26009 - Monte Rosa Sugar

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Environmental & Social Review Summary

Project Number

26009

Company Name

MONTE ROSA SA

Date ESRS Disclosed

May 29, 2007

Country

Nicaragua

Region

Latin America and the Caribbean

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 28, 2007
Signed : Oct 1, 2007
Invested : Jan 15, 2008

Sector

Sugarcane and Beets

Industry

Agribusiness and Forestry

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Monte Rosa, S.A. (Monte Rosa) is a fully-owned Nicaraguan subsidiary of Pantaleon Sugar Holdings Company Limited (Pantaleon). Pantaelon is the largest sugar producer in Central America, with mills located in Guatemala and Nicaragua. Monte Rosa supplies raw sugar to the domestic market in Nicaragua, and exports raw sugar to the world market including the U.S. In addition, Monte Rosa’s co-generation facilities supply electricity for sale to the national power network in Nicaragua.

The purpose of the investment is to support Monte Rosa’s ongoing investment program which has and will include:

- expanding the company’s sugar production in Nicaragua by 20%;
- expanding and improving the company’s plantations in Nicaragua;
- expanding the company’s existing electricity co-generation facilities in Nicaragua; and
- general capital expenditures.

Overview of IFC's Scope of Review

The scope of review of Monte Rosa’s compliance with IFC’s Performance Standards for existing operations and those under construction or expansion (mill and plantations) included an assessment of the company’s management capacity of its environmental, health and safety and social performance in the development, expansion and operation of its mill and sugarcane fields; ensuring that social and environmental management processes are integrated into the company’s business management process; occupational health & safety and terms of employment in sugarcane plantation and harvesting operations as well as in operation of expanded milling facilities and power plants; life and fire safety; labor practices own operations and in the supply chain; ensuring quality and sustainability of potable water supply; management of air emissions from all sources including any bagasse-fired steam and co-generation activities; pest management in agriculture and raw material/product storage activities; management of solid, liquid and hazardous wastes from agriculture and processing activities; energy consumption and energy efficiency, including greenhouse gas emissions and carbon finance opportunities; community relationships and community development, and use of security forces; land acquisition process for sugarcane plantation development, facilities expansion, and land use permitting; and cultural heritage.

E & S Project Categorization and Applicable Standard

Performance standards that are expected to be applicable for this investment may therefore include:

- PS 1: Social and Environmental Assessment and Management Systems,
- PS 2: Labor and Working Conditions,
- PS 3: Pollution Prevention and Abatement,
- PS 4: Community Health, Safety and Security,
- PS 5: Land Acquisition and Involuntary Resettlement,
- PS 6: Biodiversity Conservation and Sustainable Natural Resource Management.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because it may create a limited number of specific environmental and social impacts that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. Corrective actions identified to address these issues are listed in the attached Environmental and Social Action Plan (ESAP).

Environmental and Social Mitigation Measures

The sponsor has presented plans to address these impacts to ensure that its operations 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 is summarized in the paragraphs that follow.

Environmental and Social Assessment and Management Systems:

Monte Rosa has a process to assess the environmental impacts and risks of new expansions and projects. For all new projects the company needs to apply for an environmental permit under Nicaraguan law. The scope of the evaluation includes pollution prevention and abatement at the mill, and applicable national environmental laws and regulations. As part of this investment, Monte Rosa will review their current scope for ESIA’s and include all aspects covered under IFC’s Performance Standards.

Monte Rosa is ISO 9001 certified since 2005 and has HACCP since 2005. Monte Rosa implemented an efficient EHS integrated management system. Detailed procedures for environmental and occupational health and safety performance have been implemented at the mill and EHS indicators have been included in the company’s scorecard. Each operation process is responsible for their EHS performance, performs continuous evaluations, reports monthly to senior management, and implements the necessary corrective measures. In accordance with the attached ESAP, Monte Rosa will implement an integrated management system (IMS) covering all aspects of IFC’s performance standards. This IMS will provide a structured framework to consistently identify risks and opportunities in the management of its environmental and social responsibilities at its existing mill, plantations and future expansions or acquisitions. This will include the development of an integrated EHSS policy, an EHSS function and clear EHSS responsibilities at the mill and plantations. This systematic approach will also include environmental & social performance of future suppliers and third parties.

Labor and working conditions:

Labor and working conditions are an important consideration at Monte Rosa’s operations. Monte Rosa has more than 4,000 workers including direct and contracted employees at their facilities and plantations. All employment relationships are in compliance with national labor law. Monte Rosa ensures that no Child Labor or Forced Labor is used at their operations through their hiring and selection procedure. Some of the actions Monte Rosa has taken in order to ensure a good labor relationship with sugar cane cutters include:

- eliminating the middleman contract labor boss in favor of direct hiring; and
- working directly with local community leaders to organize the crews.

