25304 - OEH - Mexico

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Environmental & Social Review Summary

Project Number

25304

Company Name

Belmond Ltd.

Date ESRS Disclosed

Jul 19, 2006

Country

Mexico

Region

Latin America and the Caribbean

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Aug 11, 2004
Signed : Sep 14, 2004
Invested : May 18, 2007

Sector

Resort Hotel (Including Lodges)

Industry

Tourism, Retail and Property

Department

Regional Industry MAS LAC & EUR

Project Description

OEH will invest $5 million in Casa de Sierra Nevada (CSN or the hotel) for renovations to existing buildings, as well as construction of new guestrooms, a full service spa, and a new pool and garden area on the Parque property. Currently, the hotel has 33 guest rooms that are located in five separate buildings: Caballo (7 rooms), Fuente (7 rooms), Limon (8 rooms), Centro (5 rooms) and Parque (5 rooms) all of which are located close to each other. The property includes three other buildings, which will eventually house the administration, warehouse, laundry, security and maintenance. The existing buildings will undergo complete refurbishment and updating of all the electrical, plumbing and mechanical equipment. Most new construction will be at the Parque property, where 25 rooms will be added. This work will commence in July 2006 and be completed in 2007. On completion, the hotel will have a total of 55 rooms.

Overview of IFC's Scope of Review

IFC reviewed the “Environmental Due Diligence of Casa de Sierra Nevada Hotel, San Miguel de Allende, Mexico,” prepared by ERM. Dated June 14, 2006. Interviews were conducted by phone and email to clarify issues with respect to the environmental management system and life and fire safety. No visual inspection of the site was undertaken.

E & S Project Categorization and Applicable Standard

The key social and environmental issues were as follows:

- Social and environmental management systems;
- Soil erosion;
- Potable water;
- Effluent discharge;
- Air emissions;
- Ozone depleting substances;
- Noise;
- Worker health and safety;
- Fire and life safety; and
- Cultural heritage.

This is a category B according to IFC’s Environmental and Social Review Procedure. It will create a limited number of social and environmental impacts that can be avoided or mitigated by available facilities and/or generally recognized performance standards, guidelines, or design criteria.

Environmental and Social Mitigation Measures

OEH Inmobiliaria, S.A. de C.V. (the sponsor) has presented plans to address these impacts and to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with host country laws and regulations and the World Bank/IFC environment and social policies and guidelines. The information about how these potential impacts will be addressed by the Sponsor/project is summarized in the paragraphs that follow.

- Social and environmental management

The hotel will develop a social, environmental, health, safety and quality policy statement, specifying, at a minimum, management commitment to meeting Mexican law and regulations, IFC policies and guidelines, and Orient Express Hotels corporate standards. The hotel will also develop and implement an integrated management system for the social, environmental, health, safety and quality performance of its operation.

This system will have the following elements:

- organizational capacity;
- training;
- community engagement;
- monitoring; and reporting.

The hotel general manager will have overall responsibility for this management system. The hotel will also seek to participate in an internationally recognized ‘green’ hotel certification program.

- Soil erosion

The land around the Parque property shows signs of soil instability, a possible sign of slope destabilization. CSN will design, construct and operate the property, as with all of its properties, in such a way as to minimize soil erosion. In particular, the Parque site will be provided with adequate storm water drainage to reduce the risk of erosion and destabilization.
Potable water. A potable water technical survey, carried out by an independent consultant, found that the existing water supply at the hotel does not meet IFC standards for bacterial contamination, alkalinity and hardness. CSN will install a new water treatment system, with filter, softeners, and UV irradiation, to address there problems.

- Efffluent discharge

The hotel is connected to the city’s wastewater treatment plant, which was newly commissioned in 2005. The plant is operated by a private company that follows the standards of the State of Guanajuato. The plant is currently operating at half its capacity of 120 liters/second. While the city’s sewage treatment will be able to handle the volume of effluent coming from the hotel, the hotel will need to take additional measures to help maintain the efficiency of the plant. Oil and grease coming from the kitchen and phosohates coming from the laundry are of particular concern. The hotel will, therefore, collect used kitchen oils for recycling and will install grease traps in the drains of the kitchens. The hotel will make a best effort to use low or no phosphate soaps. The hotel will also promote the conservation of water through water conservation equipment, training personnel, and encouraging guests to reuse linens and towels.

- Air emissions

The project will have negligible impacts on air quality through its emissions.

- Ozone depleting substances

The hotel has existing refrigeration equipment with Freon 12 (R-12), which is an ozone depleting substance. Mexico has committed, under the Montreal Protocol, to phasing this substance out. CSN will have a replacement plan for those units using this coolant. The hotel will additionally phase out units using Freon 134 (HFC-134), which is not an ozone depleting substance, but can contribute to global warming. New equipment will use non-ozone depleting coolant that will have negligible global warming potential.

- Noise

Except during construction, noise levels from the hotel will be minimal. As the hotel will still be operating during construction, CSN will want to make sure that its guests are not bothered by noise. Construction will be limited to working hours. Equipment will have proper noise suppression. The hotel will comply with IFC noise standards during this work period.

- Waste management

Non-hazardous waste is currently sent to a private land fill near the city. The landfill operator will be operating a recycling plant to extract any valuable or recyclable waste. The hotel buildings do not contain any asbestos or past chemical spills. The City does have underground transformers that may contain Polychlorinated Biphenyls (PCBs). An independent consultant has recommended that these be replaced by new transformers (which would be PCB free), based on a need for greater reliability. Though the old transformers are not owned by CSN, CSN will work with the City to ensure that they do not contain PCBs and have not contaminated the surround ground.

- Worker health and safety

Mexican regulations require the hotel to establish a Hygiene and Security Commission, which includes staff that have received first aid and health and safety training. CSN must also implement under these regulations a monitoring system for health and safety. The hotel will establish both the committee and the monitoring system. Additionally, occupational health and safety measures will be part of the integrated social and environmental management system. These measures will include modification or elimination of hazardous substances, worker training, and documentation of occupational accidents and diseases.

- Life and fire safety

The current structures have poor electrical connections, and some have poor signaling and emergency lighting. These will be replaced during construction. The hotel will have a life and fire safety master plan, developed by a specialist using internationally-recognized standards, as required by IFC guidelines.

- Cultural heritage

All renovation work will have to be approved by the National Institute of Anthropology and History. The hotel will have to meet all Mexican national and state regulations for the protection of cultural heritage. The project will not adversely affect irreplaceable cultural heritage. To the contrary, it will help to conserve the historic structures that are part of the hotel.

Stakeholder Engagement

The CSN will make the ERM report, translated into Spanish, publicly available for 30 days before the start of construction. This disclosure period is part of IFC’s current agreement with the parent company, Orient Express Hotels. Since this project is a subproject under a facility previously approved by the IFC’s Board, there is no Board decision on this particular investment. The hotel’s primary community engagement will be through the promotion of local artists and their work, for which the city is famous, and local supply linkages.

Justin Andrews
Orient Express Hotels
1114 Ave of the Americas – 38th Floor
New York, NY 10036

Email: jandrews@oeh.com
Telephone: +1.212.302.5055

**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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