24791 - Conaprole Exp.

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Environmental & Social Review Summary

Project Number

24791

Company Name

COOPERATIVA NACIONAL DE PRODUCTORES DE LECHE

Date ESRS Disclosed

Dec 29, 2006

Country

Uruguay

Region

Latin America and the Caribbean

Last Updated Date

Aug 26, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Feb 20, 2007
Signed : Mar 15, 2007
Invested : Dec 31, 2007

Sector

Dairy Products

Industry

Agribusiness and Forestry

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Created in December, 1935, the Cooperativa Nacional de Productores de Leche (Conaprole) is an existing client of IFC and Uruguay’s leading dairy processor. Starting 70 years ago as a cooperative, the Conaprole Group is now the largest private enterprise and the number one dairy products exporter in Uruguay. It is also the largest milk exporter in Latin America. Sales in 2006 totaled USD 297 million, 60% of which was exported to 54 different countries (Mexico 21%, Brazil 12%, Venezuela 18%, Cuba 14%, USA 7%).

IFC is proposing an investment which entails the following:

- Building a powder milk plant with a capacity to process 1 million liters of raw milk per day, and associated milk reception and storage infrastructure; and
- Investing in equipment and machinery modernization.

The major capital investment will be at Conaprole’s Plant 8 at Villa Rodriguez, province of San Jose, the Cooperative’s main milk base (50% of total milk receipts). Currently, this is a cheese and UHT milk processing plant, located in the same milk collection area of Plant 11. This plant is projected to become Conaprole’s main export production site, and will now be expanded to include drying facilities as well as a larger cheese production facility. This decision follows a review of alternatives, space availability for expansion, milk supply prospects and water supply.

Overview of IFC's Scope of Review

The review of this project consisted of appraising technical, environmental, health, safety and social information submitted by the project sponsor, and a field visit in October 2006. The environmental and social (E&S) appraisal team visited the following plants: Plant at Montevideo (CIM), Plant at Villa Rodriguez (Plant 8, site of future investment) and surroundings, Plant at Florida (Plant 7). IFC communicated closely with client senior management and responsible people for environmental and social affairs including environmental coordinators at each plant visited.

E & S Project Categorization and Applicable Standard

- PS1: Social and Environmental Assessment and Management systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security
- PS6: Biodiversity Conservation and Sustainable Natural Resources Management

Non applicable:

- PS 5: Land Acquisition and Involuntary Resettlement will not apply since the land is owned and construction will take place within the existing premises of Conaprole Plant 8. There are no plans to buy new land in any of the other operations.
- PS7: Indigenous Peoples will not apply because no known indigenous people’s communities have been identified in the area.
- PS8: Cultural Heritage will not apply because no cultural heritage or archeological sites are found in the project site or its vicinity. The appraisal mission did not find any evidence for the need to implement a Chance Finds Procedure.

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 that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria.

Environmental and social review of the project will encompass evaluation of an environmental and social impact study commissioned by Conaprole to an external contractor. In addition, IFC professional staff performed a physical evaluation of the project site and environs.

Environmental and Social Mitigation Measures

Key environmental and social issues are listed below. In addition, specific information is presented on the way Conaprole will 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 IFC Environment and Social Performance Standards and the World Bank Group (WBG) environmental, health and safety guidelines. The information about how these potential impacts will be addressed by Conaprole is summarized in the paragraphs that follow. Further information is provided in the attached Environmental and Social Action Plan (ESAP), which is agreed upon by IFC and Conaprole and which will address the compliance gaps with IFC’s requirements.

- Environmental, Health and Safety, and Social Assessment and Management Systems

The company’s environmental, health & safety and social policy is in the process of being established and will be implemented in all operations, in accordance with the attached ESAP.

In accordance with the ESAP, Conaprole will develop and implement an integrated management system (ESMS) at all their operations. The management system framework will help Conaprole improve their environmental, social and health & safety performance.

