- EHS Assessment and Management Systems:
Both Avangard and PASA have well established business management systems and specific Environmental Management Systems (EMSs) that they currently apply to their respective businesses and operations. Both companies also place environmental and social performance at the core of their corporate cultures and missions and have personally concerned management. PASA, as Mexico’s largest private provider of municipal solid waste collection and disposal services, additionally places the “improvement of the quality of the environment” at the core of its corporate Mission and Vision. Avangard’s internal Code of Ethics states that the company’s objective is to “collect, recycle and commercialize post-consumer and post-industrial plastics…” while remaining “committed to social, ecological, and economic responsibilities” and its vision is to “recycle plastics for a better world”.
Environmental and Social Assessment:
Petstar is preparing an Environmental and Social Impact Assessment (ESIA) of the proposed project. The ESIA will focus on the potentially negative impacts in the project’s zone of influence, identifying any relevant prevention and mitigation measures as required by applicable regulations in order to obtain an environmental operating license issued by the Secretaria de Medio Ambiente y Recursos Naturales (SEMARNAT). The study is being conducted during the project planning and design phase in order to incorporate any necessary mitigation measures into the engineering design currently under development by the engineering consulting firm SACMAG.
Management Program:
Based on the assessment of the Project’s environmental and social impacts, Petstar will identify actions to prevent and control the impacts following management procedures already in place as part of the EMS used in Avangard’s existing operations. A project-specific program will be structured to manage construction impacts, normal operations, and emergencies. Quantitative indicators will be established for monitoring of relevant environmental parameters to more accurately determine their performance. For example, environmental indicators in the proposed project will include water consumption rates, pollutant emissions, and waste generation and disposal volumes. Appropriate Action Plan documents will be prepared to ensure that any identified corrective actions are implemented according to agreed-upon schedules.
The existing management program will be adopted for the project, including the adaptation of the more than thirty (30) procedures covering their current operations’ key environmental, occupational, and community health and safety issues.
Organization, Training and Monitoring:
Overall responsibility and authority for implementation of the proposed project’s environmental and social policies and programs will fall with the corporate management of Petstar, its plant manager and operations supervisors, but support will also come from PASA. Led by their respective presidents, who have a clear commitment to the responsible management of environmental and social issues, operational issues at PASA and Petstar are coordinated by full-time, and qualified environmental and social professionals who oversee all environmental and social assessment and management activities. An internal audit procedure will be applied to evaluate the environmental, health, safety and labor aspects of the Petstar project and audit results will be used to identify any necessary corrective actions.
Additionally, most of PASAs operations have been externally audited through a voluntary, government sponsored program (PROFEPA’s National Program for Voluntary Environmental Audits), which has resulted in Compliance Certifications for most of its current operations throughout Mexico. The Petstar project will be audited and certified according to this voluntary program during its operational phase.
Reporting:
Appropriate and regular environmental and social performance information reports are currently submitted to senior management of Petstar and PASA. In addition, PASA annually publishes an external Annual Report that includes a section devoted to reporting on their corporate social responsibility initiatives as well as the company’s performance in its core business of environmentally sound waste management. The key performance aspects of the Project will be included in future corporate reports following the start of operations.
- Labor Issues
Working Conditions and Management of Worker Relationships:
Avangard has a well-established human resource policy and management system that will be applied to the approximate 22 management level and 41 plant level workers to be hired as part of the Petstar project.
Avangard’s policies are developed and implemented at the corporate and divisional levels and apply to Avangard’s 445 employees. Avangard’s employees belong to a union (Sindicato de Trabajadores y Empleados de las Casas Comerciales y sus Servicios Conexos en la Republica Mexicana, Sección 14, CTM) supporting freedom of association and recognizing the right to collective bargaining. These rights will also be applied to the employees of the Petstar facility.
