27128 - Wings SAS

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Environmental & Social Review Summary

Project Number

27128

Company Name

PT SRIWIJAYA ALAM SEGAR

Date ESRS Disclosed

Apr 14, 2008

Country

Indonesia

Region

East Asia and the Pacific

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 18, 2008
Signed : Jun 24, 2008
Invested : Sep 18, 2008

Sector

Other Food

Industry

Agribusiness and Forestry

Department

Regional Industry - MAS Asia & Pac

Project Description

This project involves the construction by the Wings Group of a new, greenfield plant in Palembang, South Sumatra, for the production of packaged instant noodles. The Wings Group has existing noodles plants in Jakarta and Surabaya, which IFC has also financed, and this plant will be a replica of those existing operations. The Wings Group has a variety of holdings in the food processing and chemical manufacturing sectors in Indonesia.

Overview of IFC's Scope of Review

The review of this project consisted of a desk review of technical, environmental and social information submitted by P.T. Sriwijaya Alam Segar in response to IFC’s Environmental and Social Appraisal Questionnaire and interviews with company representatives. As this is an existing client, the review was informed by the results of site visits (September 2006) to other noodles plants in Jakarta and Surabaya, and subsequent monitoring reports. The existing investments have Environmental and Social Risk Ratings of B2 (for both P.T. PAS and P.T. KAS). A field visit will be carried out prior to disbursement.

IFC and P.T. SAS have agreed that the new plant will be designed and operated to achieve compliance with IFC’s Performance Standards and World Bank/IFC Guidelines.

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 and Safety;
- PS5: Land Acquisition and Involuntary Resettlement; and
- PS6: Biodiversity Conservation and Sustainable Natural Resource Management.

This ESRS assesses the project against the above Performance Standards. The project was not assessed against PS7 on Indigenous People or PS8 on Cultural Heritage as the project does not impact on either Indigenous Peoples or known Cultural Heritage.

In addition, the following Guidelines are applicable to this project:

- Environmental, Health and Safety General Guidelines, dated April 30, 2007; and
- Environmental, Health and Safety Guidelines for Food and Beverage Processing, dated April 30, 2007.

This is a Category B project under IFC’s Policy on Social and Environmental Sustainability 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:

- land acquisition and plant siting;
- 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.

This new plant is the further expansion of the Wings Group’s noodles operations in Surabaya and Jakarta, which have been financed by IFC and previously assessed as Category Bs. The existing investments have submitted AMRs in a timely fashion and are categorized as ESRR B-2 Satisfactory.

Environmental and Social Mitigation Measures

The sponsor has presented information which indicates that the proposed project will comply with IFC’s environmental and social requirements, including host country laws and regulations and IFC’s Policy and Performance Standards on Social and Environmental Sustainability, and the applicable environmental, health and safety guidelines. The information about how any 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 SAS’ operations and relevant legal requirements were reviewed by the company and the responsible local government departments. This new plant was required to prepare environmental management and monitoring reports (RKL and RPL) to meet Indonesian requirements. The design and operation of the facilities have incorporated systems and procedures to prevent detrimental environmental and health and safety impacts.

Management Program:

As is the case throughout the Wings Group operations, SAS will have procedures in place to manage environmental, health and safety, labor, and life and fire safety issues. The plant is being designed for and will apply for certification of its integrated food safety, quality, EHS and health and safety management system to ISO 22000 (incorporating HACCP) after it comes into operation. Further incorporation of environmental measures in the system will enable certification to ISO 14001. The integration of these management systems, which share a common approach, will provide a comprehensive framework for management of these elements, which fully meets IFC’s PS1 requirements.

Organization:

As is the case in its other operations the company will assign responsibility for EHS and fire safety matters to responsible staff. Supervisors will conduct daily briefings and performance reviews with staff after each shift and report results and issues to Managers. Managers will hold weekly meetings to review issues and identify improvements.

Training:

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

Monitoring and Reporting. SAS will have 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 further formalize monitoring and reporting.

- Labor and Working Conditions

Human Resource Policy and Management:

The company expects to have a work force of approximately 370, of which about 250 will be women, hired locally. Compensation, working hours and workplace conditions will comply with Indonesian labor standards and requirements. The company will provide additional financial compensation based on performance as well as amenity and cultural facilities for staff.

