Catalog

1. Environment Interventions for Poverty Reduction

31. ADB will help DMCs to pursue projects and programs to enhance environmental management and protect natural resources to increase the livelihoods and protect the health of the poor. ADB focuses on environmental improvement and sustainable natural resource management programs and projects that will make the greatest contribution to poverty reduction, and will support the poverty partnership agreements. Where possible, interventions will generate environment benefits not only at local and national, but also global levels. A key consideration will be to adopt a catalytic approach focusing on potentially replicable interventions, with emphasis on mobilization of additional resources. Within the overall context of the CSP process, poverty-oriented environmental programming is directed at three main areas of concern: (i) protection, conservation, and sustainable use of natural resources to maintain the livelihoods of the poor; (ii) reduction of air, water, and soil pollution that directly impacts the health and productivity of poor people; and (iii) reduction of vulnerability to natural hazards and preventing disasters.

a. Protection, Conservation, and Sustainable Use of Natural Resources

32. The priority areas for ADB assistance include (i) maintaining the flow of ecosystem goods and services to sustain the development process, and rural livelihoods in particular, including through the conservation and sustainable use of biodiversity; (ii) protection and improved management of freshwater systems, and coastal and marine resources; and (iii) prevention of land degradation, including desertification. ADB envisages a wide range of loan and TA support to DMCs encompassing the strengthening of national policy and institutional frameworks to provide appropriate incentives for improved natural resource management, including through community-based initiatives, building the capacity of relevant agencies and stakeholders at local level, strengthening rural support services and access to markets and appropriate technologies, and collecting data and generating knowledge.

b. Environmental Quality Improvement

33. By the year 2020, more than half of Asia’s inhabitants will live in cities. The region’s rapid increase in urbanization and industrialization will continue to create a host of environmental problems. It will also exacerbate existing ones related to the health of urban populations, especially the poor. Improving the urban environments in the region will require increased focus on the institutional problems of the inability to pay, low willingness-to-pay, weak capacity, lack of technological and engineering capability, and absence of appropriate policy and legal frameworks. To reduce environmental health risks, ADB will support governments to (i) promote the development of environmental infrastructure and services (including water supply and sanitation) and address absence of appropriate policy, legal and enforcement frameworks; (ii) improve waste management (water, solid, and hazardous waste); (iii) reduce indoor and outdoor air pollution; and (iv) improve slum conditions.

34. Funding for environmental quality improvements is critical and is ultimately the responsibility of both the public and private sectors in DMCs. Users of water supply, wastewater management, and solid waste services should pay a fair and reasonable price for value received, although the needs of the population’s poorest strata must be considered. In most urban centers in Asia, services must be improved to ensure that they are being provided in an economically efficient manner. Financial strategies that include investment and recurrent costs (operation and maintenance) must be adopted. Generators of industrial, construction, medical, and hazardous waste should be responsible for the cost of collection and disposal. Development assistance and government funding are insufficient to meet the needs for capital improvements in water supply and sanitation. To accelerate provision of necessary services, ADB will promote private sector participation and innovative financing mechanisms. ADB will foster the policy reform that must precede new investments. Issues of cost recovery, profitability of utilities and companies, access to capital, and service coverage and level must be addressed. ADB will support greater devolution of decision-making responsibility and authority to local governments as appropriate.

35. Industrial pollution will continue to generate severe environmental problems, unless cleaner production processes are introduced. Governments are beginning to recognize the potential resource savings from programs to promote cleaner industrial production. ADB will continue to assist DMCs to develop policy and institutional frameworks for integrating cleaner production in national, industrial, and relevant sector strategies. ADB is encouraging cooperation among government, the private sector, and academia for effective integration of environmentally sound practices (such as the use of best available technologies, cleaner production techniques, and demand-side management) into industrial development policy. Small- and medium-scale enterprises need to be a focus for pollution abatement as they provide employment for the poor, but also expose them and others to harmful levels of pollution. The power and transport sectors are also major sources of pollution. ADB will assist DMCs to consider increased emphasis on energy efficiency and renewable energy technologies, as well as cleaner fuels and long-term transportation and energy development options that minimize pollution.

c. Reducing Vulnerability to Natural Hazards and Preventing Disasters

36. Changes in the frequency and incidence of disasters in recent years are largely due to socioeconomic change and the impact of human activities on the environment. While increasing emphasis has been placed on disaster prevention and mitigation, most of the DMC effort has focused on post disaster relief and reconstruction. In addition to emergency reconstruction, ADB will encourage governments of disaster-prone countries to place greater emphasis on disaster prevention and mitigation through policy dialogue to highlight, for instance, the need for natural hazard and vulnerability mapping as well as the linkages between natural resource degradation and the incidence of disasters. ADB will strengthen its disaster mitigation activities by incorporating risk and vulnerability considerations in country strategies and in the design of projects in disaster prone areas, and by adopting guidelines and policies to address hazard vulnerability and disaster mitigation issues.

