27299 - EDC China

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Environmental & Social Review Summary

Project Number

27299

Company Name

EDC CHINA HOLDING LTD

Date ESRS Disclosed

Nov 24, 2008

Country

China

Region

East Asia and the Pacific

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : May 14, 2009
Signed : Jun 15, 2009
Invested : Sep 18, 2009

Sector

Other Services (Including IT Enabled Services)

Industry

Financial Markets

Department

Equity Portfolio Management

Project Description

This project involves the construction and operation of 12 datacenters in China. Each data center will consist of a low rise commercial office building, on average four or five stories high, each approximately 21,000 square meters, fitted out with mechanical equipment and systems to process data. The project will be carried out in two phases. The first phase will consist of five datacenters in primary cities (Shanghai and Beijing) and secondary cities (Chengdu, Suzhou and Chongqing), all to built in existing industrial parks which have been specifically zoned by the government, and which have been in operations for some years. The project is sponsored by GDS China, an IFC investee company (IFC investment #25336) which presently owns 40% of EDC. The rest of EDC is owned by SBCVC (30%), an IFC investee fund (IFC investment #24835) and EDC’s management team (30%).

Overview of IFC's Scope of Review

The review of this project consisted of appraising technical, environmental and social information submitted by EDC China (“EDC” or “the company”), and visits by IFC staff to the project site, to meet with EDC and GDS management and to have a first-hand look at operational activities. Written environmental and social policy and procedures at the corporate level were provided to IFC, as well as environmental and social assessment documentation for one site. Submission of documentation for future sites as it becomes available would be required as a condition of investment.

E & S Project Categorization and Applicable Standard

IFC’s environmental and social due diligence indicates that the principal Performance Standards (PSs) to be applied to this investment are:

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions,
- PS3: Pollution Prevention and Abatement

A condition of IFC’s investment will be that EDC’s operations shall ensure that all relevant social and environmental risks and impacts, including issues covered in all IFC PSs, are considered and managed as appropriate.

The key environmental and social issues associated with this project are the compliance with national, local, and IFC standards on land acquisition, construction, and management of hazardous materials (e.g., fuel oil and sewage); fair, safe and healthy working conditions; energy management; and corporate social responsibility efforts. The nature of EDC’s operations is such that no major adverse environmental or social impacts are expected to result from the project, and that it will be possible to avoid or mitigate any limited adverse impacts that might result. As a result, it has been classified as a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects.

Environmental and Social Mitigation Measures

The proposed project will upon implementation of the specific agreed measures described below comply with applicable standards including host country laws and regulations, IFC Performance Standards, and IFC environmental, health and safety guidelines. Information provided by EDC is summarized as follows:

PS1: Environmental, Health, Safety and Social Management

Environmental and social policy and procedures for the development of all industrial parks where EDC sites will be located will be consistent with Chinese and IFC standards. To manage environmental and social risks and impacts in EDC’s own operations, and as a condition of IFC’s investment, EDC will continue to implement its corporate Environmental and Social Management System (ESMS). This ESMS includes policies and procedures to manage all relevant functions consistent with IFC’s PS1 through PS8. The company will assess environmental and social risks and impacts for both construction and operation of each site as it becomes developed, and will manage those risks and impacts in accordance with the ESMS.

EDC will include environmental, health and safety terms in all contracts for its outsourced construction and security services, and will monitor compliance with those terms and require improvement in the event that non-compliance is identified.

PS2: Labor and Working Conditions

EDC has been working to comply with all applicable local labor laws and regulations. The company will develop full written documentation of human resources policy and procedures, which will include a mechanism for handling employee grievances, to IFC’s satisfaction. The company will ensure that all of its employees are provided with appropriate personal protective equipment and health and safety training for the type of work in which they are engaged. For all of its operational sites, appropriate measures for life and fire safety will be included.

EDC shall make commercially reasonable efforts to ensure that no contractors’ employee who performs work related to core functions of EDC for a substantial duration is below the legal employment age. EDC shall also make commercially reasonable efforts to ensure that contractors’ employees who perform work related to core functions of EDC for a substantial duration shall be provided a safe and healthy work environment, including appropriate training, protective clothing and equipment.

PS3: Pollution Prevention and Abatement

The company will oversee work performed by construction contractors to ensure compliance with PS3, and practices addressed by IFC’s Environmental, Health and Safety Guidelines. The company will itself operate each datacenter to ensure compliance with PS3 and applicable guidelines. This will include compliance with all elements relating to the structural safety of the project’s infrastructure, and with an internationally accepted life and fire safety standard. A life and fire safety master plan will be prepared by a suitably qualified professional, and a project completion test will be performed against the accepted design plans for all sites.

The company will ensure that all sites comply with the energy conservation standards in IFC’s EHS Guidelines. An energy management program will be developed and implemented, with measures to maximize energy efficiency. Procedures will be developed and implemented for both process heating and process cooling.

This project is one of several that will be part of a pilot IFC effort to develop both develop new Green Data Centers and improve existing ones. IFC may offer donor-funded technical assistance to EDC to support best practices in energy efficiency for buildings, equipment, and cooling. As energy costs are substantial for data centers, payback of the incremental capital costs may be possible through operational savings.

Stakeholder Engagement

EDC recognizes the importance of community engagement. For acquisition of sites, the company shall consult with relevant municipalities, obtain required authorizations, and comply with local environmental codes and IFC Performance Standards. EDC will disclose relevant facts to community members regarding proposed new sites, and will have provisions in place for handling and resolving complaints or grievances received from community members regarding any site.

**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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