Proposed investment is an A loan of up to EUR15 million to Societe Industrielle Moderne Des Plastiques Africains ("Simpa", or "the company"), Senegal's leading plastics packaging company. Simpa manufactures a wide variety of plastic packaging products sold primarily to agribusiness companies and hygiene/cosmetic companies. Simpa is planning a regional expansion by establishing a greenfield plastic packaging subsidiary, Simpa Cote d'Ivoire, in Abidjan (the "Project").Simpa is a supplier of mass consumption injected plastic products, and of flexible thin film plastic packaging solutions for consumer goods, notably food products. The company currently manufactures products from quality rejects (and also scrap collected from outside through resellers), and is procuring raw materials from international companies. The main raw materials are low density polyethylene (LDPE), polypropylene (PP), bi-oriented PP (BOPP), cast PP (CPP), polyethylene tetra phthalate (PET) and aluminum. The production processes include injection molding, extrusion of plastic film, thermoforming, printing and converting. Simpa has also a small bleach and soap production line. For the new plant, Simpa will procure raw materials from international companies and will also use quality rejects.Simpa's existing plant is located in the Rufisque industrial zone, in the suburb of Dakar, Senegal and covers 41,200 m2 of land bought on a willing buyer willing seller basis. The land for the new plant covers 18,000 m2 in modified habitat of the industrial zone in Abidjan-Yopougon, Cote d'Ivoire. Construction commenced in early 2016 and will extend over a period of one year.
OVERVIEW OF IFC'S SCOPE OF REVIEW
IFC's review included a visit to the following sites: existing Simpa plant in Rufisque, plant of supplier of recycled plastics in Thies, and Dakar municipal landfill on February 29 and March 1, 2016. A visit was also conducted to the construction site in Abidjan-Yopougon, Cote d'Ivoire on March 3, 2016. Meetings were held with the following individuals: Simpa General Manager, Plant Manager, Recycling Manager, Finance Manager, Supply Manager, Medical Doctor, Quality Manager, Environment, Health and Safety (EHS) Manager, Human Resources (HR) Manager, workers representatives (4); General Managers of recycled plastics suppliers, Manager, and EPC Contractor. IFC reviewed the following documentation: Draft Environmental Audit, HR Policy, EHS Policy, Health and Safety Committee composition, Life and Fire Safety audit report, Personal Protective Equipment (PPE) procedure, Emergency Preparedness and Response Plan, grievance mechanism for workers, 2016 Training Plan, hazardous materials list, and noise testing results.
IDENTIFIED APPLICABLE PERFORMANCE STANDARDS**
While all Performance Standards are applicable to this investment, IFC's environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards.PS 1 - Assessment and Management of Environmental and Social Risks and ImpactsPS 2 - Labor and working conditionsPS 3 - Resource Efficiency and Pollution PreventionPS 4 - Community Health, Safety and SecurityIf IFC's investment proceeds, IFC will periodically review the the project's ongoing compliance with the Performance Standards
The existing plant is located on land acquired through a willing buyer willing seller transaction, and the new plant will be located on a land leased for a 30-year period owned by an existing company, therefore Performance Standard (PS) 5 (Land Acquisition and Involuntary Resettlement) does not apply. The project is to be constructed in modified habitat in an industrial zone where there are no Indigenous Peoples and there is no known cultural heritage in the area. Therefore PS 6 (Biodiversity Conservation and Sustainable Management of Living Natural Resources), 7 (Indigenous Peoples), and 8 (Cultural Heritage) are also not applicable.
ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE
This proposed investment is an Environmental and Social (E&S) Category B project according to IFC's Policy on Environmental and Social Sustainability because potential adverse environmental or social risks and/or impacts are limited, few in number, site-specific, largely reversible and readily addressed through mitigation measures. Key environmental and social risks and impacts during construction include occupational health and safety, dust emission, noise, and vibration from vehicle transit and earth moving activities as well as the potential for soil erosion. These impacts are expected to be temporary and will be minimized via implementation of the construction environmental and social management plan. Key risks and issues associated with operations relate to environmental and social management, occupational health and safety (OHS), management of hazardous and non-hazardous wastes, noise, volatile organic compound (VOC) emissions and particulate matter, Life and Fire Safety and emergency preparedness and response. Food safety management for packaging material also needs to be considered.
**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability
ENVIRONMENTAL AND SOCIAL MITIGATION MEASURES
IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFC's requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.