2. Mainstreaming Environmental Considerations in Economic Growth

a. Policy Integration

37. The interdependent goals of economic growth, social development, and environmental protection are managed today by institutions that tend to be independent and fragmented, and that respond to narrow mandates. ADB actively encourages the integration of environmental considerations and objectives at each level of policy development and decision-making, from general macroeconomic policies to improve the quality and equity of growth, to sector development policies. ADB will assist DMCs to establish coherence across sector policies and plans, so as to confront conflicts in environmental management and address policy trade-offs when they arise. In addition, ADB will encourage DMCs to adopt strategic environmental assessment of national development strategies and policies to ensure better integration of environment into policy making and program formulation. ADB will ensure that appropriate attention is placed on addressing environmental opportunities in policy-based lending.

38. Continued policy dialogue is critical to address the following issues: (i) institutional issues, such as integrated planning frameworks, decentralization of environmental management responsibilities, environmental management capacity in sector agencies, and integration of environmental concerns in national accounting and budgeting processes; (ii) financing and resource mobilization issues, such as financing modalities for urban environmental improvement, energy pricing, and public and private collaboration in pollution control; (iii) cross-sector resource management issues, such as river basin management of water resources and integrated coastal zone management; (iv) poverty-environment issues, such as sustainable use and conservation of biodiversity, and community-based resource management to combat land degradation; and (v) the role of traditional knowledge and livelihood systems.

b. Integrated Economic and Environment Development Planning

39. ADB will continue to refine the conceptual framework for integrated economic and environmental planning as well as its supporting tools and techniques. ADB will encourage and support DMCs to integrate economic, social, and environmental planning for subnational development planning. This approach enables consideration of economic, environmental, and social and cultural imperatives. National development strategies rarely contain sufficient detail for such integration. Local and project plans are usually too specific for such considerations. The key level of intervention therefore appears to be at the subnational level, where there is a remarkable paucity of integrated economic and environmental plans. Integrated economic and environment development planning at the subnational level in many DMCs may ultimately be pivotal in achieving sustainable development. A major constraint to improved planning and decision-making continues to be the lack of credible data on environmental status and trends in the DMCs. ADB will work closely with relevant partners to provide strategic long-term support for environmental data collection and management systems.

c. Strengthening Regulatory Systems and Environmental Governance

40. Many DMCs have recognized the relationship between effective environment regulatory systems and good governance. Weak administrative capacities and lack of judicial independence can hamper enforcement of environmental regulations. Resource management regimes that favor rent-seeking behavior can undermine public trust and lead to inefficiencies. Stakeholders do not always have relevant information on the environment, including information on products and activities that are likely to have a significant impact on the environment. Strong and effective institutions are necessary for good governance, but they must also operate within the principles of accountability, transparency, participation, and predictability.⁹ To improve environmental governance, ADB will support and encourage the strengthening of legislative and regulatory frameworks; improvement of public accountability for environmental management responsibilities; development of more effective compliance and enforcement mechanisms; decentralization of environmental management capacity where appropriate; and improved delivery of urban environment services, particularly to the poor. ADB will provide demand-driven TA to strengthen the capacity of environmental management agencies to deliver core functions such as EIA review, environmental monitoring, setting and enforcing of environmental standards, and environmental awareness and training.

d. Market-Based Instruments and Other Policy Instruments

41. Market-Based Instruments. In a growing number of DMCs, there is scope to move beyond a sole reliance on a "command and control" approach to environmental protection, which is still the primary approach to controlling pollution in Asia. As regulatory systems mature, and where the proper enabling conditions are in place, market-based instruments (e.g., taxes, charges, and tradeable permits) could increasingly become useful components of the regulatory framework. ADB will assist DMCs to examine the relevance of alternative policy instruments, including market-based instruments, to identify options for greater flexibility, efficiency, and cost-effectiveness in pollution control and environmental management. Where appropriate, ADB will support DMCs to develop, test, and implement programs for introducing market-based instruments for environmental management to complement command and control regulatory systems. This will build on experience already gained in DMCs, for instance with emissions trading, tradeable effluent permits, and the pollution levy system in the PRC. ADB will ensure that its policy dialogue on market-based instruments and other environment policy innovations will not jeopardize efforts to meet the basic needs of the poor.

