October 26, 2021
In the run-up to the annual meeting of the Asian Infrastructure Investment Bank (AIIB) on October 26–28, the Heinrich Böll Foundation presents an analysis of what transparency requirements the AIIB has met following the review of its Environmental and Social Framework for financing. China controls the Bank, but European countries such as Germany and France are shareholders. They have always justified their participation in the AIIB by wanting to enforce high environmental and social standards and more transparency.
The authors of the analysis, Dr. Korinna Horta and Wawa Wang (Just Finance International, VedvarendeEnergi), conclude that Beijing has concentrated decision-making power over the Bank’s project financing with the Chinese AIIB President, leaving the international co-founding states with little say in the project approval process.
The Bank mainly finances risk-prone, large-scale infrastructure projects such as power plants, dams, and transport infrastructure with potentially negative social and environmental impacts. At the same time, the analysis makes clear that the separation of the AIIB from China’s Belt and Road Initiative (BRI), which was emphasized until some time ago, has apparently been reversed recently – the AIIB is now to take over the management of one of the BRI’s financial programs at Beijing’s request, although these activities will not be submitted to the international supervisory body.
In particular, the AIIB’s new Environmental and Social Framework, which came into force this month, sets deadlines for the publication of environmental impact assessments for high-risk projects. However, it also opens up possibilities for the highest decision-makers as well as for customers of the AIIB to circumvent them, according to the analysis of Dr. Horta and Wawa Wang. Thus, in the last instance, projects could once again be pushed through that have high social and ecological consequences while excluding the public.
Barbara Unmüßig, Executive Director of the Heinrich Böll Foundation, said on the occasion of the publication: “In view of its massive investment capacities, the AIIB occupies a key position if the decarbonization of the global economy is to succeed. That is why fine words on paper are not enough. It needs comprehensive transparency through clear information obligations and concrete environmental and social standards. These must apply without restriction and be verifiable at all times. They must not be able to be undermined through backroom deals based on political whims or national strategic interests.”
Unmüßig continued: “The European founding members of the AIIB must take advantage of the AIIB annual meeting (October 26–28, 2021) and the planned Strategic Energy Review to push for an exit from fossil infrastructure financing, full transparency, and high environmental and social standards that are binding. With such a powerful Bank in which they are shareholders, this push would result in serious climate protection and social responsibility. The European Union, but above all France and the (still incumbent) German government, have justified their entry into the Bank on the grounds that they want to enforce higher standards in lending. They must now provide proof of this.”
Wawa Wang, Just Finance International
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Dave Walsh, Communications Advisor
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