DOMESTIC LAWS

At the national level, approval processes for linear infrastructure development vary between jurisdictions and depend on the infrastructure type, location, and proponent. Most countries do not have a dedicated regulatory regime governing the development of major infrastructure, let alone linear infrastructure specifically. Instead, countries usually have a mix of regulatory tools that apply to various activities and developments, which capture certain phases of the linear infrastructure project development cycle.

EIA laws establish the primary project evaluation and approval processes throughout the ASEAN region. All ASEAN members states81 have adopted EIA legislation or procedures that incorporate EIA requirements for linear infrastructure projects.82 With some variations for local circumstances, the EIA processes adopted in ASEAN reflect the standard procedure recognized universally:83

• Screening

• Scoping and defining terms of reference

• Data collection by EIA consultants

• Preparation of draft EIA report

• Preparation of environmental management plans (EMP)

• Submission of EIA report

• Assessment of EIA report and EMP

• Approval of EIA report and EMP

• Issuing of environmental compliance certificates

• Approval of licenses or permits

• Commencement of project construction

• Commencement of project operations

• Monitoring and compliance with approval conditions and EMP

• Closure or completion of the project

Table 4 summarizes the elements of the EIA systems in the ASEAN member states. The green boxes reflect clear requirements in laws and policies, the yellow boxes reflect partial requirements (laws not directly related to EIA), and the grey boxes reflect the absence of laws or policies, with some of the transboundary EIA elements arising from membership in the MRC. 81  Note that Singapore does not have any specific EIA laws or regulation. Singapore does conduct EIA on an ad-hoc basis and has required EIA assessment and approval for linear infrastructure projects in the past. 82  UNESCAP (2021) Technical Report and Recommendations to Strengthen Environmental Impact Assessment Procedures in ASEAN 83  See EIA Guidelines for Business Project Development in ASEAN Economic

Reflects a clear requirement in the laws and policies

Reflects a partial requirement

Reflects an absencet in the laws and policies

MRC refers to the Mekong River Commission

In the last four years, Thailand, Vietnam, and Indonesia have each amended their national EIA laws and procedures. Regulations and guidance manuals are also being updated, which provides an opportunity to include recommendations for amendment in the EIA process to strengthen and enhance its effectiveness.

In addition to EIA laws, the most common regulatory arrangements relevant to biodiversity, resilience, and inclusion that are applied in ASEAN are summarized in Table 5. Sector specific regulations may also apply, covering rural development, road or rail transportation, and energy. Such sector specific regulations may include design requirements or construction standards, as well as processes for public participation in planning and decision making.

Regulatory area Relevance to linear infrastructure

Environmental impact assessment

Requires the assessment of potential risks of the project and identification of mitigation measures, with approval required prior to construction commencing

Land use planning Defines processes for identifying the types of development that can occur in a region, including zoning, and guiding decisions on land use

Land titling Establishes rules governing the nature of tenure that can be held over land, transfer of rights in land, and processes for the acquisition of land for public purposes

Forestry Governs logging activities in identified forests, including approval for logging to facilitate development activities

Protected areas Establishes processes for demarcating areas of land as protected from certain activities, including development, as well as for seeking approval for exemptions from these restrictions

Endangered species Identifies species at various degrees of risk of extinction and establishes rules for activities that may impact on such species

Water resources management

Governs access to the use of water resources and authorizes the discharge of pollutants into water resources

Disaster risk management Defines disaster risk management systems, which can include requirements or links to construction standards

Access to information Defines rules for the public dissemination of certain information and processes for individuals to seek access to information held by government agencies—this could relate to information about proposed, planned or operational linear infrastructure

Project cycle phase

Project design and financing—EIA approval point comes prior to project proceeding to construction phase EMPs and other conditions of the EIA approval must be complied with through construction, operation, and decommissioning

Strategic planning

Strategic planning; project prioritization and selection; project design and financing; construction

Project design and financing; construction; operation and maintenance

Strategic planning; project prioritization and selection; project design and financing; construction

Project design and financing; construction; operation and maintenance

Project design and financing; construction; operation and maintenance

Project design and financing; construction; operation and maintenance

Strategic planning; project prioritization and selection; project design and financing; construction; operation and maintenance

The application of these regulations and their sequencing varies throughout ASEAN. One consistent point, however, is that an EIA must be approved before a project proposal proceeds to implementation (i.e., before the construction phase commences).

Table 5 shows that most regulations that apply to linear infrastructure development in ASEAN become relevant at the project design and financing, construction, and operation and maintenance phases. They generally relate to specific controls on activities. Land use planning is an area of regulation that is particularly relevant at the strategic planning stage, but in practice is seldom adhered to; detailed strategic plans that clearly identify areas that are or are not appropriate and prioritized for linear infrastructure development are seldom implemented. Land use planning primarily governs zoning the types of development that can be undertaken in urban and peri-urban areas.

