The objective is to mobilize private capital investments for the energy sector by investing in renewable energy, energy efficiency, energy storage and microgrid projects in selected AIIB members within developing Asia via a fund.
The SUSI Asia Energy Transition Fund is a private equity fund established to provide institutional investors with the opportunity to take advantage of the energy transition trend in developing Asia and invest in renewable energy, energy efficiency, energy storage and microgrid projects in the region. The target fund size is USD250 million. The first closing date is expected in Q1 2020, whereas the final closing date will be up to 18 months from the first closing date.
AIIB’s Environmental and Social Policy (“ESP”) is applicable to this investment. The project has been placed in Category FI, because the financing structure involves the provision of funds through a financial intermediary, whereby AIIB delegates to SUSI Partners Asia Pte Ltd (“SUSI Asia”) the decision-making on the use of AIIB’s funds for investments into subprojects that meet the conditions to be agreed with the client in the form of eligibility criteria and investment guidelines, and applied through an Environmental and Social Management System (“ESMS”).
SUSI Asia has initiated the establishment of an ESMS that includes screening, categorizing, appraisal, contracting and monitoring of investments supported by AIIB in accordance with the ESP, the Environmental and Social Exclusion List, the Operational Policy on International Relations, regulatory requirements in the jurisdictions of operation and, where applicable, the AIIB Environmental and Social Standards (“ESSs”). SUSI Asia’s Managing Partner will be responsible for the oversight of the ESMS, supported by an environmental and social professional as well as external specialized environmental and social resources for conducting environmental and social due diligence on all investment opportunities. All SUSI Asia staff will undergo recurrent training in the implementation of the ESMS.
SUSI Asia will apply eligibility criteria for selection of investments to avoid, where feasible, those exposed to significant risks, comprising risks of: (i) significant adverse impacts to community health and safety as a result of construction and/or operation of the assets; (ii) significant number of serious injuries and/or fatal accidents during construction and/or operation of the assets; (iii) involuntary resettlement of people; and (iv) impacts on critical habitat, indigenous peoples and cultural resources.
These sensitive activities are either to be avoided or managed in accordance with AIIB’s ESSs.
For all investments supported by AIIB, SUSI Asia will require the establishment of a subproject-level ESMS in accordance with the ESP and applicable environmental and social standards, including appropriate processes to disclose environmental and social information, conduct stakeholder engagement activities, and establish subproject-level grievance redress
mechanisms (“GRMs”) to address concerns and grievances from both project workers and external stakeholders. SUSI Asia will monitor these aspects as part of its subproject monitoring process.
SUSI Asia will be required to periodically disclose the names, locations and sectors of sub-projects that have been supported by AIIB’s investment, subject to regulatory constraints and market sensitivities, and to create an external communication mechanism to address third-party views, enquiries or concerns regarding their own environmental and social processes and outcomes, as well as environmental and social impacts and performances of their AIIB-supportedsubprojects.
AIIB will further review and validate SUSI Asia’s ESMS, and conduct a prior environmental and social review of the initial subprojects to be financed using AIIB funds. Subsequently AIIB will receive an annual environmental and social monitoring report issued by SUSI Asia reporting on the environmental and social performance of all AIIB-supported investments. AIIB will conduct regular monitoring of SUSI Asia’s activities, including visits to selected subprojects, and periodically disclose the names, locations and sectors of subprojects, subject to regulatory constraints and market sensitivities.
Jingyi Zhang
Senior Investment Officer
Elif Sel-Freischlager, CFA
Investment Associate
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