The Project objective is to mobilize private capital to promote clean energy and decarbonization solutions in the Bank’s developing members.
The Project proposes USD50 million fund investment and a co-investment sleeve up to USD50 million in the Brookfield Catalytic Transition Fund (“CTF” or “the Fund”). Its targeted geographic capital allocations are 40-45% in South and Southeast Asia, 40-45% in Latin America, and 10-20% in Middle East and Eastern Europe. The Fund is targeting a total size of USD5 billion.
The Fund will pursue investment opportunities through three primary themes,
Applicable Policy and Categorization. AIIB’s Environmental and Social Policy (ESP) applies to the Project. The Project is classified as FI, as the financing involves an equity fund investment by AIIB to expand CTF investments in clean energy and decarbonization solutions in Emerging Markets and Developing Economies (EMDEs). The financing will support investments undertaken by Brookfield Asset Management (BAM), and its underlying operating businesses. AIIB will delegate decision-making related to the use of its funds to BAM, provided that subprojects meet agreed conditions. This delegation may include the selection, screening, categorization, appraisal, approval, monitoring, and reporting of subprojects in accordance with AIIB’s EESP requirements. Activities listed in AIIB’s Environmental and Social Exclusion List (ESEL) will be excluded from the Project. No more than three Category A investments may be considered on a deal-by-deal basis provided they fully align with AIIB’s ESP including applicable disclosure requirements. Hydropower subprojects will not be proposed under this Fund. AIIB will retain excuse rights where subprojects are not materially aligned with AIIB’s ESP.
Environmental and Social Instruments. CTF has established and maintains a comprehensive Environmental and Social Management System (ESMS) that applies across the full investment lifecycle, including due diligence, acquisition, development, construction, operation, decommissioning, and exit. CTF’s ESMS is aligned with the IFC PS and provides a robust framework for the environmental and social (ES) management of subprojects under this Project. BAM has track record in implementing their ESMS across other funds. CTF is committed to updating its ESMS for compliance with AIIB’s ESP and an overview of the updated ESMS will be disclosed prior to financing approval by AIIB. The updated ESMS will serve as the primary ES instrument for the Project.
Environmental and Social Aspects. Potential environmental impacts in this clean energy and decarbonization focused Fund could arise depending on the nature of the assets at the subproject level. Typical environmental issues include, but are not limited to, generation of solid waste, wastewater, noise, and disturbance to nearby residents, water quality impacts and ecological impacts. Provisions for assessing and managing impacts from associated facilities will be included in the ESMS. The environmental impacts are expected to be project specific and manageable through CTF’s ESMS which focuses on early integration of sustainability considerations into the project lifecycle. For assets in pre-construction or construction phase, CTF’s ESMS requires the validation or preparation of Environmental and Social Impact Assessment (ESIA) instruments inclusive of detailed baselines studies. For operational assets, the sub-project develops an Environmental and Social Management Plan (ESMP) that is to be implemented on a forward basis. Each subproject is required to develop management systems for environmental risk management and establish a grievance redress mechanism/external communication mechanism. Potential social risks may be limited and mainly associated with construction and operational stages. These arise at the subproject level, including labor and working conditions risks, occupational and community health and safety risks, land acquisition and livelihood impacts, and stakeholder engagement challenges, particularly in projects involving large scale infrastructure development or industrial transformation. These risks are expected to be context specific and manageable through CTF’s ESMS. In addition, BAM demonstrates strong gender related reporting at both the Fund and investment levels. The Bank continues to engage with Fund Manager to promote gender inclusion in sub projects.
Occupational Health and Safety (OHS), Labor and Working Conditions. CTF’s ESMS demonstrates that OHS management plans are in place covering their operations. OHS risks for subprojects are expected to be site-specific, primarily arising from construction and field operations. These risks will be mitigated through subproject-level mitigation measures, including safe work practices, use of personal protective equipment, and emergency preparedness. All eligible subprojects will be required to comply with the host countries’ applicable labor laws and standards.
Stakeholder Engagement and Information Disclosure. Stakeholder engagement is a core element of CTF’s ESMS. Engagement is carried out at both internal and external levels, globally and at the operating business level. At the operating business level, engagement is undertaken with a wide range of stakeholders to identify, avoid, and mitigate potential adverse impacts. BAM publicly discloses its sustainability strategy, programs, and performance through an annual Brookfield Renewable Partner’s Sustainability Report and Databook. An overview of CTF’s ESMS and agreed Environmental and Social Action Plan (ESAP) will be disclosed by BAM and AIIB, prior to the first disbursement made by AIIB. In addition, BAM will disclose annual ES documentation during the preceding 12 months, including the name, location and sector of the Fund’s portfolio companies supported by the Bank’s financing, unless such disclosure is subject to the host country’s regulatory requirements or market sensitivities.
Project Grievance Redress Mechanism (GRM) and Monitoring Arrangement. Fund‑level GRM is in place. BAM maintains a confidential global whistleblowing mechanism. Subprojects are required to establish grievance mechanisms accessible to workers and affected communities. BAM will submit an annual ES performance report for the Project’s portfolio on an agreed format and schedule. The Bank will continue engaging with BAM on CTF’s ESMS, ES Management processes, monitoring and reporting requirements to the Bank. Site visits to proposed subprojects will be conducted, as necessary, to identify and address any gaps in respect of subproject performance and ES compliance.
Asian Infrastructure Investment Bank
Jingyi Zhang
Senior Investment Officer
Xuanhe Wang
Investment Officer
Brookfield Asset Management Ltd.
Brookfield Investor Relations
