China: GLP China Logistics Fund III

OBJECTIVE

The project's objective is to promote the development of smart, modern logistics facilities in China to enhance connectivity, improve efficiency and support sustainable growth.

DESCRIPTION

AIIB will invest in GLP’s 3rd China flagship logistics development fund (the “Fund” or “CLFIII”) as an investor. The Fund’s strategy is to develop, own, manage and operate a diversified portfolio of institutional-grade logistics facilities across China’s Tier-1, Tier-1.5 and Tier-2 cities with a focus on the 58 cities clustered around the Yangtze River Delta, Greater Bay Area, Bohai Economic Region and Central China Region.

ENVIRONMENTAL AND SOCIAL INFORMATION

AIIB’s Environmental and Social Policy (ESP) is applicable to this project. The project has been placed in Category FI, because the financing structure involves the provision of funds through a financial intermediary (the Fund), whereby AIIB delegates to the Fund Manager the decision-making on the use of AIIB’s proceeds for further investing in accordance with the conditions in the Project’s legal documentation to be agreed with the Fund Manager in the form of eligibility criteria and investment guidelines, and applied through an Environmental, Social and Governance Framework (ESGF) which was prepared in congruence with AIIB’s Environmental and Social Framework (ESF), Environmental and Social Standards (ESSs) and the Environmental and Social Exclusion List. AIIB is finalizing its review of the ESGF to ensure consistency between the Fund Manager’s ESGF and the Bank’s ESP, documenting disclosure requirements, applicability of PPM to the project and of the ESP and Environmental and Social Standards.

This ESGF includes screening, categorizing, appraisal, contracting and monitoring of investments supported by AIIB. As per this ESGF, the Fund Manager (i) assesses and quantifies the ESG risks and impacts of potential investees against the applicable ESG regulatory requirements in their jurisdiction of operation and good international industry practices, (ii) defines measures to align their performance with the same, (iii) identifies and enhances ESG-value addition opportunities, (iv) monitors and assesses ESG performance during the investment holding period and (v) monitoring and reports regularly to the Limited Partners and external stakeholders.

For all investments supported by AIIB, potential environmental and social risks will be screened and mitigated using the Fund’s ESGF and complemented by monitoring and supervision by AIIB. For each investment, the Fund Manager shall prepare an Environmental and Social Action Plan (ESAP) determining the required measures to align existing and future operations with the applicable standards. In addition, the Fund requires the establishment of a portfolio company-level ESGS in accordance with the ESF/ESP and, where applicable, the ESSs, including appropriate processes for timely disclosure of environmental and social (E&S) information, conduct of stakeholder engagement activities, and establishment of subproject-level Grievance Redress Mechanisms (GRMs) to address concerns and grievances from both project workers and project-affected people. The information regarding fund-level and subproject-level GRMs, including information regarding AIIB’s Project-affected People’s Mechanism will be timely disclosed in an appropriate manner. The Fund Manager will monitor these aspects as part of its portfolio monitoring process.

The Fund Manager is required to disclose the names, locations and sectors of portfolio companies that are being supported by AIIB’s financing, subject to regulatory constraints and market sensitivities. Furthermore, the Fund Manager is required to create an external communication mechanism to address views of affected people, enquiries or concerns regarding its own E&S processes and outcomes as well as E&S impacts and performance of the portfolio companies invested by the Fund. AIIB will conduct a prior E&S review of the initial investments to be financed using AIIB funds. Subsequently, AIIB will conduct prior review of investments presenting significant E&S risks including issues related to supply chain, and will conduct regular monitoring of the Fund’s activities, including visits to selected investments.