25841 - Wings Noodle Integration

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Environmental & Social Review Summary

Project Number

25841

Company Name

KARUNIA ALAM SEGAR, PT

Date ESRS Disclosed

May 15, 2007

Country

Indonesia

Region

East Asia and the Pacific

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 19, 2007
Signed : Jun 22, 2007
Invested : Aug 24, 2007

Sector

Other Food

Industry

Agribusiness and Forestry

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

PT Karunia Alam Segar (PT KAS or the company), an existing IFC client, is one of the operating companies in the Wings Group. It produces instant noodles in Surabaya. Due to high demand, the company is seeking capital to increase its noodle production capacity.

Overview of IFC's Scope of Review

The review of this project consisted of appraising technical, environmental and social information submitted by PT Karunia Alam Segar (PT KAS or the company) in response to IFC’s Environmental and Social Appraisal Questionnaire and interviews with company representatives. Site visits were conducted of company’s operations during previous appraisals and recent supervision visits by an IFC’s Environment and Social Specialist.

IFC and PT KAS have agreed to a set of actions to ensure the company’s continued compliance with IFC’s Performance Standards and World Bank/IFC Guidelines.

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 (PS):

- PS1: Social and Environmental Assessment and Management Systems;
- PS:2 Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement;
- PS4: Community Health and Safety; and
- IFC’s Policy on Disclosure of Information.

The following Guidelines are applicable to this project:

- General Environmental Guideline, dated July 1998;
- Occupational Health and Safety Guideline, dated June 2003;
- Food and Beverage Processing Guideline, dated July, 1998;
- Policy on Environmental Assessment (OP 4.01), dated October 1998;
- IFC Life and Fire Safety Guidelines, dated October 2002; and
- IFC Hazardous Materials Management Guidelines, dated December 2001.

This ESRD assesses the project against the above Performance Standards. The project was not assessed against PS 5 on Land Acquisition and Involuntary Resettlement, PS 6 Biodiversity Conservation and Sustainable Natural Resource Management, PS 7 on Indigenous People and PS 8 on Cultural Heritage as no new land is required for the project, natural resources are not harvested from biodiverse areas or sensitive supplies and the project does not impact on either Indigenous Peoples or known Cultural Heritage.

This is a Category B project under IFC’s Environmental and Social Review 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, design criteria, local regulations and industry certification schemes. Environmental, social, health and safety issues which may be associated with this type of project, and which were reviewed during appraisal, included: management systems for environmental, health and safety (EHS), and life and fire safety issues; compliance with local and WB/IFC requirements for air emissions, wastewater discharges, indoor air quality, noise and waste management; energy, water and other material use and efficiency; labor issues and community engagement.

Environmental and Social Mitigation Measures

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 and 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.

Social and Environmental Assessment and Management Systems:

- Environmental and Social Assessment

Environmental and social risks arising from PT KAS’ operations and relevant legal requirements were reviewed by the Company and the responsible local government departments. The design and operation of the facilities have incorporated systems and procedures to ensure the prevention of EHS and fire/explosion impacts.

- Management Program

The company has procedures in place to manage environmental, health and safety, labor, and life and fire safety issues and is preparing for certification of its integrated food safety, quality, EHS and fire safety management system to ISO 22000 by early 2008.

- Organization

The company has assigned responsibility for EHS and fire safety matters to responsible staff. Supervisors conduct daily briefings and performance reviews with staff after each shift and report results and issues to Managers. Managers hold weekly meetings to review issues and identity improvements. The establishment of integrated systems under ISO 22000 will formalize and improve existing procedures, training and performance as has been observed in Wings’ Jakarta facilities.

- Training

The company provides induction and job-specific training for all employees, including training on environmental, health and safety and fire safety issues. Ongoing awareness raising initiatives are undertaken as well as regular refresher training based on job functions.

Community Engagement:

The company’s initiatives are described in the section “Community Engagement” below.

- Monitoring and Reporting

The company has monitoring systems and reporting requirements as part of its EHS management system, both within the company and the Wing Group. The establishment of integrated systems under ISO 22000 will formalize and improve monitoring and reporting.

Labor and Working Conditions:

- Human Resource Policy and Management

PT KAS provides all staff with a staff manual, known as the Company Regulations, outlining the company’s human resource policies, compensation and benefits provided sick leave and holiday allocation, insurance, etc. The manual also includes information on union membership and channels for internal communication and raising grievances. All staff sign their acceptance of the staff manual. Employees of all group companies receive documented conditions and terms of employment and benefits in compliance with national law and PS2. Internal communication and grievance channels include daily briefings between supervisors and workers, weekly meetings between managers, participation of the union representative in management meetings, an internal e-mail and staff suggestion boxes.

- Worker’s Organizations

A workers’ union has been established and operates in accordance with local laws. The company does not discriminate against union members and it has established a variety of parallel mechanisms for engaging staff. PT KAS, as in all Wings’ companies, is very attentive to worker needs and makes significant efforts to ensure a pleasant working environment is maintained.

