Asian Infrastructure Investment Bank (AIIB) | Project-Affected People’s Mechanism (PPM)
The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank headquartered in Beijing, China. The bank’s mission is to foster sustainable economic development, create wealth, and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors.
Asian Infrastructure Investment Bank (AIIB)
Created In: 2016
Headquarters: Beijing, China
Member Countries: 61
Largest Shareholder: China
Mission: By investing in sustainable infrastructure and other productive sectors today, the AIIB will better connect people, services, and markets that over time will impact the lives of billions and build a better future.
Projects funded by the AIIB, whether they are standalone or co-financed, must comply with the bank’s Environmental and Social Framework. This includes standards for environmental and social assessment and management, involuntary resettlement, and Indigenous Peoples.
The AIIB has a Policy on Public Information (PPI), which sets out the bank’s guiding principles on information disclosure and confidentiality.
The Accountability Office
The AIIB is currently establishing its Project-Affected People’s Mechanism (PPM) (formerly known as the Complaints Handling Mechanism, CHM), which will aim to provide an independent, impartial, and effective way to address grievances from project-affected people.
The PPM will be housed under the Compliance, Effectiveness and Integrity Unit (CEIU), which is independent of the AIIB’s management and reports directly to the board of directors. The CEIU’s mandate includes monitoring and evaluating the bank’s portfolio, ensuring policy compliance, and overseeing internal and external grievance procedures.
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Advocating for an Effective Accountability Framework at the AIIB
Accountability Counsel works with NGO Forum on ADB and other civil society partners to ensure that communities negatively impacted by AIIB projects have effective avenues for accountability and remedy. In October 2015, Accountability Counsel co-authored joint recommendations with several CSO partners for the AIIB’s accountability framework, including recommendations regarding procedures for the accountability office and operational-level grievance mechanisms. We also provided suggestions on how to ensure accountability when the AIIB elects to use country and corporate systems to manage environmental and social risks of projects instead of its own Environmental and Social Policy.
Continuing this advocacy, Accountability Counsel and partners submitted recommendations in February 2017 on the process for consultations on the creation of the AIIB’s accountability office, calling for the consultations to be participatory and transparent. In his response, Hamid Sharif, Managing Director of the Compliance, Effectiveness and Integrity Unit (CEIU), assured that the consultations would be meaningful.
In April 2017, the CEIU launched Phase I of the two-phase stakeholder consultations on the proposed Complaints Handling Mechanism (CHM) and invited the public to submit recommendations for the accountability office. Phase I of the consultations included phone calls, meetings, and video-conferences with external stakeholders, including CSOs, which we were able to join and offer our feedback. Phase I also involved consultation with AIIB member governments through their board representatives.
Accountability Counsel and partners submitted joint recommendations for the CHM in June 2017, encouraging the office to follow, and in some areas exceed, the current best practice of independent accountability mechanisms at development finance institutions around the world. The recommendations called on the CHM to be a robust, independent, accessible, transparent, and impartial accountability office. We covered the CHM’s mandate, functions, structure, information disclosure and outreach, and the complaint process in our recommendations.
The CEIU released a draft policy for the AIIB’s accountability office, rebranded as the Project-Affected People’s Mechanism (PPM) on 25 January, 2018, commencing the second phase of the public consultations. The policy marked a disappointing first draft because it failed to meet a number of basic, best-practice principles. We took part in a face-to-face consultation on the draft policy in Manila in February 2018 hosted by NGO Forum on ADB.
On 26 March 2018 Accountability Counsel and several partners submitted joint recommendations as a part of the second phase of the public consultations. The submission included a critique of the current draft PPM policy, highlighting areas where the draft policy failed to incorporate our recommendations from the first phase of the consultations. We called on the CEIU to substantially revise the draft policy to address fundamental flaws related to the accessibility, transparency, and legitimacy of the mechanism.
In September 2018, Accountability Counsel and its partners provided further recommendations on the AIIB’s Accountability Framework, which governs project approval procedures and the Board’s relationship to management.
We will continue to work with NGO Forum on ADB and other partners in the International Advocates Working Group (IAWG) to ensure that the PPM is an effective avenue for remedy for communities negatively impacted by AIIB projects.
Accountability for AIIB Financial Intermediary Financing
Accountability Counsel is also working with partners to ensure that AIIB financing of financial intermediaries (FI), that is providing financing through other banks and funds, does not harm vulnerable communities, and if it does, communities are able to effectively seek remedy for harm. In January 2018, we joined a joint CSO letter calling the AIIB to have robust policies and systems around FI lending to guarantee transparency, accountability and efficient channels of communication with all stakeholders. The AIIB responded in February 2018 and committed to reviewing its FI financing in order to reflect the latest good practices in managing environmental and social risks. We will continue to work with our partners to ensure that the AIIB effectively manages the risks of FI lending and provides access to accountability and remedy for communities that are negatively impacted by these investments.
Accountability for Chinese Overseas Investment
In November 2017, Accountability Counsel participated in a workshop in Beijing with all major Chinese commercial and policy banks to discuss the role of accountability offices as China spends a trillion dollars in dozens of countries for the Belt and Road Initiative (BRI). The workshop was organized by the China Banking Regulatory Commission, China Banking Association, the Green Finance Committee of the China Society for Finance and Banking, and Greenovation Hub. Accountability office representatives from the World Bank, IFC, ADB, and AIIB also participated in the workshop.
In June 2018, we were invited by the Asian Development Bank’s Office of the Compliance Review Panel to present on the importance of accountability offices for Chinese financial institutions at workshops in Beijing and Xiamen. These workshops, which included presenters from Chinese financial institutions, multilateral development banks, accountability offices, and some civil society groups, brought together a diverse audience to explore environmental and social governance and accountability for these important financial actors.
Advocating for Transparency and Access to Information
Accountability Counsel is also pushing the AIIB to enhance its transparency and ensure fair access to information regarding its operations. These conditions are integral to effective access to remedy and accountability. Accountability Counsel signed on to a letter sent to the AIIB Board of Directors on 26 September 2018. The letter highlighted numerous policy concerns and proposed, among other recommendations, that the PPM be authorized to handle complaints related to non-compliance with the AIIB’s Policy on Public Information.