27973 - Veolia Voda

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Environmental & Social Review Summary

Project Number

27973

Company Name

VEOLIA CESKA REPUBLIKA, a.s.

Date ESRS Disclosed

May 18, 2009

Country

Eastern Europe Subregion

Region

Europe

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 18, 2009
Signed : May 31, 2010
Invested : Jun 24, 2010

Sector

Water and Wastewater Utilities

Industry

Infrastructure

Department

Gbl Infrastructure & Natural Resources

Project Description

Veolia Voda (“the Company”) operates water and sanitation infrastructure (water treatment plants, water distribution systems, wastewater treatment plants, sewerage collection systems) owned by municipalities or associations of municipalities in the Czech Republic, Slovakia, Hungary and Poland. Apart from a few exceptions (concessions or operating models with limited contractual investments), the Company does not own these assets. The vast majority of its contracts involve only the operation and maintenance of the systems. Over the next 12 months, the company plans to enter the Russian and Ukrainian water and sanitation sectors, as well as explore other opportunities in Central and Eastern Europe. To support the Company’s expansion into these new markets, IFC is considering an equity investment in Veolia Voda for up to €50 million.

Veolia Voda is 90 percent owned by Véolia Eau-Compagnie Générale des Eaux (CGE), the world’s largest water services company. Since 2007, EBRD has owned the remaining 10 percent stake in the Company.

Overview of IFC's Scope of Review

IFC’s review included visits to Veolia Voda’s offices in Prague, Czech Republic, where meetings and interviews with key staff (management, technical, human resources) were conducted, and numerous, relevant internal documents and records surrounding the Company’s environmental and social (E&S) performance were analyzed. Among others, these included annual E&S reports, ISO-certified independent audit reports, and selected internal due diligence reports of prospective water and sanitation utilities in Russia and the Ukraine. IFC staff conducted inspections of representative operating facilities – the Zelivka water treatment plant (serving Prague), and wastewater treatment plants serving Liberec and Bystrany in the Czech Republic. Finally, the E&S appraisal also relied on the relevant findings of an independent technical and management review of Veolia Voda conducted by the Halcrow Group on behalf of IFC (May 2009).

E & S Project Categorization and Applicable Standard

Because this is an equity investment in a corporate entity to support its further expansion into operating future, but as of yet, undefined utilities, the principal Performance Standards to be applied are:

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

Veolia Voda’s activities help reduce water pollution and contribute to improved water quality and enhanced public health in the communities it serves, consequently there are no adverse impacts addressed by PS4 (Community Health, Safety and Security). Nor is additional land acquisition resulting in physical displacement of people (PS5) expected to occur. No biodiversity impacts (PS6) are expected from the Company’s activities, nor are any indigenous people (PS7) affected. No cultural heritage sites are expected to be associated with these activities.

This is a category B project because the Company’s activities help provide safe drinking water, reduce water pollution, and contribute to improved water quality and enhanced public health in the communities it serves. Potential environmental impacts of its operations are relatively small and limited, and can be minimized through adhering to the company’s established production processes and procedures, as well as new innovations continually introduced.

Environmental and Social Mitigation Measures

Veolia Voda has demonstrated that, upon implementation of the specific measures detailed below, their activities will meet the requirements under the IFC Performance Standards.

Social and Environmental Assessment and Management

Veolia Voda identifies and maintains registries of the environmental aspects and impacts of all its operating facilities – water supply lines, sewerage collection lines, WTPs, and WWTPs. Impacts that involve potential adverse environmental or public health risk, such as delivery of potable drinking water quality or discharge of treated sewage effluent, are identified and continuously monitored to ensure conformance to relevant standards. When considering new business opportunities, the company conducts audits of prospective facilities to determine areas of concern and identify necessary mitigation measures to ensure compliance with relevant requirements, as well as areas where energy and resource efficiencies could be improved. Specific activities covered by the audits include analyses of: the water supply network, the sewerage network, water and wastewater treatment plants, water consumption, laboratories, existing quality management system (including waste generation and energy and materials utilization), water losses, and customer service.

Most subsidiaries are, or soon will be, certified to ISO 9001 and 14001, and OHSAS 18001, the international quality, environmental, and occupational health and safety management system standards. Among other things, this ensures the operations comply with applicable laws and regulations, which include both host country requirements and EU standards, which Central European countries have adopted in recent years.

Veolia Voda has established and maintains a unified system of management and control across all subsidiaries to ensure compliance with all relevant and applicable legal and other requirements. Principal organizational functions include technical, operational, financial, and human resources departments. Within each subsidiary, qualified personnel across these functions have responsibility for various environmental and social matters. Routine monitoring activities are undertaken by these staff according to established procedures, including regular recording of key environmental and safety control factors, such as water or effluent quality and employee safety incidents. This allows staff to continually identify environmental areas of concern or non-compliance. Where operational or maintenance activities can mitigate non-compliances, the company takes appropriate actions. Sometimes, however, certain non-compliances may require significant capital improvements beyond the scope of the company’s role as an operator. In these cases, a key part of any subsidiary operational procedure is to periodically identify subsidiary capex needs to their municipal partners. This ensures that any necessary capital intensive mitigation measure can be addressed, even though the Company is not directly responsible for funding these investments.

The Company provides professional training to key operating personnel to ensure they have the up-to-date knowledge and skills to perform their work. Noteworthy is the water management program that enabled a group of Czech subsidiary employees to obtain university degrees in this field of study.

