27250 - Corporacion Dinant S.A. de C.V.

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Environmental & Social Review Summary

Project Number

27250

Company Name

Corporacion Dinant S.A. de C.V.

Date ESRS Disclosed

Nov 13, 2008

Country

Honduras

Region

Latin America and the Caribbean

Last Updated Date

Sep 24, 2023

Environmental Category

B - Limited

Status

Active

Previous Events

Approved : Jan 26, 2009
Signed : Apr 3, 2009
Invested : Nov 5, 2009

Sector

Palm Vegetable Oil

Industry

Agribusiness and Forestry

Department

Regional Industry MAS LAC & EUR

Project Description

The project will consist of a corporate loan to Corporacion Dinant S.A. de C.V., a vertically-integrated palm oil and food company in Honduras. The company is seeking funds primarily to:

- increase production capacity in its snacks and edible oils divisions;
- expand and upgrade its distribution network;
- develop young palm oil plantations; and
- build a biogas facility to generate electricity for own and third-party consumption.

Overview of IFC's Scope of Review

The appraisal of this project consisted of a review of technical, environmental and social information prepared by an independent consultant, interviews with company management, staff, and representatives of several local communities, as well as site visits to the company’s industrial and agricultural operations in Honduras.

E & S Project Categorization and Applicable Standard

All Performance Standards are applicable to this investment.

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security
- PS5: Land Acquisition and Involuntary Resettlement
- PS6: Biodiversity Conservation and Sustainable Natural Resource Management
- PS7: Indigenous Peoples
- PS8: Cultural Heritage

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 good international industry practice, guidelines, design criteria, local regulations and industry certification schemes. Oil palm plantation development is occurring on existing, cleared agricultural land, and there is no destruction of or impact on critical habitat involved. Land acquisition is on a willing buyer-willing seller basis, and there is no involuntary displacement of any people. There are no indigenous peoples’ ancestral lands in the area and the Pech community near the company’s Aguan operations is not expected to be adversely affected by the project. The company is working to actively upgrade its environmental protection capabilities, and will ensure that its operations meet international standards for the sector. As a result, the Category B designation is appropriate.

Environmental and Social Mitigation Measures

The company has presented information which indicates that the proposed project will be developed to 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 Project is summarized in the paragraphs that follow.

SOCIAL AND ENVIRONMENTAL ASSESSMENT AND MANAGEMENT SYSTEMS:

Environmental and Social Assessment: An Environmental Assessment of Agricultural Plantations was carried out in May 1997 on behalf of the IFC; more recently, an environmental and social assessment covering both agricultural and industrial operations of Dinant was undertaken by an independent consultant to identify the company’s current environmental and social impacts. The recommendations therein will be instrumental in guiding the development of the company’s Environmental and Social Management Systems. Mitigation of impacts will primarily focus on sustainable agriculture, as well as management of waste and of hazardous materials in both their industrial and agricultural operations. The primary social impact of Dinant’s expansion will be the creation of more direct and indirect employment. This project does not require any additional formal impact assessment.

Management System: At the corporate level, responsibility for environmental and social issues lie with the Vice-President of Environmental Planning and the Vice-President for Human Resources, supported by a newly-hired Corporate Social Responsibility professional. Responsibilities for environmental and social matters are highly decentralized at the plant or business unit level. The company started the process of preparing for ISO 14001 (environmental management system) certification in 2003, encountering some delays due to lack of necessary financial and human resources. The company will engage again in the ISO 14001 process and will strive to achieve certification within an agreed upon timeframe. The company will also build on the ISO process to obtain OSHAS 18001 (occupational health and safety) certification within a similar timeframe.

