10809 - Coppel S.A. de C.V.

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Environmental Review Summary

Project Number

10809

Company Name

Coppel, S.A. de C.V.

Date ERS Disclosed

Oct 19, 2001

Country

Mexico

Region

Latin America and the Caribbean

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Dec 17, 2001
Signed : May 21, 2002
Invested : May 24, 2002

Sector

Retail (Including Supermarkets, Grocery Stores, etc.)

Industry

other

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Coppel, S.A. de C.V. (or, the "Company" or "Coppel") is a retail chain based in Culiacan in the Sinaloa state of Mexico, with a strong presence in the north, northeast and the Pacific area of Mexico. Coppel currently offers a wide variety of products including electrical equipment, electronics, furniture, and apparel. Its target customers are the low to middle income segment of the market. Coppel operates 132 stores located in 22 Mexican states. The total project cost is estimated at US$179.6 million, and IFC is considering a senior loan of US$30 million to the Company. The project would (i) open 58 additional stores to increase the Company''s geographic coverage; (ii) open 8 distribution centers to service the new stores; and (iii) build 2 warehouses to optimize transportation costs. The stores, distribution centers, and warehouses will be located in various Mexican states.

Environmental and Social

The sponsor has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific measures agreed, comply with applicable host country laws and regulations and World Bank/IFC requirements. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow.

1. Site acquisition and possible economic and/or physical displacement (resettlement). Before acquiring a property, Coppel undertakes a study to verify that there is no competing claim to title and that the property is not occupied or being used by persons other than the owner, such as squatters, sharecroppers or informal vendors. Additionally, the company confirms that the property is in an area zoned for commercial activities. Land for warehouses and distribution centers is acquired in areas located away from residential areas. In this manner, homes are not affected by the noise produced by trucks serving the warehouses and distribution centers.

Coppel will develop a “Corporate Policy on Land Acquisition” in order to formalize the policies and procedures for acquiring land for future facilities. This policy will ensure compliance with local legislation and IFC’s social standards. It will also permit Coppel to follow a systematic process for all land purchases and will reduce the risk of legal disputes.

In cases where the property being acquired is occupied or used by persons other than the owner, such as squatters, sharecroppers or informal vendors, Coppel would abstain from purchasing or leasing the occupied property until it has submitted to IFC, and IFC has approved, a Resettlement Action Plan that meets the requirements of IFC''s policy on involuntary resettlement.

2. Liquid waste treatment and disposal. Coppel''s activities do not generate industrial liquid waste. Domestic liquid waste (e.g. sanitary) is discharged to the municipal sewer system. The municipality collects domestic solid waste.

3. Use of asbestos-containing building materials. Coppel has confirmed that asbestos-containing materials will not be used in the construction of facilities.

4. Potable water supplies. Potable water will be supplied by public sources. The Comision Federal de Electricidad will supply electrical power for all Coppel locations.

5. Fire safety. The existing stores are not sprinkled, but have adequate signed emergency exits, hose points or hand-held extinguishers and smoke alarms. As most of the stores occupy rectangular, two to three level buildings, the fire protection is adequate.

6. Supply chain issues. The wooden furniture sold by Coppel (supplied by approximately 45 different companies) is made of pine or particleboard with melamine veneer. The furniture does not contain any materials obtained through logging operations in primary tropical moist forests.

Approximately 600 regular suppliers that operate in Mexico fabricate clothes sold by Coppel. Under the Federal Labor Law (Ley Federal del Trabajo), children under the age of 14 are prohibited from working (title I, article 5). This also regulates working conditions of minors between 14 to 16 years of age. Key provisions include:

employment of minors is subject to controls by the Employment Inspection Agency or Inspección del Trabajo and all minors are prohibited from working at night in industrial establishments;
minors under the age of 16 must obtain a medical certificate saying that they are able to work and are prohibited from working in dangerous occupations or jobs that could affect their physical development;
the work day of minors under the age of 16 is limited to six hours with a rest periods every three hours;
minors under the age of 16 are prohibited from working on Sundays and holidays and are entitled to an 18-day paid annual vacation; and
employers of minors under the age of 16 are obligated to keep records of the working child (age, salary, health certificates, etc.) and to schedule work activities in such a way that they do not interfere with schooling.

Coppel considers that labor authorities generally do a good job enforcing these provisions. Nevertheless, Coppel is committed to develop corporate policies and procedures to prevent harmful child labor practices among it suppliers.

Conclusion & Monitoring

IFC will evaluate the project''s compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering: (i) ongoing performance of project-specific environmental, health and safety and social activities. Periodic site supervision visits will also be conducted.

This Environmental Review Summary (ERS) is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Any documentation that is attached to this ERS has been prepared by the project sponsor or in conjunction with the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content. The following ERS is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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