Conaprole has selected a qualified consultant to conduct the environment and social impact assessment study (ESIA) for the new project at Plant 8. In accordance with the ESAP, the study will incorporate an environmental and social management plan and listing of mitigation measures necessary to meet IFC Performance standards and WBG guidelines.

Conaprole will establish an “Environment Department”, reporting directly to senior management, and responsible for environmental and social performance at a Group level. Conaprole will also ensure an adequate level of authority and close coordination with health & safety coordinators in each operation, to implement the ESHS policy at all levels of operations, and ensure compliance with national laws and regulations, IFC’s Performance Standards and the WBG environmental, health and safety guidelines.

- Labor and Working Conditions

Conaprole is a non discrimination and equal opportunity employer. It has adopted a human resources policy that outlines rights, duties and grievances mechanisms for the entire workforce. The policy is made available to all workers at the time they are contracted by the Group. Conaprole has 1,450 permanent employees, 188 of which are women. During the peak of operations (zafra), 250 temporary employees are hired. Personnel either hired directly or through contractors are ensured all national labor benefits. The Human Resources department observes in full ILO Conventions 138 on Minimum Age, and 182 on Worst Forms of Child Labor. Conaprole has implemented a grievance mechanism to review and resolve employee complaints.

When contractors are used, Conaprole will engage in a contract only if these are legitimate enterprises. The Human Resources office monitors this contract to ensure that all workers are vested with all benefits to which they are legally entitled, and that wages are paid in a timely fashion.

In accordance with the attached ESAP, all new employees at Conaprole will receive an induction training where all policies, guidelines, environmental and social risks and impacts, and ways of working are explained in detail.

Health and safety rules are outlined in the “Manual de Procedimientos de Seguridad y Salud Ocupacional” and current safety procedures are enforced to avoid accidents, injury or disease. In accordance with the attached ESAP, Conaprole will perform a health and safety risk evaluation and implement preventive actions in all plants.

- Pollution Prevention and Abatement

The main sources of emissions to the environment and the risk of environmental contamination come from the processing plants. These include air emissions from combustion of fuel oil and wood to generate steam for the dairy processing facilities; process liquid effluents; and solid waste from dairy processing. All ammonia storage and use facilities were found to be adequate for the protection from sources of heat and ignition, therefore minimizing the risk of ammonia-related accidents.
Conaprole implemented the use of natural gas as one of the solutions proposed to reduce energy costs and emissions. Nevertheless, this has run into problems, because of interruption of supply from Argentina. Conaprole has a system that measures energy consumption on each of the lines of production at Plant 7. A similar monitoring device will be installed in the new facility at Plant 8. This figure has been targeted to be reduced by 10% for next year. As an annual mean, Conaprole reports that one litre of fuel is used to produce 84.04 liters of milk. Thirteen tons of wood were used during 2005 and this figure is likely to increase given rising energy costs.

The estimated annual GHG emission (Carbon Dioxide equivalents) from Conaprole’s operations in 2006 is 41,954 tons. Conaprole is testing an employee incentive program to reduce energy consumption. The program will also reward energy-saving innovative ideas.

All wells are monitored for ground water elevation and extraction. The amount of water extracted from each well is recorded and can be seen on a screen at any time of the day.

Conaprole does not generate any hazardous waste. Regularly, all garbage (monthly weight ranging from 150 kg in Plant 14, to 15 tons in Plant 7) is collected and disposed by the municipal waste management system. Large plastic containers from chemical products are returned to the supplier for appropriate disposal. All other recycling waste is sold to recycling groups. Conaprole, has agreements in some of the plants with an NGO (Union de Clasificadores del Aglomerado de Polietileno) to recycle waste.

A legally registered company, SEDEL, conducts pest control at each plant. Activities include building inspection and maintenance; and pests are controlled and monitored constantly in order to report to the government authority. All products used are certified.