PS 1: ASSESSMENT AND MANAGEMENT OF ENVIRONMENTAL AND SOCIAL RISKS AND IMPACTS
Environmental and Social Assessment and Management SystemSimpa in Senegal was certified against ISO 9001, a quality management system; The facility will be re-audited in 2016 with the intention of again being certified against this standard. The quality management system includes procedures related to client's needs, complaints management, internal audits, quality assessment of suppliers, European and West African Economic and Monetary Union regulations compliance, laboratory testing, etc. Simpa is also in the process of obtaining certification against the ISO 14001 environmental management system (by end of 2016) for the Senegal facility.For the existing facility, Simpa has an Environmental and Social Management System (ESMS) which is partially aligned with the requirements of the Performance Standards. Simpa has a policy (described below) that indicates who within the organization is responsible for implementation of the system. The company generally identifies risks and impacts of new projects through an Environmental and Social Impact Assessments (ESIA). However this needs to be strengthened via a detailed risk and impact identification process at the workstation level and by the development of related management programs/procedures for environmental aspects, occupational health and safety, and fire safety. More details on requirements are provided in the paragraphs below.For the new plant in Cote d'Ivoire, Simpa will develop and implement an ESMS in line with IFC's Environmental and Social Performance Standards. As outlined in the ESAP (action #1a), the ESMS will incorporate the following elements: (i) a policy that will indicate who within the organization will ensure compliance and be responsible for its execution; (ii) identification of risks and impacts; (iii) management programs/procedures for environmental aspects, occupational health and safety, and social aspects; (iv) organizational capacity and competency; (v) emergency preparedness and response; (vi) monitoring and review; and (vii) a community grievance mechanism in order to manage communication with customers and outside communities.PolicySimpa has an EHS and HR Policy. The EHS Policy includes provisions related to the ESMS, compliance with laws and regulations, internal and external audits, assessment of EHS issues at design and operations phase, pollution prevention, communication, and responsibility. The HR Policy is described under PS 2.Identification of Risks and ImpactsAn environmental audit of the existing Senegalese facility was prepared by a local consultant in 2015. Main recommendations identified in the audit include the following: collection of vapors through air extractors and subsequent treatment of gas stream by removing VOCs is required; hot temperatures in permanent work environments should be avoided through implementation of engineering controls and ventilation; need to set up a circulation plan and adequate signage, and improve evacuation routes; development of a waste management plan; improve enforcement of PPE use; and build secondary containment for all hazardous materials. For the new facility in Cote d'Ivoire, an Environmental and Social Impact Assessment will be developed as required by Ivorian law (Decree 98-43 of 28 January 1998).Management ProgramsSimpa has procedures in place for the following aspects: PPE rules, training (first aid, fire prevention, employee induction), and accidents. As outlined in the ESAP (action #1b), for all future developments, a construction phase Environmental and Health and Safety Management Plan will be developed by the EPC contractor; in addition the contractor will have a full time EHS Officer on site.For the operational phase of the existing facility Simpa has only a few procedures and is yet to develop its management programs for OHS and environmental issues. As indicated in the ESAP, the following procedures will need to be developed and implemented (action #1c): workplace monitoring (e.g., emissions, noise, heat stress, and illumination), hazardous and non-hazardous waste management; management of noise, management of volatile organic compound emissions and particulate matter; Life and Fire Safety; food safety for packaging material; emergency preparedness and response; external communications; monitoring and reporting. Such procedures will equally be part of the ESMS to be developed for the new facility.Organizational Capacity and CompetencySimpa recently hired an EHS Manager to assist with development of the EHS management program. A training framework and an action plan was drafted including that related to EHS issues, Life and Fire Safety, first aid, evacuation drills, hazardous materials storage, accidents reporting, waste management, PPE. A Quality Manager is implementing the quality management system. The company currently has an organizational chart that does not include the EHS position and thus Simpa will amend the chart such that this position reports directly to senior management. As set forth in the ESAP (action #1d), a suitably qualified EHS Officer will also be hired at the new plant.Emergency Preparedness and ResponseSimpa has developed an emergency preparedness and response plan to be validated by local authorities. Major risks include fire and explosion, and hazardous materials spills. The proximity of other industrial facilities induce other emergency scenarios to consider such as ammonia leakage from neighboring plants. To be in line with requirements of PS 1, as set forth in the ESAP (action #1c), the existing emergency plan should be strengthened to include the following aspects: coordination and communication with other neighboring facilities, roles and responsibilities, interaction with authorities, regular drills, decontamination procedures, etc. Evacuation routes should also be improved. Equally, the ESMS for the new plant will include an emergency preparedness and response plan.Monitoring and ReviewThe company has established a draft E&S monitoring and reporting program. Some parameters are regularly monitored such as PPE use, and noise levels. Under the ESMS, Simpa will adopt a structured EHS monitoring and reporting system on environmental, OHS and social impacts of its operations. Monitoring frequencies and methodology will be reflective of the risks and impacts and incorporated into the ESMS; monitoring data will be stored in a centralized database for monthly and annual report production. Simpa will also incorporate Key Performance Indicators related to its activities in order to be able to report upon E&S performance: a) Safety - Lost Time Injury Frequency Rate, Accident Free Days; b) Resource Efficiency - water usage, energy usage, solvent consumption, etc.; c) Staff - Retention and training days, d) Air Emissions (VOCs, particulate matter), and temperature in the workplace. The company will report annually to IFC in relation to any impacts affecting them and associated mitigation measures. These monitoring requirements will apply to the new plant as well.
