IFC requires that this document is made available through the World Bank InfoShop and to the locally affected community no less than 30 days prior to project consideration by the IFC Board of Directors. The Summary of Project Information (SPI) also provides details of where the ERS has been made available to the locally affected community. The SPI must be sent to World Bank InfoShop no less than 30 days prior to project consideration by the IFC Board of Directors.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental/social information submitted by the project sponsor. The following potential environment, health safety, and social impacts of the projects were analyzed. - Land acquisition and potential physical and economic displacement of current land users, if applicable; - Source and volume of water required; - Source of power, including fuel storage if applicable; - Handling, storage, use and disposal of hazardous chemicals; - Employee housing infrastructure (sewage disposal, water supply, cooking fuel supply) if applicable; - Treatment and disposal or liquid wastes, including sewage; - Disposal of solid wastes including waste minimization and recycling programs; - Air emissions from boilers and other sources; - Compliance with host country laws and IFC labor policies; - Retrenchment packages and retraining programs for employees retrenched as a result of the project, if applicable; - Employee exposure to dust, heat and noise and provision of personal protective equipment and training; - Corporate-wide program for worker health and safety, including HIV/AIDS awareness; - Use of CFCs in cooling systems; - Fire prevention and emergency response; and - Local disclosure.

The sponsor has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. - Land acquisition and potential physical and economic displacement of current land users, if applicable: Cottonline occupies a 2-hectare site under a 20-year lease with a textile plant, Cotona, which has a 30-hectare complex in Antsirabe. The site was formerly a football field; an alternative sports field has already been created. No removal of dwellings or displacement of people occurred as a result of the Cottonline plant. The site is physically separated from the Cotona facilities by fences and has separate access to the public road. Cottonline’s plant is a steel framed structure designed to a very high standard to create a first class workplace. - Source and volume of water required: Water for the factory is drawn from the municipal supply, which feeds a holding tank and pressurization system that serve the sanitary facilities and fire ring main. Cottonline currently uses 1,066 cubic meters per month. At full production this figure is expected to increase to 1,700 m3/month. - Source of power, including fuel storage if applicable: Electricity is obtained from the national grid. The plant has its own incoming power cable from the grid to modern transformers and switchgear. There are stand-by diesel generators available in case of power outage. Fuel is stored in small diesel storage tanks placed on concrete slabs to prevent spills from reaching soils or surface water. - Handling, storage, use and disposal of hazardous chemicals: No hazardous chemicals are used. - Employee housing infrastructure (sewage disposal; water supply) if applicable: Cottonline rents 10 houses for 16 expatriate staff in Antsirabe. These houses are equipped with septic tanks, water drawn from the municipal source, and electric or gas stoves. - Treatment and disposal or liquid wastes, including sewage: Sanitary wastes are discharged to a septic tank on the premises. Cottonline has no wet production processes on site and thus has no process effluent discharges. Washing of woven garments, which forms part of its production is sub-contacted to Columbia Clothing Company (CCC), another garment firm located on the Cotona premises. CCC, which is also an exporter under AGOA, has built a three-stage wastewater treatment plant (flocculation, pH balancing, biological filtration). Under the requirements of its AGOA customers, CCC must test the treated wastewater regularly to ensure compliance with specific discharge standards, which are comparable to or (in some cases) more stringent than World Bank group limits for key parameters. Recent test results indicate that the washing unit’s outflow complies fully with internationally acceptable limits. Input fabrics for all Cottonline products are currently sourced from outside Madagascar, primarily from China. Should this supply linkage situation change in future, and Cottonline begin sourcing fabric from plants in Madagascar, IFC will need to assess whether these plants comply with host country effluent discharge limits. If not, IFC will require these suppliers to develop a Corrective Action Plan, including deadlines for completion, for achieving compliance. - Disposal of solid wastes including waste minimization and recycling programs: Because it is producing only finished garments, rather than textiles, Cottonline’s generation of solid wastes is minimal. The sophistication of the production equipment at the factory ensures that cut waste is kept to a minimal level. Cut waste is sold locally. - Air emissions from boilers and other sources: Dust emissions in the Cottonline factory are negligible, because of the nature of its operations (production of garments rather than production of textile inputs) . Cottonline’s factory does not produce significant air emissions. - Compliance with host country laws and IFC labor policies: Cottonline has confirmed that it complies fully with host country labor laws and IFC’s policy on forced/harmful child labor. - Retrenchment packages and retraining programs for employees retrenched as a result of the project, if applicable: No retrenchment has occurred as a result of Cottonline’s operations. - Employee exposure to dust, heat, and noise and provision of personal protective equipment and training: Employee exposure to dust, heat and noise is well within international limits and consistent with international best practice for the sector. Under the terms of its supply contracts with international clothing companies, Cottonline is subject to unannounced inspections annually, to verify that working conditions and processes comply with the strict conditions and Codes of Conduct set down in these contracts. As discussed, the plant has been designed and equipped in accordance with prevailing international occupational health and safety standards. Locker rooms and washrooms are excellent. Cottonline has brought in experienced technical staff from Sri Lanka to oversee development of the plant. This team provides occupational health and safety training to all employees and monitors that required procedures and workplace conditions are enforced. Employee health and safety training is monitored during announced inspections carried out by international customers, described above. - Corporate-wide program for worker health and safety, including HIV/AIDS awareness: Cottonline employees are covered by an adequate medical plan, which includes awareness programs on issues such as family planning. The plan does not currently address HIV/AIDS awareness in a comprehensive manner, but the sponsors have indicated that they would welcome IFC guidance on this topic. - Use of CFCs in cooling systems: The plant does not require an air conditioning system. - Fire prevention and emergency response: Fire exits are well marked and extinguishers are correctly positioned and marked. - Local disclosure: The ERS is expected to be available for review at the Chamber of Commerce in Antsirabe on or about 6 May 2003. An advertisement is to be published in the national daily L’Express on or about 6 May, announcing the availability of the ERS for review at this location.

This ERS contains the full environmental and social documentation prepared for the project.

Accordingly, IFC concludes that the proposed project will meet the applicable World Bank/IFC environment and social policies and the environmental, health and safety guidelines upon successful implementation of the agreed mitigation measures.

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 ongoing performance of project-specific environmental, health and safety and social activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.