26427 - BGK

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Environmental & Social Review Summary

Project Number

26427

Company Name

BELGRANKORM, OOO

Date ESRS Disclosed

Dec 3, 2007

Country

Russian Federation

Region

Europe

Last Updated Date

Jun 3, 2022

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Feb 7, 2008
Signed : May 29, 2008
Invested : Jun 4, 2008

Sector

Poultry Farming

Industry

Agribusiness and Forestry

Department

Regional Industry MAS LAC & EUR

Project Description

BGK (Belgrankorm Holding Ltd) one of Russia’s leading integrated agro-industrial meat producers, has requested IFC’s assistance in financing its corporate expansion aimed at satisfying rapidly growing domestic demand via doubling production of meat, grain and milk by 2009. The project involves:

- expansion a poultry broiler and breeding farms,
- expansion of pig farming operations,
- construction of a pork and cattle slaughter house and processing facility,
- expansion of dairy operations,
- expansion of agricultural land for grain growing from 67,000 to over 100,000 ha, and
- acquisition of agricultural machinery and equipment.

With the proposed project the company plans to increase poultry production from 74,000 tons per year (tpy) to 150,000 tpy, pork production from 15,000 tpy to 40,000 tpy, to double milk production to 25,000 liters to per annum, and broaden its product offering through the introduction of higher valued-added processed products.

Overview of IFC's Scope of Review

The review of this project consisted of appraising technical, environmental, health, safety and social information submitted by the project sponsor, and a site visit to a range of company assets and offices in October 2007.

E & S Project Categorization and Applicable Standard

While all Performance Standards (PS) are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have specific 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
- PS6: Biodiversity Conservation and Sustainable Natural Resource Management

All land acquisition has been achieved through willing buyer willing seller arrangements, and it is not anticipated that expansion activities will require involuntary resettlement or economic displacement. The project will not affect cultural heritage and Indigenous Peoples were not identified in the project area of influence.

This is a Category B project according to IFC’s Environmental and Social Review procedures 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.

The company has grown rapidly through the acquisition of previous farms (often communal farms or farms that were communal and have passed into private ownership) in the districts of Byelorodsky, Rhakityansky, Shebekinsky and Yakovlevsky in the region of Belgorod. Farms that are being acquired generally comprise existing arable land, farm buildings and infrastructure (often in a poor state) and related facilities. BGK’s approach to these farms is to improve and enhance assets and infrastructure to increase productive capacity, and also to implement modern arable farming systems. Their activities do not create environmental or social impacts that are diverse, irreversible or unprecedented.

Environmental and Social Mitigation Measures

- Environmental and social management and organization:

BGK’s operations have grown rapidly over the past 10 years and elements of an environmental and social management system (ESMS) are in place (particularly in relation to Occupational Health and Safety - OHS), however as the company expands there is a need for a more formal and extensive ESMS that more fully reflects social and community issues. Specifically, the company will develop:

- a comprehensive set of environmental and social policies (based on the scope and requirements of IFCs Performance Standards);
- enhanced procedures and processes for managing environmental and social issues in BGK’s operations;
- annual action plans for environmental and social activities (with a budget and accountabilities) that demonstrate how new and existing assets will be developed ad managed so as to comply with both the requirements of the Russian Federation and IFC;
- further training and capacity building for all environment staff so that they understand and can fully manage environmental and social issues as the company grows;
- monitoring and reporting capacity so that environmental and social issues can be understood and managed across the range of company operations;
- organizational capacity and skills at the corporate level so that opportunities for integrating environmental issues in the company’s operations can be realized; and
- enhanced consultation mechanisms (including a formal grievance mechanism).

These requirements will be defined in an Action Plan which will form a condition of disbursement for the investment.

- Labor and Working Conditions:

The company employs c 4,600 staff (estimate 40% female and 60% male staff) and this figure is growing as new farms are acquired and processing capacity comes on stream. There is a human resources department which is responsible for employment and there are internal regulations governing employment practices and labor issues. All employees have a written contract and the rights/obligations of employees are explained to all staff. A formal grievance mechanism has been developed.

There is a collective labor contract governing relations between employees and company, and employees are free to join a union. Although the company has acquired a number of old communal farms, they have not retrenched significant staff numbers and in many instances re-hire employees who previously worked on communal farms. When staff do need to be released from a specific position, the company has a process of notifying by writing and discussing potential other positions with the staff. If alternative employment is not found within the company within a two month period, the company provides compensation in line with the labor regulations of the Russian Federation. There is no formal minimum age policy for employees, but the company complies with Russian legislation (minimum age 14 years and in such situations parental approval required and only non hazardous work is offered). Temporary summer staff often include younger people but never less than 14 years and always with parental approval. The youngest full time employee currently is 18 years old.

Migrant labor is not used and there is no significant employment via outgrower programs or third party services (farms etc).

There is an extensive OHS training program and Personal Protective Equipment is provided and used.

- Pollution Prevention and Abatement:

Pollution Prevention, Resource Conservation, Energy Efficiency: BGK operates approximately 67,000 of arable land under a variety of crops (including corn, wheat and peas), scheduled to increase to over 100,000 within the next few years. There are a range of production facilities and processing plants including pig and poultry operations, dairy and feed mill, and slaughter houses.

