25599 - Sodimac Colombia

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Environmental & Social Review Summary

Project Number

25599

Company Name

SODIMAC COLOMBIA S A

Date ESRS Disclosed

Feb 28, 2007

Country

Colombia

Region

Latin America and the Caribbean

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 19, 2007
Signed : Jun 29, 2007
Invested : Aug 2, 2007

Sector

Retail (Including Supermarkets, Grocery Stores, etc.)

Industry

Tourism, Retail and Property

Department

Regional Industry MAS LAC & EUR

Project Description

Sodimac Colombia S.A. (Sodimac or the company) is the largest home improvement retailer in Colombia, operating in the modern sector of the country. Since its inception in 1993, Sodimac has grown steadily reaching 10 stores in five cities (Bogota, Cali, Medellin, Barranquilla and Pereira) under two formats and brands targeting different segments: "Homecenter" and “Constructor”.

Sodimac is seeking from IFC a $50 million long-term corporate loan (in its equivalent in Colombian pesos), of which the first $35 million would be committed and utilized in the near term, and the remaining $15 million would be committed in the next few years. The IFC loan would be utilized for Sodimac’s corporate financing needs, including its expansion program to be implemented during the next 2-3 years and the refinancing a portion of its debt. This investment is an important part of its long-term growth strategy.

Overview of IFC's Scope of Review

The review of this project consisted of appraising technical, environmental, health, safety and social information provided by the Company, and a field visit in November 2006. The environmental and social (E&S) specialist visited the headquarters of the company in Bogota and two stores in Bogota. The E&S specialist held meetings with senior management of Sodimac.

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
PS5: Land Acquisition and Involuntary Resettlement

Stores are located in urban areas. There are no protected species or protected areas at or near the stores. There are no indigenous people in the area. The proposed project has no impact on culture heritage.

Environmental and Social Mitigation Measures

Sodimac has plans to address these impacts to ensure that the proposed operations comply with the host country laws and regulations; IFC environment and social performance standards; and the IFC/WBG environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the Company is summarized in the paragraphs that follow.

1. Social and Environmental Assessment and Management Systems

Environmental and Social Assessment: Sodimac uses internal experts to conduct environmental and social (E&S) assessments for the development, construction and operation of new stores in accordance with Colombian regulatory requirements. All environmental, health and safety and social permits required by national law are obtained for each step of the process before Sodimac proceeds to the next step. Sodimac will continue ensuring that the E&S assessments for all future projects in Colombia comply with IFC performance standards.

Management Systems and Organization: Sodimac has a well established management system which helps them manage and monitor the quality, environmental, and health & safety (including occupational health and safety, life and fire safety, and community health and safety) aspects of their operations. They have established a department (Gerencia de Seguridad Integral) at a corporate level to oversee these issues which is involved in the decision-making process. There are EHS coordinators in each store who have the responsibility of implementing corrective measures, monitoring and reporting performance. Sodimac has established clear and quantifiable EHS objectives, and has developed an action plan to meet these objectives. This action plan includes resources, timelines and responsibilities for implementation. Sodimac has also developed innovative tools for monitoring and reporting EHS performance. Environmental and social performance records are kept and weekly reports to senior management are delivered through an internal reporting structure. Sodimac has also implemented an appropriate system to manage human resources aspects. Sodimac will be required to maintain its EHS and Human Resources management systems and update them as necessary to continue complying with local regulations and IFC performance standards.

Training: Sodimac has an established program to provide necessary training for all its direct and contracted employees on the environmental and health and safety aspects related to its operations.

2. Labor and Working Conditions

Human Resources Policy and Management: Sodimac has a Human Resources policy (Reglamento de trabajo/Politicas laborales) which specifies the terms of employment and working conditions at the company. These include procedures for selection, hiring, training, promotion, resignation, lay-off and firing. It also specifies wages and benefits, working hours and overtime, leave and holidays. The human resources function is a corporate function and is managed centrally by the human resources manager. At each store there is a responsible for this function. All policies, procedures and guidelines follow Colombian labor law. The company has also a Code of Ethics and an Ethics Committee which is composed by the general manager, the operations manager and the human resources manager. This committee investigates complaints and determines actions to be taken.

Grievance Mechanism: HR is responsible for supervising the grievance process and ensuring proper follow-up. There are five channels for a worker to convey a concern or complaint to Sodimac''s management, through an annual survey, a suggestion box (boxes are near the cafeteria in each store), directly to management, through the Ethics Committee, and during the monthly meetings corporate senior management has at each store with all employees.

