25677 - UPDC Company

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Environmental & Social Review Summary

Project Number

25677

Company Name

UACN Property Development Company Plc

Date ESRS Disclosed

Feb 21, 2007

Country

Nigeria

Region

Africa

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : May 10, 2007
Signed : May 21, 2007
Invested : Aug 14, 2007

Sector

Construction and Real Estate

Industry

Tourism, Retail and Property

Department

Regional Industry - MAS Africa

Project Description

UACN Property Development Company PLC (UPDC or the company) is a leading Nigerian property development and management company listed on the Lagos stock exchange. As UPDC continues to grow, IFC will assist in financing its overall capital expenditure and working capital program for 2007 through 2009. The three-year capital expenditure program includes construction of the Victoria Island Mall Plaza consisting of a complex of 36 high-end town houses, a 15-story office tower, a multistory car park with 252 spaces, a shopping center and a 160-room hotel. IFC’s financing will be used mainly for the Victoria Island Mall Plaza project.

Overview of IFC's Scope of Review

IFC’s review of the project included review of the following documents:

- The Environmental Impact Assessment for the Victoria Island Mall Plaza, dated February 2, 2006 (this document will be publicly disclosed);
- Health, Safety and Environment Policy (+Community Affairs) for Cappa & D’Alberto PLC, dated 2006 (subcontractor health, safety and environment policy).
- UAC of Nigeria Personnel Policies, Terms and Conditions of Service for Managers and Assistant Managers of UAC of Nigeria PLC and Associated Companies
- Monthly Divisional SHE Report Statistical Analysis, Ginaker – LTA Construction, Nigeria LTD, 30 September 2004 to 30 November 2006 (for the Novatel FESTEC Hotel project).

IFC’s social and environmental specialist, along with the project technical specialist, visited the sites of the Novatel FESTEC Hotel project – for which IFC has already provided financing – and the Victoria Island Mall Plaza project. The visits to Novatel FESTEC Hotel and the Victoria Island Mall Plaza included discussions with architects and contractors. Additionally, IFC met with the senior management of the company and the Human Resources manager. Finally, IFC met with IFC’s lender’s representative for the Novatel FESTEC project.

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 that 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; and
- PS5 Land Acquisition and Involuntary Resettlement.

The project appraisal also assessed the potential impacts in light of the following Performance Standards:

- PS6: Biodiversity Conservation and Sustainable Natural Resource Management,
- PS7: Indigenous Peoples, and
- PS8: Cultural Heritage.

Performance Standards 1, 2, 3, 4, and 5 are applicable to this project. The company’s main business activity is the construction and refurbishment of buildings within urban areas. The likelihood that company’s activities will have an impact on natural habitat is quite low. UPDC is, however, aware of the requirements of PS 6 and will apply it should it become appropriate. There are no indigenous people, as defined in PS 7, in the areas of current or potential projects. With respect to cultural heritage, the company is unlikely to encounter cultural heritage in its projects, given their generally urban setting with likely prior impact on any cultural heritage. Again, however, the company is aware of the requirements of PS 8 and will apply it should the standard become appropriate.

As a result of IFC’s appraisal of the project, the following key social and environmental issues were identified:

- Corporate health, safety and environment management systems;
- Stakeholder engagement;
- Fire and life safety; and
- Wastewater treatment.

These issues can be addressed through known procedures, practices and technology. Though IFC’s review indicates that the company needs to create a central environmental and social management function and develop community consultation mechanisms as appropriate, the current management structure has been able to address the fire safety and wastewater treatment issues in its existing projects. Any impacts will be limited to the various project sites and will, in any case, be reversible. Thus, this is a category B project under IFC’s Environmental and Social Review Procedure.

Environmental and Social Mitigation Measures

The IFC appraised the following social, environmental, health and safety issues:

- the corporate social and environmental management system and its ability to manage the diverse environmental and social impacts of the investment program;
- community engagement;
- corporate human resources policy and labor conditions;
- employee safety and training;
- sewage and liquid waste treatment where urban services may be insufficient;
- solid waste disposal;
- water and power supply under frequent shortages;
- fuel storage;
- tenant operations;
- site selection;
- access road construction;
- emergency response preparedness;
- life and fire safety; and
- land acquisition in dense urban settings.

