While all Performance Standards 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: PS 1: Social and Environmental Assessment and Management Systems, PS 2: Labor and Working Conditions, PS 3: Pollution Prevention and Abatement, PS 4: Community Health, Safety and Security, The following performance standards are not applicable for the stated reasons: PS5: Land Acquisition and Involuntary Resettlement - Not applicable as the company is not proposing any land acquisition based on the corporate loan. Any updates to production capacity (i.e., the addition of a pasta line) will take place within the confines of the existing production plant foot print. If future decisions are made to re-locate any production plants the land required to establish the new facility must be undertaken on a willing buyer-willing seller basis and must be undertaken so as to avoid the need for physical or economic resettlement or such activity may trigger PS5 thereby requiring appropriate assessment of resettlement impacts. This is addressed in the ESAP. PS6: Biodiversity Conservation and Sustainable Natural Resource Management - Not applicable as the project will not result in any expansion of existing operations onto new lands or require a change in land use status, e.g. existing plants are located in industrial areas (with the exception of the bakery associated with HQ in Quito which is located in a residential area of Quito). As per PS5 above, should land be required to re-locate any part of the operation an assessment of the land will be required; whereas this may only be a remote possibility, the chance of it happening and consequences will be addressed in the ESAP. PS7: Indigenous Peoples – The company employs 23 Indigenous Peoples as employees within its operations as of the date of the appraisal. All employees are governed by national employment law with discrimination protected against under that law and the employment regulations resulting from its implementation. PS8: Cultural Heritage - Not applicable; the company buys wheat from overseas, notably the US and Canada (i.e. it does not own or operate any farms in Ecuador). Operations are located in industrial parks or other areas that have been used for industrial purposes for many years. Land use patterns are not set to change so no impacts upon cultural heritage resources are expected to occur in conjunction with activities funded by the corporate loan.

The B categorization is applicable as there are no elements of the project with diverse, unprecedented negative social or environmental impacts. Milling is essentially a dry process that avoids large scale issues associated with managing wastewater effluents; food production, e.g. making pasta or baking bread similarly does not require large amounts of water other than for cleaning purposes. Limited air emissions are associated with small boiler operations to generate heat for production purposes and from generators that provide back-up power which can also have minor noise issues associated with their operation. Occupational health and safety issues are of a greater concern in milling; new acquisitions made by the company are not yet at the standard of their existing operations and will need improvement. The company does not engage with the community in other than an ad hoc manner; no serious social/community issues were observed or discovered, however, during the appraisal. No issues involving the supply chain are to be expected. As mentioned above, wheat is sourced from either the US or Canada, two countries with sufficiently implemented laws and regulations to guard against inappropriate labor or environmental activities associated with supplying grain for milling.

PS 1: Social and Environmental Assessment and Management Systems Environmental and social assessment: Due to acquisition activity Grupo Moderna’s production facilities are either currently in operation (e.g. the Bakery operation in Quito, Manta Mill, and Cajabamba) or were idle at the time of the appraisal (e.g. Cayambe). With minor exceptions, those operating facilities that were visited during the appraisal were seen to have sufficient management and staff assigned to oversight, and appropriate existing infrastructure and equipment in place to avoid, manage or mitigate actual or potential project-related impacts related to environmental, occupational health and safety and social/community issues. In addition, a program is underway to better assess workplace safety hazards associated throughout Grupo Moderna. This is being led by a new manager who has company-wide responsibility for safety and security. Occupational health hazards have not yet been subject to the same level of assessment and will require further attention to ensure worker health is not impacted. This will be addressed in the ESAP. The idle operation at Cayambe is not up to standard with respect to OH&S assessment or associated equipment; a program to correct physical plant deficiencies (e.g. lighting, wiring, machine guarding) and to design and implement procedures to ensure safe and healthy working conditions (e.g. based upon HAZOPS) will be undertaken to ensure worker OH&S is protected when operations start up again. This will be addressed in the ESAP. Environmental assessment is more limited in scope due to the limited nature of environmental impacts associated with milling and associated food production processes. For example, minimal waste water discharges drain to municipal waste water systems at Quito and to septic tanks at Manta operations. Air emissions from boilers are used to provide heat to bake bread at the Quito bakery; these are very small and are below the output capacity required to be considered under the General EH&S Guidelines from an emissions perspective. Their emissions are, however, subject to regulatory limits with the necessary monitoring being conducted by accredited laboratories and results submitted to the appropriate agency for their review. Demonstrated compliance of the Quito boilers with these regulations was reviewed during the appraisal. Related to the emissions review is the wider environmental audit required of Moderna facilities within Quito that is undertaken by the relevant regulatory agency. To date these Moderna facilities have achieved compliance with the necessary requirements. Newly acquired facilities will need to demonstrate similar positive results with their compliance audits, a process that can be managed under an expanded ESMS. This will be addressed in the ESAP. Management program and organization: Much of