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 #28723).The proposed project (the "Project") is up to US$30 million uncommitted, short term facility by IFC, subject to a participation by Export Development Canada ("EDC") of 50% of that amount, to support the suppliers of Aldo Group, Inc. ("Company" or "Aldo") in emerging markets. Aldo is a privately held Canadian corporation that produces footwear and operates a worldwide chain of over 1800 shoe and related accessory stores, including franchise stores, with a strong presence in the US and Canada. IFC will provide short term financing to the suppliers of the Company in exchange for their receivables owed by Aldo to help them better manage their cash flow needs as well as to provide them with a cheaper source of financing. The short term facility proposed by IFC is expected to be initially utilized by Chinese and Vietnamese suppliers, and can be expanded to include other emerging markets. OVERVIEW OF IFC'S SCOPE OF REVIEW In supplier financing programs of this nature, IFC's due diligence approach is to asses environmental and social (E&S) risk at supplier level by reviewing buyers' management system and procedures, especially as it relates to managing E&S performance of their Suppliers.IFC due diligence for this proposed transaction involved: (i) a review of Aldo's documentation pertaining to E&S management of the supply chain, including Aldo's Code of Ethics, Aldo Group Ethical Sourcing Policy and samples of compliance audits and action plans of selected suppliers; (ii) written responses to questionnaires regarding Aldo's management of E&S aspects in the supply chain; (iii) conference calls with Aldo's Ethics and Compliance Manager; and (iv) a review of publically available information on emerging issues on the footwear manufacturing supply chain with particular emphasis in China and Vietnam. 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 ImpactsIf IFC's investment proceeds, IFC will periodically review the the project's ongoing compliance with the Performance Standards Aldo's supplier systems consider potential impacts of the suppliers in the aspects related to PS1 (Assessment and Management of Environmental and Social Risks and Impacts) and PS2 (Labor and working conditions); some elements of PS3 (Resource Efficiency and Pollution Prevention) are considered in the audit process. Suppliers are expected to be established manufacturing facilities and therefore potential impacts related to PS5 (Land Acquisition and Involuntary Resettlement), PS6 (Biodiversity Conservation and Sustainable Natural Resource Management), PS7 (Indigenous Peoples), and PS8 (Cultural Heritage) are not expected. Impact of the suppliers activities in nearby communities is unlikely and therefore PS4 (Community Health Safety, and security) issues are not expected. ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE In the shoe and accessory manufacturing sector in emerging markets, key E&S elements are mostly related to labor practices, including child labor, forced labor, occupational health and safety, over-time, and grievance mechanisms; in addition, for the shoe manufacturing sector, management of supply chain issues on sourcing of materials such as rubber and leather are of relevance. Expected suppliers under this facility are mainly assembly lines and are unlikely to process leather or other raw materials, reducing therefore the environmental risks. The potential E&S risks, where encountered, are reversible, may be readily mitigated and are site specific. This is therefore considered to be an E&S Category B project in accordance with IFC's Policy on Environment and Social Sustainability. **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 Aldo's framework to manage its suppliers is defined in the Aldo Group Ethical Sourcing Policy, available at Aldo's website:http://www.aldoshoes.com/us/policies. Aldo has defined the social principles that suppliers are required to follow and monitors the actual progress of the suppliers.A core component of Aldo's policy is the Code of Ethics, which IFC has reviewed. The code includes explicit provisions to addresses forced labor, child labor, disciplinary practices, discrimination, hours of work, health and safety, wages and benefits; in addition, it requires full compliance with local laws and regulations. The Code of Ethics is closely aligned with IFC's Performance Standard 2 on Labor and Working Conditions. Currently the Code does not have explicit reference to worker's organizations, grievance mechanisms, environmental aspects or sourcing of raw materials. Although there are not explicit references to such topics, it was noted that some elements such as employee grievance mechanisms, solid waste, liquid effluents and chemical waste are verified as part of the periodic audits of suppliers in the context of compliance with local law. Aldo will review and update the existing Code of Ethics, applicable to its suppliers, in order to include provisions on environmental aspects. Specific product requirements also apply regarding the use of certain chemicals regulated under California Proposition 65 or REACH (Registration, Evaluation, Authorization and Restriction of Chemicals), both of which include list of hazardous chemicals to be avoided in products and for which Aldo has strict controls in place.Factories involved in the manufacturing of Aldo products undergo compliance audits; the audits cover direct suppliers as well as suppliers producing on behalf of Aldo agents. The social compliance team of Aldo has to approve a factory before it is authorized to manufacture products on its behalf. The evaluation is initiated with a self-assessment, which is later verified by on-site visits. Aldo accepts well known social compliance auditing standards such as Better Work or WRAP. The auditing process is mostly performed by reputable third party auditing companies. Audits are both announced and unannounced,and include on-site inspections as well as on-site and off-site discussions with workers. Audits are performed annually and the follow up of identified non-compliances is performed internally by Aldo. Aldo verifies the capacity of the auditing companies and performs randomly shadow audits to evaluate the results and to confirm the quality of the auditing companies. Audits are performed annually unless there are significant findings, in which case more periodic audits are planned.In cases where non-compliances are identified, the supplier and Aldo agree on a Corrective Action Plan (CAP) with defined dates for implementation. In the event the issues are not addressed by the supplier in the agreed timeframe or it is not possible to do so, Aldohas the right to choose to terminate the business relationship with the non-compliant supplier. However, Aldo aims to have a collaborative approach and supports continuous improvement in the factory's progress.The findings of the audit are scored using an internal Risk Matrix, which considers the level of significance and the priority of the findings. The factory is then scored according to a rating scale from A to D, where factories rated "A" are considered low risk and factories rated as "D" are high risk. The compliance rating is part of a multi-facetted supplier scorecard. These rating scores are communicated to the sourcing division.Aldo has a Social Compliance Team which includes in-house auditors and the Ethics and Compliance Manager. Local procurement and quality teams, which are on daily contact with the factories, provide strong support in identifying potential non-compliances at the supplier's level. Aldo's Global Sourcing teams are trained and use their visits to factories as part of the verification program and they report any identified issues to the compliance team and to the management team. Such support is in addition to the regular independent audits performed at the supplier's factories.Aldo reports internally the results of the compliance program to the sourcing department and to Aldo's management team. Aldo, currently, does not publish a sustainability or supplier's compliance report.Aldo has identified criteria regarding the type of raw materials used for its products, and has preferred vendors. In particular, for chemical substances used in the manufacturing of products, Aldo follows strict requirements as defined by international codes such as REACH; Aldo conducts random testing to monitor for the presence of restricted substances, and non-compliant product can be refused and orders cancelled. Regarding traceability of materials such as leather, Aldo is committed to define and implement a policy for leather sourcing among its primary suppliers, specifically to ensure there are no issues related to leather sourced from cattle raised in the Amazon Biome. Aldo suppliers to be supported under the proposed Project are mostly manufacturers of shoes, handbags and accessories, and are not likely to be involved in direct processing of leather.Potential environmental and social impacts associated with the suppliers under the proposed transaction are mostly related to labor and working conditions; elements which are addressed by Aldo's supplier's compliance program as described in this ESRS.

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/