42. Ecolabeling and Voluntary Compliance Programs. ADB will assist the development in DMCs of ecolabeling, and other voluntary compliance mechanisms. Ecolabeling schemes select products on the basis of environmental criteria and distinguish them from similar products through a logo or some other form of accreditation. Ways to encourage voluntary participation and involvement of stakeholders include (i) pollution inventories, which provide information to understand pollution problems, identify priority actions, make informed decisions, and identify opportunities for waste minimization and cleaner production; (ii) the disclosure of information on enterprise performance, which allows the public to monitor progress and exert pressure for change; (iii) voluntary agreements reached on the basis of negotiations between environmental agencies and the private sector, or between industry and a community; and (iv) implementation of environmental management systems and the International Organization for Standardization (ISO) 14000 standard series.

e. Promoting Education and Public Awareness

43. ADB is committed to promoting education, public awareness, and capacity building for environmental management. Both formal and nonformal education are essential to changing people’s attitudes and providing them with the capacity to assess and address their environmental concerns. It is also critical for achieving environmental awareness, values and attitudes, skills, and behavior for effective public participation. Environmentally literate communities and volunteer organizations can be instrumental in promoting compliance among polluting industries, especially in DMCs whose enforcement mechanisms are weak. ADB will consider assistance to DMCs to prepare or update national strategies for integrating sustainable development concerns into education at all levels. This may require setting up national advisory environmental education coordinating bodies with representation of various environmental, developmental, education, gender, and other social development interests, including NGOs, to facilitate partnerships and help mobilize resources. ADB will assist educational authorities, with help from civil society, to strengthen preservice or in-service training programs for teachers, administrators, and educational planners, as well as nonformal education, addressing the nature and methods of education for sustainable development.

3. Maintaining Global and Regional Life Support Systems

a. Responding to Multilateral Environmental Agreements

44. In the last few years, ADB has played a facilitating role in the context of multilateral environmental agreements (MEAs), including treaties, conventions, and protocols, particularly to support its regional cooperative efforts. The following criteria help determine where ADB assistance can be particularly helpful to DMCs: (i) ADB will concentrate on thematic areas in which it has already acquired expertise, instead of trying to build capacities in new areas; (ii) ADB will focus its participation on MEAs that have clearly identified roles for multilateral development banks; (iii) ADB participation will make a significant contribution to implementing the MEA within specific DMCs or at the subregional or regional level; and (iv) ADB participation will respond to DMC priorities for the relevant MEA. It is axiomatic that the precise nature of ADB operations in any DMC will be determined through the CSP process, and special attention will be paid to interventions that (i) deliver significant local level benefits as well as global environmental outcomes, (ii) assist vulnerable groups and countries to adapt to global environmental changes, and (iii) facilitate the mobilization of additional resources through the financial mechanisms of the respective MEA.

45. The MEAs that are consistent with these criteria are Agenda 21, the Convention on Biological Diversity, the Ramsar Convention on Wetlands, the Convention to Combat Desertification, the Framework Convention on Climate Change and its protocols, the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, and the Stockholm Convention on Persistent Organic Pollutants (POPs). In addition, regional agreements, such as the South Pacific Regional Environment Programme (SPREP) Convention, have been appropriately supported through standard ADB operations programs. Each of these MEAs may furnish specific themes for environmental activities (i.e., loans and TA), including those that help conserve environmental resources for the livelihoods and health of the poor. ADB will assist DMCs to incorporate relevant commitments and opportunities under these international environmental treaties. The opportunities may also be pursued in collaboration with agencies that have special responsibilities for implementing particular agreements. Some important provisions of these MEAs are summarized in Appendix 6.

