PROJECT DESCRIPTION MCS Group ("MCS" or the "sponsor") - an existing IFC client - is one of the largest diversified conglomerates in Mongolia. Its major businesses include food, beverage and consumer products, telecommunications, property development, minerals, infrastructure and engineering. Each of MCS Group's core subsidiaries holds a number one or number two position in their respective industries in Mongolia.Unitel ("Unitel" or the "company"), established in 2006, is the 2nd largest wireless operator in Mongolia, and has been an MCS wholly-owned subsidiary since 2010. As of May 2014, Unitel had approximately 909,000 subscribers. The company has a national presence with 66 branch stores and nearly 9,000 licensed sales points nationwide.IFC is considering an investment in Unitel, to support MCS's plans to re-finance US$60 million of MCS Holding loans at Unitel level (the "project"). OVERVIEW OF IFC'S SCOPE OF REVIEW IFC's review of this proposed investment consisted of appraising technical, environment, health and safety, (EHS) and social related information provided by MCS Group, including the information available in public domain.IFC has several investments in MCS businesses such as Mongolian Mining Corp. (Project #31752), MCS Property LLC (Project #31669), Intermed Hospital (Project #33808), Shangri-La UB (Project #28546) and especially MCS Group (Project #25170), which covers Unitel.The project information including Environmental Social Review Summary (ESRS) and Environmental and Social Action Plan (ESAP) for IFC's investment in MCS Group (Project #25170) is available at:ifcext.ifc.org/ifcext/spiwebsite1.nsf/0/294b693de0f70e68852576ba000e2add?OpenDocumentMCS has implemented the ESAP for the previous investments and is current on E&S reporting to IFC, with satisfactory E&S performance. This review thus builds upon the previously disclosed ESRS, ESAP, and the information collected during IFC's engagement with these companies / subsidiaries over the past years. As such, this ESRS is prepared as a supplement to the previously disclosed documents. 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 PreventionIf IFC's investment proceeds, IFC will periodically review the the project's ongoing compliance with the Performance Standards The project will not involve any new construction or expansion of network infrastructure. As such, impacts related to PS 4: Community Health, Safety & Security; PS5: Land Acquisition and Involuntary Resettlement; PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources, PS7: Indigenous Peoples and PS8: Cultural Heritage, are not expected for this investment. ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE This is a category B project according to IFC's Procedure for E&S Review of Projects because a limited number of specific E&S impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines.Typical E&S risks and issues associated with mobile telecom operations include: screening of potential new tower sites; site construction and disclosure to local communities; fair, safe and healthy working conditions for the company's staff as well as the contractors' workforce; utilization of equipment and operational practices that maximize conservation of energy; management of air emissions; solid and electronic/hazardous waste disposal; and mitigation of risks and impacts on community health, safety, security including those due to transport infrastructure and electromagnetic radiation. **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 The entire MCS group adheres to a vision that promotes responsible EHS management to minimize potentially adverse E&S impacts of its operations. The Group's business units maintain integrated systems to manage EHS performance commensurate with the level of risk associated with their operations. These systems incorporate, or are consistent with ISO standards of quality management and continuous improvement.Unitel, as a subsidiary of MCS Group, implements EHS programs under the supervision from the MCS Group Risk Management Division, which manages implementation of EHS policy and programs throughout subsidiary companies approved by the MCS Group Audit & Risk Management Committee that reports to MCS Group Executive Board. A high level "Quality and Safety committee" oversees the development of Standard Operating Procedures (SOPs), and after putting SOPs in place it also monitors its implementation.At operational level, subsidiaries have an Occupational Health and Safety Sub-Committee (OHSC) headed by the Head of Facilities Management Department, reporting directly to MCS Group Risk Management Division with a dotted reporting line to Unitel's management. PS 2: LABOR AND WORKING CONDITIONS As of July 2015, Unitel had a total workforce of about 1,400 employees. Female employees constitute about 50 % for the workforce across all levels.Each of MCS Group's companies abides by the requirements of the Mongolian Labor Law and has its own corporate framework for a Human Resources (HR) management system modeled on Procter & Gamble standards adapted to the requirements of the socialist model of labor relations. This framework is governed by a policy that is consistent with the ILO declaration on fundamental principles and rights at work, and includes components related to: guidelines for recruitment, selection and continuity in service; standardized skill competencies; performance appraisal; career progression; professional development; rewards and recognition; and professional ethics.- Worker's Organizations:There is a strong tradition of organized labor and worker's rights in Mongolia inherited from Soviet influences. The workforce of the Group's companies is not unionized but there is no restriction to any employee joining a union.Under the supervision of the Group Vice President for HR, MCS undertakes and annual Organizational Culture Survey to sample the opinions/grievances/ suggestions of all employees regarding wages, benefits, working conditions, relations with management and professional development. The results of the survey are reviewed by Group management and consolidated into an Action Plan that is circulated among the entire workforce. The Vice president for Human Resources is accountable for the implementation of the Action Plan.- Occupational Health and Safety (OHS):The key EHS issue for telecom companies is the health and safety of its workforce - especially those involved in the network maintenance activities (especially working at heights).At corporate level, MCS Group has a dedicated team to oversee the OHS issues across the subsidiary companies. MCS is progressively implementing OSHAS 18001:2007 certified safety management systems across the group subsidiary companies. Every year, MCS conducts an assessment of OHS performance of all the subsidiary companies, based on 6 performance indicators used in the OHS performance report.As a result of robust safety management, Unitel has reported strong safety performance and continuous improvement - without any major incident in the past years. PS 3: RESOURCE EFFICIENCY AND POLLUTION PREVENTION The primary source of energy for all operations of Unitel is electricity, which is sourced from the national grid. In addition, many facilities (such as switching stations, towers) have diesel generators of adequate capacity to provide backup power.The GHG emissions of the project are, therefore, dominated by those due to the electricity consumption and diesel consumption. The project had estimated emissions of 28,000 tons of CO2e.Day to day operations of mobile telecom networks do not result in large quantities of wastes, except for small quantities of solid wastes that are generated during the network maintenance activities, and electronic wastes at the end of life of the equipment.Unitel manages the waste generated from its network operation through the licensed contractors in accordance with the local regulatory requirements and the MCS Group's corporate policies and procedures.All the generators and the associated diesel storage tanks in the main data center have secondary containment to prevent any accidental spillage of diesel into sewers or in the ground.

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/