25668 - Concern Khlibprom

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Environmental & Social Review Summary

Project Number

25668

Company Name

Kontsern Khlibprom, Publichne AT

Date ESRS Disclosed

Mar 14, 2007

Country

Ukraine

Region

Europe

Last Updated Date

Jun 3, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : May 21, 2007
Signed : May 22, 2007
Invested : Aug 27, 2007

Sector

Grain Processing (Milling, Starch, Flour, Malt)

Industry

Agribusiness and Forestry

Department

Regional Industry MAS LAC & EUR

Project Description

Open Joint Stock Company Khlibprom (Khlibprom or the company) is one of the leading manufacturers of bread and bakery products in Ukraine. It owns and operates three flour mills, fourteen bread making plants and eighty one specialty retail stores in Western and Central Ukraine. The proposed project is a corporate-wide investment program aimed at expanding production capacities, improving efficiencies and strengthening the company’s balance sheet. It involves:

- acquisition of additional bread making capacities;
- modernization of existing bakeries;
- expansion and upgrade of the company’s retail network;
- construction of a new flour mill and associated grain storage facilities; and
- refinancing short-term debt.

Overview of IFC's Scope of Review

IFC’s appraisal consisted of:

- site visit to existing baking plants in Lviv, Vinnitsa and Gaysyn and interviewing environmental, health and safety (EHS) specialists at each plant;
- site visit to existing mill in Gaysyn and interviewing designated EHS staff;
- meeting with the head of project team on construction of new flour mill in Lviv region;
- meeting with corporate quality management staff; and
- reviewing of sample environmental and social documentation.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

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

Environmental and Social Mitigation Measures

The company has presented plans to address any adverse impacts and to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with the environmental and social requirements – Ukrainian laws and regulations and IFC PS and the 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.

- PS1: Social and Environmental Assessment and Management Systems:

Khlibprom’s management is strongly committed to institutionalizing a systematic approach to management of quality, environmental affairs, food safety and occupational health & safety (OHS). The company is in the process of establishing a corporate Unit for Integrated Quality Management aimed at establishing an integrated management system in the existing operations, based on internationally recognized standards such as ISO 9001-2000, ISO 14001:2004, OHSAS 18001:1999 and ISO 22000:2005. This corporate unit will also carry out a benchmarking activity among the company’s operations and will facilitate good-manufacturing and EHS practice implementation.

The resulting integrated management system will form the basis for assessing and management any future expansions and acquisitions by Khlibprom. As new facilities are constructed or acquired, Khlibprom will ensure that appropriate environmental assessment or site audits are carried out according to relevant IFC performance standards and guidelines, and that appropriate local consultation and disclosure is provided. Khlibprom will implement similar management and relevant certification systems, as in the existing operations, to ensure quality and compliance at the new facilities.

- PS2: Labor and Working Conditions:

Khlibprom employs about 4,600 workers at all its facilities in the Ukraine. It has a robust human resources policy and labor practices, which are in compliance with Ukrainian national law and consistent with IFC policies and guidelines. Most of the employees are organized and belong to all Ukrainian trade union “Social progress”. All new employees are provided orientation on various issues such as collective bargaining, code of conduct, workspace conditions, etc.

Training is obligatory for all employees at Khlibprom on OH&S, sanitary and hygienic safety. Work areas, equipment and processes which might pose health and safety risks are identified and measures are taken to reduce those risks. The largest OHS risks associated with grain handling facilities are the risk of grain and flour dust fires and explosions. Khlibprom is providing control of dust and ignition sources to reduce explosion hazards. Systematic inspections of fire detection and suppressions systems are carried out.

Occupational health and safety (OHS) accident statistics did not exceed 2.5 LTA/MMH in the past 2 years which is a good level. When quality management system is well established, the OH&S program will be integrated to a certifiable level in accordance IFC EHS Guidelines requirements.

- PS3: Pollution Prevention and Abatement:

Khlibprom’s largest baking plants in Lviv, Vinnitsa and Gaysyn are in basic compliance with Ukrainian environmental requirements and regulations. All boiler units are gas fired and well maintained. Air emissions from the units are in compliance with Ukrainian regulatory and IFC guideline limits for NOx and particulates. Collected wastewater from Khlibprom’s operations and surface runoff are discharged to the sewer system and associated municipal wastewater treatment facilities. Solid waste is transported to the municipal landfill sites for disposal. Waste fluorescent lamps, which contain mercury, are collected by the licensed company and removed for recycling.

An improvement plan is required for flour milling facilities to meet IFC requirements, mainly better dust emissions control. As a key priority, Khlibprom will carry out a gap analysis at three existing mills to identify any outstanding compliance issues and will prepare a corrective action plan with target resolution dates. Corrective Action Plan will be disclosed to the affected communities as the condition of IFC disbursement. Outcomes of the gap analysis will be taken into consideration for a new flour mill design and construction.

Khlibprom is paying strong attention to energy and water use optimization. Each plant has developed and implements an energy efficiency program, including modernization of boilers and production equipment, installation of heat exchangers, better thermal isolation of production buildings, etc.

- PS4: Community Health, Safety and Security:

Most of the Khlibprom’s production assets were put in operation in Soviet era and are well integrated into local social environment. In the framework of quality management system, Khlibprom will enhance community engagement through establishing a grievance mechanism to understand the community’s perception of risks and impacts associated with Khlibprom’s activity and to adjust its measures and actions to address the community concerns.

For new operations, Khlibprom will provide relevant local authorities, emergency services and the affected communities with information on the nature and extent of environmental and human health effects that may result from routine operations or unplanned emergencies at the facility.

Stakeholder Engagement

The electronic versions of the ESRS and the ESAP will be available for public review on IFC’s website. The public can also view the ESRS and the ESAP in Ukrainian language on the Khlibprom website: www.hlibprom.com.ua.

The hard copies will be made available at the following locations:

2, Khlebnaya Str., City of Lviv.
1, Artyoma Str., City of Vinnitsa
48, Vozrozhdeniya Str., City of Gaysyn

For inquiries and comments about the project, please contact:

Mr. Valentin Melnichenko
2, Khlebnnaya str, Lviv, mail box 79035
E-mail: info@hlibprom.com.ua

As part of the ESAP agreed with IFC, Khlibprom will carry out a gap analysis at three existing mills to identify any outstanding compliance issues and will prepare a corrective action plan with target resolution dates. Corrective Action Plan will be disclosed to the affected communities as the condition of IFC participation in the project.

For new flour mill plants, Khlibprom will ensure that appropriate environmental assessment are carried out according to relevant IFC performance standards and guidelines, and that appropriate local consultation and disclosure is provided.

Client Documentation

File Name	Actions
ESAP.pdf

**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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