25397 - Century Sunshine

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Environmental & Social Review Summary

Project Number

25397

Company Name

CENTURY SUNSHINE GROUP HOLDINGS LIMITED

Date ESRS Disclosed

Sep 13, 2006

Country

China

Region

East Asia and the Pacific

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Oct 31, 2006
Signed : Nov 13, 2006
Invested : Nov 21, 2006

Sector

Other

Industry

Agribusiness and Forestry

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Century Sunshine Ecological Technology Holdings Limited (CS or the company), headquartered in Fuzhou, Fujian province, is China’s leading producer of organic fertilizer. It is engaged in the production and sale of organic fertilizers for farming of tea, orchards, vegetables, peanuts and tree plantation. The company also produces microbial compound fertilizer and organic pesticides. The company has existing plants in Youxi, Jian’ou of Fujian province and Nanchang, Jiangxi province. To address growing market demand and take advantage of favorable government policies, the company plans to expand its capacity through expansion of existing operations and possible acquisition and refurbishment of additional production facilities.

Overview of IFC's Scope of Review

The review of this project consisted of appraising technical, environmental and social information submitted by the project proponent, including the company’s 2005 Annual Report, the Placing and Public Offer documentation, and IFC’s Environmental and Social Questionnaire, which have been summarized in this document. The IFC project team is planning a field appraisal of the company’s facilities prior to project approval, to confirm this review of the investment.

E & S Project Categorization and Applicable Standard

Applicable Performance Standards:

- PS1: Social and Environmental Assessment and Management System
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security

The project appraisal also assessed the applicability of:

- PS5: Land Acquisition and Involuntary Resettlement
- PS6: Biodiversity Conservation and Sustainable Natural Resource Management
- PS7: Indigenous Peoples
- PS8: Cultural Heritage.

In regard to PS5, all plant sites were under industrial use or were empty and unused, and no people were displaced or lost economic livelihoods when the plants were established. All lands were clearly modified habitat, with no known critical habitat present. The company has contributed to replanting trees in its area, consistent with PS6. No indigenous peoples are known to be present, and no cultural heritage sites have been identified close to any of the plants.

This is a Category B project according to IFC’s Environmental and Social Review Procedures, because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The production of organic fertilizer is a low-tech process which effectively makes waste into a valued and valuable product. The nature of the production process is such that emissions are minimal, and any health and safety issues can be readily handled using basic engineering technology. Since mitigation measures for the very limited impacts can be readily defined, adverse impacts are not expected to be diverse or irreversible, will be limited to the project site, and physical or economic displacement of communities or people has occurred, the project has been classified as a Category B.

Environmental and Social Mitigation Measures

The following potential environmental, social, and health and safety issues were reviewed during appraisal:

- site selection for organic fertilizer plants;
- management of air and water emissions, including odor control;
- sanitary controls on use of animal waste;
- worker labor aspects, health and safety; and
- development and implementation of environmental and health and safety management systems.

The sponsor 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 IFC environment and social performance standards 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.

- PS 1: Social and Environmental Assessment and Management System:

Under Chinese law, the company works with local regulatory authorities to prepare environmental impact assessments for all of their production facilities. Monitoring of air and water emissions, and noise, is carried out by the government during operation of the plants. Disclosure follows local requirements.

The company has established an environmental and health and safety management system, headed by a vice-president and supervised by the human resources and administration departments. Factory directors have the main responsibilities for production, environment and health and safety issues in their plants. The company has already received the ISO 9001:2002 quality management certification, and has a team preparing for ISO 14001 environmental management certification. The company is also planning on achieving OHSAS 18001 certification in 2007.

- PS 2: Labor and Working Conditions:

The company has a comprehensive human resources management system in place, with procedures that reflect local labor law and cover recruitment, hiring, compensation, training, promotion guidelines, job description, performance standards social insurance and dispute resolution. Contract employees are not covered under this system, but the main staff members of contracted companies are provided with training to improve their skills. The company currently has approximately 375 employees at its three main production facilities, and this number will expand significantly as the company develops additional factories.

