PS1: Social and Environmental Assessment and Management Systems
Suntech has an actively engaged and comprehensive Environmental and Social Management system to manage and monitor E&S issues and performance, partly based on ISO requirements and also adapted to its Total Quality Management System. It has an organizational structure in place which clearly defines the roles of the following departments tasked with Environmental and Social responsibilities: Administration; Internal Quality Control; Environmental Health & Safety; Equipment and Facility; Human Resources; Materials; Supply Chain Management; Engineering; and Corporate Social Responsibility. These departments report to the Chief Operations Officer or directly to the CEO office.
As per host country regulatory requirements, Suntech completed an Environmental Impact Assessment (EIA) for each of its facilities, and has designed and constructed its facilities according to EIA requirements. EIAs were approved by the local government prior to commencement of activities related to the construction or operation of its facilities in the Wuxi Industrial Park. The Wuxi Suntech facilities are ISO9001 and ISO14001 certified and have a management system which provides oversight of environmental, health and safety (EHS) functions. The Shanghai thin-film facility is in the process of applying for ISO9001 and ISO14001 certifications and is committed to achieving them in 2010. The Luoyang facility can produce solar cells rated at 120MW and Yangzhou is rated at 300MW total capacity, while Qinghai is a panel assembly facility. All facilities follow the Wuxi headquarter E&S requirements and national regulations. Each facility has a dedicated EHS team and the Wuxi headquarter conducts an annual EHS audit of all facilities.
The Company will achieve OHSAS18001 and SA8000 certification at all other facilities by mid 2011.
The corporate headquarter of Suntech employs a Total Quality Management System, in which Key Performance Indicators (KPI) are defined for all operational aspects of the company including EHS. EHS indicators take up 15% of all KPI indicators. KPI data is regularly recorded and monitored. The KPI system includes detailed quarterly hazard point analysis, looking at frequency and severity of occurrence of each type of hazard. These analysis results form the basis for assessing the performance of all staff responsible for EHS. As part of ISO requirements, the company also has a document control system in place and controlled E&S documents are placed on the intranet for all staff to read. All facilities in Shanghai, Luoyang, Qinghai, and Wuxi develop their own EHS management systems in compliance with the corporate headquarter KPI system.
Until recently, the solar cell and PV module manufacturing divisions at the Wuxi headquarter were one department with one EHS team and a facility and equipment team. In order to achieve stronger quality and management control, the two divisions were recently restructured to become two separate departments, each now having its own dedicated EHS team and facility and equipment team. The F&E team is responsible for ensuring environmental and safety aspects in the design of facility layouts, and also to ensure that equipment are running properly. These two teams work in tandem to ensure EHS performance and both report to the departmental general manager. The two general managers report to the Chief Operations Officer with monthly EHS monitoring reports. Suntech believes that this restructuring will strengthen its ability to monitor EHS performance to a greater level of detail.
Once the restructuring process is complete, the Company will make preparations to apply for OHSAS18001 certification at its Wuxi facility. Its Corporate Social Responsibility department is making preparations for the company to apply for SA8000 certification.
Local government environmental monitoring stations conduct annual audits at Suntech facilities. Through its own KPI and reporting system, Suntech tracks its environmental, safety and health performance closely.
PS2: Labor and Working Conditions
Human Resource Management: Suntech has a total workforce of around 9,000 persons, of which approximately 8,100 are employed at the Wuxi facility, with the rest working at other facilities and overseas sales offices. Approximately 60% of its workforce - mostly front line workers – is not directly employed by Suntech but through 6-7 employment intermediaries. These workers are typically employed by the intermediaries on a one-year renewable contract.
Terms of employment, and the company’s human resource policies and practices – such as working hours and overtime payment - adhere to China’s Labor Contract Law and other relevant national labour regulations. The company has a policy of providing the same level of net wages to direct-employees and workers employed by intermediaries. Subsidized housing is provided for a number of managerial and non-local technical staff. Working conditions and terms of employment are directly communicated to employees and formalized into employment contracts. The company’s human resource practices are based on principles of equality and non-discrimination, and there was no evidence of child or forced labor. The company has a retrenchment policy in place to ensure severance payments to departing workers and the policy operates in accordance with national regulatory requirements. In 2008, the company had turnover rates in the 2%-4% range.
