), "Community Guide to the Asian Infrastructure Investment Bank," 2020, View the PDF.

Definition

The point in time when developers or contractors are entitled to drawdown on the loan. This will usually require that all finance documents have been signed and all conditions precedent to the initial drawing of the loan have been delivered to, or waived by, the financier.

Source(s)

Adapted from Equator Principles Association (EPA), "The Equator Principles 4," 2020, View the PDF; Thomson Reuters Practical Law, “Financial Close,” accessed in 2022, View the Website.

Definition

Accounts for financial considerations, such as the incremental costs of adopting certain measures and actions compared to a project’s total costs, and whether these incremental costs could make the project nonviable for the developer or contractor.

Source(s)

Adapted from World Bank, "World Bank Environmental and Social Framework," Washington, DC, 2016, View the PDF; Asian Infrastructure Investment Bank (AIIB), "Environmental and Social Framework," 2021, View the PDF.

Definition

A policy bank, commercial bank, investment fund, or company that pools funds from other financial institutions in order to finance projects or business operations.

Source(s)

Adapted from Inclusive Development International (IDI), "Community Guide to the Asian Infrastructure Investment Bank," 2020, View the PDF

Definition

A company, policy bank, commercial bank, investment fund, government, or other type of financial institution that commits capital to a project, an asset, or business operations. Although BRI projects could receive funding from local, regional, or international financiers, which either operate or have a presence in host countries, see Chinese Financiers for more information about their possible roles and responsibilities in BRI projects.

Source(s)

Adapted from James Chen, "Investor," Investopedia, 2021, View the Website.

Definition

Sovereign-backed financing or non-sovereign-backed financing for a project. Such financing may be provided in a variety of ways, such as making loans, investing in the equity capital of a company, and guaranteeing loans for economic development.

Source(s)

Adapted from Asian Infrastructure Investment Bank (AIIB), "Enhancing AIIB's Accountability: The Project-Affected People's Mechanism," 2018, View the PDF.

Definition

Cross-border investment in which an investor establishes a lasting interest in and a significant degree of influence over an enterprise in another economy.

Source(s)

Adapted from Organisation for Economic Co-operation and Development (OECD), “Foreign Direct Investment (FDI),” accessed in 2022, View the Website.

Definition

A sum of money provided to a host country government, civil society organization (CSO)/nongovernmental organization (NGO), or another stakeholder that does not need to be paid back.

Source(s)

Adapted from Asian Development Bank (ADB), "Project Glossary," accessed in 2022, View the Website.

Definition

A project or land that has not been developed and has no existing assets or operations.

Source(s)

Adapted from Thomson Reuters Practical Law Canada, "Project Finance, Overview," accessed in 2022, View the Website.

Definition

Compensation for a loss or liability. Many indemnities are created by a contract, under which a host country government, developer, contractor, or another stakeholder promises to pay an identified loss.

Source(s)

Adapted from Thomson Reuters Practical Law, “Indemnity,” accessed in 2022, View the Website.

Definition

A contract in which a financier, developer, contractor, or subcontractor receives financial protection or reimbursement against losses from an insurer.

Source(s)

Adapted from Julia Kagan, "Insurance," Investopedia, 2021, View the Website.

Definition

A company or another institution that provides insurance. See Chinese Insurers for more information about their possible roles and responsibilities in BRI projects.

Definition

International banking, investment, and insurance institutions that provide lending, investment, insurance, or other financial products and services.

Source(s)

Adapted from Sustainable Finance Advisory, "Environmental and Social Risk Due Diligence in the Financial Sector: Current Approaches and Practices," 2013, View the PDF.

Definition

A project or other asset acquired by a company, financial institution, or investment fund with the goal of generating income or value over time. This investment may be part of a larger portfolio of various projects and assets.

Source(s)

Adapted from Adam Hayes, "Investment," Investopedia, 2021, View the Website.

Definition

A supply of capital belonging to numerous investors used to collectively purchase securities. While each investor retains ownership and control of their own shares, the fund provides a wider range of investment opportunities, greater management expertise, and lower fees than investors might be able to obtain on their own. See Investment Funds to learn more about major funds affiliated with the BRI.

Source(s)

Adapted from James Chen, "Investment Fund," Investopedia, 2020, View the Website.

Definition

A policy bank, commercial bank, investment fund, company, or other entity that makes funds available to a developer or contractor with the expectation that the funds will be repaid. Repayment often includes the payment of any interest or fees.

Source(s)

Adapted from Adam Barone, "Lender," Investopedia, 2022, View the Website.

Definition

A legal or regulatory risk that may need to be covered by insurers.

Source(s)

Adapted from Adam Hayes, "Liabilities," Investopedia, 2022, View the Website.