The Framework for Improving ASEAN Infrastructure Productivity, prepared by the ASEAN Secretariat in October 2020 under the Master Plan on ASEAN Connectivity 2025 (MPAC), acknowledges the need for improved strategic, landscape-level planning and decision-making processes for linear infrastructure. ASEAN leaders adopted MPAC 2025 in September 2016 with the vision “to achieve a seamlessly and comprehensively connected and integrated ASEAN that will promote competitiveness, inclusiveness, and a greater sense of community.”85 The Framework for Improving ASEAN Infrastructure Productivity recognizes that “new infrastructure projects are being delivered in fast-tracked programs as governments focus on enhancing infrastructure development quickly.”86 In response to this, the framework states that appropriate strategic planning is needed to identify projects that should be undertaken and prioritized, and the trade-offs that are involved in those decisions.87

NON-REGULATORY MEASURES

A wide variety of non-regulatory measures (i.e., those that are not required by the host government’s laws) support improved environmental and social outcomes of linear infrastructure development. Many of these measures are applied to different stages and types of linear infrastructure development around the world, including ASEAN. A proponent or finance institution may apply these measures as part of standard methodologies or due to the nature of the project proposal.

Table 6 provides a summary of some of the mechanisms that apply to linear infrastructure development within ASEAN and demonstrates the variability in the mechanisms and how they might apply directly or indirectly to linear infrastructure projects. The summary also highlights the fact that there is little coordination between these mechanisms and the existing legal framework for linear infrastructure development.

Project proponents and financial institutions also employ a wide range of tools and methodologies during the project design and financing stage of the linear infrastructure project lifecycle. Many of these methodologies strengthen sustainability, resilience, and inclusivity factors at this stage and involve certification possibilities, which can be used to support project proponents’ and financial institutions’ efforts and reporting on

85 ASEAN Secretariat (2017) Master Plan on ASEAN Connectivity 2025, p. 7.

86 ASEAN Secretariat (2020) Framework for Improving ASEAN Infrastructure Productivity, p. 14.

87 ASEAN Secretariat (2020) Framework for Improving ASEAN Infrastructure Productivity, p. 14.

ESG investing. The Sustainable Infrastructure Tool Navigator (https://sustainable-infrastructuretools.org/) is a comprehensive, publicly accessible website dedicated to collating and making accessible many of these tools. This study does not analyze these tools in any detail88 or recommend the adoption of particular tools, but rather is concerned with how ESG investing intersects with the regulatory processes governing the development of linear infrastructure, as discussed in the following section.

Figure 8 provides a summary of the main regulatory and non-regulatory measures that support sustainability outcomes and currently apply to linear infrastructure development in ASEAN.

Table 6: Key tools for building resilient and inclusive linear infrastructure

Tool Relevance to building resilience and inclusivity

Nationally Determined Contributions (NDCs)

Strategic environmental assessment (SEA)

National-level plans set strategies for climate change mitigation and adaptation, which should in turn establish a national context and expectations for the resilience of major infrastructure.

SEA considers environmental effects of proposed strategic actions and provides early warning of cumulative effects and largescale changes, thereby integrating the environment into sector-specific decision-making. Contemporary approaches to SEA emphasize inclusivity and enable broader consideration (in terms of geographic and temporal scale) of the climate resilience implications of multiple linear infrastructure projects.

Ecological corridor planning

Planning for ecological connectivity can maximize biological diversity conservation and, therefore, increase resilience from ecosystem services. Such planning is particularly relevant for both existing and future linear infrastructure.

Multi-hazard risk and vulnerability assessments

Involves the identification of areas prone to various hazards to support planning and decision making on strategies, projects, and mitigation measures that maintain and strengthen resilience. Vulnerability assessments ensure that resilience is understood as a function of the climate risks and the local community circumstances, and therefore strengthens inclusive approaches to decision making.

Free, prior and informed consent (FPIC)

Multilateral development bank environmental and social safeguards

Nature-based solutions

Following FPIC principles is a way of ensuring that there is meaningful participation of key stakeholders in the linear infrastructure project development lifecycle.

Safeguards policies provide a framework for considering the needs of communities and climate resilience, inter alia, in projects funded and supported by multilateral development banks.

Nature-based solutions incorporate natural features or processes into projects or interventions as alternatives to traditional infrastructure. They inherently promote resilience and inclusivity.