The Company has found in the past that some employment intermediaries have had a practice of charging workers high processing fees or requiring a deposit from them. It stopped working with those intermediaries and has developed systems to prevent such practices with the current labor intermediaries. To facilitate application of these systems, it is in the process of reducing the number of employment intermediaries to about three. In doing so, it will ensure reasonable arrangements for workers from phased-out intermediaries to be transferred to the remaining intermediaries it works with. Suntech currently monitors intermediaries through monthly reports and evaluations, examining such aspects of their operations as legality of employment practices, whether social security payments to the government and wages to workers have been made on time. It is committed to continuing stringent monitoring to ensure that all intermediaries it uses adhere to national labour regulations and IFC PS2 requirements. It will do so by conducting an annual internal or external labor audit to verify the labor practices of its employment intermediaries. It will ensure that the intermediaries pay workers fair remuneration on time and do not withhold a deposit from workers.
There is a union in place at Suntech and 60% of all employees have joined the union. The union works to negotiate fair employment terms, benefits and working conditions for its members. In setting human resource policies, the company consults with the union.
Employee can express their grievances through several channels: general drop-off-boxes; a box collecting employee feedback which reaches the General Manager directly; and a company email address to which employees can express grievances anonymously. Conversations with employees have confirmed their satisfaction with these measures for them to express concerns and communicate with management. The human resource department also interviews workers on a random basis to understand their views and concerns. The company has a whistle-blower policy in place to ensure that employees can lodge complaints without fear of reprisal. A Whistleblower Hotline is administered by the Anti-Fraud & Whistleblower Committee under the Company’s Audit Committee.
Each employee has received no less than 40 hours of training in 2008, a benchmark set by the company to ensure that employees receive necessary training, through classroom sessions or through the company intranet portal. In 2008, the company provided EHS training for 18,069 staff, on topics such as environmental laws and regulations, risk assessment, and the use of protective equipment.
Occupational Health & Safety: The Human Resource Department, in concert with EHS departments, tracks each employee’s health status and information is kept in an employee health database. Health checks are regularly conducted for each employee when the employee enters into and leaves a new job or switches to a different job function within the company. There is a job rotation scheme to move employees around so that no one works in a high risk position (for instance – at laminating machines, and cleaning jobs with possible exposure to chemicals) for prolonged periods of time. A detailed list of work-related injuries in 2008 was reviewed by IFC staff, confirming that the Company keeps track of incidents and outlines steps taken to minimize future occurrence.
As part of its ESMS, the company adopts a 5-S (S for safety) approach to ensure cleanliness and safety in all production spaces. There are specific provisions for how all objects are handled, stored and located. The intent is to ensure unobstructed access to escape routes in case of emergencies. Each production area has an assigned safety team consisting of the safety coordinator, deputy coordinator, engineering coordinator, and EHS custodian, so that at all times any staff can reach one of the safety personnel in case of emergencies. Observation confirmed that there is a set of emergency preparedness and response procedures and documentation, and responsibilities are assigned to various staff and are defined in a personnel organizational chart.
There is clear signage at each section of the production line on safety measures and safety operation procedures that workers need to follow. Observation confirmed that workers throughout the production line were wearing necessary personal protective equipment, and that each corner of production rooms has emergency showers for workers to wash themselves in case of chemical spillage. First aid kits and in-house medical personnel are easily accessible to workers, who receive regular training on safe operation procedures. Mock evacuation exercises are conducted and all production staff is required to attend. The facility has adequate fire safety provisions such as double exits, extinguishers, sprinklers and clearly displayed instructions.
