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 available in the 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 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 information submitted by the company as well as visits to the sites. The following potential environmental, health and safety impacts of the project were analyzed: - Air emissions; - Water use and waste water management; - Hazardous materials use and solid waste management and disposal; - Fire protection and emergency response; - Occupational health and safety; and - Environmental management capabilities.

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 and in the attached Corrective Action Plant, depicted in Table 1. - Faria Lima Plant The plant is located in São José dos Campos in the State of São Paulo about 90 km northeast of the city of São Paulo in an industrial area of approximately 560,000 m2. This aircraft assembly plant is comprised of metal machining, cleaning, and painting operations. The plant has air pollution control devices to reduce process emissions (i.e., gas boilers, paint cabins, electroplating operations, etc.) Embraer conducts periodic stack emissions monitoring of sulfur oxide (SO2), nitrogen oxides (NOx), particulate matter, volatile organic compounds (VOCs), and chromium. The emissions from all parameters at all sources, with the exception of VOC emissions at few points in the paint operations area, are in substantial compliance with IFC environmental requirements. Nonetheless, Embraer is compliant with local applicable emission requirements. As part of this project, Embraer will implement actions to ensure that all stack air emissions, including VOCs, and particularly those in the paint operations where the levels are currently above IFC requirements. See details in Table 1 in the Corrective Action Plan. Water for industrial and domestic use is obtained from authorized wells. The domestic and industrial effluents generated by the Faria Lima plant are treated separately prior to being released into a nearby lake. Beginning in November 16, 2004, the domestic effluents of this plant are being released directly to the municipal system (SABESP) to be treated prior final disposal. The treated wastewaters comply with the applicable local and IFC requirements. This plant has a well-structured program for segregation, reuse and/or recycling of solid and hazardous wastes. Once collected and according to the type of waste, they are sent to the appropriate destination (i.e., authorized recyclers, cement plants, sanitary landfill, etc.), and handled by authorized companies. The sludges resulting from the treatment of the domestic and industrial effluents are sent to sanitary and industrial landfills, respectively. Embraer continues to develop initiatives to identify and develop uses of discarded materials. The company has preventive and control programs to address the exposure of its employees and contractors to work-related impacts. The plant has implemented programs for the prevention and control of occupational hazards and personal accidents and controls and monitors work-related exposure levels of its employees. Among the parameters controlled are: noise, heat, luminosity, radiation, metallic fumes, and VOCs. The monitoring results show compliance with the applicable World Bank requirements. As part of Embraer safety procedures they conducted a process hazard analyses covering its operations and developed a risk assessment and risk prevention program, as well as contingency and emergency response programs. The plant has safety prevention equipment in place (i.e. extinguishers throughout the plant for the various fire precursors, hydrants, alarms, equipment for detection of gases in working areas, etc.), trained fire brigades, and internal commissions to prevent accidents. The chemical materials area is protected by double containment to prevent soil contamination in case of accidental leaks or spills. The plant is developing programs to enhance the day-to-day condition of its employees (i.e., ergonomic program, quality of life programs such as chemical dependence, smoking, obesity, vaccination, stress management, physical fitness, and integral health), and training and qualification programs related to environmental and health and safety aspects. The plant exhibits good housekeeping, signs are appropriate and well placed, and the personnel is provided with and required to use personal protective equipment. Embraer has health and safety training program for its own employees. The team in charge of the integrated management system that deals with corporate environmental and social responsibility aspects reports to the Vice-Presidency of Quality Operations. The Faria Lima plant is OHSAS 18001 (for health and safety aspects) and ISO 14001 (for environmental aspects) certified and as part of its continuous improvement policy this plant will develop a program requiring their suppliers to also comply with Embraer’s environmental, health and safety policy. Details of this program have been furnished to IFC. The Faria Lima plant is implementing eco-efficiency initiatives including raw material losses minimization, energy use optimization in the industrial process, water use reduction, and organic-based solvent substitutions. In addition, the plant is also working on reducing the liquid effluent and solid wastes it generates, and the substitution of CFCs, gases used in its equipment by non-ozone depleting gases. - Eugenio de Melo Plant The plant is also located in an industrial area of São José dos Campos in the State of São Paulo in an approximately 340,000 m2 area. This plant’s operations include: cabling, tooling, and testing. The plant has prepared and submitted to IFC an action plan to reduce its VOC air emissions to the levels specified in the IFC guidelines. Details of this plan are presented in Table 1 in the Corrective Action Plan. Water for industrial and domestic use is obtained from authorized wells. The industrial wastes generated at this plant are transported via truck to the Faria Lima wastewater treatment plants to be treated there. The domestic effluents are treated