25633 - Asia Environment

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Environmental & Social Review Summary

Project Number

25633

Company Name

ASIA ENVIRONMENT HOLDINGS PTE. LTD.

Date ESRS Disclosed

Oct 3, 2007

Country

China

Region

East Asia and the Pacific

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Nov 28, 2007
Signed : Nov 29, 2007
Invested : Apr 14, 2008

Sector

Water and Wastewater Utilities

Industry

Infrastructure

Department

Regional Industry - INF Asia & Pac

Project Description

Asia Environment Holdings Ltd. is a holding company incorporated in Singapore. Through its subsidiaries, it provides integrated water and wastewater treatment products and services to municipalities and industry, primarily in China. The company is based in Yixing, China, and publicly listed on the Singapore Stock Exchange in December 2003. Over the years, Asia Environment has emerged as one of the leading local players in the Chinese industrial and municipal wastewater treatment industry. It specializes in the research and development of treatment technologies, the manufacturing of treatment equipment (at three facilities), turnkey engineering and construction services related to wastewater treatment systems, and more recently has expanded into the investment in and management of large-scale municipal BOT/TOT water and wastewater projects. The proposed IFC loan will be used to primarily to finance the company’s investments in additional large-scale BOT/TOT water and wastewater projects.

Overview of IFC's Scope of Review

IFC based its Environmental and Social review, in part, on the due diligence and findings of Mott MacDonald Ltd., an independent consultant retained at the direction and on behalf of IFC for this purpose. Mott MacDonald visited Asia Environment’s Headquarters Office in Yixing, China and two representative project sites in March and again in May 2007. During these visits, the consultant examined internal company documents and records, and conducted interviews of various Asia Environment management, business development, engineering, and construction management staff. Mott MacDonald’s review findings were presented in a written report submitted to IFC in May 2007.

E & S Project Categorization and Applicable Standard

Because this is to support future, but as yet, undefined water and wastewater treatment projects, the principal Performance Standards (PS) to be applied to this investment are:

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement

It’s important to note, however, the differences in risks and impacts posed by Asia Environment’s three principal business activities and the corresponding degree to which the PSs apply.

The company’s wastewater equipment manufacturing business pose the typical, limited pollution control, waste management, and occupational health and safety issues found in small-scale, general manufacturing activities. Because Asia Environment’s engineering and construction activities contribute to cleaning-up water pollution generated by others, these activities are essentially supporting industry and government clients in managing a broader set of environmental and social impacts and risks over which these parties have control. In the same way the company’s large-scale municipal water/wastewater business is primarily driven by the assessment and management of environmental and social performance conducted by responsible government authorities as part of their original planning activities. Notwithstanding, a condition of IFC’s investment going forward will be that any and all BOT-type projects undertaken shall consider all relevant social and environmental risks and impacts, including the issues identified in PS1 through PS8.

This is a Category B project 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. Asia Environment’s activities will help reduce water pollution and contribute to improved water quality and enhanced public health in the communities it serves in China.

Environmental and Social Mitigation Measures

- Social and Environmental Assessment and Management Systems:

In the more than twenty years Asia Environment has been engaged in the wastewater treatment industry in China and other countries in Asia, the company has accumulated significant experience and knowledge of the applicable and relevant laws and requirements, as well as the appropriate technologies to design and construct to meet the necessary standards. Two of its wastewater treatment equipment manufacturing facilities are certified to ISO 9001:2000 the international quality management standard; its pipe manufacturing facility will be certified soon. The company is currently seeking certification to ISO 14001:2004, the international environment management system standard, for these operations. In preparing for ISO 14001 certification, Asia Environment has made appropriate evaluation and consideration of adverse impacts of the environmental aspects of its equipment manufacturing operations and has an adequate program of control, monitoring and reporting measures in place to address these.

For newer municipal BOT and related projects and consistent with PRC laws and requirements, the originating local government identifies the site and prepares the preliminary design for the facilities, and subsequently commissions the appropriate Environmental Protection Research Institute to assess and document environmental risks and impacts. These environmental assessments examine the environmental benefits and adverse impacts of the construction and operation of the treatment plant on the surrounding area. Impacts during construction often include noise, dust, and waste management. Operation-related impacts are primarily odor nuisances and potential hazards from the use and handling of chemicals on site. Some information is then used to prepare specific environmental mitigation measures which must be included in bidding or negotiations for the project.

The government authorities also assess and manage any related social impacts associated with a particular BOT-type project. Where planned facilities require land acquisition (such as treatment plants) or land access (such as buried pipeline construction rights-of-way), the government authorities are responsible for acquiring the land and compensating land users whose assets are affected and/or whom may need to be relocated. The authorities manage all aspects of the process, including: notification of the affected parties; and individual consultation and agreement as to the size, type and number of the assets affected by the construction (e.g., structures, walls, fences, agricultural products, etc.). Based on government-established compensation guidelines, the authorities then calculate the amount of compensation owed to each affected party. The respective local government officials distribute compensation to the affected parties in the various villages and towns, and are also responsible for making the land available at certain agreed dates. In addition, local government officials are responsible for addressing any grievances or complaints by the affected parties.