46. Financial Resources and Technology Transfer. The special funding mechanisms under the multilateral environmental agreements offer a number of opportunities for DMCs (Appendix 6). However, most DMCs lack the financial, economic, and environment policies; human resources; and technological capacity to take full advantage of these mechanisms. ADB is committed to helping its DMCs access financial and other resources under the designated financial mechanisms of international conventions and protocols, such as the GEF. In light of commitments in MEAs on transfer of technology, the international community at large has an obligation to facilitate developing countries’ access to environmentally sound technologies, although this obligation does not supercede existing intellectual property rights. ADB is committed to supporting its DMCs to develop the capacity to effectively manage the process of technology transfer.

b. Supporting Regional and Subregional Cooperation on Environment

47. Many of the most critical environmental challenges confronting DMCs are regional, commonly occurring in a number of countries, or transboundary in nature. Regional cooperation is a crosscutting theme in ADB’s strategic agenda. ADB will facilitate cooperation in sector and thematic areas through capacity building for decision makers and technical experts. Where relevant and appropriate, ADB will continue to support the development of environmental capacity in regional and subregional organizations to address regional public goods. ADB will

1. continue to support the Greater Mekong Subregion environment program;
2. strengthen subregional cooperation for implementing the Central Asian Republics Regional Environmental Action Plan;
3. expand the environmental cooperation program under the South Asia Growth Quadrangle;
4. expand support for environmental cooperation among Pacific island DMCs;
5. continue to support the North-East Asian Subregional Programme of Environmental Cooperation (NEASPEC);
6. support programs for transboundary resource management; and
7. continue support for environmental programs among Southeast Asian DMCs.

4. Building Partnerships

48. The LTSF outlines ADB’s commitment to work closely with other development partners to complement and build on one another’s strengths. ADB is ready to assume a lead or supporting role among partners in the environment sector or around specific environmental themes in specific DMCs in line with comparative advantage and capacity. ADB will seek strategic alliances for regional or subregional cooperation with development and financial agencies, including United Nations programs and specialized agencies, the World Bank, the European Union and bilateral partners. ADB will also seek to expand its partnership agenda by developing ways of working closely with NGOs, community-based organizations, civil society, and the private sector. The partnerships will be pursued with other institutions at a corporate level, or will involve stakeholder coalitions for thematic issues at national or subregional levels. Where appropriate, partnerships may involve policy dialogue and cofinancing, as well as program and project design, assistance in implementation, and monitoring of development impact.

49. ADB will continue to develop partnerships with international financing and development institutions to increase harmonization of development environment policies and processes, facilitate dissemination of information and data, share environment research and analytical results, build cofinancing arrangements, and strengthen and replicate impacts.¹⁰ This will include the following: (i) ADB will initiate strategic alliances with key NGOs; (ii) ADB will actively increase its partnership with the GEF, and enhance its capacity to help DMCs identify and develop ADB-GEF pipeline opportunities; (iii) ADB will explore opportunities to enter into partnership with other agencies to develop policy-based programs for environmental management in DMCs; and (iv) ADB will continue to participate in the Multilateral Financial Institutions Working Group on Environment to harmonize safeguard policies and procedures.

5. Integrating Environmental Considerations into ADB Operations

50. ADB has developed and refined its procedures for internalizing environmental considerations in its operations since the 1980s. ADB periodically revises its guidelines for environmental assessment to strengthen the process. In addition, ADB’s organizational restructuring has emphasized ensuring compliance with ADB environmental and social safeguard policies by strengthening environmental management capacity in operations departments. An ADB chief compliance officer has been appointed, supported by the Environment and Social Safeguard Division.

a. Country Strategy and Program

51. Country Environmental Analysis. The revised ADB business processes give increased emphasis to preparation of upstream sector road maps and thematic analyses as fundamental elements of a sound CSP. Preparation of a country environmental analysis (CEA) will provide the necessary background information for informed decision making on environmental constraints, needs, and opportunities in a DMC, including those that impinge upon poverty partnership agreements. The CEA will outline environmental issues that are most important to a DMC’s development strategy and describe ADB’s role in helping remove the environmental constraints on the DMC’s sustained development. The objective of conducting a CEA is to ensure that environmental impacts are considered on a par with traditional economic concerns when formulating policies, plans, and programs. The assessment is directed at the policy, program, and sector levels, and not at the project level. The CEA is envisaged as a process that is initiated before the CSP, and continues through CSP preparation to assess potential environmental issues associated with the CSP.