The company has developed a comprehensive permit and monitoring system that satisfies Russian Federation planning and permitting procedures and solid waste and hazardous materials management are good. There are efforts to reduce energy use and chemical inputs in arable operations and costs are being tracked for new initiatives (for example, no till technologies, use and application of animal manure as a substitute for mineral fertilizers). Waste effluents from virtually all the poultry, pig and cattle operations are returned to the field as manure or liquid effluent via pumps after a period of settling/ biological treatment in pre-existing (communal farm) sedimentation ponds. Waste waters from the meat processing plants are either discharged under license to municipal sewer (Belgorod), discharged to an on site waste treatment works (Yasnozovenskoye) or discharged in untreated manner to sedimentation ponds (Rakitnoye). The sponsor will address the situation at Rakitnoye through the construction of a waste water treatment plant and subsequent biological treatment in the sedimentation ponds. An independent assessment of design assumptions for the waste water treatment works and agreement on the scope, scale and design specifications of this plant (to assure compliance with IFC requirements) will be a Condition of Disbursement.

Solid Waste and Hazardous Materials:

These aspects are well managed and effective at most sites. Some of the older (newly acquired former communal farms) have rudimentary solid waste management systems, but the company works to improve these over time (within 1-2 years of acquiring the asset).

Emergency Preparedness and Response:

These are adequate for likely risks. Staff receive training and Personal Protective Equipment (PPE) and there are regular company audits of hazardous facilities (feed mill, garages and fuel stores). There is an incident record and accidents are investigated.

Greenhouse Gas Emissions:

Green House Gas emissions will be determined and if in excess of 100,000 tons of CO2 equivalent/year, BGK will monitor and seek to reduce these emissions and will report GHG emissions annually to IFC.

Pesticide Use and Management:

Agrochemical use is efficient and well managed and efforts are made to reduce agrochemical use through the use of no/low till systems, and widespread use of waste effluents to reduce use of synthetic fertilizers. The sponsor uses a range of agrochemicals (including some that are classed as moderately hazardous under World Health Organization classification - see table below), but there is an effective system of managing the use and storage of these products (and disposal of chemical containers), as well as training and the provision of personal protective equipment. For more information, please see the attached table in the Client’s Documentation section in this ESRS.

Overall there appears to be an effective waste management and pollution prevention system in place (with the exception of the new Rakitnoye meat processing operations - above), however there are a number of challenges (including the development of a more effective monitoring system) in ensuring this is realized consistently as the company grows and also that opportunities (energy and water use efficiency etc) are realized, these will be addressed via the enhanced ESMS.

Community Health, Safety and Security:

The levels of risk to adjacent communities are generally small. Most of the assets are remote from local settlements (1 km or so distant), consultation is undertaken whenever new plants or operations are proposed and Russian regulators assess risks to communities as part of their assessment of permits. However the range of risks assessed should be broadened to include transport/ trucks and groundwater quality needs to be monitored more comprehensively so that risks of elevated levels of nitrate/ phosphates can be tracked. The risks to communities from fire and explosion are small given the distance between plant operations and local communities.

The company has an in-house security team to protect properties from theft and damage and also employs an external security service. Training is provided to security staff who are not armed and the sponsor asserts that there have been no complaints in relation to security services (or other community health issues such as transport or odor). There is a basic grievance mechanism and the system will be made more proactive, explicit and clear (as part of the ESMS).

- Protection and Conservation of Biodiversity:

While the company has a significant land asset base, all of its land was previously farmed and there has been no conversion of natural or semi natural habitats (beyond the regular re-use of fallow land). The main risks to biodiversity and ecosystems arise from the disposal of animal manure and liquid effluents on company farmland and potential impacts to groundwater. Relevant government permits for land-disposal and specific monitoring of ground water quality will be implemented as part of the enhanced ESMS to track changes in ground water quality.

Stakeholder Engagement

BGK discloses details of new assets and its plans to develop these as part of formal permitting procedures, and will undertake further disclosure and consultation in relation to the proposed IFC investment. In particular, BGK will translate and disclose this document.

For more information, contact the company’s office at:

BEZRK-Belgrankorm Agroholding
1 Borisovskoye Shosse
Proletarsky
Rakitianksy area
Belgrorodsky region
309300 Russia

The hard copies of the ESRS and ESAP will be made available at the following locations:

- Belgorod City Library, 14 ul. Nikolaia Ostovskogo, Belgorod 308000, Russia
- Rakityanskaya Library, 20 ul. Proletarskaya, Rakitnoye 309310, Belgorod region, Russia
- Borisovskaya Library, 2a ul. Pervomaiskaya, Borisovka 309340, Belgorod region, Russia
- Yakovlevskaya Library, 1a, ul. Yubileinaya, Stroitel 309070, Belgorod region, Russia
- Shebekinskaya Library, 12 Rzhevskoye Shosse, Shebekino, Belgorod region, Russia
- “Nasha Zhizn”, regional newspaper, Rakitianksy area, Belgrorod region
- “Nasha Letopis”, corporate publication, BEZRK-Belgrankorm agroholding.

The electronic version of the ESRS will be also available for public review on the company’s website: www.jasnzori.ru.

Client Documentation

File Name	Actions
Sponsor Action Plan - ENG.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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