Avangard provides new employees with induction training that includes instruction in job-specific tasks, occupational health and safety requirements, and company rules and procedures. Company rules at Avangard are communicated through the Internal Rules Handbook (employee handbook) that outlines the basic terms and conditions of employment, including working days and hours, safety procedures, disciplinary procedures, leave, benefits and termination of employment. A Company Code of Ethics complements the Internal Rules. The Code of Ethics outlines the company mission and values, general behavior standards, and the company’s definition of conflict of interest. Workers are required to sign the Code of Ethics. Avangard has a compensation procedure that ensures workers are paid regularly and on time. The daily compensation for line workers at sorting facilities, which will also be applied to plant level workers at the Project facility, is compliant with government-established minimum wages. A project-specific employee manual and induction training program will be prepared and implemented for the Petstar facility.
Employee policy decisions are usually established with the approval of a Joint Worker-Management Committee (Comite Mixto) where company management and worker-elected representatives meet to discuss issues of common concern including the contents and approval of Company Rules, occupational health and safety concerns, and other labor issues. A Joint Worker-Management Committee will be created at the Project facility according to applicable Mexican requirements.
Petstar will apply non-discriminatory practices in the selection of workers and managers for the Project as well as allow for freedom of association in the workplace as part of its employment policies. The company will locally advertise the job openings at all levels in the new facility in the City of Toluca to give the local labor pool the opportunity to apply and be considered in the selection process.
Protecting the Work Force:
Avangard has strict policies with regards to the employment of minors which they prohibit in adherence to Mexican national regulations. (See Ley Federal del Trabajo (1998) Part II, Chapter I, Articles 22 and 23, which prohibits work for children of less than 14 years of age, or for those up to 16 years of age who have not completed compulsory education, unless their work is compatible with the pursuit of their education and under authorization from the competent authorities. Children between 14 and 16 years of age are required to have written authorization from their parents or from the competent authorities.)
Occupational Health and Safety:
Avangard has an occupational health and safety (OHS) program based on the identification and quantification of workplace risks coupled with applicable legal and other requirements. To prevent workplace accidents and promote the health of its employees, Avangard has a set of approximately 30 documented procedures which address the continuous identification of dangerous conditions, evaluation of associated risks, and implementation of control measures. Employees are trained in understanding workplace risks and their prevention and control, including the use of personal protective equipment (PPE), hazardous materials handling, and emergency response. Activities are routinely monitored, inspected, and audited. Incidents and accidents are investigated according to a documented procedure so that steps can be taken to prevent reoccurrence.
Petstar will develop an occupational health and safety management program, which may be based on the application of certain elements from Avangard’s current EMS and related procedures, based on applicable regulatory requirements for Mexico, and based on relevant guidance from IFC’s EHS Guidelines. Petstar will assign primary responsibility and accountability for the implementation of the program to the facility management, providing the necessary performance-based incentives and financial means to ensure successful program implementation.
Protection of the Work Force in the Supply Chain:
The project will significantly rely on the supply of recycled PET bottles from a well established network of suppliers developed by Avangard over the last ten years. Avangard collects PET bottles from a network of approximately 1,330 supply sites located throughout Mexico. These can be broadly separated into four groups:
(i) suppliers that separate PET at source; (ii) suppliers that separate PET during the collection process; (iii) informal suppliers that separate PET from mixed waste disposal sites; and (iv) intermediaries that have previously collected PET from suppliers within groups (i) to (iii). The incidence of informal harmful child labor is of particular concern within group (iii) where garbage sorting and recycling workers (known in Mexico as “pepenadores”) labor in poor working conditions, very often as family units.
Source Separated Suppliers: In 2006, this group represented 887 or 67% of Avangard’s supply sites but only 3% of its supply volume. Suppliers in this group include source separation programs in communities, industrial sites and schools as well as various ecological clean up projects. Child labor is not considered to be a concern within this group.