Observation at production lines confirmed that incoming chemicals used as production raw materials come into the production areas through enclosed double-layered pipes. Outgoing waste chemicals go into underground pipes. This arrangement minimizes the opportunity for production workers to get into direct contact with chemicals. A March 2009 Government Centre for Disease Control monitoring report on indoor air quality confirmed that Suntech performance has met national regulatory standards.
There was an incident in November 2008 in which the malfunction of a piece of module laminating equipment led to 3 serious employee injuries and 4 minor injuries resulting from burns. The company has re-evaluated its safety procedures and as a result has made personnel changes to strengthen its safety management. It is committed to minimizing the occurrence of workplace accidents and is currently restructuring the solar cell and module departments to achieve stronger management oversight.
Contractor E&S management: Suntech has a set of requirements – for instance on working at elevation - to manage the safety performance of its construction sub-contractors and inspects their work on a daily basis. Sub-contractors are required to sign an agreement in which safety requirements are specified, but there is no provision on construction waste discharge. Construction projects exceeding a certain monetary value are directly managed by the company’s construction department. Projects below that cost threshold are out-sourced to external parties, and construction can begin only after Suntech has approved project plans and related documentation.
During a walk through the Wuxi facility, IFC staff observed that at one construction site, some workers were not wearing personal protective equipment, and volatile chemicals were left uncovered creating a strong odor at the site. The Company will rigorously monitor contractors to ensure that they comply with national regulations and IFC performance standard and environmental health and safety requirements.
Supplier Management: Suntech has a system in place to screen and select suppliers, and conducts an annual supplier audit to monitor their performance. As part of the screening, it requires potential suppliers to fill out a corporate social responsibility questionnaire on human rights, ethics, environmental policy and practice, and noise and pollution. The company recently established a Supply Chain Management team headed by a Vice President. The team is in the process of refining procedures to manage supplier relationships including their environmental and safety performance.
PS3: Pollution Prevention and Abatement
The Company currently produces up to 1,600 tons of waste water per day, which is first treated at the company treatment plant (with a capacity of up to 5,000 tons per day) to national discharge standards, before being discharged through the industrial park waste water sewage system. Each facility has gas emission processing silos, relying mainly on a wet scrubbing process to treat raw gas before they are emitted into the atmosphere. Each silo has a processing capacity of 80,000 m3 per hour. Government monitoring tests of the gas emissions has demonstrated compliance with national limits and IFC Electronics and Semiconductor EHS Guideline values.
An annual environmental monitoring report by the government – dated March 2009 – showed that emission and discharge levels were within national regulatory limits and IFC Electronics and semiconductor Environmental Health and Safety Guideline limits. The parameters monitored in the government reports were pH, COD, suspended solids, total phosphorus, Ammonia, fluoride, HCl, HF, Cl2, and ambient noise levels. A portion of its wastewater is treated on-site and re-used in production processes; the rest goes to the industrial park sewage and treatment system. Suntech commissions a third-party environmental monitoring company to analyze its waste water on a quarterly basis.
The company handles wastes according to national regulations such as the China Solid Waste Environmental Management Regulation. Its waste management policy clearly spells out the respective responsibilities of the departments involved and how they work together to ensure proper waste management. External contractors are enlisted to handle waste disposal and they are audited half-yearly by Suntech’s safety department. There is a recycling program on site. The Company conducts random checking of external contractors and their waste disposal practices. It makes payment to contractors only after verification through an audit trail that contractors have abided by company EHS policies.
The Suntech facilities, as part of the industrial parks in which they are located, are served by a centralized rainwater collection and distribution system separate from pipes transporting wastes. This significantly limits the possibility of storm water coming into contact with chemicals and hazardous substances.
Silane gas tanks are stored in a National A-grade-design store-room equipped to prevent fire and explosion hazards and accidental leakage. The store room is located at a corner of the Wuxi facility far away from residential quarters and from the main buildings of Suntech facilities. There is no use of any substances which are nationally banned.
The Suntech facilities do not use coal. Small quantities of liquefied petroleum gas are consumed on site for kitchens.