Asia Environment’s management team, including the Chief Engineer and legal department, has overall responsibility for assuring environmental performance for their business activities. After agreements to construct and/or operate are executed, individual projects are implemented by assigned project managers within the company’s Operations Department. Construction subcontracts include clauses with requirements to ensure control of construction-related impacts. Asia Environment’s project manager regularly monitors construction to ensure any non-compliances are identified and brought under control through regular meetings with the contractors. Employees are made aware of their responsibilities through a variety of training mechanisms, as appropriate.

Going forward, Asia Environment will more fully develop their internal business processes for managing environmental and social risks. This will include adopting IFC’s Performance Standards as part of the applicable requirements to be satisfied by both their manufacturing and future BOT activities. In addition, the company will incorporate formal procedures for environmental and social screening of new business opportunities and projects into its BOT business development processes. Finally, formal procedures will be established to internally monitor, measure and report on a regular basis by the Operations Department the implementation of key environmental and social mitigation measures and other improvements to which the company has committed.

- Labor and Working Conditions:

Asia Environment employs over 400 permanent employees, with the majority (approximately 250) working in the three equipment manufacturing facilities. The company employs construction contract workers as and when needed. Manufacturing and construction operations ensure fair labor and working conditions according to PRC laws and requirements. The company will also develop an appropriate human resources policy providing information on employee rights under Chinese labor law, and that will be accessible to all employees.

Asia Environment has a documented occupational health and safety program aimed to fulfill its obligations under national and local laws. The company’s written safety policy seeks to “ensure that the lives and safety of our employees are safeguarded against associated work risks….” A Safety Manual also details procedural requirements for staff and subcontractors in addition to PRC legal requirements. The Manual covers:

- organizational responsibility for each manager and employee;
- procedures for firefighting;
- production safety;
- training;
- accident prevention, reporting and investigation.

In the planning and execution of each of its projects, Asia Environment determines, in coordination with local government authorities, relevant and applicable project obligations, then appropriately incorporates these into its own plans construction plans, as well as subcontractor and supplier contracts. During construction, safety committees are established and chaired by Asia Environment’s site manager. Daily briefings are held at each site to ensure requirements are being met.

Over that last five years, the company reported no serious accidents by its employees, nor has an accident occurred on any construction site serious enough to cause work to be halted. Going forward and to ensure operations are consistent with international good practice, Asia Environment will initiate detailed reporting of all accidents that occur, whatever the severity, as well as record lost work day incidents. Records of all worker health and safety training activities will also be kept, where all employees shall be trained in emergency procedures and safe work systems. A program of regular safety and health inspections and audits will also be undertaken.

- Pollution Prevention and Abatement:

When it designs, builds and operates municipal water supply treatment plants, Asia Environment agrees to accept and treat the raw water that is provided by the responsible government authority. In most cases, the company typically employs conventional treatment processes to produce finished water that meets applicable Chinese and WHO drinking water standards.

Industrial effluent discharges in China are regulated by a number of industrial sector-specific standards that have come into force over the last 20 years. Standards for municipal sewage treatment have been in effect since 2002, include effluent limitations for the internationally-accepted parameters, and consider factors such as the use and pollution assimilation capacity of receiving waters. The wastewater treatment facilities that Asia Environment constructs (and operates) discharge to local rivers to which a range of regulatory limits apply depending on the assimilative capacity of the water body. In general, the Chinese Standards compare favorably to, and are consistent with, IFC Performance Standard 3 and the associated industry sector effluent guidelines.

Management and disposal of sludge and other residue from water and wastewater operations complies with Chinese standards.

Facilities where chemicals are used and stored, particularly gaseous chlorine, are subject to stringent standards because of the risks associated with accidental releases. Asia Environment will adopt international best practices to ensure that plants are designed and constructed with adequate containment and neutralizing systems to minimize the impact of release. Where the company also operates these facilities, appropriate emergency prevention and control plans will be put in place, and will include provision of appropriate response equipment and materials, and a detailed set of procedures to be followed to minimize the harm of any potential accident.

Stakeholder Engagement

Asia Environment’s opportunities for community engagement are limited by the nature of its business. Dialog and communication with affected communities for BOT projects is accomplished primarily by the local government authorities according to their own procedures. As a project constructor and operator, the company undertakes its activities after most of the initial community engagement is completed. Consequently, Asia Environment’s role is necessarily limited to participating in a relationship that has been already established. In supporting of its clients, the company will establish methods for communicating environmental and social aspects to external interested parties and maintain procedures for receiving, documenting, and responding to concerns relating to its projects. On the manufacturing business side and consistent with ISO 9001 and 14001 certification of the three facilities, Asia Environment will have appropriate procedures that address communication with external parties, including the handling of complaints.

For inquiries about the project, please contact:

Koh Poh Yeok, CFO
Asia Environment Holding Ltd.
77 Robinson Road #15-01
SIA Building
Singapore 068896

**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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