Collection Separation Suppliers: In 2006, this group represented 96 or 7% of Avangard’s supply sites but 26% of its supply volume. Suppliers include deposit centers where collection crews sell separated materials, and materials recovery facilities (MRFs) where renewables are formally separated from the waste stream. The six MRFs represent 23% of Avangard’s supply volume and most are located within the State of Mexico and the Federal District. The MRF’s formally employ workers and do not engage in child labor practices. This type of sourcing is expected to grow in the long-term given recent changes in Mexico’s waste management laws requiring closure of informal dumps and their replacement with properly designed and operated landfills including formalized MRFs.
Mixed Waste Disposal Sites: In 2006, this group represented 184 of Avangard’s supply sites and 27% of its supply volume. At these sites, pepenadores are known to labor informally, typically coordinated by site leaders who control the sale of materials and in effect act as intermediaries. These sites include private, municipal, and informal dumps as well as sanitary landfills. Avangard purchases the materials from the site leaders who in turn compensate the pepenadores. It is estimated that approximately 2,600 persons contribute to the collection of PET at these 184 sites including a population of children less than 18 years of age. Estimates place the number of children at these sites between 10% and 25% of the total population of pepenadores. Mexico''s Instituto Nacional de Estadistica, Geografia e Informatica (INEGI) estimates that 3.3 million children between the ages of 6 and 14 worked in Mexico in 2002. The states with the highest number of child labor are Chiapas, Campeche, Puebla, and Veracruz, where between 22-29% of children working, while the lowest are Chihuahua, Nuevo Leon, Distrito Federal, Baja California, and Coahuila, with 6.7-8.3% of children working.
Commercial Intermediaries – In 2006, this group represented 163 of Avangard’s suppliers and provided 44% of its supply volume. Suppliers in this group include dedicated regional suppliers of Avangard as well as small, informal and large, formal competitors. The role of this group within Avangard’s supply chain is expected to grow as it expands its collection reach by recruiting new regional suppliers. Although Avangard has less information and control over PET sourcing via intermediaries, it is thought that they collect PET from the same types of source as Avangard’s direct collections (see groups (i) to (iii)).
Although the company’s potential to influence a change in the incidence of informal harmful child labor is limited by the extent of the problem (both in geography and in numbers) and by the breadth of recycling sectors involved (PET represents only a proportion of all materials recycled which include cardboard, paper, glass, and other plastics), the company will address this issue by taking reasonable steps at the supply sites where informal harmful child labor is known to be an issue, commensurate with Avangard’s level of influence at these sites.
- Petstar’s Proposed Programmatic Response:
Petstar’s proposed program will consist of a multifaceted approach that has been conceptually developed by Petstar and PASA’s management in consultation with academic experts, IFC’s own review of project conditions and existing published literature, IFC’s technical expertise and advice to the client, Avangard’s own detailed knowledge of the issue and sector,
and the experience and NGO network of PASA’s Foundation (Mundo Sustenable).
The Child Labor Management Program and accompanying Action Plan will include the following elements:
- Child Labor Management Program:
Petstar will develop a formal program to address the informal harmful child labor issues in its supply chain. The program development and implementation will be supported by current internal capacity within both Petstar and PASA and will draw on expert advice and assistance from the Sponsor’s Foundation, Fundacion Mundo Sustenable, which has an established track record and environmental and social education and development programs.
Petstar’s ability to influence change will depend in large part on Avangard’s relationships with waste disposal site leaders, who control the work of the pepenadores, which have developed not only into business relationships but also into mutual trust.
Petstar will assign the management of such program to a dedicated individual to be specifically contracted for this purpose.
- Partnership Approach:
The program will also engage key stakeholders, seeking a partnership approach with other industry, governmental, and non-governmental organizations.
The Social Action Plan is attached.
- Emissions, Effluents and Waste:
The Petstar manufacturing facility will be built on a cleared, level land parcel with an approximate area of 23,725 m2 at a site purchased from the Government of the State of Mexico near the City of Toluca which was previously developed in 2002 as an industrial park (the San Cayetano Industrial Park). Although the region is arid to semi-arid, the area is predominantly agricultural and landuse prior to development of the industrial park was reported to be arable land.