PS 2: LABOR AND WORKING CONDITIONS
Human Resources Policy and ProceduresThe company has 440 full time employees, and in any given month hires up to 430 daily workers. Third party contractors are mainly hired to carry out construction and maintenance works. Every full-time employee has a contract registered at the "Inspection Regionale du Travail et de la Securite Sociale de Dakar" (Labor Ministry). The company is in compliance with the local labor code governed by a commerce convention, which defines the various work categories, employee benefits, as well as minimum salary to be paid for each type of work. The company contributes to social security and both the client and full time employees contribute to the ''Institut de prevoyance medicale'' (medical insurance for employees and his/her family) as well as to the Caisse nationale de securite sociale'' in case of work accidents. In addition, there is an optional private medical insurance for employees subsidized by the company. In Senegal the minimum age for work is 15 (although harmful work is not legal under 18) and in Cote d'Ivoire, it is 14 years. Simpa is not hiring anyone under the age of 18 years. There is a grievance mechanism but the existing HR Policy (''Rcglement interieur'') does not cover all types of workers; it also lacks provisions related to non-discrimination and equal opportunity, and prohibition of forced and child labor.Construction works for the new plant in Cote d'Ivoire entails the creation of 150 jobs for about one year; all employees will be hired via the EPC contractor; operations will involve 200 workers. As set forth in the ESAP (action #2a), to comply with the requirement of IFC's PS 2, Simpa will enhance its existing approach to HR for the facility in Senegal to ensure compliance with the Performance Standards and specifically include issues related to policies regarding non-discrimination and equal opportunity, and prohibition of forced and child labor amongst others. In addition, the procedures will also ensure the management of contract labor including daily workers aligns with the requirements of this Performance Standard, including that related to OHS management. Equally as it relates to the new facility the company will also develop and implement HR policies and procedures aligned with the Performance Standards (for permanent and contract employees alike) including but not limited to the following provision: working relationship; working conditions; terms of employment; non-discrimination and equal opportunity; grievance mechanism; prohibition of child and forced labor; and occupational health and safety. Once the policy / procedure has been updated for the existing facility this will be communicated to all employees. For purposes of construction the company will ensure that the EPC contractor complies with national requirements, and that all employees have written contracts and they have access to a grievance mechanism.Workers' OrganizationsAs per local labor laws and regulations, current employees have the right to freedom of association. Employees are unionized and affiliated to the CNTS (''Confederation des travailleurs du Senegal'') and CSA (''Confederation des syndicats autonomes''). There are 16 workers representatives at the Simpa facility in Senegal. According to the labor law, workers representatives have the following tasks: ensure that workers grievances are communicated to management and to the Labor Ministry; ensure implementation of OHS preventive measures; propose measures to improve work organization and productivity; and opine on potential retrenchment. The Ivorian labor law has similar requirements that will be enforced at the new plant.Occupational Health and SafetyIn order to minimize OHS incidents, Simpa provides PPE such as ear plugs, foot wear and gloves. During the site visit, IFC observed that not all employees were wearing adequate PPE (e.g., loading of trucks without protective footwear). Noncompliance with PPE was more prominent with subcontractors, and daily workers. Heat stress is a concern through most of the facility as