Definition

A sum of money provided to a host country government, developer, contractor, or another stakeholder to develop, build, operate, and/or maintain a project or to support general operations. The funds must be paid back within a specific period of time with interest.

Source(s)

Adapted from Inclusive Development International (IDI), "Community Guide to the Asian Infrastructure Investment Bank," 2020, View the PDF; Asian Development Bank (ADB), "Project Glossary," accessed in 2022, View the Website.

Definition

A supranational financial institution chartered by a group of countries. All member countries are shareholders, acting as creditors and/or borrowers. MDBs fund large infrastructure projects, offer loans tied to policy reforms, and provide other forms of financial assistance to developing countries in order to promote economic and social development

Source(s)

Adapted from Inclusive Development International (IDI), "Community Guide to the Asian Infrastructure Investment Bank," 2020, View the PDF; European Investment Bank (EIB), "Multilateral development banks," accessed in 2022, View the Website; Congressional Research Service (CRS), "Multilateral Development Banks: Overview and Issues for Congress," 2020, View the PDF; Rebecca Ray, "Who Controls Multilateral Development Finance?," 2019, View the PDF.

Definition

Loans with a market-based interest rate and substantially less generous terms than concessional loans.

Source(s)

Adapted from the Education Commission, “Glossary | the Education Commission Report,” accessed in 2022, View the Website.

Definition

Any financing to or for the benefit of a private company, a state-owned enterprise (SOE), or sub-sovereign entity that is not backed by a guarantee or counter-guarantee and an indemnity provided by a government to the financier

Source(s)

Adapted from Asian Infrastructure Investment Bank (AIIB), "Enhancing AIIB's Accountability: The Project-Affected People's Mechanism," 2018, View the PDF.

Definition

Government aid that promotes and specifically targets the economic development and welfare of developing countries.

Source(s)

Adapted from Organisation for Economic Co-operation and Development (OECD), “Official Development Assistance (ODA) - OECD,” accessed in 2022, View the Website.

Definition

All financial assets, including loans, grants, guarantees, equity investments, and other types of assets owned by a financier or developer

Source(s)

Adapted from Asian Infrastructure Investment Bank (AIIB), "Environmental and Social Framework," 2021, View the PDF.

Definition

The process of replacing an existing loan with a new loan, which will also be used to pay out the existing loan. The older loan should not be near or in default. 

Source(s)

Adapted from Equator Principles Association (EPA), "The Equator Principles 4," 2020, View the PDF.

Definition

An instrument for estimating the probability of harm occurring from the presence of dangerous conditions or materials at a project site. Risk represents the likelihood and significance of a potential hazard being realized; therefore, a hazard assessment often precedes a risk assessment, or the two are conducted as one exercise. The risk assessment is a flexible method of analysis, a systematic approach to organizing and analyzing scientific information about potentially hazardous activities or about substances that might pose risks under specified conditions. Financiers may require risk assessments for projects involving handling, storage, or disposal of hazardous materials and waste, the construction of dams, or major construction works in locations vulnerable to seismic activity or other potentially damaging natural events. For certain projects, the environmental and social impact assessment (ESIA) report may consist of the risk assessment alone. In other cases, this assessment is part of the ESIA documentation.

Source(s)

Adapted from World Bank, “Operational Manual - OP 4.01 -- Annex A,” 1999, View the Website; Asian Infrastructure Investment Bank (AIIB), "Environmental and Social Framework," 2021, View the PDF.

Definition

The degree of variability in investment returns that investors are willing to withstand in their financial planning.

Source(s)

Adapted from Alexandra Twin, "Risk Tolerance," Investopedia, 2020, View the Website.

Definition

A loan to, or guaranteed by, a government entity, or a guarantee that covers debt service defaults under a loan that are caused by a government’s failure to meet a specific obligation in relation to a project or by a borrower’s failure to make a payment under the loan and is accompanied by a government’s indemnity.

Source(s)

Adapted from Asian Infrastructure Investment Bank (AIIB), "Enhancing AIIB's Accountability: The Project-Affected People's Mechanism," 2018, View The PDF.

Definition

A person, company, or institution that owns at least one share of a company’s stock, known as equity.

Source(s)

Adapted from Adam Hayes, "Shareholder," Investopedia, 2021, View the PDF.

Definition

When several financiers collectively finance or underwrite a particular project to limit their exposure. The financing is structured, arranged, and administered by lead arrangers that can be policy banks, commercial banks, investment funds, or other financial institutions. 

Source(s)

Adapted from Sustainable Finance Advisory, "Environmental and Social Risk Due Diligence in the Financial Sector: Current Approaches and Practices," 2013, View the PDF

Definition

See World Bank for specific information about this multilateral development bank (MDB).