The Companies have presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with the environmental and social requirements including: the host country laws and regulations; IFC’s Performance Standards; and the World Bank Group (WBG)/IFC environmental, health and safety (EHS) guidelines. The information about how these potential impacts will be addressed by the Company is summarized in the paragraphs that follow.
PS 1: Social and Environmental Assessment and Management System
IFC’s assessment considered Piaggio’s management of its EHS performance in the establishment and operation of its facilities; compliance with national and local permit requirements; and Piaggio’s engagement with local communities as well as its suppliers, regarding EHS performance. - Environmental & Social Assessment:
As a regulatory requirement, prior to establishment of its greenfield facility, PV conducted formal environmental impact assessment (EIA) with the help of external consultants and has been validated by the relevant authorities. In case of PVPL, though a formal EIA study was not a mandatory regulatory requirement, PVPL carried out and documented a “Significant Environmental Aspects and Impacts Evaluation” in accordance with its management system procedures. PVPL also maintains a Register of Rules (ROR) to ensure its compliance with all the relevant legal and regulatory requirements.
- Management Systems:
While it is not a mandatory corporate level requirement from Piaggio for its group companies to be ISO certified, the Group policy encourages certification. In fact, PV has received ISO9001 certification of its quality management system in October 2009 and is expecting to obtain ISO14001 certification of its environmental management system in the future . Similarly, PVPL is expecting to obtain ISO9001 certification for its new engine plant during third quarter of 2010.
- Organization:
Both PV and PVPL have full-time dedicated teams in place to manage the EHS related issues, with their well defined roles and responsibilities.
PV’s EHS team is led by the Technical and Maintenance manager who reports to the Operations Director in cooperation with the Human Resources Department. One full-time dedicated officer is responsible for management of environmental issues.
In the case of PVPL, the environmental team is under the Maintenance Department, reporting to Director-Operations and comprises of managers, engineers and operators. The safety team is under the administration department and reports to Director-HR. Both the teams are led by senior professionals with long experience in their respective areas and work very closely with the day-to-day operations.
Monitoring & Reporting:
Both PV and PVPL have comprehensive and well documented monitoring programs for the EHS aspects of their operations.
PV undertakes quarterly monitoring of process effluent, domestic effluent, stack emissions, workplace (temperature, noise and humidity), indoor air quality and ambient air quality. In addition, water and energy consumption, wastewater generation, and solid waste are regularly monitored and monthly reports are submitted to the management.
PVPL too has a monthly monitoring program that covers raw and treated effluent parameters, drinking water, and air emissions. In addition, workplace monitoring for noise, temperature, and VOCs is carried out quarterly. In addition, there are 3 water meters and online flue gas analyzers for the chimney for continuous monitoring of carbon monoxide, carbon dioxide and oxygen.
- Managing Supply Chain:
Piaggio is working with high degree of localization of the supplier base. In Vietnam, one motorcycle produced by PV has around 200 components. Of the total sourcing, 90% is sourced from around 44 suppliers based in Vietnam. Two wheeler engines are sourced from a large Chinese manufacturer, who is also exploring the possibility of setting up the manufacturing facility in Vietnam.
As a part of vendor development, a Piaggio team comprising representatives from purchase, technical and quality departments (including at times representation from Piaggio, Italy) extensively engages with the potential vendors. All the local suppliers undergo Piaggio System Certification, which covers elements such as compliance, process, quality, and environment.
- Community Engagement: Both PV and PVPL are located in industrial zones and are primarily surrounded by other industrial units, with nearest communities at a distance of at least 1-2 km. Apart from any mandatory requirements by the government, the Companies do not yet engage formally with these communities in the near vicinity regarding its EHS performance or corporate social responsibility (CSR) initiatives. However, they engage with these communities to recruit employees.