on-site prior to being discharged to a nearby water stream. The treated effluents are in compliance with IFC requirements as well as local regulations. This plant, like the Faria Lima plant, has a similar program to handle and to dispose of solid and hazardous materials and to implement similar prevention and controlled work environment initiatives. It also requires its employees to use personal protective equipment and has work-related monitoring and appropriate employee health and safety training programs in place. The Eugenio de Melo plant exhibits good housekeeping, signs are appropriate and well placed. It also has in place fire prevention measures including trained fire brigades available at all times, periodic fire drills, and installation of fire prevention/response equipment such as extinguishers throughout the plant for the various types of fires, hydrants, alarms, equipment for detection of gases in working areas, etc. The chemical materials area is protected by double containment to prevent soil contamination in case of accidental leaks or spills. The plant’s operations are OHSAS 18001 and ISO 14001 certified. There is a local team in charged of the environmental health and safety aspects and it is also part of the corporate environmental and social management structure of Embraer. Additional programs in implementation stage, at this plant, include, substitution of equipment using CFCs, equipment using non-ozone depleting gases; improvements to the solid residues collection/segregation system, development of environmental, health and safety programs for suppliers, improvements to fire prevention (fire brigade) and emergency response plans, optimization of water and energy usage, etc. - Gavião Peixoto Plant This plant, located in Gavião Peixoto, in the State of São Paulo, occupies an area of approximately 17 million m2 at approximately 300 km Northwest of the city of São Paulo and 310 km from São José dos Campos. This plant conducts approximately 80-90 percent of Embraer aircraft tests, hosts some of Embraer’s current and expected partners, conducts large-size structural assembling operations, and final assembly of defense aircraft units. The plant is located in an industrial area, re-zoned by the local authorities from its prior use as agricultural land. Prior to Embraer beginning operations, local authorities conducted the land acquisition. The runway is one of the largest in Latin America and its design and location were chosen to minimize the potential for future encroachment of human settlements. As part of the tests, the run-away has a water pool, which was built and is operated to prevent water contaminated from leaching into the ground. Embraer was required by the local authorities to develop a reforestation program of 350 ha in nearby river basins as replacement for the green agricultural areas that were used for the plant. Currently, Embraer has completed approximately 60 percent of the reforestation, which is required to be completed by the end of 2006. This plant does not generate air emissions from its operations. Water for industrial and domestic use is obtained from authorized wells. The plant’s domestic and industrial effluents are treated separately prior to releasing them into a nearby river. The treated water complies with the applicable local and IFC cleanliness standards. Embraer is assessing the best alternatives to reuse their treated domestic effluents given the excellent characteristics of this treated water. Embraer permanently monitors the potential impact of its operations in the groundwater and the aquatic ecosystems of the nearby river. The monitoring results of the analysis conducted by Embraer demonstrate that there are no negative impacts in the aquatic bodies. The groundwater as well as the soil in and around the plant are permanently monitored by the local authorities and do not show evidence of contamination. This plant has a well structure program for segregation, reuse and/or recycling of its wastes. Once collected and according to the type of waste, it is sent to the appropriate destination (i.e., authorized recyclers, incineration, reuse, sanitary landfill, etc.) The sludges resulting from the treatment of the domestic and industrial effluents are sent to the sanitary and industrial landfills, respectively. Authorized companies handle the final disposal operations. Embraer, continues to develop initiatives to identify and develop uses of discarded materials. The company has preventive and control programs to address the exposure of its employees and contractors to work related exposure impacts. It has implemented programs for the prevention and control of occupational hazards and personal accidents. Embraer controls and monitors work-related exposure levels of its employees. Among the parameters controlled there are noise, heat, luminosity, radiation, vibration, metallic fumes, and VOC vapors. The results showed compliance with the applicable World Bank requirements. Embraer is developing programs to enhance the day-to-day condition of its employees (i.e., ergonomic program, physical fitness, integral health, and training and qualification programs related to environmental and health and safety aspects). As part of Embraer safety procedures they conduct process hazard analyses covering its operations and has developed risk assessment program, risk prevention, as well as contingency and emergency response programs. The plant has safety prevention equipment in place, trained fire brigades, and internal commissions to prevent accidents. This plant is developing and implementing additional programs to promptly reach its zero accidents goal. The plant exhibits good housekeeping, signs are appropriate and well placed, and the personnel is provided with and required to use personal protective equipment. Embraer has health and safety training program for its own employees. The Gavião Peixoto plant has a team responsible for the integrated management system that deals with environmental and social responsibility objectives. Embraer requires that its partners, suppliers, and sub-contractors working within the plant premises, comply with