Veolia Voda maintains a robust system of internal and external reporting. Among the numerous indicators measured across all subsidiary companies, those with particular E&S significance include: volume of drinking water supplied; volume of wastewater treated and corresponding pollutant loadings; amount of energy consumed; amounts of renewable energy (biogas) produced; and volumes of wastewater treatment sludges disposed. Subsidiaries report regularly on the results of operational monitoring, and the results of periodic internal audits are also provided to Veolia Voda management. In addition, there is a unified system of reporting to the Company’s municipal stakeholders. Each subsidiary makes annual reports publicly available. Since 2007, Veolia Voda has also provided E&S reports annually.

Going forward and within the above described existing set of E&S management system policies and practices, Veolia Voda will adopt IFC’s Performance Standards as part of legal and other requirements that apply to future operations.

Labor and Working Conditions

Veolia Voda employees over 9400 staff in its various subsidiaries. Roughly 73% are male and 27% are female. The Company’s progressive human resource policy and practices ensure a loyal and highly motivated workforce. Central to the successful relationship between Veolia Voda and its workers is the existence of effective collective bargaining agreements with relevant trade unions across the various subsidiaries. Working conditions covered by these agreements comply with national law and relevant EU standards. Attractive wages and pension schemes, sophisticated performance evaluation programs, and comprehensive training programs, and other benefits all contribute to the Company’s reputation as an exemplary employer. Worth noting is the fact that 1.5% of the Company’s labor costs are dedicated to the provision of regular vocational training and professional education.

When implementing staff reductions at new operations, Veolia Voda respects host country labor law requirements and the terms of collective agreements. Retrenchment decisions are based on clearly defined, transparent criteria in coordination with municipal partners and in consultation with affected employees and trade unions.

An increasing emphasis is placed on occupational safety and health of employees. This is reflected in the continued reduction in work-related injuries recorded year-on-year for operations over which Veolia Voda assumes control. The focus is to provide a safe working environment to reduce risks. Responsible staff conduct regular workplace inspections aimed at identifying and eliminating risks that lead to injuries. Inspection records specify remedial measures and deadlines for accomplishing these. To ensure implementation, follow-up checks are also conducted.

Regular work safety training relevant to specific job activities is provided to all employees. Examples of areas covered by special training include chemical hazards (e.g., handling chlorine), operating hoisting equipment, and repairing electrical equipment.

Going forward, the Company will ensure that the management at individual affiliates will carry out a regular assessment of workplace conditions to understand the concerns of individual employees while protecting their confidentiality. The mechanism will involve an appropriate level of management and address concerns promptly, and should be legally consistent with the mechanisms provided by any existing collective agreements.

Pollution Prevention and Abatement

The drinking water treatment plants and distribution systems Veolia Voda operates produce finished water that meets applicable host country, EU and WHO standards. In certain systems there have been occasional exceedances of aesthetic parameters, such as iron (with the associated color and turbidity), due, in part, to corrosion of distribution piping. These minor violations are limited, and have no adverse impact on public health.

Effluent discharges from wastewater treatment plants operated by Veolia Voda generally meet the standards specified in permits issued by the relevant country environmental authorities. Typically, and consistent with IFC’s PS3 requirements, these permits limit discharges of internationally-accepted parameters at levels that take into account receiving water use, as well as its assimilative capacity. In many cases and with financial support from its municipal partners, Veolia Voda has modified/expanded the treatment processes of subsidiary plants to achieve higher pollutant (i.e., BOD, COD, TSS, N,P) removal efficiencies.

Municipal wastewater systems with industrial users/discharges can pose performance problems for wastewater treatment plants where these dischargers aren’t properly managed. Although municipalities may regulate the quality and strength of industrial wastewaters discharged to their sewerage systems, the absence of effective monitoring and enforcement can cause treatment process upsets which may lead to breach of effluent discharge standards. Veolia Voda will collaborate with any new municipal partners to implement effective industrial discharge (to public sewerage systems) source control programs to ensure sufficient treatment of wastewaters.

The principal waste generated by Veolia Voda’s activities are wastewater treatment plant sludges. After processing, these are typically disposed by third parties under independent arrangements with the municipal partners. In cases of new operations where Veolia Voda has responsibility for disposal, they will ensure that this is conducted consistent with host country regulatory requirements. These requirements typically limit disposal options based on sludge chemical characteristics. For example, sludges with excessive concentrations of heavy metals will be disposed accordingly.

Facilities using and storing hazardous chemicals, particularly gaseous chlorine at drinking water treatment plants, pose risks associated with accidental releases. Veolia Voda’s subsidiaries adequately handle these materials to minimize the impact of such a release. Appropriate emergency prevention and control plans are in place, and include provision of appropriate response equipment and materials, and a detailed set of procedures to be followed to minimize the harm of any potential accident.

Stakeholder Engagement

Veolia Voda’s community engagement activities are necessary limited by the nature of their water and sanitation operating business. Information disclosure regarding tariffs and tariff adjustment is managed by the relevant municipal partner. The company’s role with affect communities primarily involves contact with customers who may have concerns related to drinking water quality, noise, or accidents. Customer centers are established to allow for immediate contact needs. Subsidiary communication and marketing departments provide avenues of information disclosure and dialog with the rest of the general public. These departments also develop and implement social programs with organizations such as schools and other social institutions.

**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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