As part of the Environmental and Social Action Plan (ESAP) disclosed together with this ESRS, both PV and PVPL will develop a formal and documented information disclosure and grievance mechanism for the nearby communities to address their concerns related to EHS performance, if any.
In order to formalize and further enhance the community engagement, the Companies will set down formal and documented community engagement programs for PV and PVPL. Through these activities the Companies will proactively engage with the communities in the vicinity of its facilities to build long term relationships. This will also help the Company to remain appraised of community concerns related to its operations, if any.
PS 2: Labor and Working Conditions
PV employs nearly 400 staff as well as 135 workers on short-term contracts until April 2010. The temporary workers will be converted to full-time staff once the operations are stabilized with adequate capacity utilization over the next few months.
PVPL currently has around 500 regular employees including 380 workers and 123 managers and executives, in addition to nearly 1,000 temporary workers. Around 90 employees work in its new engine plant, expecting gradually to increase to around 400 at full capacity.
- Human Resource Policy, Management and Training
HR departments for both PV and PVPL have developed various HR policies and procedures covering terms of employment and working conditions including procedures for hiring, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and firing, leave and vacation, and retirement, which are consistent with the national labor laws. Trade unions exist at both PV and PVPL.
PV provides a printed copy of its “Internal Labor Rules” to all the new employees together with a one-day orientation training at the time of joining. In addition, as a part of induction program, all the new recruits have to undergo one day training on EHS issues. Pre-employment as well as annual health check-ups are carried out at designated hospitals for all the employees, with health insurance coverage for all employees as an additional benefit.
PVPL has a formal and well documented recruitment as well as human resource development process with a strong focus on learning and training and reward and recognition programs. PVPL has developed an E-portal – which serves as a helpdesk and information clearinghouse on HR related issues as well as grievance mechanism for white collar employees. Employees on the shop floor can raise their grievances through suggestion boxes, shop floor supervisors/managers as well as through trade union. PVPL produces a quarterly magazine for its employees and workers and also runs “E-care” – an employee assistance program, which includes various types of assistance to employees and their families, including career counseling for the children of employees.
- Occupational Health and Safety
The Company combines adherence to the national industrial safety standards as well as Piaggio’s corporate standards for workplace health and safety. As such, the Company is instituting high standards of occupational health and safety at both PV and PVPL facilities. Based on the Hazard Identification of Risk Analysis (HIRA) conducted by PVPL, an on-site emergency response plan has been developed. Similarly, PV has developed an Emergency Management Plan for its newly built facility.
This includes standard safety protocols, operational control procedures, adequate signage, training of staff, and continuous monitoring.
Elaborate fire detection and suppression fighting equipment is fitted across the facility in accordance with the potential fire risks. This includes smoke detectors, central control room, sirens, PA system, fire extinguishers, fire hydrants as well as sprinkler system. Fire exits and the locations of fire extinguishers are clearly marked.
Appropriate Personal Protective Equipment (PPE) is provided to, and worn, by all employees – with special overall gear available for the paint shops.
PVPL has established Safety Committees across the departments which regularly undertake Safety Patrol Rounds. PV has designated Fire Fighting Teams whose training is updated annually by the fire fighting authorities. There have been no major reportable accidents in PV and PVPL so far. However, near misses are regularly documented and necessary safety measures are instituted accordingly.
PS3: Pollution Prevention and Abatement
IFC’s assessment considered the Company’s operations with regard to resources consumption (water, energy, fuel), efforts to optimize resource inputs, waste minimization and management practices as well as the storage, handling hazardous materials used in the construction and operations of facilities.
PV’s operations include welding of body frame, painting (plastic and metal parts) and assembly. Of these, welding and assembly are primarily dry operations and result in only some solid waste. Primary source of waste is painting operation, which results in volatile organic compounds (VOCs) and wastewater generated due to VOC control and treatment system.
PVPL’s engine plant operation comprises primarily machining and assembly, and is expected to result in some solid waste. No significant wastewater and air emissions are expected from this operation.