52. It is expected that CEA will evolve as experience is gained in its application. A CEA process will be defined to provide a systematic, replicable approach to the assessment. Guidelines on CEA will enable a more uniform analysis and effective use in the CSP process in DMCs. The CEA will be prepared by the regional department concerned, and will focus specifically on relevant sectors and institutional analysis of direct concern to ADB operations. The analysis will be tailored to the requirements of each DMC, and will purposefully build on complementary work undertaken by other agencies. In addition to enhancing the consideration given to environmental factors in formulating policies, plans, and programs, the information and analysis contained in the CEAs will support and facilitate the downstream environmental assessment of individual ADB-financed projects. The CEA will also provide a basis for monitoring country environmental performance.

b. Lending Operations

53. ADB requires environment assessment of all project loans, program loans, sector loans, sector development program loans, financial intermediation loans, and private sector investment operations. ADB’s environment assessment process starts as soon as potential projects for ADB financing are identified, and covers all project components whether financed by ADB or by cofinanciers. The borrower is responsible for doing the environment assessment in accordance with ADB environment assessment requirements. The borrower is also responsible for implementing the recommendations of the environment assessment. ADB reviews the environment assessment to ensure that it meets ADB requirements, and that it provides a sound basis for project processing and implementation. ADB also monitors the implementation of agreed environmental mitigation measures by the borrower.

54. Environmental Classification. Loans are classified into category A (with potentially significant environmental impacts); category B (with potentially less significant environmental impacts); category C (unlikely to have significant environmental impacts); and a new category, FI, (credit line for subprojects through a financial intermediary, or equity investment in a financial intermediary). A project’s environment assessment category is determined by the category of its most environmentally sensitive component, including both direct and indirect impacts. An IEE is required for category B projects, and an EIA, requiring greater depth of analysis, for category A projects. No environmental assessment is required for category C projects although their environmental implications nevertheless need to be reviewed. The classification scheme helps conserve resources for project preparation, by ensuring that the greatest effort is deployed on projects with potentially the most significant adverse environmental impacts.

55. The process of determining a project’s environment category is initiated by the regional department sector division, which prepares a project environment screening checklist, taking into account the type, size, and location of the proposed project. The sector division director submits the checklist and proposed environment category to the director, Environment and Social Safeguard Division, for concurrence or further discussion as required. Final classification will be the responsibility of ADB’s chief compliance officer. Projects are tentatively classified at initial screening of anticipated potential environmental impacts on the basis of a concept document, and this classification is reconfirmed by the chief compliance officer at the time of the management review meeting. However, classification is an ongoing process, and the environment category can be changed at any time with the approval of the chief compliance officer as more detailed information becomes available and project processing proceeds.

56. Category FI. A loan is classified as category FI if it involves a credit line through a financial intermediary or an equity investment in a financial intermediary. For ADB projects involving equity investment in a financial intermediary, where ADB funds will not finance specific subprojects but where the FI may have operations with adverse environmental impacts, the FI must adopt an appropriate environmental management system, comprising policy, procedures, and capacity, to comply with all relevant government environmental regulations and requirements in its operations. Where ADB involvement is a credit line for subprojects, the FI must adopt an appropriate environmental management system to cover the environmental assessment process of all subprojects to be financed with ADB funds. For category A and environmentally sensitive B subprojects above the free limit,¹¹ the IEE or EIA must be cleared by ADB before subproject approval. For these subprojects, ADB will review compliance with ADB environmental assessment requirements, including those related to consultation and information disclosure. FI projects where all subprojects will result in minimal environmental impacts are classified as category C. The requirements for the environmental management system are given in ADB’s environmental assessment guidelines.

57. Program Loans. ADB requires that the environmental impacts of policy actions associated with program loans be evaluated, appropriate mitigation measures identified, and appropriately incorporated as further loan covenants. The environmental assessment will focus on the policy actions to be supported by the program loan. A matrix of potential environmental impacts of each policy action, together with appropriate mitigation measures, will be prepared, with a qualitative indication of the likely order of magnitude of each impact, and brief reasons for the judgment. The principles followed in preparing the matrix include screening of potential environmental impacts (including indirect impacts); mitigation of potential adverse impacts to the levels of “no significant harm to third parties”; the polluter paying for mitigation measures; least-cost mitigation; and ensuring that the institutional basis for implementing mitigation measures, including environmental monitoring, is in place. Strategic environmental assessment, which facilitates systematic evaluation of the environmental impacts of a policy, plan or program and its alternatives, may be usefully applied in the preparation of program loans.