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ENVIRONMENTAL, SOCIAL, AND GOVERNANCE STANDARDS

Financing and operational organizations are using environmental, social, and governance (ESG) investing to strengthen the sustainability of infrastructure. ESG investing is broadly understood as “an approach that seeks to incorporate environmental, social, and [corporate] governance factors into asset allocation and risk decisions, so as to generate sustainable, long-term financial returns.”89 While there is limited clarity and consensus around what ESG investing means in practical terms, it is commonly used as a framework for reporting and disclosing information on how enterprises incorporate these factors in their processes and decision-making, as well as on how financial institutions consider these factors when making investment decisions. The IFC has summarized the ESG factors, and examples of common issues under each factor, in the diagram replicated in Figure 9.

The IFC has also released ESG standards that comprise its existing performance standards, which define clients’ responsibilities for managing their environmental and social risks, and the Corporate Governance Methodology, which sets out an approach to evaluate and improve the corporate governance of clients.90

ASEAN member states are also developing guidance for ESG investing. There are also important developments in ESG investing arising from within ASEAN. The stock exchanges in six of the ASEAN member states have issued guidance for listed companies on reporting ESG factors:91

• The Indonesia Stock Exchange has issued the Application of Sustainable Finance for Financial Services Institutions, Issuers and Public Companies (2017)

• Bursa Malaysia has issued the Sustainability Reporting Guide (2020)

• The Philippine Stock Exchange has issued the Sustainability Reporting Guidelines for Publicly Listed Companies (2019)

• The Singapore Exchange has issued the Sustainability Reporting Guide (2018)

• The Stock Exchange of Thailand has issued Guidelines for the preparation of sustainability reports (2012)

• The Hanoi and Ho Chi Minh Stock Exchange, Vietnam, has issued the Environmental and Social Disclosure Guide (2016)

In December 2020, the Monetary Authority of Singapore (MAS) adopted guidelines on environmental risk management for banks.92 In 2022, the managing director of the MAS, Mr. Ravi Menon, was appointed the chair of the Network for Greening the Financial System (NGFS) which now includes over 100 central banks. The NGSF Glasgow Declaration, released at the UNFCCC COP26 in November 2021, stated: “In light of the urgency and seriousness of climate change and environmental issues, we will expand and strengthen our collective efforts to improve the resilience of the financial system to climate-related and environmental risks and encourage the scaling up of the financing flows needed to support the transition towards a sustainable economy.” 93

Environmental

Businesses rely on natural resources and physical assets to perform their operations. Products and services may directly or indirectly impact the environment.

• Climate change

• Carbon management

• Resource depletion

• Pollution

• Energy consumption

• Land use

Social

• Loss of biodiversity

• Water consumption

• Waste management

• Innovations or products or services that reduce environmental impact

To conduct their operations, companies harness the talent and skills of their employees. Products and services, and operating activities involved in production, may benefit society or cause harm.

• Job creation and working conditions

• Equal opportunity

• Diversity

• Training

• Impacts on local communities

• Health and safety

Governance

• Child and forced labor across supply chains

• Grievance mechanisms

• Human rights

• Social impact of products, services, or company operations

• Gender-based violence and harassment

When making decisions and allocating their natural, human and financial resources, companies should consider how they will create long-term value that will benefit all stakeholders.

• Purpose, values and culture

• Board diversity, structure and oversight

• Succession planning

• Executive pay

• Internal controls

• Risk governance

• Ethics and compliance

• Shareholder rights

• Governance of stakeholder engagement

• Disclosure and transparency

Although ESG is not explicitly mentioned in the ASEAN Vision 2025, commitments in the ASEAN Socio-Cultural Community Chapter support key ESG factors. The aim of the ASEAN Socio-Cultural Community is to “be one that engages and benefits the peoples, and is inclusive, sustainable, resilient, and dynamic.”95 This will be achieved by good governance (12.1), promotion and protection of human rights (12.2), environmental protection and intergenerational equity (12.3), climate change and disaster risk resilience (12.4), and promotion of innovation and global connectivity (12.5). Moreover, the ASEAN Capital Markets Forum (ACMF) is working to foster sustainable finance for long-standing development in the region. While developing the ASEAN Sustainability Bond Standards, ACMF published a Roadmap for ASEAN Sustainable Capital Markets. As one of its top priorities, the roadmap highlights that “ASEAN countries need to adopt consistent measures to increase the transparency and comparability of reporting in promoting sustainability.”96

The growth of ESG investing provides opportunities for the formal inclusion of ESG criteria in the linear infrastructure project lifecycle. Importantly, these criteria can be used to promote inclusivity and resilience in the funding analysis, rather than a more traditional down-stream consideration of environmental and social safeguards.