28578 - Megalogix Rostov

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Environmental & Social Review Summary

Project Number

28578

Company Name

LOGOPARK DON, OOO

Date ESRS Disclosed

Aug 24, 2009

Country

Russian Federation

Region

Europe

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Sep 26, 2009
Signed : Sep 30, 2009
Invested : Nov 18, 2009

Sector

Storage (Including Agricultural Products)

Industry

Tourism, Retail and Property

Department

Regional Industry MAS LAC & EUR

Project Description

The proposed project involves the refinancing and placing into full operation a newly constructed Class A warehousing facility of approximately 100,000 square meter (“sqm”) leasable space in the city of Rostov on Don (“Rostov”), Russian Federation. The project is being developed by Raven Russia Limited (“Raven Russia”), and implemented through Logopark Don LLC (“the Borrower”), set up in December 2006 as a 100% greenfield subsidiary of Raven Russia.

Rostov, a frontier region of Russia with per capita income of less than half of national average, is faced with significant shortage of quality warehousing facilities in the medium term. The project will address the imbalance between demand and supply of quality warehouse space in the Rostov region, and is also aligned with Raven Russia’s overall strategy to consolidate its position as the leading warehousing service provider in Russia.

Overview of IFC's Scope of Review

The environmental and social review of this project included a visit to the Logopark Don construction site, observations of warehouses in operation; interviews with the Logopark Don and a management company managers; review of relevant information provided by the company and follow up discussions. The information reviewed by IFC included the Environmental Impact Assessment and selected sections of design documentation including fire and environmental protection; typical agreements with management companies and tenants; information on land acquisition procedures; and a positive conclusion of the State Review Committee issued on the design documentation for the construction start up.

E & S Project Categorization and Applicable Standard

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:

- PS1: Social and Environmental Assessment and Management System;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement;
- PS4: Community Health, Safety and Security;

As described later the application of PS5 (land acquisition) was evaluated during the appraisal and was not found to be needed due to a willing seller/willing buyer transactions. No impacts related to biodiversity and natural resources (PS6), indigenous peoples (PS7) or cultural heritage (PS8) are expected.

This is a category B project according to IFC’s environmental and social review procedure due to limited potential environmental and social adverse impacts, which can be duly minimized or eliminated. The key environmental and social issue associated with the Logopark Don facility is the capacity of the company to manage environmental and social performance of third parties, including construction contractors and future tenants of the logistic centre. Issues likely to arise include:

- construction impacts;
- air emissions from boiler and back-up diesel generator;
- wastewater and storm water management;
- solid waste management and disposal;
- hazardous materials management;
- occupational health and safety.

Environmental and Social Mitigation Measures

The Company has presented its plans to mitigate the project’s environmental and social impacts and risks. The project will comply with IFC’s Policy and Performance Standards on Social and Environmental Sustainability. The findings of the IFC’s review and conclusions are summarized for each applicable PS in the paragraphs below.

PS1: Social and Environmental Assessment and Management Systems

- Social and Environmental Assessment:
A process of social and environmental assessment (SEA) was conducted in compliance with the national legislative and regulatory requirements. The main steps of this process include environmental and social baseline data gathering, environmental impact assessment (EIA) study, and identification of specific measures for preventing and/or mitigation of identified negative impacts and compensation for environmental disturbance and damage where risks and impacts cannot be avoided. Outcomes of environmental and social baseline and EIA studies serve as prerequisite for design works. Environmental Protection Section of design documentation is an integral part of the project design package and encompasses analysis of environmental impacts for construction and operation phases and description of specific mitigation measures. The project design documents undergo the State Expert Review (SER) for its compliance with Russian laws and regulations followed by issuing of construction and ultimately operating permits.

Logopark Don has completed SEA for the construction and operation of warehouse facilities and has received SER positive conclusion followed by the permit for the construction. Currently Logopark Don has outsourced the preparation of the SEA for the construction of the intersection with the M4 highway to a consulting company and is committed to implement actions to avoid and/or mitigate identified negative environmental and social impacts and risks associated with construction and operation phases through regular inspections to be undertaken by the Company/ Logopark Don suitably qualified specialists or independent contractor.