58. Sector Loans. Feasibility studies, including environmental assessments, are prepared for sample subprojects during formulation of a sector loan. An environment assessment framework needs to be in place to guide the environment assessment of subprojects and facilitate compliance with environment requirements of ADB and the Government during loan implementation. The executing agency must prepare an IEE for subprojects classified as category B, and an EIA for all subprojects classified as category A. Strategic environmental assessment can be undertaken as part of the comprehensive sector study to address social and environmental issues and the sector’s development needs, and identify potential win-win policy interventions that can be included in the policy matrix. Strategic environmental assessment can help identify better and more responsive environmental criteria for selecting subprojects and policies for implementing the sector loan. Strategic environmental assessment is especially useful for assessing the cumulative and synergistic environmental impacts of a series of projects proposed for a sector.

59. Private Sector Investments. Private sector entities and implementing institutions are a diverse group with varying environmental awareness and capabilities, and ADB generally adopts a flexible procedure in dealing with private sector loans, to tailor environmental requirements to the project and expected subprojects. Nevertheless, the substance of ADB’s environmental assessment requirements for private sector investments is the same as that for the public sector. For direct investments and equity investments with specific identified projects or subprojects, the standard environmental assessment requirements for project lending will be applied. For indirect investments in the form of a credit line and equity investment operations through a financial intermediary where some subprojects are known only during project implementation, ADB’s environmental requirements for loans involving financial intermediaries will apply (category FI).

60. Partial Credit Guarantees and Partial Risk Guarantees. ADB provides partial credit guarantees to help cover all commercial and sovereign risks for a portion of the debt service, and partial risk guarantees to guarantee all or part of the debt service to against a specific list of risk events that may adversely affect project viability. These guarantees can cover a wide range of debt instruments including loans from private financial institutions and bond issues. In principle, any project eligible for ADB lending is eligible for the use of a guarantee. To ensure that standard criteria and procedures for ADB loans are followed, guarantees can be extended only in the context of projects and programs in which ADB participates.¹² Thus, ADB must have a stake in the project in the form of a direct loan or an equity investment. In all cases, ADB environmental requirements for loans or equity investments will apply, whichever is relevant.

61. Environmental Assessment Reports. For category A and B projects, the borrower prepares environmental assessment reports. The borrower also prepares the summary IEE and summary EIA reports. Important considerations in preparing the environmental assessment include assessing induced, indirect and cumulative impacts, examining alternatives, achieving environmental standards, designing least-cost mitigation measures, developing appropriate environmental management plans and monitoring requirements, formulating institutional arrangements, and ensuring meaningful public consultation. ADB recognizes that conventional project-focused EIA has limited application to policy-based lending instruments, like program loans. Such interventions benefit from upstream policy analysis tools, such as strategic environmental assessment. The format of the environment assessment report for program loans is flexible, but includes a matrix describing the environmental consequences and mitigation measures for the policy actions underpinning the program loan. For FI projects, the environmental assessment report includes a description of the environmental management system to be applied by the financial intermediary.

62. Environmental Standards and Emission Levels. In determining appropriate environmental standards for ADB projects, ADB will follow the standards and approaches laid out in the World Bank’s Pollution Prevention and Abatement Handbook.¹³ This handbook describes generally acceptable pollution prevention and abatement measures and emission levels. However, as in the case of the World Bank environmental assessment procedures,¹⁴ the environment assessment for any individual project may recommend adoption of alternative emission levels and approaches to pollution prevention and abatement. This flexibility is required to best reflect national legislation and local conditions in determining the appropriate standards and emissions levels. In all such cases, the environment assessment report will provide justification for the levels and approaches chosen for the particular project or site.

c. Public Consultation and Information Disclosure

63. Public Consultation. ADB requires public consultation and access to information in the environment assessment process. For category A and B projects, the borrower must consult with groups affected by the proposed project and local NGOs.¹⁵ The consultation should be carried out as early as possible in the project cycle so that the views of the groups to be affected by the project are taken into account adequately in the design of the project and environment mitigation measures. Such consultation will also take place during project implementation to identify and help address environmental issues that arise. For category A projects, the borrower will ensure that consultation will take place at least twice: (i) once during the early stages of EIA field work; and (ii) once when the draft EIA report is available, and prior to loan appraisal by ADB. The public consultation process needs to be described in the EIA and summary EIA reports. ADB’s revised Environmental Assessment Guidelines describe the specific best practice procedures for consulting stakeholders and providing access to information.

