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; and - PS4: Community Health Safety and Security; and - PS5: Land Acquisition and Involuntary Resettlement Issues associated with the following Performance Standards were not encountered during the assessment of the project: PS6: Biodiversity Conservation and Sustainable Natural Resource Management – All aspects of concessions including those related to biodiversity and conservation are reviewed through government led impact assessments, and for the concessions under consideration for IFC financing, no negative impacts on conservation or biodiversity within the projects area of influence have been identified; PS7: No Indigenous People are known to have been in the area or affected by the project; PS8: Cultural Heritage – With the exception of the concessions in Xian, projects being considered for IFC financing are not located in areas of known historical or cultural significance. Any construction activity undertaken by EPure for its concessions in Xian is solely on sites, and as per plans, approved by the PRC Ministry of Culture. A representative of the government has oversight of construction activities in Xian to ensure appropriate procedures are followed, including those related to chance finds. Because the proposed investment will be used to support future, but as yet, undefined projects in addition to existing projects, the principal Performance Standards to be applied to this investment are those listed above. A continued condition of IFC’s repeat investment going forward will be that the Company shall consider all relevant social and environmental risks and impacts, including the issues identified in PS1 through PS8 while assessing any new business opportunities or service models.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because it may create a limited number of specific environmental and social impacts that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. Key environmental, health and safety, human resources and social issues that were reviewed included the following: environmental and social management system; quality and sustainability of water resources; emissions to the environment – air, water and subsurface; solid, and hazardous waste and materials management, including transportation; life and fire safety; community and occupational health and safety; energy use and efficiency; community engagement; cultural heritage and land acquisition. Wastewater treatment services provided by EPure help in environmental protection and enhancing public health through treatment and disposal of otherwise untreated sewage.

Key environmental and social issues associated with EPure’s business in manufacturing and providing water/wastewater equipment, infrastructure, EPC and operations services to municipal and industrial clients are summarized below. Environmental, social and health and safety issues that require ameliorative measures are included in the Environmental and Social Action Plan (ESAP) and will be addressed by the Company as agreed in IFC’s investment documents and any associated agreements. Social and Environmental Assessment and Management Systems: EPure has a corporate management system which provides limited oversight of environmental, social, health and safety (ESHS) issues. The Company’s management program includes operational policies and procedures that are implemented at the facilities level by supervisors who report to management on a reactive basis. Policies and procedures comply with applicable local regulatory requirements for operation of these facilities including those for human resources and labor, occupational health and safety, and environmental compliance. As part of the agreed Environmental and Social Action Plan (ESAP), EPure will implement an effective Environmental and Social Management System (ESMS) to provide consistent oversight of environmental, social and health and safety for all its activities from construction management to operation of facilities, as well as screening of new opportunities in expanding its business. EPure will either hire or designate an individual on the board of the Company to ensure compliance with group policies, procedures and regulatory requirements, and ensure consistency with good international industry practice for ESHS performance, including IFC Performance Standards and applicable guidelines. Local governments select sites for locating wastewater treatment plants, and obtain documented approval from the impacted communities for location of the facility. Consistent with the PRC laws and requirements, EIAs are prepared by the government for all BOT projects. The government ensures that potential impacts of the project are identified and addressed during the project planning stage, and are used to prepare specific environmental control plans containing identified mitigation measures. The concessions may be publicly bid or negotiated with the concessionaire, and terms of the concession agreements vary by project. EPure's obligation in the concessions is to comply with the requirements set forth in concession documents. The Company’s environmental management team has overall responsibility for obtaining appropriate permits and approvals from various government agencies, and ensuring all operations are consistent with the terms of the concession agreement. Moving forward, EPure will ensure that compliance with IFC requirements is included through the project life cycle, from project selection through construction and operations. As agreed in the ESAP, the Company will prioritize, review and implement any ameliorative actions at sites where construction is already underway. Human resources are managed at corporate level with oversight of all the EPure's facilities and operations. Training of staff is done on a routine basis in compliance with local workplace regulations. The department of human resources is responsible to ensure that all employees are adequately trained to perform their work safely. Supervisors monitor that standards are met and any reportable incidents are reported and follow up action taken when required. Training, monitoring and reporting framework is consistent with PRC requirements, and is expected to be consistent with IFC requirements after implementation of the ESMS program. Labor and Working Conditions: EPure employs 670 directly, while the number of sub-contracted employees can