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,
- the World Bank/IFC environment and social policies 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 Systems

At present, UPDC places responsibility for environmental and social management under the responsibility of the three general managers, each of whom is responsible for a particular business line. The responsibility is placed with them as part of their oversight of project development and on-going management. Given this structure and the differences between business lines with respect to environmental risks and mitigation measures, responsibility for direct management of social and environmental performance should remain with them. A central quality control, monitoring, and reporting function, however, will be needed to meet the requirement of PS 1. UPDC has agreed to identify a central person who will take on these responsibilities. The company will develop a corporate Social, Environment, Safety and Health (SESH) policy that will commit the company’s future projects to following the Performance Standards, IFC’s guidelines, and local law. It will also define roles and responsibilities, the procedure for the review of project performance and the development of action plans where performance needs to be improved. The quality improvement function will involve, at a minimum, reviews of SEA documents for all new projects using the SESH policy; collation and analysis of monitoring data and its communication to senior management and the IFC; and the preparation and review, on at least an annual basis, of an environmental and social action plan. The monitoring and reporting system will be collect data from the existing IFC investment in the Novatel FESTEC hotel project, as well as any projects either

- under construction or planned for construction at the time of IFC’s investment or
- future projects that may be undertaken during the time of IFC’s investment.

IFC has recommended that UPDC management review existing properties with respect to their meeting the IFC’s standards and Nigeria’s new National Building Code and develop action plans to address any gaps.

Under Lagos State law (1986 Lagos State Town and Country Planning Regulations), UPDC must carry out a social and environmental assessment (“SEA”) of its projects. IFC has reviewed a sample of these assessments and found that, while they are adequate to meet Nigerian requirements, the Company will need to broaden their scope in the future to meet Performance Standard 1. Generally, the SEA will need to clearly define the project, provide baseline data, and assess the impacts of the project throughout its lifecycle, including during construction. If involuntary land acquisition is involved in a project, the assessments will need to follow PS 5, the requirements of which differ from Nigerian law. Finally, the SEA will need to provide an environmental and social action plan that shows measures to mitigate the impacts, taking into consideration PS 1 through 5 and the IFC’s environmental guidelines for office buildings and hotels. UPDC has agreed to implement guidelines for consultants, included in their contracts that will ensure that future social and environmental assessments meet the requirements of PS 1.

UPDC has developed training for the project managers, who have actual responsibility for management at specific sites. This training will include training on ensuring the quality of the SEAs and the on-going social and environmental management of projects.

Under Nigerian laws, there is no requirement for disclosure of environmental impact assessments associated with office buildings, housing or hotels. Thus, with the exception of IFC’s current investment in the Novatel FESTEC Hotel project, community engagement has not taken place. Because many of the Company’s properties are in commercial areas, defining a community with which to engage is difficult. For future projects, UPDC will make its SEA documents publicly available, including its environmental and social action plan. Additionally, where projects will have impacts on residential areas or small and medium scale commercial activities (including agriculture or fishing), the UPDC will undertake community engagement appropriate to the scale of the project. The Company will also publicly display contact information at its site for lodging enquiries and grievances with respect to environmental and social performance.

PS 2: Labor and Working Conditions

UPDC has a human resources policy that is contained in a handbook provided to workers. On joining the company, the staff member is given the book. Copies of the handbook are available to all employees. The hand-book clearly states to employees that the company follows national law, defines a policy of merit-based promotion and pay-raises, and provides opportunities for training. The company lacks a non-discrimination policy, but has committed to IFC to develop and implement one. Junior staff are represented by the Nigerian Shop Steward Union.

Child labor is not usually associated with this type of project because of the nature of the construction work and the types of on-going operations. UPDC, in its own operations, does not hire workers below the minimum age specified by law.