its environmental, health and safety procedures. The plant anticipates having its operations OHSAS 18001 and ISO 14001 certified by the end of 2004. - Neiva Plant (an Embraer Subsidiary) The plant located in Botucatú in an approximately 230,000 m2 area, produces: - components for the airplanes built in Sao Jose dos Campos and Gaviao Peixoto; - support equipment for the maintenance of Embraer aircraft; and - builds the Ipanema plain used in agribusiness. Main industrial operations include cleaning, painting, and assembling. The plant has air pollution control devices to reduce process emissions (i.e., two fuel-oil boilers, paint cabins, electroplating operations, etc.) Embraer conducts periodic stack emissions monitoring of SO2, NOx, particulate matter, VOCs, fluor compounds, and chromium. The emissions from all parameters at all sources, including VOC emissions, are in substantial compliance with local environmental regulations as well as IFC environmental requirements. Water for industrial and domestic use is obtained from the municipality (SABESP). The domestic waters are sent to the municipality (SABESP) for treatment. The industrial wastes are treated in a wastewater treatment plant (WWTP) prior being released into the municipality for treatment. The industrial wastes are treated in an on-site wastewater treatment plant prior to release into the municipal system. The WWTP sludges are sent to the appropriate landfills. This plant has a well-structured program for segregation, reuse and/or recycling of their solid and hazardous wastes. Once collected and according to the type of waste, they are sent to the appropriate destination (i.e., authorized recyclers, cement plants, sanitary landfill, etc.) and handled by authorized companies. The sludges resulting from the treatment of domestic and industrial effluents are sent to a cement plant to be used as alternative fuel in its operations. As part of plant constant improvements, Embraer has a system to collect and distribute the solid/hazardous wastes generated at the facility, including double containment to prevent soil contamination. The company has preventive and control programs to address the exposure of its employees and contractors to work related impacts. The plant has implemented programs for the prevention and control of occupational hazards and personal accidents and controls and monitors work related exposure levels of its employees. Among the parameters controlled are noise, heat, luminosity, radiation, metallic fumes, sulphuric acid vapors, and VOC vapors. The monitoring results show compliance with the applicable World Bank requirements. The plant has safety prevention equipment in place (i.e. extinguishers throughout the plant for the various types of fires, hydrants, alarms, equipment for detection of gases in working areas, etc.), trained fire brigades, and internal commissions to prevent accidents. Contingency and emergency response plans have also been developed. The plant exhibits good housekeeping, signs are appropriate and well placed, and the personnel is provided with and required to use personal protective equipment. Embraer has health and safety training program for its own employees. The plant has a team responsible of the integrated management system that deals with environmental and social responsibility objectives. Embraer anticipates having this plant’s operations OHSAS 18001 and ISO 14001 certified by the end of 2004. As part of its continuous improvement policy this plant will develop a program requiring their suppliers to also comply with Embraer’s environmental, health and safety policy. Details of this program will be furnished to IFC as soon as ready. The Neiva plant is also implementing eco-efficiency initiatives including water use reduction, ergonomic improvements in the working areas, and programs to further reduce the accidents/incidents rates. - Communication and Consultation Internal and external communication are important for Embraer. Embraer supports worker representation in labor discussion. There is also an effective internal grievance system for complaints. Concerns from external groups or members of the local community are channeled to the department in charge of the specific environmental, health, safety, or social issues under the coordination of the Director of Institutional Relations. Annually, Embraer publishes a Financial and Social Balance Report. - Corporate Social and Environmental Responsibility Embraer’s track record of community projects reflects a corporate philosophy that contributing to community development is both good business and good ethics. The company promotes and participates in actions that contribute to the development and enhancement of education in the nearby communities (i.e. Instituto Embraer, improves corporate governance of municipal schools, high school leaders program, etc.) Embraer believes that investments in both the quality of its relationships with communities and in its own employees is the best way to maintain a constructive and professional work force. Embraer has an education and learning policy which supports training and education that will either help an individual perform better at work or further their career plan. Embraer gives preference to hiring locally and, as on March 31, 2004, employs approximately 14,500 direct employees and 2,500 indirect employees.

Based on the information presented above, IFC concludes that the proposed project will meet the applicable World Bank/IFC environmental and social policies as well as applicable 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. At a minimum the AMR will include: - list of the projects with the most significant environmental and social impacts, along with a summary of the actions implemented to mitigate any adverse impact of the projects; - significant accidents/incidents and corrective measures; - interaction with communities (i.e., awards, recognitions, complaints, interaction with NGOs, etc.); - community development aspects; and - ongoing overall environmental and social improvements of Embraer operations. Site supervision visits will also be conducted, as appropriate.