are VOC and particulate matter emissions. There is also no clear approach to safety and associated movement of vehicles / rolling stock on-site. Pavement markings for workers safety also need to be improved. Simpa records accidents for the purpose of reporting to the social security services. An OHS committee was set up in March 2015 and is composed of 6 members (Plant Manager, Doctor, Quality Manager, EHS Manager, and 2 workers representatives). The committee meets once a month, inspects each workstation, prepares a report including preventing measures and proposes an action plan. The number of minor injuries is high (>200 in 2015), though only one major accident occurred in the last 6 years. There is a clinic on site.Given the number incidents and to be in line with requirements of PS 2 related to adequate OHS management, Simpa will conduct a third party OHS audit for the existing facility in Senegal and this will include workplace monitoring associated with heat stress, exposure to VOC's and particulate matter emissions, lighting and noise, and review the approach to machine guarding and traffic safety (action #2b). In addition, gaps will be defined relative to the existing OHS systems and that as aligned with the requirements of the Performance Standards; thereafter the client will agree with IFC on a time based plan to implement actions to address the gaps identified including the findings associated with the environmental audit as referenced under PS1. Similarly, following commissioning of the new plant, an OHS audit will also be undertaken to assess project compliance relative to the Performance Standards requirements / accepted industry practice; thereafter and based on the audit findings the client will agree with IFC on a time based plan to implement the recommendations of the audit.During the site visit at the construction site, mainobservations related to absence of PPE for a number of workers, and the person responsible for EHS did not have clear procedures to implement. Thus as defined in the action plan for purposes of construction of the Cote d'Ivoire facility, an OHS management system will be developed and implemented as part of the Environmental and Health and Safety Management Plan described under PS 1. The client will also implement engineering controls and ventilation to avoid high temperature in the work environment.Simpa intends to provide workers accommodations for about 20 workers during construction of the Cote d'Ivoire processing plant. Simpa will ensure that standards for workers' accommodations will be compliant with the IFC and the European Bank for Reconstruction and Development Guidance Note on Worker Accommodation Process and Standards (2009).Supply ChainThe existing plant in Senegal uses approximately 200 t/month of recycled plastic out of a total of about 1,300-1,500 t/month. Recycled plastics is sourced from two main suppliers, who provide 90% of the material. The rest is sourced from about 10 smaller suppliers. Most suppliers source their raw material from approximately 2,500 collectors who obtain used plastics from the municipal landfill. Collectors may use children for collecting, sorting, or washing used plastics. In order to mitigate any potential incidence of harmful child labor in its supply chain, as set forth in the ESAP (action #2c), Simpa will adopt a management procedure for its supply chain, which will include the development and implementation of a Supplier's Code of Conduct which will be mainstreamed into its contractual agreements with recycled plastics suppliers. This Code of Conduct will include provisions against child and forced labor in line with requirements of PS 2. Simpa will monitor full compliance with the provisions through regular visits in the field and awareness raising of suppliers. Suppliers will also be mapped by levels of risks. Where remedy is not possible, the client will shift primary supply chain to suppliers that can demonstrate that they are complying with this Perfomance Standard. Results of visits and mapping should be reported in the Annual Monitoring Report (AMR).
