China: Nature Finance Accelerator Program – Bank of Jiangsu

OBJECTIVE

To catalyze private capital for nature finance in support of China’s ecological transition and Kunming-Montreal Global Biodiversity Framework implementation, while harnessing cross-border green finance to scale eco-friendly and climate mitigation investments across selected AIIB members.

DESCRIPTION

The Nature Finance Accelerator Program (NFAP or “the Program”) is AIIB's first standalone investment initiative dedicated to nature finance – an emerging yet increasingly critical area within sustainable finance. The Program aims to scale up investments in nature infrastructure, nature conservation, and nature-based solutions. Under the Program, AIIB will work with Bank of Jiangsu Co., Ltd. (BOJS) and other partner banks through its on-lending facilities to support a portfolio of high-impact, nature-related subprojects aligned with the MDB Common Nature Finance Taxonomy. The subprojects will be primarily located in China's Jiangsu and Zhejiang provinces and are expected to contribute to a paradigm shift toward ecological civilization. In addition, the NFAP will adopt a programmatic approach that integrates subproject preparation with capacity building activities to mobilize private capital at scale.

Under the Bank of Jiangsu Project (the “Project”), at least 80% of the loan proceeds will be earmarked for eligible subprojects classified as nature finance under the MDB Common Nature Finance Taxonomy across China. Eligible nature-related activities will involve one or more of the following: (a) restoring or conserving natural ecosystems, (b) addressing key drivers of nature loss, or (c) integrating nature-based solutions in infrastructure. Priority sectors in the Jiangsu context include Water, Sanitation and Waste Management, and Urban Development.

Up to 20% will be directed toward cross-border green subprojects in emerging market AIIB members, aligned with the Multi-Jurisdiction Common Ground Taxonomy. These subprojects will be required to meet recognized green eligibility criteria and deliver measurable contributions to addressing climate-change-related challenges, with a focus on renewable energy, energy storage, electric vehicles, and related infrastructure and productive sectors along the value chain.

ENVIRONMENTAL AND SOCIAL INFORMATION

Applicable Policy and Categorization: AIIB’s Environmental and Social Policy (ESP), including the Environmental and Social Standards (ESSs) and the Environmental and Social Exclusion List (ESEL), applies to the Project. The Project is assigned as Category FI as the financing involves providing a senior unsecured loan to BOJS, which will on-lend the proceeds to a portfolio of eligible nature finance subprojects primarily located in Jiangsu Province, with a limited allocation to cross-border green subprojects in selected AIIB’s members. Category A subprojects, as defined by AIIB’s ESP, are not eligible for financing. AIIB has delegated to BOJS the responsibility for selection, screening, categorization, appraisal, approval and monitoring of subprojects in accordance with agreed eligibility criteria and BOJS’s enhanced Environmental and Social Management System (ESMS) and retains oversight through prior review and approval of the first three subprojects and all higher-risk activities in line with the AIIB’s ESP requirements. 

Environmental and Social Instruments: The primary instrument for managing Environmental and Social (E&S) risks in the Project is BOJS’s enhanced ESMS which is used to identify, assess, and manage E&S risks across its investments. The ESMS comprises a set of policies and procedures developed with reference to IFC’s Performance Standards and is guided by BOJS’s Environmental, Social, and Governance (ESG) Risk Management Policy, supported by the SuYin Green Finance System for E&S due diligence (ESDD) documentation and environmental benefit tracking. The ESMS will be further enhanced, through an agreed Environmental and Social Action Plan (ESAP) with time-bound actions. The enhanced ESMS of BOJS will be used to guide the ESDD and follow-up monitoring to facilitate the subproject’s compliance with applicable standards. The MDB Common Nature Finance Taxonomy and the Multi-Jurisdiction Common Ground Taxonomy, as well as the trial Biodiversity Finance Catalogue issued by the People’s Bank of China (PBOC), will guide subproject classification, verification, and monitoring. BOJS has established ESG governance arrangements across the Board, senior management, and operational levels, including a dedicated Green Finance Department responsible for reviewing ESDDs and overseeing implementation. For outbound investments, BOJS engages qualified local legal counsel to assess compliance with applicable host-jurisdiction E&S requirements. To further strengthen institutional capacity, technical assistance under NFAP will support BOJS in nature finance verification, significant E&S risk screening, and monitoring of ecological and social benefits. 

