Solar Rooftop Investment Program (Tranche 3): Updated Environmental and Social Management System Arrangement

Environmental and Social Management System Arrangement PUBLIC November 2023 India: Solar Rooftop Investment Program (Tranche 3) Prepared by National Bank for Agriculture and Rural Development for Asian Development Bank (ADB).

This environmental and social management system arrangement 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. Your attention is directed to the "terms of use" section of ADB's website. 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, ADB does not intend to make any judgments as to the legal or other status of any territory or area.

Page | i Contents 1.0 INTRODUCTION 1 1.1 About NABARD 1 1.2 Project Financing by NABARD 1 2.0 PROGRAM OVERVIEW 1 3.0 ENVIRONMENTAL REGULATIONS FOR SOLAR ROOFTOP INSTALLATIONS 2 4.0 ENVIRONMENTAL AND SOCIAL POLICY OF NABARD 5 5.0 SCOPE OF APPLICATION OF ESMS FOR ADB'S LOC 6 6.0 ENVIRONMENTAL, HEALTH, SAFETY, AND SOCIAL IMPACTS 7 7.0 SCREENING, CATEGORIZATION, AND REVIEW PROCEDURE 8 8.0 EHS MANAGEMENT AT SOLAR ROOFTOP INSTALLATION SITES 10 9.0 INSTITUTIONAL STRUCTURE FOR ESMS MANAGEMENT 12 10.0 CAPACITY BUILDING AND TRAINING NEEDS 12 11.0 MONITORING AND REPORTING 13 12.0 GRIEVANCE REDRESSAL MECHANISM & INFORMATION DISCLOSURE 13 12.1 Documentation 14 12.2 Record-keeping 14 12.3 Grievance Redressal Cost 14 12.4 ADB's Accountability Mechanism 14

Appendix-1: ADB Prohibited Investment Activities List 15 Appendix-2: Information Checklist for Solar Rooftop Installations 16 Appendix-3: Environment/ Social Screening & Categorization for Solar Rooftop Installation 18 Appendix-4: Guidance for Initial Environmental Examination (IEE) report for Solar rooftop installations with certain site-specific conditions 22 Appendix-5: EHS Management Plan applicable for Solar Rooftop/Ground Mounted Installation Sites 25 Appendix-6: Institutional Structure for ESMS Management - 27 Appendix-7: Format for receiving grievances from aggrieved person(s) 28 Appendix-8: Format for Environmental and Social Safeguards Monitoring Report (ESMR) for Solar Rooftop/Ground mounted Installations. 30 Appendix-9: Terms of Reference for Engagement of Safeguard Specialist under ADB TA 32

Page | 1 1.0 INTRODUCTION 1.1 About NABARD 1. National Bank for Agriculture and Rural Development (NABARD) is a development bank established in 1982 to foster rural prosperity and is wholly owned by the Government of India (GOI). NABARD partners with other banking and financial institutions and development-oriented government and non-governmental institutions with a mandate to promote sustainable and equitable agriculture and rural development. NABARD, with its headquarters in Mumbai, has 31 regional offices and over 400 development managers at the district level of all states and Union territories across India. 1.2 Project Financing by NABARD 2. NABARD1 is mandated to provide finance/refinance grid-connected solar rooftop installations and contribute to achieving the Government of India's (GOI) ambitious set target in grid-connected solar rooftop installations. 3. The GOI has set an ambitious goal of reaching 40 GW in total solar capacity, with 10.9 GW of grid-connected solar rooftop installations already in operation, and there is vast potential for augmenting the lending portfolio to solar rooftop installations across India. NABARD has thus drawn up plans to expand its lending portfolio/investments in this sector, enabling the transition towards low-carbon and climate-resilient operations and achieving the voluntary goal of carbon neutrality in the coming decade. 4. NABARD already has a line of credit for the solar rooftop segment for commercial, industrial, and residential housing sectors to provide long-term and affordable financing through the Green Climate Fund (GCF). NABARD is accredited as a national implementing entity (NIE) for the implementation of feasible climate adoption projects in India under the Adaptation Fund (AF), set up under the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC). 2.0 PROGRAM OVERVIEW 5. Asian Development Bank (ADB), through the solar rooftop investment program (SRIP), proposes to provide a $500 million sovereign-guaranteed multi-tranche financing (MFF) comprising four tranches.2 The SRIP aims to finance solar rooftop systems through public financial institutions, including the State Bank of India (SBI) and the NABARD. The definition of the solar rooftop has been modified to include ground-mounted solar power installations by the Ministry of New and Renewable Energy, Government of India3. The impacts of the facility would be energy security

1 NABARD's mission is to "Promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives". NABARD as a National Implementing Entity (NIE) of Adaptation Fund, has an accreditation to the Green Climate Fund (GCF) and is committed to all climate change related proposals and programs for accessing Adaptation Fund, Green Climate Fund, and other international funds and to position itself as an ethical Development Financing Institution (DFI). 2 MFF comprise USD 9.5 million to PNB as Tranche-1, 90.5 million loan to SBI as Tranche-2 and USD 150 and 250 million loans as Tranches 3 & 4 respectively to NABARD. 3 Ministry of New and Renewable Energy, Government of India notification dated 5th September 2019, regarding the definition of solar rooftop installations, now include ground mounted solar power installations, Per MNRE notification, the Rooftop Solar (RTS) power plant is a solar power plant installed on the roof of the residential/Institutional/Commercial/Industrial Building and/or on the appurtenant land up to an area equivalent to two times the total super built up area of the Residential/Institutional/Commercial/Industrial Building. The super built up area shall include all Residential/Institutional/Commercial/Industrial Structures being used for these activities and shall also include stores, covered parking etc. as determined by the appropriate State Authorities. The appurtenant land shall be contiguous to the Residential/Institutional/Commercial/Industrial Structure.