26462 - Home Center

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Environmental & Social Review Summary

Project Number

26462

Company Name

KHOUM SENTERZ, OOO

Date ESRS Disclosed

Feb 21, 2008

Country

Russian Federation

Region

Europe

Last Updated Date

Jun 3, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : May 9, 2008
Signed : May 22, 2008
Invested : Aug 21, 2008

Sector

Retail (Including Supermarkets, Grocery Stores, etc.)

Industry

Tourism, Retail and Property

Department

Regional Industry MAS LAC & EUR

Project Description

The $138.5 million project comprises the greenfield development of a chain of do-it-yourself (DIY) stores in Russia by Home Centers Ltd., a Russian limited liability company fully controlled by Israel’s leading DIY company, Home Center (DIY) Ltd. (HC Israel or the sponsor). The project comprises HC Russia’s investments during 2005-2010.

Overview of IFC's Scope of Review

The social and environmental review of the project comprised a visit by an IFC Environmental Specialist to the headquarters of Home Centers Ltd. (HC Russia or the company) where there was a discussion of the company’s recently opened store in Yaroslavl, company’s plans for the future, as well as of IFC’s environmental and social requirements for the project, as defined in IFC’s Performance Standards on Social and Environmental Sustainability. These requirements were then clarified in the written form, and explained further and agreed with the company.

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 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 and
- PS4: Community Health, Safety and Security

The project stores will be located in established residential areas, within shopping malls, and it is therefore highly unlikely that issues related to biodiversity conservation, indigenous peoples or cultural heritage will arise.

The key environmental and social aspects of the project, which have been considered, are the following:

- Social and Environmental management systems and structure;
- Labor and working conditions;
- Resource efficiency;
- Solid waste disposal and management;
- Life and fire safety.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because the project has limited potential adverse environmental and social impacts that are few in number, site specific and readily mitigated.

Environmental and Social Mitigation Measures

The project is currently in its start-up phase. It may, therefore, become necessary for the company to adapt the mitigation measures described below as it expands and becomes more complex. Another implication of the start-up phase is that many of the mitigation measures described below take the form of planning, to be followed by development and adoption of procedures which have not yet been implemented. IFC will liaise closely with the company, particularly during the early stages of this project, to ensure that the mitigation measures described here, with such adaptation as may be necessary do in fact operate as expected.

- Environmental Assessment and Planning Processes:

HC Russia does not plan to buy land or construct new stores. Instead, it expects to lease space in malls or in industrial buildings converted into malls. The project stores will be located in the developed urban areas with the population in excess of 500,000 people. Although most of the malls will be located on the outskirts of the cities, they will be connected to the utility suppliers, so very limited adverse environmental or social impacts may be anticipated. The owners of the malls are responsible for receiving all the necessary government permits, including environmental ones. However, HC Russia will develop a mechanism to screen for adverse environmental and social (E&S) impacts when entering into a preliminary lease contract with malls.

- Social and Environmental Management:

HC Russia does not presently have a corporate environmental and occupational health and safety (OHS) manager. On the company level, environmental and safety management is currently the responsibility of the Construction and Operations Director. On the store level, environmental and safety management activity is supported by the engineering service group. While it is sufficient for a small company, this structure would not provide adequate environmental oversight for a much larger organization, which the company aspires to become. HC Russia will recruit or commission environmental and safety manager when the work justifies. This person’s early tasks will be to develop and adopt a mechanism to screen for adverse E&S impacts while entering into a lease contract with malls; develop procedures on hazardous materials management (e.g. mercury lamps); ensure resource the efficiency and secondary use of recyclable solid wastes; ensure that adequate provisions are made for life and fire safety (L&FS) in the store refurbishment process and at its operational phase; moving onwards to the design and implementation of environmental, occupational health and safety management systems, or an integrated management system covering these issues. The company shall aim to achieve independent certification of these management systems to ISO 14001, OHSAS 18001 or equivalent respectively within two years of opening the tenth store.

- Labor and Working Conditions:

There are presently 65 employees in the HC Russia headquarters and 137 people in operation in Yaroslavl. As of the appraisal date some 65 people had been hired in Krasnodar and Orenburg, where staffing for new stores has already begun. The company has developed and implemented employment policies in full compliance with local legislative requirements. HC Russia has written contracts with employees, which define the keys issues of the employee/employer relationship such as mutual obligations, working time, benefits and holidays, remuneration etc. All employees are provided with a free meal and with state and private medical insurance.