Environmental and Social Aspects: The Project aims to support nature finance subprojects primarily located in Jiangsu Province focused on nature-based solutions and ecological restoration, as well as cross-border green subprojects related to renewable energy, energy storage, and electric vehicle component manufacturing in selected AIIB members. Potential environmental risks are anticipated to be moderate, site-specific, and generally associated with land and water use, habitat modification, and ecological restoration activities. While these subprojects are intended to deliver nature-positive outcomes, impacts still require appropriate assessment and management, and are subject to verification of environmental performance through BOJS’s ESMS beyond eligibility classification under applicable nature finance taxonomies. BOJS requires compliance with applicable national E&S regulatory requirements, including relevant permits and approvals covering environmental assessment, resource use, pollution control, biodiversity protection, and other applicable obligations. Land use is expected to be secured primarily through land transfer arrangements, by leasing existing industrial premises, or purchasing land within established industrial parks, rather than land acquisition. Relevant requirements for managing the potential risks and impacts associated with such land use have been incorporated into BOJS’s enhanced ESMS. In addition, BOJS will apply a proportionate approach to screening gender-related risks through E&S due diligence for subprojects financed under the loan. A gender analysis has been conducted in the areas of corporate policies and procedures and governance structure. A gender-related indicator has been included in the Results Monitoring Framework to strengthen institutional capacity and promote the integration of gender-responsive considerations across BOJS’s operations, including nature finance activities. E&S risks of subprojects will be further assessed through BOJS’s enhanced ESMS screening and due diligence procedures. 

Occupational Health and Safety (OHS), Labor and Employment Conditions: BOJS’s existing ESMS includes requirements for the identification, assessment, and management of OHS, labor, and employment-related risks in line with the nature and scale of subproject E&S risks. Eligible subprojects will be required to comply with applicable national labor laws and standards, as well as relevant provisions of AIIB’s ESP. The anticipated OHS risks are expected to be site-specific and primarily associated with construction activities, material handling, and field operations, including worker safety, equipment use, and site conditions. These risks are expected to be temporary and manageable through the implementation of appropriate subproject-level OHS measures, including safe work practices, use of personal protective equipment, and emergency preparedness and response arrangements. AIIB advised BOJS of the importance of labor and working conditions and relevant requirements have been incorporated into the ESAP. All eligible subprojects will be required to comply with applicable national labor laws and standards, as well as relevant provisions of the ESP. 

Stakeholder Engagement, Consultation and Information Disclosure: BOJS has established a consistent practice of publicly disclosing its ESG performance. BOJS has also published an Annual Social Responsibility Report since 2013, which was renamed Annual ESG Report in 2021 and is made publicly available on BOJS’s official website. Since 2023, BOJS has also disclosed its Carbon Emission Reduction Loan Information on a quarterly basis and has published its PRB Self-Assessment Report since 2024. As part of its sustainability approach, BOJS regularly engages with stakeholders, including through its aforementioned sustainability reporting, which incorporates sustainability performance data. Such practice will continue during the implementation of the Project.  BOJS will be required to disclose its E&S policy and an overview of enhanced ESMS in accordance with AIIB ESP requirements. 

Project Grievance Redress Mechanism (GRM): BOJS established a GRM with detailed protocols, and disclosed it on its website. It provides multiple access channels for stakeholders identified, including telephone, mail, complaint boxes, and in-person communication. Subprojects will be required to establish appropriate subproject-level GRMs and inform local communities of their availability. AIIB’s Project-affected People’s Mechanism (PPM) applies to this Project as an independent recourse mechanism. Further information about the established GRMs and PPM will be disclosed in an appropriate manner. 

Monitoring and Reporting Arrangements: BOJS will submit an annual E&S performance report for the Project’s portfolio on an agreed schedule and template. AIIB will conduct post-reviews of subproject selection and implementation, including engagement with BOJS, site visits as needed,  review of E&S documentation, including tracking of corrective actions and ESAP commitments as part of ongoing implementation monitoring, and will undertake prior review and approval of all higher-risk Category B subprojects and of the first three subprojects.