Conaprole will conduct total particulate matter stack emissions measurements for the operating boilers at production peaks on each plant. It will undertake particulate distribution analysis using actual stack emissions data and local meteorological data to define isopleths of particulate distribution and concentration in the downstream air shed, and will compare projected levels to IFC’s General Environmental Guideline for ambient air concentrations, in accordance with the attached ESAP.

All plants will ensure that their effluents are treated efficiently to guarantee a discharge limit in compliance with the IFC guideline limit on discharge to surface water. In accordance with the ESAP, Conaprole will present an implementation schedule for any corrective action needed to bring discharged effluent levels at all plants into compliance with IFC guideline levels. Conaprole will also provide data for all plants and a quarterly report on progress to meet this requirement. The new investment at Plant 8 includes a wastewater treatment plant for effluents originating from cheese processing (including dissolved air flotation, DAF, and a biological treatment of wastewater; aeration) and effluents from cleaning and spillages at reception areas, UHT, and the powder milk plant. In all plants where untreated effluents are used for land irrigation and ponds of wastewater treatment systems are not lined, Conaprole will, in accordance with the ESAP, conduct an annual comprehensive chemical/physical/ microbiological assessment of groundwater and report annually through the Annual Monitoring Report (AMR) variances from an established baseline of these parameters. If assessment demonstrates deterioration, Conaprole will take specific action to mitigate the situation. Sample locations, parameters and methodology will be determined as per a groundwater monitoring study.

- Community Health, Safety and Security

Conaprole has developed good working relations with the nearby community in Villa Rodriguez, where the new investment will be made, and in populations around the other processing plants. Conaprole has developed and communicated to all workers and the nearby communities their emergency action plan.

Conaprole has contracts with several security companies, all registered legally, to provide security services at all processing plants and wastewater treatment areas. The guards are armed and Conaprole requires the companies to train their personnel on appropriate conduct towards employees and the nearby communities.

Complaints have been presented in relation to odor due to inefficient on-site wastewater treatment at Villa Rodriguez. The population has repeatedly requested Conaprole to solve the issue. As indicated in the ESAP, the client will present and implement an action plan in order to mitigate the issue. All decisions and actions will be communicated to the local community.

- Biodiversity Conservation and Sustainable Natural Resource Management

Thirteen tons of wood were used during 2005 to generate steam in two of the Plants. Conaprole purchases wood from suppliers, which transport the wood to the facilities. Wood consumption is likely to increase given rising fuel costs, and limited supply of natural gas. Conaprole has committed to purchase wood from suppliers that have introduced sustainable forest management practices for their plantations, and are certified by an independent agency, in accordance with the attached ESAP.

Stakeholder Engagement

Conaprole provides direct and indirect employment to almost 0.7% of the total working population of Uruguay. Most individuals working at the dairy processing plants live in adjacent towns. Conaprole has been successful in increasing income generation and encouraging small milk producers to stay on the land, which in turn reduces migration to urban areas.

Conaprole provides support to primary schools, helping in developing teaching materials, and providing products for free to the national food plan. Twenty-five years ago Conaprole helped create a Social Services Association (CASSECO, Caja de Servicios Sociales y de Enfermedad del Personal de Conaprole), to offer medical service, dental care, eye care and eyeglasses, loans for housing, etc., to all employees, their families, retirees and spouses. Links have been established with several NGOs in poverty reduction activities. Other benefits to workers and former workers include low interest loans and scholarships for technical and university education.

As part of this investment, Conaprole will improve their community engagement process in order to include disclosure of environmental and social information to affected communities in an on-going manner. Conaprole will also develop and implement a grievance mechanism and appoint a senior manager as responsible for evaluation, action and monitoring of corrective actions. Conaprole will also play an active role in preparing for and responding to emergencies associated with their operations.

Client Documentation

File Name	Actions
Conaprole ESAP.pdf

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

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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Environmental & Social Review Summary

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Environmental and Social Mitigation Measures

Environmental and Social Mitigation Measures

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