The shortage of qualified personnel with experience to fill top positions and a high turnover (8% per month for low level positions) is becoming increasingly common for Russian retail market because of increased competition. In order to attract good quality employees and retain those already employed, HC Russia has instituted a bonus incentive system related to store sales for their respective merchandise category.

The company has established and operates an employee grievance mechanism which permits employees to express grievances, if any exist, while protecting employment rights. Internal grievance procedure is described in the corporate human resources (HR) policy and comprises a monthly meeting of employees with store’s management.

Training is taken seriously and is mostly carried out on the store level. The category managers and the major suppliers organize periodic seminars for all new staff on the technicalities of different products sold within the store. Each new employee is coached by a mentor according to the internal education program for store staff. For managers in the Headquarters training programs and seminars are available upon request.

In accordance with Russian regulations, after start-up of its operations, the company will carry out job safety analysis for each workstation and develop OHS action plan to minimize any exposure of employees to identified hazards.

- Resource efficiency:

Energy represents a significant expense in the retail industry and one which the company wishes to control closely. HC Russia’s store in Krasnodar and the future stores will be equipped with high efficiency lighting. The stores will be equipped with electricity and water meters which will be regularly monitored, and a utility management system developed to promoting efficient use of utilities.

- Solid waste management and disposal:

Some solid wastes, in the form of damaged goods will arise in the stores. These will be collected and disposed of by an authorized waste management company. Other solid wastes, such as paper and cardboard, as well as plastic packaging materials will be collected and sold for recycling depending on the availability of the regional secondary markets.

- Life and fire safety (L&FS):

HC Russia’s store in Yaroslavl is located on the ground floor of the building with the direct emergency exits to the street. Exit doors are equipped with magnetic separators, which are released when the fire alarm system is triggered. The fire detection system comprises both smoke and temperature increase detectors. Fire suppression systems include sprinklers and 4 drenchers to provide proper compartmentation of 4,800 square meter space.

In addition to the fire safety permit obtained by the owners of the building, HC Russia had to receive a separate positive opinion of the fire authorities for the store’s refurbishment design.

Fire water supply and building’s alarm system maintenance is the responsibility of the Landlord. HC has a separate contract with the third party for the maintenance of the fire protection system installed in its trading space.

Going forward, L&FS will be the part of the overall EHS management system. The company will prepare a corporate L&FS Master Plan and commission a fire safety professional acceptable to IFC to review Master Plan to ensure that prospective properties will be refurbished in full compliance with the local building codes and fire regulations and consistently with internationally recognized Life Safety and Fire protection Codes, such as NFPA. This Master Plan will contain guidance on how to adapt the generic L&FS-related aspects of refurbishment according to individual store circumstances.

The company plans to open stores with floor areas averaging around 11,000 square meters. The store design plans will be developed to include generic fire protection facilities appropriate for a building of this size, and will include consideration of fire suppression, fire detection and alarms, multiple unobstructed exit routes, emergency exit signage and lighting and emergency response plans. Staff training and routine inspection needs will be considered in the development of the social and environmental management system, and post-construction inspections by the fire safety professional will be included to confirm that the construction and operation of the building are compliant with the Master Plan.

Stakeholder Engagement

The company has established a formal system, the “Book of Suggestions and Complaints” one of which will be held in each store, to receive comments from members of the public. These comments are studied and acted upon by the company’s senior management.

It is expected that the major part of the company’s community engagement will take the form of advertising and brand-building.

Publication of this ESRS and associated Environmental Action Plan constitutes the client’s first community engagement related to its project plans.

Client Documentation

File Name	Actions
ESAP_ Home Center.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.

Projects

Environmental & Social Review Summary

Project Description

Overview of IFC's Scope of Review

E & S Project Categorization and Applicable Standard

Identified Applicable Performance Standards

Environmental and Social Categorization and Rationale

Environmental and Social Mitigation Measures

Environmental and Social Mitigation Measures

Stakeholder Engagement

Stakeholder Engagement

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Client Documentation

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