Environmental and Social Monitoring Report Project Number: 47046-002 August 2020 PRC: Gansu Featured Agriculture and Financial Service System Development Project (January−June 2020) Prepared by the Project Management Office of Gansu Featured Agriculture and Financial Service System Development Project for the Asian Development Bank. This environmental and social monitoring report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. Gansu Featured Agriculture and Financial Service System Development Project Loan Number: 3312-PRC Safeguard Monitoring Report Reporting Period January 1 – June 30, 2020 Prepared by the Project Management Office of Gansu Featured Agriculture and Financial Service System Development Project Date: August 27, 2020 Gansu Featured Agriculture and Financial Service System Development Project Safeguard Monitoring Report 甘肃特色农业及金融服务体系建设项目 安保监测报告 TABLE OF CONTENTS ABREVIATIONS AND ACRONYMS ............................................................................. 3 I. INTRODUCTION ....................................................................................................... 4 II. IMPORTANT ACTION AND SAFEGUARD ............................................................ 9 A. Major actions......................................................................................................... 9 B. Safeguard............................................................................................................. 13 i. Progress of the establishment and implementation of ESMS by FIs: Environment Safeguards...................................................................................................................... 13 ii. Good practices of environment management .................................................... 33 C. Social safeguard .................................................................................................. 36 D. Social and gender ................................................................................................ 39 E. Information disclosure ........................................................................................ 42 F. Progress of implementing grievance redressing mechanism .............................. 42 G. Application of MIS system in ESMS .................................................................. 44 III. EFFECTIVENESS AND IMPACT OF PROJECT ENVIRONMENTAL MONITORING .................................................................................................................. 46 IV. PROBLEMS ENCOUNTERED IN ESMS IMPLEMENGTATION AND SOLUTIONS ..................................................................................................................... 47 A.Issues .......................................................................................................................... 47 B. Solution ..................................................................................................................... 47 V. LESSONS LEARNT AND NEXT STEPS ............................................................... 49 A. Lessons learnt ...................................................................................................... 49 B. Next steps ............................................................................................................ 50 1 Gansu Featured Agriculture and Financial Service System Development Project Safeguard Monitoring Report 甘肃特色农业及金融服务体系建设项目 安保监测报告 APPENDIX 1: SOCIAL AND GENDER ACTION PLAN MONITORING ................... 53 APPENDIX 2: ETHNIC MINORITY DEVELOPMENT MONITORING ...................... 56 APPENDIX 3: ETHNIC MINORITY DEVELOPMENT PLAN ..................................... 57 APPENDIX 4: RECORDS OF COMPLAINTS ............................................................... 68 APPENDIX 5: CREDIT MONITORING ......................................................................... 69 APPENDIX 6: CAPACITY BUILDING ACTIVITIES ................................................... 75 APPENDIX 7: FURTHER SUBLOANS OF THE PROJECT ..................................... 82 APPENDIX 8: SNAPSHOTS OF MIS ............................................................................. 87 2 Gansu Featured Agriculture and Financial Service System Development Project Safeguard Monitoring Report 甘肃特色农业及金融服务体系建设项目 安保监测报告 ABREVIATIONS AND ACRONYMS ADB Asian Development Bank BARA County Agriculture and Rural Affairs Bureau BOF County Bureau of Finance BOG Bank of Gansu BOL Bank of Lanzhou CNY Chinese Yuan CPMO County Project Management Office DARA Provincial Department of Agriculture and Rural Affairs DOF Provincial Department of Finance EES Expenditure Statement EMDF Ethnic Minority Development Framework EMDP Ethnic Minority Development Plan ESMS Environment and Social Management System EUR European Dollar IEE Initial Environment Evaluation FI Financial Intermediary GOC Government of China JRCB Jingning Rural Commercial Bank LRCB Lintao Rural Commercial Bank MARA Ministry of Agriculture and Rural Affairs M&E Monitoring and Evaluation MIS Management Information System MOU Memorandum of Understanding PMO Project Management Office PPMO Provincial Project Management Office RFSP Rural Financial Service Provider SGAP Social and Gender Action Plan USD United States Dollar WHO World Health Organization ZRCB Zhuanglang Rural Commercial Bank 3 Gansu Featured Agriculture and Financial Service System Development Project Safeguard Monitoring Report 甘肃特色农业及金融服务体系建设项目 安保监测报告 I. INTRODUCTION 1. Asian Development Bank (hereafter refers to as ADB) approved the Gansu Featured Agriculture and Financial Service System Development Project (hereafter refers to as the Project) on November 12, 2015. ADB and the Chinese Government signed the Loan Agreement on December 8, 2015 and the project became effective on March 29, 2016. The planned total investment of the project is USD 200 million, including USD 100 million of ADB loan, USD 68.58 million input from Financial Intermediary (hereafter refers to as FI), USD 24.67 million contribution of beneficiaries and USD 6.75 million input of Gansu Provincial Government. The implementation period of the loan project is five years, completion on set on December 31, 2020 and the project closure is June 30, 2021. The maturity of the loan is 15 years including 9 years of grace period. The maturity date of the loan is November 1, 2030. 2. Project resources will be used to support the achievement of four outputs as (i) inclusive and environmentally-friendly featured agricultural production bases developed; (ii) farmer cooperatives and agricultural enterprises financed and strengthened; (iii) rural financial service system developed and enhanced; and (iv) capacity for project implementation and management strengthened. The objective of the project is to enhance the participation of farmers in more productive and market- oriented agricultural activities to achieve income growth. The Implementation Kick- off Workshop convened in Lanzhou of Gansu on June 2, 2016 symbolized the official start of project implementation. 3. As an innovative project of “agriculture + financing”, the most striking difference comparing this project with other projects operated through traditional models is the incorporation of financial intermediaries (FI). Through screening intermediary banks with the required qualifications, about 90% of project loan proceeds is on-lent to the FIs. Through close cooperation between the government and FIs, the FIs via market operation will use project resources to support local featured agriculture and the development of new rural financial institutions. In this process, the government fully plays the role of macro regulation and capacity building at all levels while the banks put their advantages in fund management and operation into full play to enable recycled use of limited funds serving the development of featured agriculture maximize its effects. Meanwhile, the project is meant to explore a sustainable model for financing in support of agriculture. The project also attaches great attention to capacity building of FIs as well as support to new rural financial service providers including rural banks, micro credit companies and mutual cooperatives to enhance the capacity of rural financing services and the development of diversified rural financing system. 4. With FI model, the first batch of selected FIs, including Bank of Gansu (BOG), 4 Gansu Featured Agriculture and Financial Service System Development Project Safeguard Monitoring Report 甘肃特色农业及金融服务体系建设项目 安保监测报告 Bank of Lanzhou (BOL) and Yuzhong SPD Rural Bank established Environmental and Social Management System (ESMS) in June 2016. The newly selected Lintao Rural Commercial Bank (LRCB), Jingning Rural Commercial Bank (JRCB), and Zhuanglang Rural Commercial Bank (ZRCB) established Environmental and Social Management System (ESMS) in January 2019, to assess and manage the potential environment and social impacts of their lending activities, which is an important instrument to implement the environment and social safeguard policies of ABD, and also an important practice of applying ADB’s environment