the organization, roles and responsibility for environmental, OH&S and social issues are to be found at the Quito HQ. The existing environmental management system is limited to a compliance-driven program due to the fewer number of environmental and social impacts associated with company operations. What is in place, however, requires updating to ensure it is current and will encompass recently acquired operations; this is addressed in the ESAP. The company tracks limited environmental metrics (e.g. generation and types of waste, fuel consumption for both emergency power generation and use in contracted trucks). OH&S matters are subject to greater oversight and management; this is deemed appropriate for an operation such as milling that has many safety and occupational health issues. Recent reviews, HAZOPS and other similar hazard assessments have been undertaken internally and with the use of qualified consultants. Results of these are driving a risk management approach to workplace safety. As noted above, greater effort is required to assess, manage and monitor occupational health issues such as exposure to noise and particulate matter. This is addressed in the ESAP. Individuals tasked with OH&S oversight are to be found on-site at operations along with medical practitioners. In addition, relationships have been entered into with clinics local to operating facilities should the need arise to provide greater medical assistance to workers. The company has plans to implement a HACCP program within all its operations; this is addressed in the ESAP. Other certifications are maintained at plants, e.g., each production plant (Valderrama (Quito), Manta, Amaguana/Cajabamba) is certified for Good Manufacturing Practices (GMP). Training: The company uses training to promote appropriate safe practices in the workplace; records are maintained and were available for review during appraisal. A new program is being rolled out to ensure hazardous jobs are conducted by properly trained individuals; its progress and full implementation are addressed in the ESAP. The more centralized approach to management that has been taken to date will present challenges as the idle plants come on-line; e.g., demands on the time of managers based at HQ will increase. The company should investigate ways to decentralize more aspects of management and oversight in environmental, OH&S and social/community matters and formally train and empower individuals at each production site; this will be addressed in the ESAP.

Little engagement with communities found adjacent to the company’s operating plants is undertaken. No records on complaints or other input from communities were available for review. Any interactions are managed on an ad hoc or informal basis; e.g. a response is generated upon receipt of a complaint/issue. No formal community Grievance Mechanism exists. These matters are addressed in the ESAP. Reporting: The company structure is evolving; at present senior management is aware of the performance of the company from an environmental, OH&S and, when it arises, a community perspective. As the overall management and oversight of operations increases due to the number of production plants, the need for summary reporting on such performance will grow and should be used to drive continual improvement. This is addressed in the ESAP. PS 2: Labor and Working Conditions Human resources policy and management: The company has policies that govern many aspects of human resources management, e.g., employee selection and induction, development and performance, training resources/management, conduct within the workplace, etc. This is laid out in a published document that is required to be submitted, reviewed and agreed to by the relevant national employment ministry. Workers, the limited number of contractors and others engaged by the company are made aware of their rights and responsibilities at the beginning of their contract and through reference to the employment document that is required to be posted at company facilities. As of mid-February the company employed 631 employees (104 females and 527 males). Worker’s organization: There are no unions with the company. Whereas unions are allowed by law, there has never been a history of unions at Moderna. The current HR Manager has confirmed to IFC that the company includes nothing in its employment contract that prohibits, precludes or prevents union membership in any way. Non-discrimination and equal opportunity: Non discrimination is prohibited and equal opportunity is required and included in the government-reviewed and -blessed Reglamento Interno as described above. The company defers to national law with no additional company policies in place. New hires are considered based on merit and experience; the background of candidates is cross referenced to recently created job position descriptions to ensure fairness and transparency in hiring practices. Related to this matter, the company employed 23 indigenous peoples at the time of the appraisal. These employees are located in the Cajabamba operation, where an indigenous community exists; such employees are direct hires and enjoy the same working conditions and contracts as other direct hire employees Further, it is mandatory under Ecuadorian labor law, for a company with more than 25 employees, to provide employment for handicapped individuals in the amount of at least 4% of the total number of employees; the company adheres to this requirement. Retrenchment: The issue of retrenchment may be relevant as the company is in a state of transition given its recent acquisitions. In addition, possible changes to operations (additions of new lines of production, increased mechanization of existing production processes, possible relocation of production facilities) may require changes in the numbers of employees working at production facilities. No formal retrenchment policy exists at present. This will be addressed in the ESAP. Legal proceedings related to retrenchment (related to acquisitions) are still ongoing and in the hands of the company’s employment lawyers. This is addressed in the ESAP. Protecting the workforce: No child labor is used within the company. All employees are subject to identification checks that verifies their age; these also have to be submitted to the employment ministry for verification and approval. Neither child labor nor forced labor is an issue in the supply chain; wheat for milling is supplied from the US and Canada where no such issues exist. Occupational health and safety: A mixture of good