vary significantly depending on construction activities from a dozens to hundreds at any given time. EPure has a Human Resources policy that complies with local and PRC regulatory requirements, and is applied consistently to all direct employees. As required by law, the policy is included in employment contracts, and addresses working conditions, terms of employment, and wages and benefits. This information is provided in the form of an employee handbook at the time of induction. As is common practice in China, although not explicitly stated, employment relationships recognize the principals of non-discrimination and equal opportunity. Although there is no union at EPure, under PRC law, employees have the right to freedom of association and have the opportunity to collectively represent to the management any issues or grievances that they may have. The minimum employment age at EPure is 18 years. Epure ensures that child labor or forced labor is not employed directly or by subcontractors through verification of relevant documents. Working hours on site can vary by nature of activity and phase of project, with most labor intensive phases being at the construction phase during which there are continuous operations. Construction activity is largely subcontracted for which unskilled labor is procured from nearby villages. Management of influx of labor into local communities and the responsibility for accommodation is managed by the subcontractor. Regulatory requirements in PRC do not require EPure to provide direct oversight of wages, working or living conditions of subcontracted labor. Wages are paid on a monthly basis and calculated with basis on the hours worked, inclusive of overtime. Terms of employment for sub-contractors are as per PRC laws and the Company relies on regulatory agencies for ensuring that sub contractors comply with applicable labor laws. Moving forward, EPure will review its human resources policy to ensure consistency with IFC Performance Standard 2 on labor, working and living conditions for any labor employed by EPure, either directly or through sub-contractors. Occupational health and safety of employees at EPure is managed by the Human Resources and Administration. There is a plan for accident prevention and worker safety consistent with local regulatory requirements. All employees in the company have to undergo a training program at induction and subsequently regarding worker health and safety relevant to their job activity. Facilities are audited yearly by regulatory agencies to monitor compliance with labor regulations. The Company has been in compliance with regulatory requirements and has recorded no significant lost time incidents or fatalities in its operational history. Although EPure has been in compliance with applicable regulatory requirements, there is variance between the Company’s regulatory obligations when compared to IFC Performance Standard 2 and Guidelines on Occupational Health and Safety (OHS). As part of the agreed ESAP, EPure will retain an external occupational health and safety consultant to review and develop an implementation plan to achieve internationally acceptable standards for OHS for its employees and sub-contractors. The scope of review will include safety of equipment manufactured by EPure for use in China or elsewhere. The Company will take corrective measures to enhance its training programs, and implement standard operating procedures that specifically seek to mitigate OHS risks during construction and operation of municipal wastewater treatment plants. It is anticipated that the Company's occupational health and safety performance will achieve consistency with applicable IFC policies and guidelines for the sector only after recommendations from the external consultant are implemented. Pollution Prevention and Abatement EPure primarily uses conventional secondary treatment technology for treatment of municipal wastewater in all the BOT projects under consideration for IFC financing. Treatment plant designs are typically developed by the client for EPC contracts, or specified in most concession agreements. The technology used is fairly basic (screening, primary sedimentation, secondary biological treatment with nutrient removal and secondary sedimentation, optional UV disinfection) and robust to provide reasonable assurance of meeting discharge standards when operated with adequate training. Effluent discharged from wastewater treatment facilities operated by EPure under the concession agreements either comply with or for those under construction are designed to comply with local regulatory requirements. Discharge standards are established by the government and vary by project location and receiving water quality standards, and are consistent with IFC guidelines for the discharge of treated municipal wastewater to surface water. However, limited effectiveness of industrial source control programs can result in industrial pollutants to be discharged to wastewater treatment plants (operated by EPure) that are not equipped to treat such pollutants, resulting in a potential pass through to receiving bodies of water and contamination of treatment plant residuals. Concession agreements do not require monitoring of industrial chemicals in the influent or effluent. Moving forward, EPure will review and quantify industrial sources of wastewater at each of its operations and implement a monitoring program for contaminants relevant to the sources of discharge. Air emissions from EPure facilities primarily include nuisance odors which are typical to wastewater treatment operations. The facilities are located away from local communities and odor is not anticipated to be a nuisance in the short term. Through its community engagement program, EPure will continually monitor the acceptance level for odors and ensure appropriate provisioning of odor control technology if needed. Emissions of VOCs and other aerosols from wastewater treatment activities will be addressed by EPure as part of its review of its OHS activities. Significant quantities of solid waste are generated as part of secondary wastewater treatment operations, mainly from primary and secondary clarifiers. Annual production of sludge from the projects under consideration for financing by IFC is estimated to be in excess of 10,000 dry tons per year. As per terms of the concession agreements, EPure is required to deliver sludge at