Bangladesh: Climate Resilient Inclusive Development Program (Subprogram 2)

OBJECTIVE

To help the Government of Bangladesh (GoB) implement critical policy and institutional reforms to mainstream climate change adaptation and mitigation actions for a sustainable, resilient and inclusive growth of Bangladesh.

DESCRIPTION

Building on the successful implementation of Subprogram 1 of the Climate Resilient Inclusive Development (CRID) program, the proposed Program (Subprogram 2) will further advance the policy reforms initiated under Subprogram 1 through co-financing with the Asian Development Bank (ADB). The CRID program has been supporting the GoB in implementing key policy and institutional reforms to mainstream climate adaptation, mitigation, and disaster resilience across climate-critical sectors while also unlocking climate investments in the country. The CRID program is a Climate-Focused Policy-Based Financing (CPBF).

The GoB has requested financing of USD400 million each from AIIB and ADB for this Program to expand the fiscal space needed to support climate investment priorities identified in the national climate plans. The Program will further support the implementation of the GoB-led national climate objectives as outlined in the National Adaptation Plan (NAP) 2023–2050 and the updated Nationally Determined Contributions (NDC-U) 2021 by strengthening the intergovernmental policy and institutional framework, mobilizing climate finance, and mainstreaming gender equality and social inclusion.

The Program includes the following reform areas: (i) enhancing the enabling environment for climate change actions; (ii) reinforcing climate change adaptation actions; and (iii) accelerating climate change mitigation actions. The Program focuses on policy actions in each reform area and aligns with the short- to medium-term priorities of the NAP and NDC-U in climate-critical sectors, including agriculture, water resources, urban, transport, and energy.

ENVIRONMENTAL AND SOCIAL INFORMATION

Applicable Policy and Categorization. The Program will be co-financed with ADB, as the lead co-financier, and, therefore, the Program’s Environmental and Social (E&S) risks and impacts have been assessed in accordance with ADB’s Safeguards Policy Statement (SPS) applicable to PBF. To ensure a harmonized approach to addressing the E&S risks and impacts of the Program, the ADB’s SPS will apply to the Program in lieu of AIIB's ESP. AIIB has reviewed the ADB’s SPS and is satisfied that: (i) they are consistent with the Bank’s Articles of Agreement and materially consistent with AIIB's ESP, including the Environmental and Social Exclusion List (ESEL); and (ii) the monitoring procedures that are in place to are appropriate for the Program. Based on the E&S assessments carried out according to ADB’s SPS requirements, ADB has categorized the Program as B for Environment, C for Involuntary Resettlement and C for Indigenous Peoples, which are equivalent to Category B of AIIB’s ESP.

Environmental and Social Aspects. The Program focuses on policy and institutional reforms that do not entail involuntary resettlement or impact the lives of Indigenous Peoples. However, it is recognized that some downstream investment activities resulting from specific policy actions under the Program may lead to indirect, short-term, and temporary adverse E&S impacts. To address these potential concerns, implementing agencies will utilize their existing grievance mechanisms, and an E&S Assessment Matrix will be developed and provided during the appraisal process. Additionally, in case needed, technical assistance support may be employed to build capacity and ensure compliance with both the ADB's SPS and the country’s safeguard system. 

Climate Vulnerability Context.  Bangladesh is highly vulnerable to a range of natural hazards, including river, coastal, and urban flooding, cyclones, landslides, extreme heat, and wildfires. Coastal areas in particular are at risk of damaging waves that could flood the coastline at least once every decade. The country also faces the threat of water scarcity, earthquakes, and tsunamis. Climate change is expected to exacerbate Bangladesh’s already significant exposure to these climate hazards, introducing new challenges. As the world’s largest delta, Bangladesh’s riverine topography and geographic location make it particularly susceptible to climate and weather-related impacts, as well as geophysical risks. Future projections suggest that climate change will lead to altered precipitation patterns with more extreme events, rising temperatures, and rising sea levels.

Gender and Climate Change. The Program is classified as effective gender mainstreaming, and the policies adopted will enhance women’s participation and support women’s adaptive capacity. Promoting climate resiliency in the agriculture sector along with GHG mitigation measures would improve the lives, livelihoods, and food security of women. Women are critical in organizing communities, raising awareness, and adopting innovative approaches to promote climate actions and resilience. The gender targets will be monitored and tracked, and adequately reported on in regular Program progress reports. The progress of the gender-related policy actions will be monitored by the steering committee appointed by the Ministry of Finance.

Monitoring and Reporting Arrangement. The Finance Division of the MoF, as the executing agency, will report to AIIB and ADB against each of the indicators and targets included in the Policy and Results Matrix (Annex 1). ADB and AIIB will jointly conduct Program monitoring semiannually. The BCDP under the government leadership, with participation by all relevant government agencies, development partners, and the private sector, will support ministries to monitor climate policy and projects, including the policy actions under the Program.