Asia Society Policy Institute

Requirements for developers and contractors to manage environmental and social risks and impacts associated with all projects financed by the Asian Infrastructure Investment Bank (AIIB).

Offers specific requirements to support the development of sustainable infrastructure and other productive sectors through careful environmental and social management.

AIIB:

• May allow developers and contractors (originally, the “Client”) to apply host countries’ laws and regulations to each project instead of its "Environmental and Social Policy (ESP)" and "Environmental and Social Safeguards (ESSs)."

Developers and Contractors:

• May only adopt host countries’ laws and regulations if the AIIB has determined that developers and contractors — on a project, sectoral, or broader basis — have the ability to fulfill the objectives of the ESP and relevant ESSs.
  • The scope and effectiveness of the host countries’ environmental and social management systems (ESMSs) must adequately address each project’s environmental and social risks and impacts.
• Must demonstrate their ability and capacity to use host countries’ ESMSs to achieve desired environmental and social outcomes.

Developers (and Contractors, where applicable) must:

• Disclose accurate information about each project’s environmental and social risks, as well as its impacts in the project area of influence.
  • This must be done in a timely manner during the planning and implementation phases; in an inclusive, accessible, gender-sensitive, and culturally appropriate manner and location; and in a comprehensible form and language(s) for affected people.
• Engage in ongoing, meaningful consultation with stakeholders, including affected communities.
  • The consultation should be based on prior information disclosure and free of external manipulation, interference, coercion, or intimidation. It should begin after identifying the environmental and social risks and impacts; document consultation activities; and cover the project design, mitigation and monitoring measures, development benefits and opportunities, and implementation issues.
• Provide additional support to vulnerable groups such as the elderly, youth, women, minorities, and people with disabilities.
• Establish and inform affected people of a project-level grievance redress mechanism (GRM).
  • This mechanism should receive and resolve concerns/complaints about not only a project’s environmental and social impacts but also the developers’ and contractors’ environmental and social performance.
• Inform affected people that they can submit complaints to the AIIB’s Project-affected People’s Mechanism (PPM) if they believe the project-level GRM failed to address their concerns or if they have concerns about the AIIB’s noncompliance with its own policies.
• Improve or at least restore the livelihoods of all people displaced by the project through cash compensation at full replacement value of land and other assets that cannot be restored, prompt replacement of assets with those of equal or higher value, and capacity-building programs that can enhance affected people’s use of or access to livelihood resources.
• Provide displaced people with needed assistance, including security of tenure, adequate housing at resettlement sites, comparable access to employment and production opportunities, transitional support and development assistance, civic infrastructure, and community services.
  • Give special assistance to female-headed and vulnerable households.
• Seek to avoid or minimize labor influxes by tapping into the local workforce whenever feasible.
• Establish a labor-management relationship system by providing each worker with clear written terms of employment; timely payment for project work; adequate periods of rest; timely written notice of work termination; employment based on the principles of equal opportunity, fair treatment, and nondiscrimination; compliance with host countries’ laws and regulations on workers’ organizations and collective bargaining; and an accessible, understandable, and transparent GRM.
• Engage in Free, Prior and Informed Consultation (FPICon) with affected Indigenous peoples and obtain broad community support (BCS) if project activities could impact land, natural, and cultural resources subject to traditional ownership; cause relocation of Indigenous peoples; or significantly affect Indigenous peoples’ cultural resources.
  • Obtain Indigenous peoples’ Free, Prior and Informed Consent (FPIC) if projects have adverse impacts on these communities.

AIIB must:

• Screen and categorize each project as early as feasible to determine the nature and level of the environmental and social impact assessment (ESIA), information disclosure, and stakeholder engagement required of developers and contractors, as well as applicable ESSs and required environmental and social instruments.
• Assign projects to one of the following three categories:
  • Category A projects have significant adverse environmental and social impacts that are irreversible, cumulative, diverse, or unprecedented. An ESIA and an environmental and social management plan (ESMP) are required.
  • Category B projects have a limited number of potentially adverse environmental and social impacts. An initial review of environmental and social risks and impacts must be conducted. An appropriate environmental and social instrument must be prepared to assess impacts.
  • Category C projects have minimal or no adverse environmental and social impacts. Although an ESIA is not required, an analysis of each project’s environmental and social aspects must be prepared.
• Monitor each project’s environmental and social aspects regularly during project implementation. Consider retaining independent consultants for monitoring.

Developers (and Contractors, where applicable) must:

• Conduct an ESIA that examines the potential environmental and social risks and impacts of each project; considers feasible alternatives (including the “no project” alternative); and recommends measures to avoid, mitigate, offset, or compensate for adverse impacts and improve their overall environmental and social performance.
• Conduct a social impact assessment (SIA) that involves meaningful consultation with relevant parties such as the private sector, governments, nongovernmental organizations (NGOs), and affected people.
  • The assessment must be culturally appropriate and gender sensitive. In addition, it should use similar methods to assess each project’s impacts on Indigenous peoples and their use of resources.
• Prepare a land acquisition and resettlement plan (LARP) that includes the following:
  • The displaced people’s entitlements, income, and livelihood restoration strategy.
  • The monitoring and reporting framework.
  • The budget and time-bound implementation schedule.
  • The institutional arrangements.
  • The provisions for the GRM.
• Prepare an Indigenous peoples plan (IPP) if projects can impact Indigenous communities.
• Conserve and avoid impacts on cultural resources.
  • If this is not possible, a cultural resources management plan (CRMP) must be prepared.
• Provide progress reports to affected communities.
  • These reports must focus on the implementation of action plans to address risks to or impacts on affected communities, ongoing consultation, or concerns identified through the GRM.