acceptable water content with no additional requirements on chemical or microbiological characteristics. All wastewater treatment plants operated by EPure are equipped with sludge dewatering facilities. Dewatered sludge is disposed only in municipal sanitary landfills at no cost to EPure. EPure will continue to ensure that sludge is disposed solely to sanitary landfills, and not incinerated or reused to mitigate risk from any potential contamination of sludge from uncontrolled/unknown industrial discharges. Principal energy usage includes electricity procured from the grid (estimated to be about 31,240 MWh per year for the 6 BOTs). Net green house gas (GHG) emissions attributable to EPure’s annual consumption of electricity are estimated to be about 25,000 metric tons of carbon dioxide equivalents per year. Net GHG emissions associated with secondary sludge is estimated to be about 5,000 tons of carbon dioxide equivalents per year. After the projects being considered for IFC financing are completed, the Company's annual GHG emissions attributable to these facilities will not exceed 100,000 tons of carbon dioxide equivalents per year. Nonetheless, the Company will continue to explore opportunities for energy efficiency in its operations to reduce operational cost and its carbon foot print. Community Health, Safety and Security Engineering controls and some staff training are provided to mitigate risks and issues associated with EPure's operation of its concessions, which includes transport, storage and use of hazardous chemicals. EPure does not use gaseous chlorine at any of its concessions, with the exception of one location where it is currently being phased out in the near term. Handling of chlorine at this facility is in compliance with stringent national requirements and there have been no accidents reported to date. At EPure's facilities, the use and storage of hazardous chemicals are subject to stringent safety standards as required under PRC laws. The company ensures that chemical stores provide for adequate containment and neutralizing systems to minimize the impact of release. EPure is required to have an emergency prevention and control plans which specifies responsibilities, ensures appropriate response equipment and materials are in place, and details a set of procedures to be followed to minimize the harm of any potential accident. Moving forward, EPure will review its scope of emergency response and update procedures as needed, including drills to test the effectiveness. EPure will also add a community involvement component that addresses appropriate behavior and safety measures to be implemented in the event of a hazardous chemical release beyond the plant boundaries. Land Acquisition and Involuntary Resettlement IFC’s assessment considered the potential displacement and compensation of occupants and/or users of land acquired for the construction and operation of EPure's BOT concessions under consideration for IFC financing. For the concessions, EPure was assigned sites by respective local governments for the construction and operation of wastewater treatment plants. Site selection and subsequent acquisition of land was by local governments was done in documented consultation with potentially affected communities and in compliance with procedures in accordance with the Land Administration Law of the People's Republic of China (LAL), local province's implementation procedures of the LAL, and relevant laws, regulations and procedures of the local municipalities. No physical resettlement was required at any of the sites resulting from land acquisition. The government paid compensation at full replacement cost through village committees to the parties from whom land was acquired, and no loss of livelihoods or displacement resulted from the acquisition process. Rates of compensation are considered equal or superior to the average return on the same land through cultivation. All compensation payments have been completed and documented. There are no outstanding legal challenges or issues related to land acquisition at any of these sites. As such, the reported outcomes of the land acquisition undertaken by the respective municipal governments are consistent with the objectives and requirements of IFC’s Performance Standard 5 for Land Acquisition and Involuntary Resettlement.

No local communities have been significantly affected by EPure’s ongoing operations. The Company has not been the subject of any public complaints or litigation related to its environmental or social performance. In China, dialogue and communication with affected communities including public consultation and disclosure of environmental and social impact assessment occurs through procedures established by PRC regulations. As a result, no formal information dissemination activities have been undertaken by the Company so far. Notwithstanding, as part of its environmental and social management program, EPure will establish methods for communicating environmental and social aspects to external interested parties and maintain procedures for receiving, documenting and responding to concerns from any external interested parties relating to the project. Specific procedures will be developed to incorporate community engagement, including clear procedure on disclosure and consultation with potentially affected communities. For more information, see the company’s website: http://www.EPure.com, or contact: Mr. Yan Xiaolei Executive Director, EPure International Ltd. Sound Group #12-01, Majuqiao, Tongzhou District, Beijing 101102, Peoples Republic of China Tel: +86 10 6050 4710

A Chinese-language copy of the Environmental and Social Review Summary (ESRS) and associated Environmental and Social Action Plan (ESAP) will be made available at the corporate offices as we all as the main entrance of the facilities listed below. An announcement informing the public of its availability for review and comment will also be placed in a local newspaper. Locations of BOT Facilities: Hancheng Yiqing Water Ltd. Hancheng, Weinan City, ShaanXi Province; Guangxi Liqing Water Ltd. Chongzuo, GuangXi Province; Taizhou Jiangyuan Water Company Ltd. Jiangyan, Taizhou, Jiangsu Province; Fushun Qingxi Water Ltd. Haicheng, Fushun City, Liaoning Province; Yantai Bihai Water Ltd (New facility). Yantai, Shandong Province; and New facility to be established in Gangwu Region, Xi’an City, Shaanxi Province