More than 75% of Dinant’s land (16,500 ha) is planted in African palm and the company has a commercial relationship with independent palm producers owning another 12,750 ha. The company has expressed interest in joining the Roundtable on Sustainable Palm Oil (RSPO), and will prepare a strategy and schedule to work towards sustainable practices in oil palm cultivation and ultimately obtain RSPO certification. Similarly, good agricultural management will be developed and applied for all other crops aiming, in time, at the independent verification of such practices. As growth of palm oil production will mainly rely on the increased sourcing from independent producers, Dinant will develop environmental and social criteria for the evaluation of existing and prospective independent growers and, in time, develop and deliver a training program on pesticide management and other sustainable agricultural practices. Dinant has also already achieved HACCP certification for its processing operations in Comayagua.

LABOR AND WORKING CONDITIONS:

Human Resource (HR) Policy and Management: Dinant employs approximately 4,500 permanent and 2,500 temporary workers, 30% of which are women, and are currently in the process of transitioning the majority of temporary workers in the agricultural operations of Lean and Aguan into permanent staff. This transformation represents an important step towards compliance with national labor law and international standards. In addition, the revision by the company of the Labor Manual and related procedures includes key changes such as the cessation of pregnancy testing as condition of employment, the formalization of a grievance mechanism for workers, and the enforcement of work shifts that do not exceed national regulations. Excessive working hours were identified as a concern during appraisal, and the company has committed to address this issue and to develop an alternative working model taking into account production, work organization, quantity, quality, and costs, in order to find a better option to regulate the maximum allowed working hours per shift (day and night) and per week.
Dinant has also made a special effort to encourage the active participation of the existing union in the company’s affairs. This union is now seeking to better define their role and engaging with senior management to address workers’ concerns. Overall, workers interviews were positive with regards to working conditions.

Occupational Health and Safety: In general, all the plants are clean, organized, and well maintained. A health and safety commission (including workers and management) is in place. Some areas need further improvement, however, such as the development of policies and procedures to handle hazardous materials, especially pesticides in agricultural activities, signage, ensuring the proper use of PPE and providing periodic training. Better documentation and monitoring of incidents and accidents is necessary.

POLLUTION PREVENTION AND ABATEMENT:

Pollution Prevention, Resource Conservation and Energy Efficiency: Process wastewater from Dinant’s plants is generally treated in aerobic lagoon systems, which are undersized for the demand and load of the effluent. Dinant has committed to upgrading their wastewater treatment to ensure that all plants meet national discharge limits as well as IFC guidelines. As part of this upgrading, Dinant has already installed a biogas recovery unit in Aguan and will do the same at their plants in Lean, which will further improve effluent quality to meet IFC guideline limits. Construction of a new system has also been completed at the Dixie plant.

Conventional solid wastes are handled focusing on the recovery and reuse of materials and by-products. Plastics and cardboard packaging is recycled, and rejected food products are sold for animal feed. On the plantation, empty fruit bunches are used as mulch, and other organic nutrients from processing of kernels are used for animal feed.

Air emissions are principally from stationary power sources which run on biomass or bunker fuel. These generate adequate power for their own operations and a percentage is sold back to the grid. Stack monitoring results are variable and in some cases particulate emissions exceed allowable limits. The company will upgrade its sampling program for stack emissions and will bring all facilities into compliance with national regulations and IFC guidelines according to an agreed schedule.

The company has been upgrading its existing biodiesel plant at Aguan, and will use this output for all of their vehicle needs and for irrigation pumps and other generating equipment. This will reduce overall company emissions accordingly. In addition, the company is installing biogas recovery facilities in order to use the methane to fuel boilers for electricity generation, which will improve energy efficiency, lower emissions and improve wastewater quality.

Pesticide Management: Dinant’s Good Agricultural Practices policy includes a commitment to implementing an Integrated Pest Management Program. The commitment to develop a formal Pesticide Management Plan is yet to be carried out and it will cover the areas of pesticide selection and handling, application and storage, staff training, safety requirements, and disposal, consistent with national laws and regulations, IFC policies and guidelines and FAO guidance. The company will immediately suspend the use of all pesticides that are listed in the Stockholm Convention, and properly dispose of any remaining stocks.