PS 3: RESOURCE EFFICIENCY AND POLLUTION PREVENTION
Resource EfficiencyAt the Senegalese facility, energy is provided by the national grid and four back-up generators (4 X 1,000 kVa) supplied via a 10,000 L and 15,000 L diesel tank respectively; both of these do not have secondary containment. Approximately 18,000,000 kWh of electricity are consumed annually. Simpa owns 10 trucks (10 tons) and maintenance is not carried out on site. Annual GHG emissions of the existing operations are estimated at around 12,000 tonnes CO2 equivalent. To be in line with requirements of this PS, as set forth in the ESAP (action #3a), Simpa will ensure that all hazardous materials (e.g. hydrocarbons, solvents, ink, chlorine) in the existing and future facilities have adequate secondary containment.Water ConsumptionAt the existing facility, potable water comes from the municipality and cooling water from 2 boreholes. There is no process water, except for washing equipment at the bleach production line. Water is also used for sanitary purposes. Total quantity usage in 2015 was 19,000 m3. At the new facility the situation will be similar with water being sourced from the municipality, but there will not be any bleach production.Pollution PreventionAir emissions are the main source of pollution at the Senegalese facility. Flexography, thermoforming, and the area for ink preparation are a source of VOCs, and particulate matter. Very limited emissions controls are in place in the form of a few air extractors and aeration ducts and air emissions monitoring is not conducted. Recommended pollution prevention and control techniques may include optimization of processing conditions for handling and mixing; filter air exhaust from material handling using cyclone and/or baghouse; and capture and control fugitive emissions from production devices.To be in line with requirements of this PS, air emissions monitoring will be carried out monthly by an independent and certified laboratory in the existing and future facilities. Expected results should be within specific and general World Bank Group Environmental, Health and Safety or national guidelines values. The client will also need to audit the facility in Senegal and the design of that in Cote d'Ivoire to define efficient pollution prevention and control systems for VOC and particulate matter emissions (e.g. use of enclosed storage for all solvent and cleaning fluids; installation of ventilation control systems; air extractors and gas treatment by removing VOCs; filter air exhaust from material handling and granulation areas using a cyclone and / or baghouse) (actions #3b). This audit which will be conducted by a suitably qualified specialist, will also include a review of engineering controls and ventilation for both facilities to avoid high temperature in permanent work environments; and will propose improvements. Based on the findings of the audit the company will agree on time based plan with IFC to implement the recommendations for the plant in Senegal, and equally agree with IFC on those measures to be implemented at the new plant under construction.WastesIn Senegal, plastic quality rejects are recycled and reused by Simpa. Other wastes include wrapping material, empty containers (for inks, solvents, chorine), used rags, etc. Solid waste except plastic is not sorted and sent to the municipal landfill. To be in line with requirements of IFC's Performance Standards as set forth in the ESAP (action #1c), Simpa will develop a hazardous and non-hazardous waste management plan that will include the following: review of all waste sources, quantities, pollution prevention opportunities, and necessary treatment, storage, and disposal infrastructure. For hazardous waste, the plan should also include an occupational health and safety component, including hazard communication and training programs to prepare workers to recognize and respond to workplace chemical hazards, safe operating and materials handling procedures, and basic emergency procedures.At the existing facility wastewater comes from sanitary sources, stormwater, and the bleach and soap production line (from washing equipment). Part of the sanitary water is sent to a septic tank and then collected by a specialized company for disposal; shower water from the ablutions is discharged along with stormwater in the municipal drainage system for which there is no treatment process. Washwater from the bleach production line is accumulated in a tank and then disposed of in a nearby field. Given the varied approach to waste water management, the company will agree with IFC on implementation of a time-based plan to ensure that the wastewater is disposed of in line with requirements of this Performance Standard (action #3c).For the new facility, stormwater will be separated from sanitary wastewater streams in order to reduce the volume of wastewater to be treated prior to discharge. Simpa will ensure compliance with national or local standards for sanitary wastewater discharges or, in their absence, the applicable World Bank Group EHS Guideline values applicable to sanitary wastewater discharges. Oil water separators and grease traps will be installed and maintained as appropriate at refueling facilities, workshops, parking areas, fuel storage and containment areas (action #3c).
PS 4: COMMUNITY HEALTH, SAFETY AND SECURITY
Community Health, Safety and SecurityThe Senegal facility is located in an industrial zone as is the facility in Cote d'Ivoire. In Senegal, the client has 10 trucks (10 tons) and this project will not induce any increased traffic in neighboring areas. Most of the transport for the future plant will be done by third party operators and the industrial nature of the zone will not affect communities.Infrastructure and Equipment Design and SafetyIn September 2015 a Life and Fire Safety (LFS) audit was conducted at the existing facility. Main recommendations were as follows; augment the capacity of water reserves as well as number of extinguishers; properly recharge and test all extinguishers; install fire hose cabinets especially where flammable materials are stored; install fire sirens, smoke alarms and detectors, and connect to a central switchboard; etc. Simpa is currently implementing the audit recommendations. As set forth in the ESAP (action#4a), once corrective actions are implemented, the client will confirm compliance with national regulations and Life and Fire Safety international standards.The company is in the process of engaging a suitable consultant to review the approach to the design of LFS at the new facility and based on this will implement the recommendations accordingly to ensure compliance with national standards and accepted industry practice.Security PersonnelIn Senegal, security arrangements are made by the client. There are 6 non-armed guards permanently stationed at the premises and a CCTV system. Before hiring non-armed security personnel in Cote d'Ivoire, Simpa will make reasonable inquiries to investigate the employment statement and other available information, including any criminal record, of individuals or firms and will not employ or use any individuals or companies that have abused or violated human rights in the past.