64. Information Disclosure. Environmental assessment reports for ADB projects are intended to be accessible to interested parties, and the general public. The summary IEE/EIA reports are required to be circulated worldwide, through the depository library system, and are placed on the ADB website. The full EIA or IEE reports are also made available to interested parties upon request. ADB’s “120 day rule” requires that the summary EIA, or in relevant cases the summary IEE, is made available to the general public at least 120 days before Board consideration of the loan, or in relevant cases, before approval of significant changes in project scope. The 120 day rule applies to all public and private sector category A and selected category B projects deemed to be environmentally sensitive.¹⁶ To facilitate the required consultations with project affected groups and local NGOs, the borrower will provide relevant information on the project’s environmental issue in a form and language(s) accessible to those being consulted.

d. Implementation, and Monitoring and Evaluation

65. Environmental Management Plans and Loan Covenants. Category A and environmentally sensitive category B projects require, as part of the environmental assessment process, the development of environmental management plans (EMPs) that outline specific mitigation measures, environmental monitoring requirements, and related institutional arrangements. Loan agreements include specific environmental covenants that describe environmental requirements, including the EMPs. The provisions for the EMPs must also be fully reflected in the project administration memoranda. To ensure proper and timely implementation of the EMPs and adherence to the agreed environmental covenants, ADB requires, for all category A projects and all environmentally sensitive category B projects, that (i) borrowers/executing agencies submit semiannual reports on implementation of EMPs, and this requirement is reflected in the loan agreements; and (ii) annual environmental review missions from ADB conduct a detailed review of environmental aspects of projects to ensure that the borrower/executing agency is implementing the EMPs and fulfilling the environmental covenants.

66. Project Completion Reports and Project Performance Audit Reports. To ensure proper documentation of the actual environmental impacts of the project and the success of the EMP, the project/program completion report (PCR) prepared by ADB’s projects departments will include (i) a concise history of the environmental aspects of the project to completion, (ii) an evaluation of the implementation of the EMP and environmental loan covenants, and (iii) an assessment of the performance of the executing agency. The environment section of the PCR is based on the facts documented in executing agencies’ semiannual reports and review missions' back-to-office reports. To foster organizational learning and project improvement, ADB’s Operations Evaluation Department prepares project/program performance audit reports which are independent evaluations and include an analysis of the effectiveness of the EMP in achieving the intended objectives. The reports also assess the PCR’s environmental reporting for its adequacy, and focus on specific environmental issues as documented in the PCR.

67. Unanticipated Environmental Impacts. Where unanticipated environmental impacts become apparent during project implementation or after project completion, ADB will assist executing agencies and other relevant government authorities to assess the significance of the impacts, evaluate the options, and estimate the costs of mitigation. ADB will also help DMCs find the resources needed to mitigate the damage. Project completion review missions will place special emphasis on reviewing project-induced environmental concerns, and will be expected to make appropriate recommendations to address these. ADB resident missions will take on an increasing role in working with DMCs to resolve outstanding issues. If unanticipated impacts are identified after a loan is closed, ADB will encourage, and assist as required, the borrower to plan and implement remedial measures.

e. Environmentally Responsible Procurement.

68. ADB lending currently generates about $5 billion worth of procurement per year. The associated activities could have considerable environmental, social, and economic impacts. ADB seeks to reduce consumption of harmful substances and promote responsible business without comprising the need for economy, efficiency, equal opportunity, and transparency. ADB will encourage borrowers and executing agencies to ensure, wherever possible, that the goods and services procured under ADB-financed projects have been produced in a responsible manner with a view to resource efficiency, waste minimization, and environmental considerations. Suitable provisions will be included in loan and project agreements as well as bidding documents to ensure environmentally responsible procurement. This will be done in coordination with other multilateral financial institutions, and with careful consideration to the need to ensure that the competitiveness of DMC firms is not compromised.