Occupational Health and Safety:

Monte Rosa has an efficient occupational health & safety management system implemented at their facilities. OHS issues are managed effectively at the plant level by a designated OHS manager who reports to production and agricultural operations managers. The mill is audited monthly by an internal team and results are reported to senior management. Accident statistics is an indicator in the company’s scorecard. Fire safety and signage is visible and adequate. Personal Protective Equipment (PPE) usage at the mill was consistently good at all the locations visited. Workplace air quality and noise is within acceptable limits. The mill and associated infrastructure is largely well maintained with minor housekeeping issues that Monte Rosa is working on improving to ensure a safe and sanitary workplace environment. The mill performs a drill every year and is implementing an emergency preparedness and response plan which will be completed in March 2007.

They have implemented new OHS procedures, and are monitoring performance at mills and plantations for this harvesting season. The information will be the baseline for future comparison and corrective measures. At all plantations, the company provides PPE to harvesters. They also have OHS supervisors who ensure that workers are properly hydrated during their working hours and who provide first aid. Accident statistics provided by the company only includes operations at their mill. The company is currently implementing a new procedure which will ensure proper recording, reporting and mitigation of accidents at sugar cane plantations. This will include operations at owned and operated plantations. As part of this investment, Monte Rosa will monitor and report accident statistics at their mill and plantations.

Emissions to the Environment:

Air emissions: Boilers are the single largest source of air emissions from Monte Rosa’s operations. Emission stacks are not monitored consistently for particulate emissions, NOx and SOx. Boilers burn bagasse during the harvesting season and are not working the rest of the year. As part of this investment the company will monitor stack emissions when boilers use bagasse, as well as when they use any other type of fuel. Monte Rosa will monitor stack emissions on March 2007 and present the report to IFC. The electricity generated is used at the mill and the excess is distributed to the national electricity grid. As part of this investment, Monte Rosa needs to implement a monitoring program for their operation to ensure compliance with national requirements and applicable WB/IFC guidelines for emission from power plants.

Effluents: Monte Rosa is improving their performance in managing its effluents. Effluents from the mill include:

- process wastewater from sugar/alcohol production,
- wastewater from cane washing,
- wet scrubber blow down from stack gas scrubbing,
- miscellaneous wastewaters, and
- stormwater.

Primary treatment systems and channels at the Monte Rosa mill are not efficient and need to be updated. Unlined sedimentation ponds and channels will be analyzed and updated. At the mill, effluents are used in irrigating their fields. Although in Nicaragua groundwater monitoring is not required for land application of untreated effluent at the present time, Monte Rosa will develop a groundwater monitoring program to quantify the impact from storage and irrigation with wastewater, and conduct a study of wastewater management at the mill. Recommendations from this study for wastewater management improvements will be implemented on an agreed timeline. As an opportunity for energy recovery from process wastewater, Monte Rosa will conduct a cost benefit analysis at the mill in order to identify alternatives available for generating methane. At Monte Rosa the company uses septic tanks for sanitary effluents which are well maintained and monitored.

Wastes:

Solid and hazardous waste from Monte Rosa’s milling operation are primarily bagasse, ash from wet scrubbers, sand and lime sludge from cane wash water treatment, empty plastic containers from miscellaneous uses such as degreasing solvents, oils, cleaners, etc. Bagasse is used for cogeneration at the mill. Ash, sand and lime sludge from cane wash water treatment facilities are disposed of on land in designated areas. Empty plastic containers are sold to licensed recyclers. Solid waste at the Monte Rosa mill is discharged to a nearby field which is used as a landfill. No municipal landfill exists in the area. In accordance with the ESAP, Monte Rosa will analyze and implement a more efficient alternative to dispose of their domestic waste. Hazardous waste management at the mill complies with local regulations. Hazardous materials including fuel and oil are stored in tanks with secondary containment walls and the fuel supplier is responsible for monitoring and maintenance.

Solid and hazardous waste from agricultural operations are typically those from harvesting operations and storage, transport and miscellaneous usage of farm chemicals including herbicides, fertilizers, fuel etc. Waste from harvesting operations (such as remnants of sugarcane) is left on the field as organic supplements for the soil. Empty hazardous material containers are collected by licensed recyclers. Chemicals and herbicides are stored in designated storage areas with restricted access.

Sustainability of Water Resources:

Sugarcane cultivation in Monte Rosa’s operations relies on natural rainfall, and the use of mill wastewater for land disposal. Extraction of water from surface or groundwater sources for process operations is done at the three mills. No permit or payment has to be done to a government entity. Water usage for the Monte Rosa mill is above the global industry benchmark of 0.9 m3/ton of cane processed. Water conservation / reuse initiatives such as recycling of cane wash water after lime treatment and sedimentation have been undertaken to reduce fresh water usage. Although there is potential for greater efficiency in fresh water usage, low-cost or no-cost of water and sufficient availability make implementation of additional water conservation/reuse alternatives economically less attractive at the present time.