Throughout the Wings Group, all staff are provided 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 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 workers’ representative in management meetings, an internal e-mail address and staff suggestion boxes. The staff manual also outlines the company’s commitment to non-discrimination and equal opportunity. PT SAS, as in all Wings companies, is very attentive to worker needs and makes significant efforts to ensure a pleasant working environment is maintained.

Wings Group does not engage any child or forced labor:

The company will comply with local labor laws and related PS2 requirements to protect the workforce. All employees will be over the age of 18. Staff turnover is expected to be about 10% annually, which is consistent with local and industry averages, and with other Wings’ facilities.

Raw Material Sourcing:

The instant noodles packages contain seasoning packages with ingredients which include onions, garlic and chili. For this plant in Palembang, these ingredients will be obtained in pre-prepared and packaged form from the Wings Group’s other operations in Jakarta and Surabaya. Those ingredients are procured from local/import suppliers that the company already has established relationships with. Wings has adopted appropriate measures to ensure that suppliers adopt pesticide management measures and encourage best practice in their supply chains, in conformance with IFC Performance Standards and guidelines.

Occupational Health and Safety:

The company plans to implement procedures to ensure 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 will receive health checks before employment and workers will be checked annually. The company will provide health insurance to workers and their families, arranged through a private supplier. Under this policy, the workers and their families will have free, unlimited access to a group of local clinics. In addition, there will be an on-site clinic. In the case of work accidents, Wings will take the employee to a hospital and pay for all emergency care expenses.

- Pollution Prevention and Abatement

Pollution Prevention, Resource Conservation and Energy Efficiency:

Measures to prevent, minimize and mitigate environmental impacts will be covered by the company’s existing procedures and the establishment of an integrated system under ISO 22000. Electricity will be sourced from the local grid, supported by a small backup diesel genset (1 MW) when needed. Annual electrical use is expected to be approximately 5 million KWH. For steam production, there will be one main 16 T/hr coal-fired boiler and a backup 5 T/hr gas/diesel boiler. The coal boiler will be fitted with an electrostatic precipitator for particulate control, and wet scrubbers or other control measures will be considered if needed. The company will monitor stack emissions to ensure compliance with local regulations and IFC guidelines.

Water supply of approximately 30,000 m3/day will be obtained from the company’s own dedicated well located on a separate site 15 km from the main plant, which is designated by the government for groundwater extraction. Process wastewater and sanitary waste will be treated in the company’s own standard treatment plant which includes physical-chemical treatment, biological treatment, and sand filtration to polish the final effluent before discharge to surface waters. Effluent water quality will meet local regulations and IFC guidelines. All solid wastes will be sold to third parties or disposed in approved municipal facilities. Neither hazardous nor plastic wastes are generated. Solid wastes will be collected for disposal by licensed contractors.

- Community Health, Safety and Security

Community Health and Safety:

SAS will implement appropriate fire and life safety measures to minimize the impacts of its operations. Company activities are not expected to result in impacts beyond the project site and will pose no dangers to neighboring communities or to neighboring industrial plants.

Emergency Preparedness and Response:

The company will implement emergency preparedness and response procedures, including fire response and protection measures. Arrangements will be established with local fire authorities and annual inspections will be undertaken by authorities responsible for fire safety issues. EHS and fire safety training will be conducted internally every four months on matters ranging from fire safety equipment operation to safe machine operations and heavy lifting to food hygiene.

Security Personnel Requirements:

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

- Land Acquisition and Plant Siting

The 10 ha site is located in a designated industrial development zone close to Palembang, South Sumatra. The closest village is 4 to 5 km away. Several other new factories have been established in the area nearby. The area was previously unused and unoccupied, and covered with scrub vegetation. The site was acquired from the local municipal government on a willing seller/willing buyer basis. There are no known other claims to this land, but if such claims were to arise in the future, the company would deal with them through the legal system and through negotiations with the local government.

- Biodiversity Conservation

The plant site is classified as modified habitat, consisting of ground cover and scrub vegetation. The original forests in this part of Sumatra have long been converted and the land used for various forms of agriculture. The site is on the periphery of Palembang, a city of approximately 3 million persons and the major urban area of southern Sumatra. No critical habitat has been identified, and no critically endangered or endangered species are known to depend on this area for their survival. No issues regarding application of PS6 therefore arise.

Stakeholder Engagement

**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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