COMMUNITY HEALTH, SAFETY AND SECURITY

Community Health and Safety: With the exception of the urban Dixie plant site in San Pedro Sula, Dinant’s plants are surrounded by small, agricultural communities. Impacts on community health and safety are limited but need to be analyzed and mitigated more systematically, including risks posed by the company’s security arrangements. In general, grievances are related to dust, traffic, noise, smells, and flies. The current system for handling grievances needs to be further formalized to ensure adequate and prompt handling of complaints.

Security Personnel Requirements. Dinant has over 300 security staff, which consists of its own security personnel, trained in house and managed by the HR vice-presidency, as well as a private security company used in the operations in Comayagua and various security companies outside Honduras. The majority of the security personnel are associated with the distribution centers in Honduras and other Central American countries and most are armed. Private security subcontractors have a contractual requirement to comply with Basic Principles on the Use of Force and Firearms by Law Enforcement Officials.

LAND ACQUISITION AND INVOLUNTARY RESETTLEMENT

The last land purchase made by Dinant was the Tumbador farm located near Trujillo in 2003. This property was devoted to cattle ranching and is now being converted to oil palm plantation. Company policies on land acquisition and land use rule out acquisition of land in protected areas, with archeological sites, or with indigenous settlements. They also exclude cultivation in protected areas, wetlands or wildlife refuges, as well as substitution of native forests with plantations. The company will develop a procedure ensuring that these policies are implemented as well as taking into account IFC Performance Standard 5.

BIODIVERSITY CONSERVATION

Dinant’s oil palm plantations are planted on already converted land that was previously dedicated to other agricultural uses such as cattle ranching and banana plantations. The company will prepare a strategy and schedule to work towards sustainable practices in oil palm cultivation and ultimately obtain RSPO certification. Similarly, good agricultural management will be developed and applied for all other crops aiming, in time, at the independent verification of such practices.

INDIGENOUS PEOPLES

There is an indigenous community of about 26 families located about 12 km from Dinant’s largest plantation in Aguan Valley. Dinant’s main impact is provision of indirect employment in an “inclusive business” project that will create linkages between the company’s oil extraction operations and the supply of corozo fruit. This initiative should increase community incomes and provide resources to further assert their cultural identity. An additional indigenous community of Tolupan families lives in the buffer zone of Texiguat National Park, about 20 km east of Finca Florida, which is owned by Dinant. It is not expected that Dinant’s farming activities could have any impact on this indigenous group but the company will include these two different indigenous communities, as well as the Garifuna community in a community risk analysis to ensure that there are no adverse impacts or mitigate them if needed. Currently, no Tolupan peoples are employed by the company.

CULTURAL PROPERTY

Dinant has committed to protect any archeological sites and will include this policy in its land acquisition protocol. In the past the Company has set aside 10 ha at its Comayagua site under the direction of local archeological authorities for the preservation of an archeological site at that location.

Stakeholder Engagement

Dinant understands the importance of having good relationships with their neighboring communities and are quite proactive in this regard. Most of the workforce comes from small villages close to their plantations and company management regularly visits with municipal officials, the Pech indigenous community, and other local stakeholders. Dinant participates in townhall meetings regularly organized by the municipalities, who most commonly receive any inquiries or grievances related to the company. Dinant often helps municipalities with small infrastructure or school projects (e.g. road maintenance, school roof repair, etc.) and provides financial support for important cultural events.

Spanish versions of the Environmental and Social Review Summary and the Environmental and Social Action Plan will be disclosed by the Company and made available to the public locally in the municipalities of Cortes (San Pedro Sula), Atlantida (Tela, Arizona, Esparta), Colon (Saba, Tocoa, Trujillo, Limon), Comayagua (Comayagua, San Sebastian, Villa), and Francisco Morazan (Tegucigalpa).

Coporacion Dinant
Apartado Postal 684
Tegucigalpa, Honduras
Attention: Olvin Francisco Andino
Vicepresidente de Asuntos Ambientales y Sociales

(504) 239-8172

ambiente@dinant.com
www.dinant.com

Client Documentation

File Name	Actions
Dinant ESAP FINAL 102708.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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