Greenhouse Gas Emissions:

Monte Rosa generates all its energy from sustainable resources through cogeneration of electricity from burning bagasse which is a by-product from their milling operations. Estimated carbon dioxide emissions from the mill exceed 100,000 tons annually. The cogeneration project has generated carbon credits for a total of 279,785 tons of CO2 for the years 2002-2007. Monte Rosa will develop a monitoring program to quantify GHG emissions from its facility on an annual basis.

Energy Efficiency:

Energy efficiency is tracked closely as a performance indicator for all facilities. Energy consumption is approximately 27kW/ton-cane at the Monte Rosa mill. Monte Rosa is working aggressively towards improving energy efficiency at its operations. A significant amount of potential energy is lost through the disposal of untreated effluent to land. Monte Rosa will conduct a study to evaluate potential alternatives for energy recovery from wastewater.

Integrated Pest Management:

Integrated Pest Management is used at all plantations. Only approved chemicals and fertilizers are used, and application rates and methods are adapted to optimize usage. Monte Rosa has a research center, and actively works to improve pest management on sugar cane plantations and minimize the use of chemical pesticides. Handling, storage and use of PPE for agricultural chemicals and herbicides complies with national regulations.

Community Health and Safety:

Potential risks to communities from Monte Rosa’s operations are primarily from aerial application of herbicides. Most locations use aerial spraying of crops by licensed companies using crop dusting airplanes which comply with local regulatory requirements. To improve oversight of these operations and minimize risk, as part of the integrated management system, Monte Rosa will update their current policies and procedures to further reduce the risks and impacts to health and other crops associated with aerial spraying of herbicides. Monte Rosa will also inform and reduce nuisances to nearby communities during aerial spraying.

Land Use and Acquisition:

There is no involuntary resettlement associated with this project. Monte Rosa’s land acquisition is strictly one of willing buyer willing seller purchases at prices mutually agreed. Purchased land must have a clear title, be free of any litigation or conflicts, and be appropriate for sugar cane cultivation. Monte Rosa is not currently expanding land purchase but rather relying primarily on rental of land and working with sugar cane suppliers (where costs are shared with land owner who plants cane to sell to Monte Rosa).

Biodiversity Conservation and Sustainable Natural Resource Management:

No critical habitats are being converted or degraded by the project. Likewise, no known endangered species are affected by the projects operations. No invasive alien species have been introduced. No legally protected conservation areas are impacted. Monte Rosa will use eucalyptus chips in their boilers in order to generate steam and phase out the use of bunker fuel. The lands used for reforestation activities are typically low productivity sugar cane fields that have been removed from cultivation and other, supplemental agricultural lands used by the company for planting. Monte Rosa will explore alternatives to develop wood plantations in the future and reduce their use of fuel in the boilers.

Stakeholder Engagement

Monte Rosa’s operation is a leader in local corporate social responsibility. IFC met with the local mayor at Chinandega (Nicaragua). This locally elected representative of civil society recognized the company’s important role as a supporter of important social initiatives and community development efforts.

Monte Rosa makes significant contributions to local and regional community development through 2 sources:

- directly through the human resource program at its operation, and
- the Pantaleon Foundation,

which operates on an annual contribution of a fixed percentage of gross profit of the operations in Nicaragua. Monte Rosa has consistently been a leader in corporate social responsibility for the local sugar cane industry for Nicaragua. The Harvard Business case study, now in the public domain, gives a good picture of the role they have set for themselves as leaders in this area. The Grievance process is well understood locally and utilized as necessary. A wide range of social programs are supported in nearby communities.

Monte Rosa works with a wide range of civil associations, including the volunteer health program. Other programs supported include school programs, a local home for young mothers from the country-side, medical volunteer programs, local trash recycling, day care for poor working mothers from nearby towns.

Contact details:

Enrique Goicolea
Gerente de Finanzas
Diagonal 6, 10-31 Zona 10
Centro Gerencial Las Margaritas
01010 Guatemala, Guatemala

Telephone: (502) 2 277-5100
Fax: (502) 2 334-7238, 2 332-1192
Website: www.pantaleon.com

Local disclosure will be made available at the following locations:

- Payment office at Monte Rosa mill (inside premises)

- School - Centro Educativo Pantaleon (outside premises), Municipio de El Viejo, Departamento de Chinandega, Nicaragua

Client Documentation

File Name	Actions
Monte Rosa ESAP - 24MAY2007.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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Environmental & Social Review Summary

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Environmental and Social Mitigation Measures

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