The company 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.
This information which follows relates to Mercator’s retail and distribution operations in Slovenia in as much as these are models for further expansion by the proposed project. Mercator also has separate food manufacturing and hotel operations in Slovenia; these operations do not form part of the project and are excluded from this review.
- Environmental and Occupational Health and Safety Management
Mercator in its present form was created by acquisition of a number of formerly independent businesses. The company has appointed a Director to identify best practice operations within these acquisitions and to develop Mercator standards reflective of these best practices. Environmental management is one area subject to this review. Mercator operations are designed to meet all applicable legislative requirements, including environmental requirements, ranging from those imposed by the European Union to local bylaws. When expanding outside Slovenia, Mercator will apply the higher of locally-required or Slovenian standards to its new investments.
An Environmental Manager has been appointed, and has the objective to achieve ISO 14001 or equivalent certification of Mercator’s environmental management processes in its retail and distribution businesses by the end of 2007. A systematic review of environmental impacts is underway, and when complete an environmental management implementation plan will be developed. In the interim, other environmental initiatives are ongoing and will be described in the sections which follow.
Mercator actively manages occupational health and safety in its operations and employs a safety professional. Hazard analysis and risk assessment studies have been undertaken throughout the company, covering 78 different types of operation. All accidents are investigated, and corrective actions identified. Accident records are kept and show a sharp reduction in accident frequency over the last year as a result of these corrective measures. Accidents tend to be relatively minor and now occur at a frequency in the order of 10 per million man-hours worked, a reasonably low figure but one which can be improved. Staff are monitored to identify occupational illness. Ergonomics have been considered in check-out design, in response to identified back injuries, and staff working in logistics are provided back supports.
- Land Acquisition and Planning
Mercator has a policy that it will only acquire land for store development which is unoccupied and ready for development. Mercator will not acquire land cleared in anticipation of sale and will not acquire land if this would result in resettlement of users of that land.
All land to be acquired is assessed for possible contamination, and if found to be contaminated will either not be acquired or suitable clean-up plans will be executed depending on the clean-up cost and other site features.
Local planning and permitting requirements are always observed. In Slovenia, this typically requires preparation of an Environmental Impact Assessment for stores exceeding 5,000 m2 in sales area. Store appearance can differ according to local requirements, though the red Mercator logo is always used.
- Life and Fire Safety (L&FS)
The fire safety design of all new or refurbished stores in Slovenia is developed by a specialist in-house team in accordance with Slovenian fire safety requirements covering construction standards and use of fire detection and suppression systems. Automatic sprinklers are fitted in buildings where individual compartments have floor area exceeding 1,000 m2, and these systems are supplemented by hydrants and portable extinguishers. Fire detector systems are linked to central monitoring stations operated by specialist companies who send intervention units to respond to alarms. Multiple emergency exits are provided. Fire fighting, detection and alarm systems are inspected on a monthly basis by a specialized external contractor. Moreover, these systems have to be certified to be in good working order every five years. Mercator makes regular internal checks of fire safety housekeeping measures such as maintaining unobstructed access to fire fighting equipment and emergency exits. Design and maintenance standards are re-enforced by internal audits and occasional unannounced inspection visits by government agencies – the last of which required upgrading of emergency exit signs and lighting. Store managers are trained in basic firefighting and emergency response plans have been developed.
Similar design standards and controls will be adopted at stores in the New Countries, thus meeting IFC requirements.
- Energy Efficiency
Mercator has commissioned energy efficiency design advice from a local technical institute, places high emphasis on energy efficiency in store construction and refurbishment and operation, and employs an energy manager.
Buildings are well insulated and are designed to optimize use of daylight and passive solar energy. High frequency fluorescent lighting is used. Displacement ventilation systems are used which supply fresh air at floor rather than ceiling level. Ventilation fans use variable speed drives, and in some stores carbon dioxide sensors are used to control ventilation according to building occupancy. Space heating and cooling are provided by underfloor hot or chilled water which is circulated at modest temperatures. Space and domestic hot water heating are based on heat recovery from refrigeration systems supplemented as required by condensing boilers. Refrigeration system energy use is reduced through use of floating condensing pressures and electronic expansion valves.
All building services are controlled by a computerized building management system.
- Refrigerant Selection
Mercator specifies the zero-ODP refrigerant R404A in all its new stores’ refrigeration and air conditioning systems. Through the acquisition of old assets, Mercator does operate some refrigeration systems using HCFC 22. This will be phased out of existing applications in compliance with European Union requirements.
- Liquid Waste Treatment and Disposal
Mercator installs and maintains fat separators on all drains from kitchens and restaurants, and on storm water drains as required by local authorities. Resulting effluents will be discharged to municipal sewers or treated locally to the stores as required by local planning authorities.
- Solid Waste Management and Disposal
In Slovenia, Mercator has developed comprehensive solid waste management systems in response to EU legislation and is a joint owner of “Slopak” a waste packaging collection company. Waste management arrangements in Slovenia are now described: these would be replicated by Mercator as it expands to new markets in accordance with the requirements of local authorities.
Mercator collects waste paper/card, wood and plastics at its stores, and transfers these materials to a number of collection centers, typically located at distribution centers, from where the recovered materials are removed by Slopak, stored and sold to recyclers. From January 2006 Mercator established a similar network for collection of used electronic equipment where it sells such products.
Glass bottles are subject to a deposit-payment scheme. Bottles are recovered from consumers in stores and returned to suppliers for re-use.
Used edible oils are collected from Mercator’s restaurants (which in the main are located in shopping centers) and supplied to a company which manufactures bio-diesel fuel. Solid organic kitchen waste is composted.
Used vehicle tires from Mercator’s distribution fleet maintenance are sent back to the suppliers for disposal. Mercator operates a take-back scheme for vehicle lead-acid batteries which it sells in some stores, and these, together with old batteries from the transport fleet are returned to the manufacturer for recycling.
- Labor Conditions
Mercator has a comprehensive Human Resources structure which covers employment planning and recruitment; education and skills; compensation, promotion and career development; motivation and satisfaction at work and special worker categories. Labor conditions and HR activities in Slovenia would be adopted in the new countries into which Mercator expands.
All retail workers in Slovenia must have a secondary education, thus the minimum age of Mercator’s employees is 18 years. Mercator has an apprenticeship scheme developed with commercial schools which combines working experience with academic training. Graduates join the company at shop floor level. Mercator has three trades unions among its workers, of whom around half are members of at least one union. Base salary in Slovenia is slightly below €1,000 monthly for a new recruit, but is supplemented by bonuses which depends on individual performance and performance of the worker’s operational unit. Basic working is 174 hours/month on a shift basis and overtime at 1.75 times is paid to those working for more than 40 hours/week. Non-wage benefits include 13 public holidays, 17 days annual leave, which increases with service and 4 days leave to compensate for shift working, and medical, dental and optical health care.
Staff turnover is very low, less than 1% per year. There have been redundancy programs in the past. Volunteers were sought and redundancy payments exceeded legal minima.