and sub-standard practices of OH&S procedures, controls and equipment were observed during the appraisal; variation can be adjudged to be either a factor of the age and current use of facilities or inconsistent work practices, e.g. a lack of machine guards on belt drives at Cayambe or a lack of hearing protection worn by those working in noisy areas at Manta and working at heights at Cayambe without fall protection. Supervisors are now receiving training on hazardous risks with individuals tasked to complete such jobs to follow. This is addressed in the ESAP. Other training initiatives are being rolled out by the new Safety and Security Manager. Specialist studies by external experts are driving a more risk-based OH&S program. Lost time incidents (LTIs) statistics are summarized; no LTIs have been recorded since the hiring of the new Safety and Security Manager. Emergency preparedness, based on audits conducted by the local fire departments, is well managed (such audits and the successful completion of any non-conformances are required in order to obtain a facility operating license). Cayambe was undergoing such an audit at the end of the appraisal visit; the outcome of this including any required corrective actions is addressed in the ESAP. Grievance Mechanism No formal grievance mechanism for workers is maintained; currently a social worker is available to receive complaints/issues. Given the lack of union representation within the company this is an important shortcoming for the company to address. This is included in the ESAP. Non-employee workers Ecuadorian employment law was changed three years ago to greatly restrict the use of contracted labor. Only certain services (e.g. catering, security, truck drivers) are allowed to be hired as contract labor. When used, contract laborers have very similar rights as employees of Moderna e.g., the right to receive the government-mandated 15% profit sharing of the profits earned by the company hiring the contractor company. Application to use contract labor must be made to, and agreement received from, the relevant national employment authority that maintains oversight of the practice. Moderna is co-responsible for ensuring benefits and other rights afforded contract workers are received by them; this is checked by the government and therefore the company frequently checks on the performance of the contracting company. PS3 Pollution Prevention and Abatement. Pollution prevention, resource conservation and energy efficiency: Given the nature of the business, there is little chance of significant impacts upon the natural environment. Processing plants run on power from the national grid in Ecuador; this is experiencing supply problems and back-up generators are used to provide power in the event the grid shuts down. Air emissions are analyzed yearly as per government requirements; small boilers running on diesel provide process where required. The company tracks fuel and water usage in production plants. Waste water is drained to municipal systems or to septic tanks, i.e., there are no direct discharges to surface waters. Non-hazardous waste amounts and types are tracked and several waste streams are recycled. Evidence of sorting was seen at the Quito bakery. Hazardous materials: Hazardous materials are required in limited amounts and quantities (e.g. for cleaning purposes). Use and storage are reviewed as part of the environmental audit. Diesel for use in the small boilers to provide heat to the baking process and for use in the back-up generators is stored appropriately on site. Hazardous wastes: Hazardous wastes are stored appropriately. Wastes are stored until collected by a licensed contractor and taken to a licensed facility. Chain of custody forms are maintained showing appropriate disposal practices. Emergency preparedness: This is included in the audit conducted by the fire department and is discussed above. Green house emissions: Based on data supplied by the company and input into IFC’s Carbon Emissions Estimation Tool (CEET) version 9 October, 2009, Moderna operations generate an approximate total of 5,710 tonnes of equivalent CO2 from the following sources: average yearly total electricity consumption of 9,842,515 kWh (3,632 tonnes CO2 equivalent); stationary fuel use 137,865 gallons of diesel (521,885 l) for a contribution of 1,461 tonnes; and, estimated fuel consumption in the delivery truck fleet of 246,396 liters per year (677 tonnes) Pesticide use and management: The need for pesticide use and management was seen to be limited; when required the company uses a contracted and licensed sub-contractor to provide needed pest control services. PS4 Community Health Safety and Security Community health and safety: The Quito bakery operation is located in a residential area; main impacts to community health and safety include truck traffic on residential streets and possible fire/explosion due to fuel storage, etc. The former is not of a sufficient volume to create a major hazard; the latter is subject to review during the fire department audit and thereby subject to ongoing management and audit. Other production plants are located in industrial areas thereby minimizing the interaction with local communities. Of potential concern is the use of trucks to move wheat and flour from the Manta plant to the Quito bakery and soon to the Cayambe production plant. These are sub-contracted drivers who own and operate their own trucks. Regardless of the contractual arrangement, the company must work to include such drivers in awareness and good driving practice campaigns/training to minimize the possibility of incidents along the route from the port town of Manta to the Andean communities of Quito and Cayambe; this is addressed in the ESAP. There is no formal community grievance mechanism; this is addressed in the ESAP. Food safety is managed using GMP; HACCP is to be introduced as stated above. Security personnel requirements: Site security is contracted out; no incidences involving the public or workers have been recorded. The company must still confirm that contracted security services apply the principle of proportionality and that security personnel have clear instructions on the objectives of their work and permissible actions. Instructions should be based on applicable law and professional standards and adhere to best international practices as included in the UN Basic Principles on the Use of Force and Firearms by Law Enforcement Officials and/or the Voluntary Principles on Security and Human Rights. This is addressed in the ESAP.