To ensure that the construction of the intersection will be carried out in compliance with national legal EHS requirements, the Company will submit a copy of the SER Conclusion to IFC before the start of construction.

- Social and Environmental Management System:
The Company has developed the management system and organizational structure appropriate for effective project control. The Company’s Moscow office is responsible for coordination and development of logistics warehouses across Russia and the CIS, while Logopark Don is responsible for the project implementation. Environmental and social responsibilities are assigned to a Logopark Don deputy director reporting to Megalogix management. To ensure compliance with national EHS legal requirements the Company is negotiating with relevant contractors to develop documents for obtaining operational environmental permits and licenses including air emissions, waste generation/disposal and treated wastewater and storm water discharge.

The management of environmental and social (E&S) issues associated with the construction is the responsibility of the construction contractors. The Company has outsourced construction operations to reputable contracting companies; the main contractor is Palmira which has a certified quality management system. Palmira undertakes its own assessment of E&S risks and allocates necessary resources to manage environmental and social risks during construction. The Company has site based staff in charge of regular inspections to confirm planned EHS mitigation measures associated with the construction are implemented.

The management of E&S issues associated with the warehouse operation is delegated to a management company, which is currently certifying its management system for compliance with ISO 9001, through clear responsibilities included in the management service agreement with Logopark Don. To ensure proper management of environmental, health and safety (EHS) issues during the operation of warehouse facilities the management company has developed and implemented a set of procedures for observation of EHS legal requirements by its own personnel and tenants, including rules of the warehouse operation. Also the management company will undertake regular inspections of tenants and its own personnel to confirm that established rules are implemented.

- Land acquisition and planning procedures:
The Company has acquired 46 hectares of former agricultural land that was re-zoned to industrial land consistent with national legal requirements from private owners through a willing seller/willing buyer market transactions. The land plot had been abandoned for a considerable time before acquisition and was unoccupied. No humans lived on or derived economic benefit from the land before its acquisition by the Company. EIA studies and supplemental water and soil samples’ analyses have documented no findings of archaeological, historical or natural value, and no historical soil contamination.

PS2: Labor and Working Conditions

Logopark Don project will create approximately 1000 new local jobs.

- Human Resources Policy, working conditions:
The Company has a Human Resources policy which is designed to ensure compliance with corporate and national labor regulation and is consistent with PS2. The policy defines rights and responsibilities of the employee and employer, including terms of employment and working conditions, grievance mechanisms, and promotion of non-discrimination and equal opportunity. The Company requires its construction contracting companies to use similar conditions in its projects.

- Occupational health and safety:
The contractors develop the project specific plans to ensure safety in construction, and following their internal procedures undertake regular compliance checks. This is supported by regular inspections undertaken by Logopark Don staff. The management of construction related occupational health and safety (OHS) hazards is addressed through training of construction contracting company personnel in safety procedures, together with provision of appropriate tools and equipment. A temporary construction camp was found to conform to general health and safety parameters.

The standard operation of the warehouses do not result in significant OHS issues upon implementation of the requirements and measures set up in the national regulations, standards and design documentation. Medical services to Logopark Don and warehouse personnel are provided by local clinics. Premises for a first-aid post are designed within the warehouse facilities.

To provide safe work conditions for personnel the Company in close cooperation with design and construction contractors will arrange actions to (a) limit the maximum temperature experienced inside warehouse facilities to address specific climate conditions of the southern Russian region, characterized by relatively high summer temperatures and (b) specify indoor lighting level sufficient for safe operations within lorry loading-unloading areas especially during night shifts.

- Emergency Preparedness and Response:
To minimize the potential risk of fire, warehouses are equipped with smoke and temperature detection, fire alarm and fire suppression by sprinkler systems; fire-resistant ceilings; a fire break /walls separating the warehouse areas from offices; two detached fire water tanks and a fire pump station.