Key environmental issues during construction are likely to include dust, noise, and vibration from construction vehicle transit and earth moving activities as well as potential for soil erosion as is common to all construction sites. These impacts are expected to be temporary and will be minimized as part of the construction site management plan being prepared by the engineering consulting firm SACMAG who will also oversee the construction of the project.
The Petstar manufacturing plant will consist of two main components which include: the sorting, washing and flaking process (referred to as the washing process) and the melting, extrusion, and solid state purification process that results in the manufacture of bottle-grade PET pellets (referred to as the SPP process).
Key environmental issues expected during the operation of the Petstar manufacturing facility include:
- Noise
- Solid wastes
- Wastewater discharges
- Atmospheric emissions
- Hazardous materials
- Pesticide use
- Water consumption
Noise:
The principal expected sources of noise include transportation along the main access road related to the movement of raw materials and finished products, in-plant handling of raw materials (bales of PET bottles) and finished product, the washing and flaking process, and the resin pellets manufacturing process. The prevailing landuse in the site and vicinity is industrial and agricultural with the nearest residential receptors located at approximately 400 feet to the west of the site, across a main public road. Noise sources will be mitigated by the planned enclosure of washing and manufacturing processes inside of the main facility building and by the provision of ample circulation and parking areas for incoming and outgoing traffic in addition to the distance between the industrial park and the nearest residences.
Solid Wastes;
Solid waste production is limited by the fact that both non-PET plastics collected and non-conforming PET flake have their own value and will be sold. The principal remaining solid wastes are from the washing and sorting process (e.g.paper and glue from labels, dirt, etc), and wastewater treatment solids which may also contain glue, dirt, and paper. Inert solid wastes removed from the washing and wastewater treatment process will be managed as non-hazardous solid waste in government-permitted landfills following confirmation of this classification.
Wastewater:
The main source of wastewater will be from the washing process which will generate a wastewater stream with solids such as dirt, glue, and paper as well as washing and rinsing chemicals (detergents). Petstar will construct and operate a physical-chemical wastewater treatment process to treat the wastewater effluent prior to discharge to the public drainage system which leads to local surface water bodies used for irrigation or public uses. Treated effluent quality will meet applicable Mexican legal requirements (e.g. NOM-001-ECOL-1996) for discharge of treated effluents into surface waters and will also be consistent with IFC’s guidance on discharges to surface waters.
Atmospheric Emissions:
The main sources of atmospheric emissions include the degassing of PET flakes in the extruding process and the reaction products and residual contaminants from the gas cleaning process in the polycondensation system. Degassing of PET flakes in the extrusion process will mostly result in low levels of emissions, which will be vented through the work area ventilation system and will not require further treatment or control. Residual contaminants and reaction products from the polycondensation process will be treated through a catalytic combustion system prior to being emitted to the atmosphere to meet applicable emissions standards.
Hazardous Materials:
The Petstar facility will store small quantities of hazardous or potentially hazardous materials such as pesticides for fumigation of bales and bale storage areas, facility cleaning and machinery maintenance chemicals, wash water additives, and wastewater treatment systems chemicals. The facility will store these materials in segregated areas properly designed to prevent and control accidental releases or cross-contamination of the washing process according to applicable Mexican regulations and IFC’s guidelines.
Pesticide Use:
Petstar will use small quantities of pesticides to fumigate the stored bales of PET bottles as is current practice by Avangard in PET sorting facilities. The fumigation is required to control pests due to the presence of sugary residues in PET bottles. The selection and application of pesticides will be conducted according to applicable Mexican requirements and IFC’s requirements applicable to pesticide use and management.
Water Consumption:
The washing process is designed with a counter-current system to conserve water. It is expected to consume approximately 26,530m3 of water per year. Water will be supplied by the State Government from a groundwater well constructed by the Mexican National Water Commission for the industrial park. The State Government represents that the aquifer tapped for this purpose has a capacity of 300,000 m3 per year and will be able supply the needs of the industrial park in a sustainable manner over the foreseeable future.