- Pollution Prevention and Resource Conservation:
As PV and PVPL are commissioning their new facilities, pollution prevention and resource conservation has been an important focus. Energy savings and sustainable water use are being adopted in the design of the facility. All resource inputs are planned to be monitored closely to maximize efficient use, and waste streams managed to minimize the discharge or disposal of hazardous substances.
For instance, PVPL has implemented several measures for resources conservation, which include:
- High Efficiency, Low loss distribution Transformer
- High Efficiency motors in compressors & pumps
- Low Mercury content, High Luminous efficiency T5 light fitting
- Dedicated lighting circuit with provision of Energy saver
- Timer based Control for Street light feeders to ensure optimum power utilization
- Eco-friendly adiabatic and sensible cooled dust-free air handling in Assembly Enclosure
- Rain water harvesting with a storage capacity equivalent to 15 days process water requirement
- Roof designed to improve usage of natural light
Currently PV is using solvent-based paints but the facility is designed to use water based paints as and when needed.
- Water Supply and Effluent:
PV sources treated water from the industrial zone authority, and further treats with its own deionization and reverse osmosis based water treatment unit for the paint shop. The average water consumption is approx 200 m3/day for the process, cooling and domestic requirements. The process wastewater generation is estimated to be 100 m3/day and the entire wastewater is recycled for cooling and gardening after treatment in on-site effluent treatment plant (ETP). The ETP sludge is sent to authorized collection and disposal contractor while the domestic effluent is discharged in the sewerage system for further treatment in the municipal effluent treatment plant.
Water consumption for PVPL’s existing light commercial vehicle operation includes 550 m3/day for process, 250 m3/day for cooling and approx 430 m3/day for domestic use. PVPL’s engine plant primarily being a dry operation, does not expect to significantly add to the water demand and wastewater generation. PVPL has already procured necessary approvals for the additional water requirement. All the treated wastewater is used for gardening within the premises and no wastewater is discharged outside.
- Solid and Hazardous Waste:
Both PV and PVPL comply with all relevant regulations for the storage, handling and disposal of hazardous materials used in the production process such as paints, solvents, paint sludge and other chemical additives. The notified hazardous wastes are disposed of through licensed waste management contractors, as per the regulatory authorizations. Packaging materials, sheet metal scrap etc. are sold for recycling. Adequate controls during the storage and handling are in place and the quantities of solid waste thus generated and disposed of are regularly monitored and documented.
Air Quality:
Both PV and PVPL have procured uninterrupted power supply from the grid. In addition diesel generator sets are provided as emergency backup – especially to cater for important processes such as CED (cataphoresis electrostatic deposition) wherein the coating bath temperature is required to be maintained continuously. DG sets are used occasionally and the stack emissions are monitored as per the standard monitoring protocols.
The emissions of volatile organic compounds (VOC) from the paint booths are captured with wet scrubbers and the effluent undergoes special pre-treatment (both for PV and PVPL) prior to reaching the ETP for further treatment and recycling.
Both PV and PVPL monitor air emissions and ambient air quality and will report to IFC through annual monitoring reports, regarding their compliance with national regulations as well as applicable IFC EHS guidelines. In case some parameters exceed the stipulated limits, PV and PVPL will take appropriate actions to ensure the compliance.
PS4:– Community Health, Safety and Security
There is direct access to the industrial zone from a national highway so that the impact of vehicular movement on surrounding communities is expected to be minimal.
The Company contracts with a nationally certified security agency for 24 hour surveillance of the facility, with unarmed security guards.
While the impacts on the nearby communities due to PV and PVPL operations are expected to be minimal, both the facilities have developed detailed emergency response plans for their respective operations.
On the basis of the above information, and by implementing the Environmental and Social Action Plan it is concluded that the Project has been designed and will be operated in compliance with IFC’s PS and relevant environmental, health and safety guidelines.
