27322 - Cencosud Arg

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Environmental & Social Review Summary

Project Number

27322

Company Name

CENCOSUD S.A.

Date ESRS Disclosed

Jul 3, 2008

Country

Argentina

Region

Latin America and the Caribbean

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Sep 8, 2008
Signed : Sep 24, 2008
Invested : Oct 15, 2008

Sector

Retail (Including Supermarkets, Grocery Stores, etc.)

Industry

Tourism, Retail and Property

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Cencosud S.A. Argentina (Cencosud Argentina or the company) is one of the largest multi-format retailer in Latin America. The company is fully owned by Cencosud S.A. Chile (Cencosud). For Cencosud Argentina and Cencosud, this project will allow the company to:

- significantly improve its debt profile;
- continue with its expansion strategy; and
- to consolidate its leading position remain competitive vis-à-vis other multinational retail companies.

Overview of IFC's Scope of Review

The review of this project consisted of desk review of Cencosud facilities in Unicenter, Pilar, and Palermo, and a field visit in June 2008 for appraising technical, environmental, health, safety and social information submitted by the project sponsor. The environmental and social (E&S) appraisal team visited the operations of Cencosud in Argentina, and IFC communicated closely with client senior management and technical staff.

E & S Project Categorization and Applicable Standard

Performance Standards (PS) that are expected to be applicable for this investment include:

- 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; and
- PS8: Cultural Heritage.

Performance standard PS7: Indigenous Peoples is not expected to apply because no known indigenous people’s communities have been identified in the area.

This is a category B project according to IFC’s procedure for Environmental and Social Review of projects because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. IFC professional staff performed a physical evaluation of the project and environs, and reviewed relevant company and government documentation.

Environmental and Social Mitigation Measures

Key environmental and social issues are listed below. In addition, specific information is presented on the way Cencosud will address these impacts to ensure that the project will, upon implementation of the specific agreed measures, comply with the environmental and social requirements: the host country laws and regulations and the IFC Environmental and Social Performance Standards and the World Bank Group (WBG) environmental, health and safety guidelines. The information about how these potential impacts will be addressed by Cencosud is summarized in the paragraphs that follow. Further information is provided in the attached Environmental and Social Action Plan (ESAP), which has been agreed upon by IFC and Cencosud, and which will address any compliance gaps with IFC Performance Standards.

- PS1: Environmental, Health and Safety, and Social Assessment and Management Systems

- Integrated management system for social and environmental affairs, quality, and occupational health and safety management:

The company agrees that it needs to develop a management system to formalize and include social and environmental affairs, quality, and occupational health and safety issues associated with their operations and their assessment of future expansions. Cencosud will develop an integrated management system at all their operations, based upon internationally recognized management systems (e.g. ISO 9001-2000, ISO 14000, and OHSAS 18000). The company will design the system to comply with Argentine regulations and IFC policies and performance standards. Cencosud will appoint a person to the managerial position of environment and social affairs, responsible for environmental and social performance in all operations. Cencosud will develop a basic environmental management plan which will include all IFC guidelines and performance standards. The company will implement a training programme on Environmental and Social issues for its workforce, and as part of the content of the induction process for new employees. The company will also implement a formal system for monitoring and reporting environmental and social issues to senior management.

- PS2: Labor and Working Conditions

All employment relationships are in compliance with the Argentinean national labour law. Cencosud is the leading private sector employer in Argentina, and the company has over 7000 direct employees. The company is a non-discriminatory and equal opportunity employer and the Human Resources Policy of each business unit is made available to all employees in Spanish which is the language of the workforce.

The field visit and written information provided by Cencosud indicated that OHS issues are managed following Argentine regulations and IFC guidelines, and are available to all employees. OH&S procedures call for a risk analysis conducted by experts every year. All employees are provided with training and personal protective equipment (PPE) relevant to their assignment. There are 2 fire drills a year and fire brigades have been created (fire, first aid, and evacuation). The company is proactive in preventing accidents, injury, and disease by minimizing causes of hazards. Cencosud has agreed to perform three fire drills per annum.

- Update of the employee “Induction Document”:

Cencosud will update its “Induction Document”, to include formally include all requirements of IFC Performance Standard on labour and working conditions. The update shall include references to freedom of association and safeguards to ensure that child labor and forced labor is not used directly or through contractors in their supply chain, and will submit the policy to IFC for review. The company has agreed to randomly select 10 of its larger national primary suppliers in each major business line, and request a letter certifying no use of child labour in their operations.

Grievance redress mechanism: an informal mechanism is in place, but it will be formalized by Cencosud at the corporate level to address and register workers grievances, and a dissemination plan of the grievance process will be developed.

- PS3: Pollution Prevention and Abatement

Main sources of emissions to the environment and the risk of environmental contamination come from the retail operations. These include process liquid effluent and solid waste.

- Air emissions:

Potential air emission sources from Cencosud include diesel fueled generators which provide contingency power to the facilities. Usage of generators is limited to less than 50 hours per year, including tests.

- Effluents:

These include process liquid effluents, sanitary wastewater and solid waste. Wastewater is discharged and treated by a wastewater treatment facility. Data provided during appraisal shows that the wastewater treatment facilities at Unicenter possess adequate capacity to treat the daily effluent flows, and the quality of the effluent discharged into surface waters meets IFC guidelines.