The company provides workers and lab technicians with personal protective equipment appropriate to their job responsibilities, including masks, gloves, work clothes, safety helmets, etc. The attention to safety in the workplace has resulted in their not being any lost-time accidents since the three factories were put into production. There have been no occupational diseases or any production safety accidents.

Appropriate fire protection measures are incorporated in the plants, including hydrant systems and foam fire extinguishers. The fire extinguishers are regularly checked.

- PS 3: Pollution Prevention and Abatement:

The processing plants are all located in rural or peri-urban areas, and none are close to any identified cultural heritage sites. Characteristics of the existing sites are as follows.

- Youxi Factory, Sanming City, Fujian Province:

This is located in an entirely rural area, remote from any villages. This site is leased from the local government on a long-term basis, and was previously used for miscellaneous township enterprises before being obtained by Century Sunshine.

- Jian’ou Factory, Nanpingjian’ou City, Fujian Province:

This plant is located on a small island in a river, surrounded by orchards, and also remote from any villages. It is leased from a military agency with owns the surrounding area, and the site was deserted for many years.

- Jiangxi Factory, Nanchang City, Jiangxi Province:

This plant is located in an industrial development estate. This was previously the site of a compound fertilizer factory, and the land use rights and buildings were purchased from the previous owner.

The processing involved in production of organic fertilizers is relatively straight-forward, using agricultural and food processing waste materials. These include livestock wastes from cattle, pig or chicken farms, wastes from food manufacturing plants with high organic content such as soybean meal and fish meal, and wastes and by-products from agricultural production such as rice husks, tea leaves and wood ashes. These wastes are sourced from local livestock farms, food and beverage production facilities, local agricultural trade markets and local farms. Through a rapid composting process, and with the addition of bacteria and nutrients, the wastes are transformed into decomposed organic material which is then ground and packaged.

The company carefully monitors its raw materials to ensure that they contain no pesticide residues, heavy metals or any other anthropogenically-derived contaminants. The resulting product is subject to independent testing by Chinese and international certification bodies specializing in organic foods. The company also produces compound fertilizers, a combination of organic material and selected inorganic chemicals including urea, ammonium chloride, monoammonium phosphate and potassium chloride, depending on the needs of the target crop.

All factories are operated on electrical supply from local utilities. The Youxi and Jiangxi factories both have very small, coal-fired boilers, as well, operating at less than 2 t steam per hour. Air emissions are minimal from these small units. The Jiangxi factory also has a dust collection system in place for the compound fertilizer production, including a spray tower and facilities for recycling the water used in cleaning. There is no other source of process water and all water is consumed in the product. Sanitary wastes are handled in conventional septic systems. There are essentially no air or water emissions from the operations.

The Jiangxi factory includes a facility which produces a limited range of organic pesticides. These include an antibiotic isolated from bacterial fermentation products and a synthetic pyrethroid. All pesticides are subject to a government approval process which includes field tests, toxicity tests and environmental assessment before being sold. The pesticide plant includes a range of safety procedures including the use of automated raw material blending and bottling production lines, and use of appropriate personal protective equipment. All workers have annual medical exams. There are no air or water emissions from this plant.

The company will ensure that any future developments or acquisitions are designed and managed in compliance with relevant Chinese laws and regulations as well as with IFC’s Performance Standards and environmental and social guidelines.

- PS 4: Community Health, Safety and Security:

The processing plants are relatively innocuous and present no threats to community health, safety or security. There are no significant emissions which could affect the surroundings, and no noxious odors are produced.

Stakeholder Engagement

The company has an active role in sponsoring and participating in local community activities. The company has been particularly active in providing books and stationery to schools in their areas. In 2003, when SARS was prevalent, the company had a program of distributing health drinks to the public. There is currently no regular forum for community engagement, but the company does actively participate in meetings with local government bodies. The company reports that it maintains friendly relationships with both local governments and local villagers, and has never had any complaints about any aspect of its operations. The company has constructed roads which are used by local people, and has also carried out planting of trees to improve habitat around its plant, which the villagers help to maintain. IFC will encourage the company to adopt more formal methods for public consultation and disclosure.

**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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