To rebuild flood damaged infrastructure that enables trade with Asia, to restore livelihoods, and reduce the impacts of future climate events in the State of Rio Grande do Sul through a sovereign-backed on-lending program.
The Program for Development and Resilience for the Southern Region (the Project) will support post-disaster recovery of trade-enabling infrastructure, in the sectors of water, flood management, urban, transport, social and other infrastructure. This infrastructure is critical for the support of the State’s export-based economy, as well as social and economic recovery of southern Brazil. The Project will be a sovereign-backed on-lending facility that will allow AIIB’s funding to reach smaller borrowers that AIIB would not normally work with directly. Best practices in enhancing climate resilience will be applied throughout the post-disaster reconstruction, with nature-based solutions incorporated wherever possible.
The Project comprises the following components:
A. Investment in projects that contribute to the economic recovery for Rio Grande do Sul and enable export-based trade (public and private);
B. Investment in Energy Transition and Sustainable Infrastructure, including renewable energy, Climate-positive investments, sustainable urban mobility, investments in trade-enabling infrastructure; and
C. Investment in climate resilience sub-projects in the public and private sectors.
Applicable Policy and Categorization: AIIB's Environmental and Social Framework (ESF), including Environmental and Social Standards (ESSs) and Environmental and Social Exclusion List (ESEL), applies to the Project. The Project is classified as Category FI because it involves the provision of funds through a Financial Institution (FI). Under this financing arrangement, AIIB will delegate to Regional Development Bank of the Extreme South (BRDE), the decision-making authority, regarding the allocation of AIIB's funds to sub-projects that meet the agreed-upon conditions. This includes the selection, appraisal, approval, and monitoring of sub-projects, as well as the oversight of sub-borrowers and sub-projects, in compliance with AIIB's ESF requirements.
Environmental and Social Instruments: BRDE has an approved Social, Environmental, and Climate Responsibility Policy (link) which sets out principles and criteria to ensure that its investments align with best sustainability practices. As a regional development bank in Brazil, BRDE has its own Environmental and Social Management System (ESMS) which has been assessed by AIIB and is deemed substantially aligned with AIIB’s ESF, including ESS and ESEL. Sub-projects involving higher-risk activities will be shared with AIIB for prior review. AIIB’s prior review and consent will apply to the first three sub-loans, all Category A sub-projects, and higher-risk Category B sub-projects. AIIB will conduct due diligence to assess the applicability of ESS requirements for these sub-projects. Furthermore, a Project Operational Manual (POM) is being finalized which will guide the selection, monitoring, and evaluation of sub-projects implemented by sub-borrowers.
Environmental and Social Aspects: The Project will support a range of initiatives, including renewable energy generation (solar), sustainable urban mobility, sustainable productive infrastructure, and investment in resilience projects including drainage improvements for municipalities and corporations. To ensure environmental and social (ES) compliance, due diligence will be conducted on the sub-projects on which BRDE intends to on-lend. Sub-projects may present various ES risks especially where infrastructure works are involved. Such risks may relate to health and safety, noise and dust generation, pollution due to improper waste management, biodiversity impacts and losses due to rehabilitation and modernization of transport and other energy infrastructure. BRDE will be required to confirm that sub-projects do not involve hydropower, land acquisition or take place on Indigenous Peoples' lands. As part of the ES due diligence (ESDD), AIIB has assessed and has deemed adequate BRDE’s processes for gender-related consultations to identify any perceived gender-based violence (GBV) risk or gender inequality in the sub-projects. Adverse ES risks will be managed and mitigated through BRDE’s ESMS and the POM. BRDE has prior experience with other MDBs and relies on internal full-time staff to implement the ESMS. AIIB has assessed BRDE’s technical capacity and confirmed that it has the required experience to effectively implement ESMS.
Occupational Health and Safety (OHS), Labor and Employment Conditions: As part of its ESMS, BRDE will screen all sub-projects for potential labor and working conditions issues. The ESMS also incorporates requirements to identify and mitigate health, safety, social, and environmental risks associated with sub-project activities that may impact employees and disrupt site operations. In general, Brazilian labor laws establish high occupational safety and health (OSH) standards, and worker awareness of these standards is strong. This will be confirmed through monitoring site visits to BRDE clients.
Information Disclosure and Grievance Redress Mechanism (GRM): BRDE has an Information Disclosure Policy (link) which seeks to ensure the dissemination of information related to BRDE and specify the content that must be made available to the public through BRDE’s official communication channels. Therefore, BRDE discloses its Social, Environmental, and Climate Responsibility Policy and an overview of the ESMS on its website(link). Since the Project may involve high-risk sub-projects, including Category A sub-projects/activities, in accordance with AIIB’s Environmental and Social Framework, the Client is required to disclose ES instruments for all Category A activities supported by the Project at least sixty (60) calendar days prior to final approval of the sub-project/activity.
BRDE has an External Communication Mechanism (ECM) known as the Ombudsperson (link), which will be the GRM of the Project to facilitate clarifications, dispute resolution, and enhance engagement between BRDE, its clients, and the general public. Furthermore, under its ESMS, BRDE assesses and monitors whether its clients have in place a GRM that is accessible to both workers and affected communities. This process ensures that all sub-projects financed are adequately covered by an operational GRM system. The information of established GRMs and the Project-affected People’s Mechanism (PPM) of the Bank will be timely disclosed in an appropriate manner.
Monitoring and Reporting Arrangements: BRDE is responsible for the implementation of the Project. A Project Implementation Unit (PIU) will be established within BRDE prior to project effectiveness, which will serve as the main implementing team of the Project and assume primary responsibility for monitoring the progress and performance of the Project. BRDE will be required, based on agreed format, to prepare and submit bi-annual ES performance reports to AIIB for review. The Bank will retain the right to conduct prior reviews and receive advance notifications of potential loans to higher-risk sub-projects. Additionally, the Bank will supervise BRDE’s application of its ESMS on an annual basis.
Banco Regional de Desenvolvimento do Extremo Sul/ Regional Development Bank of the Extreme South (BRDE)
Gustavo Trombini Orsolin
Financial Superintendent
Banco Regional de Desenvolvimento do Extremo Sul/ Regional Development Bank of the Extreme South (BRDE)
Thobias Bassotto Zani
Head of International Fundraising