- Solid Waste Management:

Recyclable materials and all waste are collected by authorized local recycling companies, as per country regulatory requirements.

- Hazardous materials:

Handling of hazardous materials conform to international standards, and are properly labeled and stored correctly in safe shelves for sale to the public. The store has safety procedures and materials for immediate clean-up of spills and leaks.

- Energy saving plan:

Cencosud has agreed to design and implement an energy saving plan in all its facilities, and submit the plan to IFC for approval prior to implementation.

- Refrigeration systems:

Cencosud uses trichloromonofluoromethane (R11) as refrigerant at Unicenter (4 equipments Carrier DK 19, of 500 kg each) in Paraná 3745, Martínez (B1640FRD) Buenos Aires; and at Shopping Parque Brown (1 equipment York YT C3 D3 C2 5 CI F, of 350Kg), in Av. F. de la Cruz y Escalada, (1407) Capital Federal, Buenos Aires. Due to concerns about its ozone-depleting potential, the consumption of R11 is now gradually stopped worldwide. To contribute to international efforts to protect the ozone layer and combat climate change, the company has agreed to replace R11 by an ozone-friendly refrigerant in all existing equipments in its facilities by year 2010.

PS4: Community Health, Safety and Security

In general, Cencosud’s operations pose no major risks to local communities, since the facilities are located some 2000 meters away from residential areas. Hazardous materials are handled well at the plant, their use is controlled, and no major emergencies affecting the neighboring communities are expected due to the use of these materials. The company coordinates with local Fire Department to respond to emergencies at the plant. Cencosud’s fire control equipment displayed in the mall is top of the line.

Training of the workforce in fire emergency response takes place during induction and the company has developed a training video on accident prevention. The company agrees that it needs to reinforce emergency training to its personnel, and will develop and implement a training plan to ensure that all employees are knowledgeable of emergency procedures and emergency contingency plans, including evacuation routes to protect customers.

In accordance to the ESAP, Cencosud will develop and implement a community engagement plan to inform customers of the Emergency and Contingency Plans. As part of the community engagement plan, Cencosud will describe and implement a process to deal with external concerns and grievances, and a means to disseminate the community engagement plan to its customers. It will be posted on the company web site and included in relevant written public communications at the facilities. The company will provide written information to IFC showing that a community Emergency Planning and Response plan (EPR) has been developed.

Develop an operational safety plan for site infrastructure at Las Palmas del Pilar Mall: Field visit to Las Palmas del Pilar indicated deficiencies in the display of signals and emergency light warning devices to allow customers clear identification of evacuation routes and ensure safety of the public and workforce. Cencosud will retain a qualified consultant in Fire and Safety, to perform an audit of all its facilities and develop an action plan to be submitted to IFC for approval. The plan will be implemented by the company following IFC approval.

- PS5: Land Acquisition and Involuntary Resettlement

Cencosud follows the Argentine law for all land acquisitions, and all transactions are done on a willing seller-willing buyer basis.

- PS6: Biodiversity Conservation and Sustainable Natural Resource Management

- Natural or critical habitat or endangered species:

There are no legally protected areas in the vicinity of any of Cencosud operations. The company operations do not involve modification, conversion, or degradation of any critical habitats.

- Sustainable Water Resource Use:

Cencosud facilities depend on groundwater sources for water supply. Water is not extracted by the company. It is provided by the municipal system. Unicenter in Buenos Aires has a daily water intake of 800 m3. Liquid effluent production capacity is 500m3/day. Wastewater at Unicenter is treated by effluent treatment facilities. It is then disposed to surface points of discharge in a stream. Data provided to IFC by Cencosud showed that the wastewater treatment at Unicenter possess adequate capacity to treat the daily effluent flows, resulting in good quality liquid effluent flows (BOD = 5 mg/l; COD = 100 mg/l; TSS = 0,1 mg/l). To add value to its operations and ensure the sustainability of water use, Cencosud will:

- develop a corporate sustainable water management and implementation plan for IFC’s approval;
- implement in full the corporate water management plan.
- evaluate the potential to recycle water in a potable form from the treated liquid effluent at Unicenter. A financial feasibility exercise would be part of the review. Based on this assessment the company will identify capital investments to implement a water recycling system.

- PS8: Cultural Heritage

Inside the premises of Cencosud is the “Pabellon Centenario”. This is a historical building as qualified by Argentine law, constructed in 1909 to celebrate the centennial of the “Revolucion de Mayo”. Cencosud has developed a plan to preserve and refurbish the building following national guidelines for this purpose. As per this ESAP, the company will implement the plan to preserve the Pabellon Centenario and report progress to IFC.

Stakeholder Engagement

Because the mall’s business depends on high levels of public access to the mall, the company has an ongoing public relations and communication program, which forms an effective community engagement channel and mechanism for expression of grievances if any should arise. Part of the new expansion is an information kiosk that will be readily available in the mall. Community grievances will be taken by the staff. The kiosk will also contain information about ongoing events in and outside the mall, benefits for the community, and actual and future projects for the mall.

The local disclosure process will make the mall expansion plans accessible in general form to the public.

Client Documentation

File Name	Actions
Cencosud ESAP FINAL.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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