OVERVIEW OF IFC'S SCOPE OF REVIEW This project is proposed under the US$ 500 million Global Trade Supplier Finance program ("GTSF" or the "Program") approved by the IFC Board in September 2010. (Original Project Link #28723). Under GTSF, IFC will support short-term financing to Suppliers ("Suppliers") in emerging markets selling to large companies ("Buyers") on open account terms. Under this project, IFC will enter into a funded risk participation arrangement with Citibank N.A. ("Citibank" or the "Bank") for financing Suppliers to selected Buyers that are clients of the Bank and for whom Citibank operates supplier finance programs in emerging markets. The Buyers under the supplier finance structures are expected to have management systems and processes to develop the necessary assurance of good Environmental and Social ("E&S") performance among their Suppliers. IFC's supplier due diligence will be based upon IFC's review of the Buyers' management systems and procurement practices applicable to their supply chain that are relevant to E&S practices among their Suppliers, usually as a component of the company's approach to Corporate Social Responsibility ("CSR").The proposed investment is the first project with the Bank under this participation arrangement and it involves provision of financing Suppliers to Goodyear Tire & Rubber Company ("Goodyear").IFC due diligence under the proposed project has involved: (i) consultations with Goodyear staff to understand procurement of natural rubber in Indonesia, the structure of Goodyear's supply chain, including the use and role of traders and/or processors to source rubber and Goodyear's Supplier Code of Conduct that encompasses E&S standards for suppliers; (ii) a review of Goodyear documentation pertaining to E&S standards, trade of rubber, etc; (iii) a review of publically available information describing Goodyear traders and/or processors; (iv) a review of secondary information concerning the state of rubber production in Indonesia and key aspects of the rubber supply chain, and; (v) consultations with key Indonesian actors, including rubber industry associations and conservation NGOs. PROJECT DESCRIPTION The Project involves up to US$50 million under a funded risk participation by IFC in the Bank's supplier finance program for Goodyear. In the first phase of the Project, IFC expects to support over 10 Suppliers of natural rubber originating from Indonesia. In later phases, the Project may be expanded to include Thailand and Malaysia. Further due diligence and development of separate documentation by IFC will occur when and if such expansion is considered.Citibank is a global financial institution, headquartered in the United States, with presence in 160 countries. The Bank currently operates multiple supplier finance programs in North America and around the world. Supply chain finance is a core product of Citibank's overall trade business under Global Transaction Services (GTS). IDENTIFIED APPLICABLE PERFORMANCE STANDARDS In this Project, potential adverse E&S impacts arise at the level of suppliers. Identified suppliers are traders and processors of natural rubber. Several trading companies are subsidiaries of companies active in rubber processing and production of various rubber products. As traders and/or processors suppliers have well established supply chains through which they source natural and/or processed rubber.While all Performance Standards (PS) are applicable to this investment, IFC's due diligence indicates that the investment may have impacts that must be managed in a manner consistent with the following Performance Standards:PS1 Assessment and Management of Environmental and Social Risks and ImpactsPS2 Labor and Working ConditionsPS3 Resource Efficiency and Pollution PreventionBased upon information received by IFC, the Project is not expected to have impacts associated with the following Performance Standards:PS4 Community Health, Safety and Security: - those suppliers solely engaged in trading operations do not generate such impacts and processing operations are generally located in appropriately demarcated areas. Inadvertent encroachment or access to operations by members of local communities, where they may exist, is prevented;PS5 Land Acquisition and Involuntary Resettlement: trading operations do not generate such impacts and processing operations are deemed to already be established, i.e. there are no issues associated with land acquisition;PS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources - this PS does not apply for the reasons described in the following sections (i.e. rubber production in Indonesia is not reported to be characterized by land expansion, and the vast majority of producers are small holders utilizing an agroforestry approach to production).PS7 Indigenous Peoples does not apply as, based upon an understanding of supply chain operations, established processing plants do not adversely impact such communities; and,PS8 Cultural Heritage does not apply to established processing operations. ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE This is considered to be an E&S Category B Project.The most common potential E&S risks associated with production of natural rubber include labor management and working conditions, chemical use and disposal, and conversion of natural/critical habitats. The common E&S risks associated with rubber processing include labor and working conditions (including OHS) and management of effluents. Risks associated with production of natural rubber are manageable although the supply chain for Indonesian rubber is fragmented and has many layers of consolidation, as further described below. Where risks are encountered in processing, they are both manageable and site specific. KEY ENVIRONMENTAL AND SOCIAL ISSUES AND MITIGATION Of the three major producers of natural rubber in SE Asia (i.e., Thailand, Malaysia and Indonesia), Indonesia has the largest area under cultivation but only ranks second (to Thailand) in production. In Indonesia the majority of rubber (around 80-85%) is produced by smallholders; concurring with IFC's understanding of the rubber supply chain in Indonesia, Goodyear Asia reports that 80% of its ultimate supplier base in Indonesia comprises smallholders. Through the supply chain these smallholders supply rubber to processors (generally Indonesian companies located in Jambi and Palembang, Sumatra as well as in Kalimantan).Smallholders produce rubber in what are characterized as agroforestry systems combining forest re-growth with planted rubber. In such systems land may have been cleared for cultivation of annual subsistence crops and then planted with rubber. Beyond such replanting there is little to no new expansion of land dedicated to rubber trees. Low levels of maintenance allow for secondary growth of forest while the rubber plantation develops. The combination of these practices with the lack of expansion to new areas promotes a characterization of primary rubber production in Indonesia as being bereft of significant biodiversity risk. Established large scale rubber plantations (typically associated with processing facilities) are also present.The supply chain associated with bringing rubber to market is extended and in a majority of cases may involve smallholders selling rubber to collectors/aggregators who bring the raw product to processing facilities; these then sell to traders/brokers who in turn sell natural rubber onto the international market. Some traders/brokers are entirely separate to processors (i.e. they act solely as spot traders) and some are known to be subsidiaries of the same company or entity and are therefore vertically integrated. In determining applicable requirements to be made of IFC's clients, and to ensure consistency of practice, the different nature of these relationships has been taken into consideration. PS2 requirements apply to all clients (in particular whether child labor, forced labor and/or significant OHS risks exist among suppliers). PS3 requirements apply to the processing facilities of the allied trader/processing entities and are managed through application of the Goodyear Supplier Code of Conduct (described in more detail below).PS1: Social and Environmental Assessment and Management SystemGiven its heavy reliance on supply contracts with selected traders, Goodyear has developed and, through its contracts, seeks to ensure that Suppliers adhere to an established Supplier Code of Conduct. The code of conduct requires full compliance with applicable national laws and regulations, addresses labor management and working conditions including use of child labor, compensation and working hours, discrimination, forced labor, freedom of association and matters of health and safety and environment.The code of conduct does include provision for compliance verification. IFC understands, however, that this practice is not yet fully implemented. Goodyear reports that they are developing a system that asks Suppliers to self certify compliance to the Supplier Code of Conduct and that this registration will be monitored by Goodyear.

ACCOUNTABILITY MECHANISM OF IFC The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/