22376 - Lojas Americanas S.A. II

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Environmental Review Summary

Project Number

22376

Company Name

Lojas Americanas S/A.

Date ERS Disclosed

May 11, 2004

Country

Brazil

Region

Latin America and the Caribbean

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Dec 16, 2004
Signed : May 13, 2005
Invested : Sep 30, 2005

Sector

Retail (Including Supermarkets, Grocery Stores, etc.)

Industry

other

Department

Regional Industry - MAS LAC

Project Description

The project is the expansion and modernization of Lojas Americanas S.A. (LASA or the company), one of Brazil’s largest discount retail chain. The proposed project includes:

- the opening of approximately 40 traditional Lojas Americanas discount stores, establishing new operations in the North, Northeast and Midwest regions of Brazil; additional stores will also be opened in the South and Southeast regions;
- the opening of approximately 20 Americanas Express stores, as an expansion of their new neighborhood store concept initiated in May 2003; and
- supporting the fast growing Americanas.com, LASA''s web-based retail operations.

This proposed project would be the second IFC investment in LASA.

Environmental and Social

The company 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 company is summarized in the paragraphs that follow.

- Location of existing stores and land acquisition.

LASA is one of the most traditional retail chains in Brazil with a broad range of convenience food, apparel and general merchandise items. The company has 121 stores located around 18 states and in the Federal District of the country, with a concentration of 62% of its stores in the Southeast. LASA also has three distribution centers located one in Sao Paulo, one in Rio de Janeiro and a third one in Recife. LASA’s expansion will not require land acquisition, since company’s policy is to rent the areas where the stores are located. Since the stores are located mostly in residential and commercial areas including shopping centers there are no impacts associated with environmentally or culturally sensitive areas.

- Environmental management.

LASA’s management system is decentralized; much of the decision making power is delegated to the specific stores. LASA can benefit from the definition of an environmental and safety policy and the development and implementation of procedures to identify, control, and improve the environmental and safety aspects of LASA’s activities, products, and services. As part of the project, LASA will develop, as needed, systems to reflect its commitment to comply with applicable World Bank guidelines.

- Environmental Impacts.

LASA stores and distribution centers use energy from the network, thus there is no generation of air emissions. All liquid effluents generated are domestic and are discharged to the local municipal systems. LASA has a corporate approach about segregating solid residues at the stores. The recyclable materials are sold for reuse and the non-recyclable are disposed in accordance to local environmental requirements.

- Safety programs.

LASA follows the Brazilian occupational health and safety requirements. Stores have safety prevention equipment in place, trained fire brigades, and internal commissions to prevent accidents. As part of the project, LASA will improve the safety conditions of its operations to ensure compliance with the applicable World Bank guidelines and requirements (identification of risk/exposure areas, fire drills, fire brigades, signaling, fire exits, etc.) LASA will submit to IFC a life and fire safety plan identifying major risk fires, standards and regulations and mitigation measures for both traditional as well as express stores. LASA has safety training programs for its employees. As part of the project, the company will further strengthen its trainings to ensure that personnel performs in accordance to the WB guidelines and policies.

- The distribution centers exhibit excellent housekeeping with safety routes and adequate safety prevention signals. They have in place fire prevention measures including trained fire brigades available at all times, conduction of fire drills, and installation of fire prevention/response equipment such as extinguishers throughout the plant for the various fire precursors, hydrants, alarms, equipment for detection of gases in working areas. Copy of the emergency response and contingency plans will be submitted to IFC.

- Transportation.

LASA sub-contracts transportation companies to deliver the products from the distribution centers to the stores. These are carefully selected by LASA considering efficiency and safety criteria. The periodic maintenance of the trucks constitute the safety prevention measures used to avoid road accidents.

- Social programs and community development activities.

LASA employs around 7,800 people. The project is expected to generate directly more than 500 jobs and to benefit many local North Eastern producers who can use the chain connections to reach a wider market. In addition, the project will contribute to provide employment opportunities for its partners along the supply chain. The company maintains the programs to benefit both its employees and the local communities where LASA has operations. LASA’s People Policy is focused on increasing the level of training of its employees, thus contributing to expand their professional horizons. For example, the Commercial Trainee Program prepares selected college graduates through an intensive apprenticeship program to later occupy management functions within the company. LASA also supports social programs and community development activities in the cities where it has stores. LASA recognizes that good corporate citizenship is one of the key elements of its relationship with society. This positioning is demonstrated through a number of initiatives:

- Program for the Handicapped.- Created approximately three years ago within the company, this initiative is designed to fully integrate handicapped individuals into the job market;

- City of Rio de Janeiro Social Work Program.- LASA actively participates in this program, offering its facilities for the collection of approximately 35 tons of non-perishable foods each year;

- Young Apprentice Program.- This program’s objective is to benefit students, as of their 14th birthday, by helping them become integrated into the job market through the sponsorship of training activities during their school periods.

- LASA will ensure that new stores built by the company will be built to comply with all applicable World Bank guidelines and new acquired or rented stores will be upgraded as needed to achieve full compliance with World Bank guidelines in a time-frame agreed upon by LASA and IFC.

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: 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 may 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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