UPDC does maintain health and safety statistics, though they are not collated and used by management to track health and safety issues. Under the SESH policy and the centralized quality control function, the Company will track health and safety performance of individual projects. Company records for the Novatel FESTEC project show a rate of 2 lost time accidents per million hours worked, which is low for this type of project. Nevertheless, observations on site indicated that the Company needs to ensure consistent use of personal protective equipment (“PPE”), particularly hard hats, eye protection, and safety lines for working at heights. These problems appeared to be generally associated with subcontractors, so UPDC will need to enforce provisions of contracts that require adherence to national law with respect to occupational safety. UPDC will pay particular attention to worker health and safety during construction. One of UPDC’s main contractors does have a Health, Safety and Environment Policy that addresses most of these issues.

The company will have emergency response plans developed as part of the life and fire safety plans for each project.

PS 3: Pollution Prevention and Abatement

IFC reviewed the provisions for wastewater treatment and air emissions at the Novatel FESTEC site as part of its prior investment and found it adequate. Provisions for these emissions at sites currently under development also appear to be adequate. Local law requires wastewater treatment for residential buildings above 6 stories, but in those building at the Victoria Island Mall Plaza with fewer floors than that number, UPDC had included wastewater treatment. Future projects will meet IFC/WBG guidelines for wastewater treatment. With respect to single family residences or townhouses, the Company will provide at least primary septic treatment for each unit. Air emissions come from boilers providing hot water and back-up diesel generators. The size of these units is smaller than World Bank Group guidelines would consider to be of concern. The company is committed to maintaining these units according to manufacturer specification, and therefore in a condition that will maintain efficiency.

Solid waste disposal is to the local municipal system.

Water is typically extracted through deep boreholes and then treated to meet drinking water standards. The projects should meet WHO standards for portable water.

As part of its monitoring, UPDC will review energy use and identify possible operations for energy audits. UPDC will also review pesticide used at its facilities with lawns and gardens and will seek ways to reduce amounts used and hazardous types.

PS 4: Community Health and Safety

As required by IFC, UPDC will have fire and life safety management plans done to internationally acceptable standards for all projects currently under development and in the future. The new Nigerian National Building Code went into effect at the end of January 2007, which strengthen local fire and life safety standards. UPDC will review their existing properties against this new code to ensure conformity with it. The buildings received a once yearly fire safety inspection by local fire safety authorities.

PS 5: Involuntary Resettlement and Land Acquisition.

Review of land acquisition will be part of the SESH policy. No current projects invoke PS 5. But past projects appear to have involved involuntary land acquisition, and future projects run the risk as well. The company will follow the requirements of PS 5 where a project involves the involuntary acquisition of land or resettlement, including, as appropriate, working with the Lagos State and other local governments where they are acquiring land on behalf of UPDC.

Stakeholder Engagement

Under Nigerian law, UPDC is not required to publicly disclose it environmental impact assessment, or carry out public consultations. With respect to the Victoria Island Mall Plaza project, UPDC will publicly release, through its website, the EIA for the project. This type of release is appropriate given that the area of the project is a relatively wealthy residential neighborhood with some major corporate headquarters in the general area. With respect to future projects, the type of public consultation and disclosure will vary according to the area around the project. In all cases, the social and environmental assessment documents for projects will be made available on UPDC’s website. In areas where a project will be surrounded by multi-story commercial structures, the use of the website for public release of documents will suffice and no further community engagement will take place. Where, however, projects are going into residential or commercial neighborhoods where local residents are unlikely to have access to the website, UPDC will make the social and environmental assessment documents publicly available through other means and will carry out community consultations appropriate to the scale and impacts of the project.

Project documents may be physically viewed at:

UACN Property Development Company PLC
Niger House 1-5, Odumlami Street
PO Box 156
Lagos, Nigeria
Tel. +234 1 266 3010
Email updc@uacnplc.com

As well as at the following website:
http://www.updcplc.com/

**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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