- Non-discrimination and Equal Opportunity

The staff manual, known as the company Regulations, outlines the company’s human resource policy, commitment to non-discrimination and equal opportunity.

- Retrenchment

PT KAS does not have plans for the retrenchment of a significant number of employees. Staff turnover is 10% which is consistent with local and industry averages, and with other Wings’ facilities.

- Protecting the Work Force

The company does engage child or forced labor. The company complies with local labor laws and related PS2 requirements to protect the workforce. All employees are over the age of 18.

Occupational Health and Safety

Recognizing the need for a clean and hygienic working environment to produce noodles, the Company implements procedures to provide a safe, healthy and hygienic work environment and to prevent accidents, injury or disease. The establishment of integrated systems under ISO 22000 will formalize and improve health and safety as well as fire prevention and response measures and performance. Job applicants receive health checks before employment and staff are checked annually. Both internal and ambient noise levels comply with local and WB/IFC standards and the Company has not experienced any fatal or serious accidents.

Pollution Prevention and Abatement:

- Pollution Prevention, Resource Conservation and Energy Efficiency

Measures to prevent, minimize and mitigate environmental impacts are covered by the company’s existing procedures and the establishment of an integrated system under ISO 22000 will formalize and improve existing procedures. Electricity is sourced from the local grid, supported by small backup diesel gensets when needed. Steam is used to heat oil for cooking, and is produced in coal boilers (backed up by natural gas-fired boilers) that replaced the existing diesel-fired boilers. Point source and ambient air quality monitoring complies with local and WB/IFC requirements. The company will monitor its incinerator emissions and undertake corrective actions if needed to ensure compliance with local and IFC requirements. The water supply is derived from wells on the site, and is properly treated and tested to ensure compliance with Indonesian and WB/IFC standards. The company’s wastewater treatment facilities operate in compliance with local requirements and WB/IFC requirements.

- Waste

Most solid waste, including steel, plastics and wood pallets are sold to recyclers. Other wastes, including solid and hazardous wastes, are collected separately for disposal by authorized contractors. Sanitary wastes are treated in septic systems.

- Hazardous Materials

The company handles, stores and disposes of hazardous materials such as cleaning agents, solvents and pesticides, in accordance with local laws and IFC requirements. Secondary containment is provided for all fuel tanks, water treatment acid and alkali tanks.

- Emergency Preparedness and Response

PT KAS has implemented systems and procedures to prevent and respond to emergencies, to conduct emergency response drills and to engage local fire and police authorities in the drills and when needed in the event of an emergency. EHS and fire safety training is conducted internally every four months on matters ranging from fire safety equipment operation to safe machine operations and heavy lifting to food hygiene. An automatic fire detection and suppression system has been installed that includes thermal detection and centralized chemical sprinkler systems in the seasoning frying areas for noodle production.

- Green House Emissions

Greenhouse gases emitted annually by the project are expected to be in quantities well below the IFC threshold of 100,000 tons of CO2, as specified in PS4.

- Pesticide Use and Management

PT KAS sources a variety of ingredients ranging from flour to onions, garlic and chili. Ingredients are procured from local / import suppliers that the company already has established relationships with and the company implements measures to ensure that suppliers adopt appropriate pesticide management measures and monitor their supply chains, in conformance with WB/IFC policies and guidelines.

Community Health, Safety and Security:

- Community Health and Safety

PT KAS implements EHS and fire and life safety measures to minimize the impacts of its operations which will be enhanced as the company adopts ISO 22000. Potential impacts are not anticipated to result in impacts beyond the project site.

- Emergency Preparedness and Response

The company implements emergency preparedness and response procedures, including fire response and measures. Arrangements are established with local fire authorities and annual inspections are undertaken by authorities responsible for EHS issues. More information is provided under PS3.

- Security Personnel Requirements

Professionally managed and trained security personnel are hired to guard the company’s facilities. Contracts include requirements to meet national laws and to provide appropriate training.

Corrective Action Plan:

Implement internal improvements at PT KAS in preparation for a consultant’s review of the company’s integrated system for managing environmental, health and safety, food safety, quality, fire and life safety and social issues, and hire a consultant to develop the system for certification to ISO 22000, by the end of 2007.

Begin the ISO 22000 certification assessment process for PT KAS’ integrated system for managing environmental, health and safety, food safety, quality, fire and life safety and social issues, by an external certifier by March 31, 2009, and achieve certification by the end of 2009.

Stakeholder Engagement

The company regularly engages with local community leaders (known as the Lurah) to discuss issues or opportunities, such as the need to increase the workforce for the expansion project. The company supports several community projects including the development of a local school and religious facilities. While no complaints have been received, a grievance mechanism for receiving and addressing grievances raised by the local community has been established.

Client’s contacts:

Hanny Sutanto, Director
Graha Ekonomi
Jl. Setia Budi Selatan Kav. 10
Jakarta 12920

Telephone: 62-21-5790 4433
Fax: 62-21-5790 4430

**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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