The Project Objective is to promote the reduction of greenhouse-gas emissions as a path to net zero by investing in renewable energy infrastructure, energy solutions and sustainable transportation in Asia, with a leaning towards emerging Asia.
The Project is proposing an equity investment of USD75 million into the Actis Asia Climate Transition Fund (AACT, the Fund) plus a co-investment sleeve up to USD25 million alongside the Fund. The Fund will be managed by Actis GP LLP (Actis).
The Fund is characterized by strong strategic alignment with AIIB’s Corporate Strategy and Thematic Priorities supported by Actis’ solid investment track record in emerging markets. Leveraging Actis’ sectoral expertise in energy and sustainable infrastructure, the Fund mainly targets making investments that align with climate transition themes in the following sub-sectors including (i) renewable energy infrastructure, (ii) energy solutions and (iii) sustainable transportation, via controlling or significant minority stakes. The Fund will also include measures to close gender gaps by improving women’s access to employment, entrepreneurial opportunities, and leadership positions in portfolio companies and their value chains. Geographically, the Fund’s investment strategy mainly targets opportunities that are operating in countries in Asia and the Pacific including India, Indonesia, Malaysia, the People’s Republic of China, the Philippines, Thailand, and Viet Nam.
The Fund is Sustainable Finance Disclosure Regulation (SFDR) Article 9 classified with objectives of materially reducing greenhouse gas emissions on its investments.
Applicable Policy and Categorization. The Bank’s Environmental and Social Policy (ESP), including the Environmental and Social Exclusion List (ESEL) and relevant Environmental and Social Standards (ESSs), applies to this project. The Project is categorized FI, as the financing structure involving a fund, Actis, where AIIB delegates the Fund Manager for decision-making on the use of the Bank funds. This will include the selection, categorization, appraisal, approval, and monitoring of subprojects in accordance with AIIB’s ESP requirements. The environmental and social (E&S) instrument will be the Actis Environmental and Social Management System (ESMS), enhanced as required to be consistent with AIIB’s ESP.
Environmental and Social Instruments. Actis has an ESG policy which the Fund Manager will upgrade to align with AIIB ESP. The Actis approach aligns with, but is not limited to, the UN-supported Principles for Responsible Investment (PRI), the UN Guiding Principles on Business and Human Rights, the UN Sustainable Development Goals (SDGs), the IFC Operating Principles for Impact Management and Task Force on Climate-related Financial Disclosures (TCFD). As is common practice with a robust E&S Management System (ESMS), the Actis ESMS will include an enhanced ESG Policy designed to (i) screen sub-projects against an exclusion list, (ii) assign an E&S risk categorization, (iii) conduct E&S due diligence with an action plan, (iv) monitor E&S risks and impacts of the sub-projects and (v) report to its management accordingly. The ESG Policy is considered to already be broadly aligned with AIIB’s ESP requirement. The Policy is disclosed on the Actis website [link].
Environmental and Social Aspects. Actis targets to invest in (i) renewable energy infrastructure, (ii) energy solutions and (iii) sustainable transportation. Depending on the nature of the asset, unmitigated typical impacts could include, but are not limited to, generation of solid waste, wastewater, noise, and disturbance to nearby residents, water quality impacts, ecological impacts, and local physical cultural resources. Category A subprojects are unlikely to be encountered and where they are, likely to be excluded subject to extensive due diligence. They are mostly site-specific, few if any of them are irreversible, and in most cases mitigation measures can be designed and implemented. Further to that, the ESMS details robust labor and working condition requirements which should be monitored closely by the Actis E&S team and reported to AIIB as required. As an LP, the Bank has excuse rights to be excused from a particular sub-project if the subproject does not meet E&S requirements of the Bank.
Occupational Health and Safety (OHS), Labor and Working Conditions (LWC). Eligible subprojects will conform with the labor laws and standards of host countries and AIIB’s ESP. The anticipated OHS risks and impacts of the Fund and its subprojects are expected to be localized, temporary and can be mitigated through appropriate OHS management plans that are commensurate with the level of such construction or civil or maintenance and monitoring works. As the Actis Fund will invest in assets that include renewable energy, and others, that may give rise to issues of labor and working conditions. The Actis ESMS caters for robust E&S Due Diligence (ESDD) of all assets to be invested into under the Fund, complying with international E&S standards, therefore robust screening on potential issues would be carried out. Actis is required to provide AIIB with an E&S appraisal form for every potential subproject prior to moving forward to ESDD and thus giving AIIB an opportunity for flagging any LWC issues to be included in due diligence. Further to that, the ESMS details robust LWC requirements which will be monitored closely by the Actis E&S team and reported to AIIB as required.
Project Grievance Redress Mechanism (GRM). Actis has established a two-tier GRM system, at the Fund level and at asset level. At Fund level, the GRM is publicized on the Actis website alongside their Complaints Policy [link]. Complainants can also submit grievances by accessing the Speak Up/Whistleblowing Mechanism [link]. At the asset level, the Actis ESMS has provisions for complaints/grievances and the Fund Manager will monitor the performance and applicability of these GRMs. Further, as part of the Fund’s ESDD process, a robust review of the assets of GRM at project level will be undertaken. The information on the Project-affected People’s Mechanism (PPM) of the Bank has been disclosed on the Fund website.
Monitoring and Reporting Arrangement. During Project implementation, AIIB will require the submission of a Project appraisal form, relevant E&S documentation, and annual E&S monitoring reports from the Fund in an agreed format providing an update on the implementation of the enhanced ESMS, and a summary of the E&S performance of each subproject. AIIB will conduct post-reviews of the selection and implementation of subprojects as part of its regular supervision, comprising engagement with the Fund, potential site visits and detailed review of the E&S documentation of selected sub-projects.
Asian Infrastructure Investment Bank
Jingyi Zhang
Senior Investment Officer
Xiali Wu
Investment Associate