The management company has developed operational procedures for fire safety monitoring to control how tenants observe fire safety requirements and for emergency response to arrange effective cooperation of warehouses’ tenants and management personnel. Since the project site is bordered with high-pressure gas pipeline right-of way, Logopark Don has obtained appropriate approvals and permits from relevant supervisory authorities and technical gas services during the land plot allocation and before the project design phase. Additionally, the Company will establish emergency preparedness and response plan that, apart from other actions, will address this feature and communicate them to the warehouse management company and tenants in accordance with the national regulations and consistent with PS2 requirements.

PS3: Pollution Prevention and Abatement

- Pollution prevention, resource conservation and energy efficiency:
Common impacts of the construction operations include noise and vibration caused by the operation of earth moving and excavation equipment, and materials transport and delivery; dust emissions generated by a combination of on-site excavation and movement of earth materials; emissions from exhaust of diesel engines; and waste handling, including the risk of oil spills associated with heavy equipment operation. As mentioned above, the Company has assigned construction operations’ assessment and control to the contracting companies that undertake their own risk assessment and develop the project specific plans to address EHS issues associated with the construction. This is supported by regular inspections undertaken by the Company’s staff.

The standard operations of warehouses do not result in significant environmental impacts upon implementation of national regulations and standards and the requirements and measures defined in the design documentation. Moreover, the management company will be contractually obliged to appoint a specialist with the responsibility for the management of EHS issues as mentioned above.

Additionally, the Company will implement actions provided in the design documentation related to final land plot rehabilitation and landscaping including stabilization of slopes by grass sowing.

The Company implements energy efficient technologies; some of them include use of sandwich panels for the warehouses for reduction of the heating need of the building; gas-fired boilers are equipped with auto flame control system that maintains good low-NOx combustion of gases and energy efficiency.

- Air emissions:
Warehouses are designed for storage and delivering of consumer goods/merchandise that do not release any harmful pollutants to environment and public health and do not have any other physical impacts. Air emissions at the operational phase will be local and limited to those arising from the transport fleet and a gas-fired boiler.

- Water supply and wastewater management
Water for domestic needs is supplied to warehouse facilities from the municipal mains; wastewaters are received by the onsite wastewater treatment plant (WTP) for mechanical and biological treatment and then discharged to terrain. Storm waters are treated to remove suspended solid particles and oil products at the WTP and are then discharged to the same discharge point. The relevant authority has approved the terrain discharge point based on quality of treated wastewater that was confirmed by the tests of the specialized laboratory.

To ensure water resource conservation, specifically in this region and during summer time with potential for irregular water supply, the Company is will consider feasible options of recycling of treated waters for technical needs (territory watering, etc.).

- Waste management and hazardous materials handling:
Types and hazardous classes of wastes generated at the construction and operation of warehouse facilities are identified and assessed in SEA. Appropriate waste management during the construction phase is provided by contracting companies.

Waste management to be implemented at the operation of warehouses includes segregation of different types of wastes; its temporary storage in defined and equipped storage areas; regular removal of waste from the site and its removal by specialized organizations for recovering and reuse (if feasible) or to the municipal landfills. Warehouse facilities accept limited hazardous materials/goods (mainly household chemical goods). These goods are stored at specially designated sections of warehouses. To ensure that on-site waste and hazardous materials’ management is in place, the Company has contractually obliged the management company to control the implementation of EHS legal requirements by the tenants.

PS4: Community Health, Safety and Security

No residences are located within a regulatory buffer zone established for warehouses, and therefore no impacts on community health and safety are expected. Potential EHS issues associated with the construction of the road intersection will be addressed through the SEA and implementation of preventive and/or mitigation measures that will be ensured through regular inspections and other actions described in PS1.

Stakeholder Engagement

Public consultations in the form of public hearings were held during the land plot allocation phase for the construction and were arranged by the local authorities. The Company also issued booklets describing the nature and scale of the projects and proposed activities. To disclose E&S aspects of the project the company will provide summary of E&S aspects of Logopark Don project at the company’s web-site including notification that the environmental and social documents are located in the Logopark Don office.

Client Documentation

File Name	Actions
Megalogix ESAP August 2008.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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