Non-Discrimination and Equal Opportunity: Sodimac is an equal opportunity employer and encourages professional development.

Protecting the Work Force: Sodimac complies with national law and the minimum age of hiring is 18 years old. Sodimac will continue ensuring that contractors they use comply with national law and IFC performance standards.

Occupational health and safety (OHS): The Safety Department manages the OHS issues at Sodimac. Safety and security awareness and preparedness are among the top concerns for both management and operators. Accident statistics has been included as an indicator in the company''s scorecard and all employees follow up performance on a weekly basis. There are effective OHS procedures, tools and adequate personal protection equipment for each activity at Sodimac''s stores. There are routine OHS trainings including annual refreshers for its employees and two fire drills per year are performed at each store. Sodimac monitors workplace conditions and ensures they meet both local regulatory requirements and good international retail practice. Sodimac has a well implemented OHS management system. Sodimac will be required to maintain this OHS management system and update it as necessary to continue compliying with local regulations and IFC performance standards. As per performance standard 2, the occupational health and safety requirement is applicable to Sodimac direct employees and employees contracted through contractors only.

3. Pollution Prevention and Abatement
Sodimac includes their management of environmental aspects as part of the safety function. Environmental issues managed and monitored are listed below.

Effluent treatment and disposal: Sodimac''s activities do not generate industrial liquid waste. Domestic liquid waste (e.g. sanitary) is discharged to the municipal sewer system.

Use of asbestos-containing building materials: Sodimac informed that it commercializes roof tiles that contain bonded asbestos at a 5 - 10% in volume, which complies with local Colombian legislation and with IFC performance standards. Sodimac has also confirmed that asbestos-containing materials are not used in the construction of stores.

Hazardous materials and waste: Sodimac commercializes inks, tints and solvents. The company has appropriate policies and procedures in order to store and handle these materials and waste in accordance with IFC Hazardous Materials Management Guidelines.

Potable water and energy supplies. Potable water and energy are supplied by public sources. Sodimac has implemented an energy savings program in their offices in Bogota. They will measure results at the end of 2006 and begin implementation in other operations.

Solid waste: Waste generated by Sodimac is basically carton, plastic and paper from packages. Solid waste is separated and given to different entities. Carton and paper is collected and recycled by Sodimac''s employee fund. Plastic is collected by a recycling company. Any other solid waste, e.g. organic waste generated at the cafeteria, is collected by the municipality.

Supply chain: Sodimac will exercise commercially reasonable efforts to ensure that all wooden products sold at their stores are sourced and produced in compliance with IFC performance standards.

4. Community Health, Safety and Security

Community health, safety and security: Stores are located in urban areas. Sodimac''s priority is to ensure the health, safety and security of clients and surrounding community. Sodimac has built trust with the communities where they operate and ensures constant communication. Security guards are used in all stores and are not armed. These are subcontracted and managed by an experienced company, which has ensured appropriate procedures are in place and constant training is provided to all security guards.

Fire prevention and emergency preparedness and response: There is adequate fire fighting equipment onsite and it is properly maintained. The external fire trucks and ambulances can reach each store in five to ten minutes. Fire prevention and emergency response are included in all employee trainings. Sodimac conducts bi-annual drills for fire fighting, natural disasters (e.g. earthquakes) and bomb threats.

5. Land Acquisition and Involuntary Resettlement
The Project Department is responsible for the development, design, construction and opening of new stores. As part of this process, Sodimac identifies locations for future stores and undertakes a study to verify that there is no legal claim and that the property is not occupied or being used by other persons other than the owner. Additionally, the company confirms that the property is in an area zoned for commercial activities. In cases where the property being acquired, leased or rented has legal problems, Sodimac would abstain from using the location for future development. After this initial assessment it enters into conversation with the owners and negotiates the best agreement for both (buying, renting, and leasing). Sodimac will continue ensuring compliance with IFC performance standards in future land acquisition processes.

Stakeholder Engagement

Sodimac engages constantly with the communities where they operate, particularly on community health and safety, and health and safety issues in their stores. Over the years, Sodimac has built a constructive relationship with these communities. They have also established a corporate responsibility function which has identified technical development of suppliers and establishment of small and medium size enterprises as key topics for expanding their community engagement to a broader audience. With regards to assessment information of new stores, this is not disclosed to nearby communities and consultation is done through client surveys, which are well documented and monitored. There is a well established grievance mechanism to address communities concerns and/or complaints.

Environmental documentation will be made available in the following locations:

Carrera 68D No. 80-70
Bogota D.C.
Colombia

and on the company''s web page:

www.homecenter.com.co

**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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