Total 2008 GHG emissions are estimated at around 475,000 tonnes CO2 equivalent, deriving from process emissions, energy use and waste treatment.
Approximately 1 million tons of water was used in the same year, and the company has a process in place to recycle water after proper treatment. The recycled water goes back into production processes. The Company undertook several energy and water efficiency initiatives in 2008. For instance its water saving initiative reduced water use in 2008 by approximately 90,000 tons compared to the previous year. A water-cooling initiative has reduced energy consumption by 24,000 kWh per month. The company has also recently launched an initiative to recycle used solar panels, contributing further to resource conservation.
In 2008, Suntech sold solar products totaling a generative capacity of 494MW. Assuming a 25-year product lifespan, avoided greenhouse gas emissions associated with this solar power capacity amount to approximately 8 million tonnes CO2.
PS5: Land Acquisition and Involuntary Resettlement
All Suntech facilities (Wuxi, Shanghai, Yangzhou, Luoyang, Qinghai) are located within government industrial parks. The respective local governments set up these parks by acquiring land from village collectives or individual villagers with compensation paid to them. The following describes further details of the acquisitions.
Wuxi: The industrial park was set up in 1998. Suntech premises take up 22.4 hectares. IFC staff visited government officials at the Wuxi City New Region Bureau of Land and Resources, who stated that 84 hectares of land was acquired displacing 660 households of 2,300 persons. The acquisition also involved demolition of houses totaling an area of 110,000 m2. The government paid compensation to original land use rights holder of RMB700,000 per hectare. Displaced persons were also resettled in new homes built and paid for by the government. The houses were at least equal in surface area to their original homes and in some cases bigger.
Shanghai: The industrial park was set up in 2005. Suntech premises take up 12.3 hectares. Original government land acquisition displaced 108 households (410 persons). Each household received an average of RMB950,000 as compensation, calculated based on the value of crops grown on the land, as well as the value of prevailing land use rights. Displaced persons were resettled in new homes built and paid for by the government. The houses were at least equal in surface area to their original homes and in some cases bigger.
Luoyang: The government technology park was established in 2003. The Suntech facility occupies 6.43 hectares. The government acquisition in 2003 displaced about 100 persons, who received compensation of RMB15,000 per hectare. The land acquired was barren land without any settlement or economic activities, thus compensation was calculated based only on the prevailing value of land use rights.
Yangzhou: The 133-hectare government export processing zone was established in 2005. The Suntech facility has an area of 13.6 hectares. Government land acquisition displaced 250 households of 1,000 persons. Cash compensation of RMB1,067 per hectare as well as a further RMB17,000 per person was made to displaced persons. The level of compensation was determined by the value of crops grown on the land and on the fair value of land use rights.
Qinghai: The industrial park was established in 2000. Suntech’s facility takes up 1.5 hectares. Original land acquisition of the Suntech land parcel economically displaced 10 persons who received cash compensation of RMB120,000 per person. The calculation was based on the prevailing value of land use rights and that of crops grown on the land.
Livelihood Restoration: At all locations, displaced persons were given a choice to receive a one-time lump sum payment as compensation, or collect a monthly payment from the social security bureau. If the latter choice were made, their lump sum compensation would be placed under the trusteeship of the local government social security bureaus, which then made monthly payments to the displaced persons. Those who wished to start their own small businesses would prefer a one-time payment, whereas others would choose to have monthly payments.
Displaced persons were enrolled under social and medical insurance schemes. Some households received more than one resettlement home as compensation, and received income from renting out homes they were not using. Some displaced persons were given skills training by government labor departments which in some cases would also help them with job placements in factories.
From the above information, IFC has confirmed that PS5 objectives have been met at Suntech facility locations. Fair compensation was provided to displaced persons for loss of land and assets. Housing was provided by the local governments where original homes were demolished. Livelihood restoration was achieved through a combination of monthly social security payments, enrolment in medical insurance schemes, skill training and help with job placement at factories. Some households also derived income from renting out extra homes received as compensation for demolished houses.
