OVERVIEW OF IFC'S SCOPE OF REVIEW IFC reviewed CCM's information publicly available including the current Company structure, Comerci's 2010 corporate social responsibility (CSR) and Sustainability Report and supplemental information provided by the Company's Deputy Procurement Director, who acts as CSR and Sustainability lead for Comerci.Of CCM's business lines Tiendas Comercial Mexicana represents 75% of its revenues, and similar percentage of its suppliers, which mainly involve food companies, but also home goods, apparel and footwear manufacturers. Potential adverse E&S impacts of the GTSF project arise at the level of the Suppliers. All Performance Standards are applicable to operations of potential suppliers to be supported by the Project.In supplier financing programs of this nature, IFC assesses environmental and social (E&S) risk at Suppliers to Buyers (such as Comerci in this proposed transaction) by assessing the Buyers' systems for management of E&S performance of their Suppliers. Therefore the Buyer (Comerci) assessment reported in this Environmental and Social Review Summary considers the application by Comerci of PS1 Social and Environmental Assessment and Management Systems as described below. PROJECT DESCRIPTION This project is proposed under the Global Trade Supplier Finance program ("GTSF" or the "Program") approved by the IFC Board in September 2010. (Original Project Link #28723).Controladora Comercial Mexicana ("CCM" or "Comerci" or the "Company") is the fourth largest retailer in Mexico with 227 retail stores, 74 restaurants and 5 distribution centers under operation as of December 31 2011. It is listed on the Mexican Stock Exchange (BMV) and, as of January 20 2012, had a market capitalization of approx. US$2.1 billion. It has 4 business lines (retail, restaurants, real estate management, and a 50-50 JV with Costco) with retail being the largest one as it represents 75% of its revenues (mainly food). Comerci has supplier finance (SF) program in place with NAFIN providing SF to 700 of its suppliers, the large majority of which are small of medium enterprises (SMEs).The Project will establish a Supplier Finance ("SF") program and make financing available to the suppliers of Commercial Controladora Mexicana ("Comerci" or "CCM" or the "Company"), through the discounting of receivables of the suppliers payable by Comerci. The SF program will have an IFC-funded, uncommitted credit line of US$100mn to be split in: i) US$85 million equivalent denominated in Mexican Pesos ("MXN") and targeted to CCM's Mexican SME suppliers and ii) US$15 million denominated in USD and targeted to CCM's foreign suppliers based in emerging markets. The program will be implemented through PrimeRevenue, a Supply Chain Finance platform, and its local re-seller, E-Factor Network ("EFN"), and it is expected to reach 700 Suppliers the large majority of which will be SMEs. IDENTIFIED APPLICABLE PERFORMANCE STANDARDS PS1: Social and Environmental Assessment and Management System ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE E&S risks associated with Comerci's food suppliers are related to the production of raw materials, initial processing in situ, further manufacturing at industrial level, and distribution. Production of raw material, depending on the foodstuff, and the size and characteristics of the farm, commonly involves issues of labor and working conditions, pollution from fertilizers and pesticides, and management of agricultural waste. On occasion, there may also be impacts related to land acquisition and resource management (especially water). Food processing may also involve issues pertaining labor and working conditions including occupational health and safety, pollution prevention and resource management. A key issue for food production and distribution is food safety, including traceability.The most common E&S risks associated with the apparel and shoe manufacturing sector relate to labor and working conditions, whilst potential adverse environmental impacts can arise from failure of adequate treatment for process or sanitary waste effluents.The above issues are readily manageable and site specific: this is therefore considered to be an E&S Category B project. CCM will be subject to satisfactory CES assessment of their supply chain and supplier compliance with IFC Performance Standards KEY ENVIRONMENTAL AND SOCIAL ISSUES AND MITIGATION PS1: Social and Environmental Assessment and Management SystemSocial and Environmental Assessment and Management SystemsIFC's review of Comerci's Procurement and CSR systems was initially based on publicly available information, supplemented with an interview with Comerci's Procurement Department. Comerci has a well established procurement procedure focused on identifying environmental and social improvement opportunities and helping Comerci's suppliers enhance their performance.The company's main criterion for the selection of suppliers is its capacity for successful selling (i.e. a supplier whose products sell well is a good supplier). Comerci does not currently have environmental and social criteria to screen/select suppliers that are aligned with IFC's Performance Standards on Social and Environmental Sustainability. Instead, the Company rates suppliers according to what the company calls eco-friendliness and works with them to gradually improve their ratings. Comerci's Eco-Friendliness Rating Program (EFRP) was developed together with two reputable organizations, Universidad del Medio Ambiente (UMA) and Ecolosystems (see attachment). The EFRP involves 5 stages: assessment, rating, advisory, capacity building and evolution. The emphasis of the program is to help suppliers improve rather than screen out those who do not comply. To promote high scorers Comerci labels eco-friendly products at the shops and informs customers of the meaning and value of the various ratings.However Comerci's EFRP does not constitute a sufficiently wide-ranging verification system to manage E&S performance in the supply chain in sufficient detail to drawn well-founded conclusions relating to supplier compliance with the Performance Standards. One area for enhancement would be to include auditing programs.Comerci has agreed to develop a supplier assurance program which will have the objective to assess Suppliers' compliance with Performance Standards. This will build upon best practices drawn from Comerci's existing EFRP, together with methodologies used by other large scale Buyers with supplier assurance programs.IFC will advise the Company in the development of these supply chain risk management processes and their capacity to determine and manage supplier E&S performance. In particular, IFC will review the Company's systems against the requirements of the Performance Standards and will seek to understand and, if necessary, agree upon an action plan to improve Comerci's E&S performance rating methodology and criteria for supplier performance. This review will include review of Comerci's social and environmental requirements of suppliers, together with Comerci's ability to be assured of suppliers' performance and bring about performance improvement, through means such as definition of evaluation criteria, self assessment by suppliers, supplier audits by or on behalf of Comerci, and development and execution of action plans for enhancement of supplier performance.Comerci's existing supplier assessment systems include many elements that can be used in or adapted for the Performance Standards-oriented screening, such as use of environmental and social codes/programs. Comerci's participation in third party initiatives will also be considered including Comerci's capacity development initiatives to support suppliers. IFC will also consider details of Comerci's external grievance mechanism to address concerns related with E&S elements in the supply chain, including Comerci's grievance mechanism to cover employees of the suppliers and details of Comerci's procedures to respond to external communications, negative press coverage and queries for operations of the suppliers.Supplier requirementsIn order to enhance Comerci's rating mechanism, the Company may need to follow the example of other established Buyers that categorize Supplier not on the basis of eco-friendliness but on their E&S performance, commonly using a sliding scale (e.g. A to D, 1 to 4), that for the higher rated suppliers is indicative of indicate material compliance by suppliers with Performance Standards. Only suppliers evaluated and categorized highly by Comerci's E&S rating methodology will be eligible for IFC finance.If IFC's evaluation of Comerci's CSR systems identifies additional gaps between these systems and Performance Standards considerations, then Suppliers will also be required to make representations in these areas. For example, most Buyer CSR systems do not consider land acquisition, therefore Suppliers will be required to represent that they have no ongoing land related disputes with respect to the land on which they have operations.

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/