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; and - PS3: Pollution Prevention and Abatement. WHI Water Health Center equipment, plants and infrastructure meet good industry practices. No Center is expected to exacerbate community health, safety and security risks or community exposure to disease either due to changes in land/hydrology or other terrestrial/air quality/hydrologic regimes or due to influx of large pool of migrant laborers. Armed security guards are not deployed at the Centers or by the WHI at other locations. (PS4). Typically, the land required for a WHC (approximately 15 x 15 m) is provided by a donor or by the concerned local government, so no physical or economic displacement is expected as a result (PS5). Similarly, WHCs are located in population centers and do not have significant emissions and discharges, hence impacts on biodiversity are not expected. For the purposes of PS7, the Centers are not expected to affect indigenous peoples or associated lands or resources on which indigenous peoples may be dependent. Similarly, the water centers are not expected to affect any cultural heritage (PS8) including sites, structures, natural relief or resources of cultural importance for the communities.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines. The environmental and social impacts/issues associated with this project include: Requirement for a corporate social and environmental management system (SEMS) for managing social and environmental impacts associated with the Company's projects and operations (including procedures for obtaining assurance on water quality, managing competition for common water resource, product hygiene, monitoring, reporting, community engagement and community participation); Capacity to implement the corporate SEMS effectively across countries, subsidiaries and operations; capacity and staffing both at corporate and in various subsidiaries/country operations to undertake projects and operations in a manner that is consistent with IFC Performance Standards; Requirement for procedures to ensure fair, safe and healthy working conditions (both for employees and contract workers) in a manner consistent with PS 2 provisions across all of its operations; procedures in place to ensure compliance with host country labor law requirements in each of its operations in various countries; and Management of discharges and wastes from water treatment facilities; and community health and safety as regards water quality and hygiene and waste management/disposal.

In its previous investment by IFC (WaterHealth India), the Company presented plans to address these impacts/issues to ensure that the proposed investment would, upon implementation of the specific agreed measures, comply with the environmental and social requirements including: the host country laws and regulations; and IFC’s Performance Standards. The Company’s affiliates in Philippines and Ghana already have many of these measures in place as they integrate the policies and procedures of WaterHealth India in their own operations. The information about how these potential impacts are being addressed by the Company is summarized in the paragraphs that follow. Through the attached Action Plan, WHI has committed to ensure that policies and procedures that have been put in place for the operations of WaterHealth India will be adopted by all current and future affiliates. PS 1: SOCIAL AND ENVIRONMENTAL ASSESSMENT AND MANAGEMENT SYSTEMS – IFC’s assessment considered the Company’s management of its environmental, health and safety performance in the establishment and operation of its facilities; compliance with national and local permitting requirements; and the Company’s engagement with local communities regarding environmental, health and safety performance. WHI has supported its affiliates in the proactive management of social, environmental, occupational health and safety risks associated with its operations. The Company’s affiliates have put in place a quality management system (QMS) which supports ISO 9001:2000 and ISO 14001 standards. The Company’s affiliates also have in place an environment, health and safety policy and the standard operating procedures (SOPs) for facility operation and environmental, health and safety management. WHI’s QMS includes SOPs for: - technical services including preventive and scheduled maintenance programs; - personnel health and hygiene; - marketing; - procurement; - calibration and laboratory/testing; - training need analysis and training of employees; - periodic monitoring and assessment of product quality and performance; - internal audits and implementation of corrective action; - reporting to senior management; and - management review of the management system. Since its engagement with IFC, WHI has built upon the existing QMS, to expand it into an integrated quality, social, environmental, health and safety management system, with IFC’s Performance Standards appropriately incorporated. In addition, the Company, for its operations in India, has developed and implemented formal SOPs in accordance with the Performance Standards particularly in the context of: obtaining applicable registrations, permits, consents and authorizations for WHC operations; mitigating impacts associated with construction, and discharge and disposal of wastes during operation of WHCs; and ensuring that vendors approved for equipment and consumables purchase meet the Company’s social and environmental standards. The Company’s India affiliate has employed a fulltime qualified professional to oversee compliance with all local, national and IFC requirements for social, environmental, occupational health and safety performance across all of its operations. WHI will ensure that such oversight will be provided to each of its existing and prospective affiliates do likewise as they ramp up operations in their respective countries. PS2: LABOR AND WORKING CONDITIONS. IFC’s review considered BPC’s operations with regard to fair, safe and healthy working conditions in its operations. WHI affiliates have employees on its rolls responsible for administration, WHC construction oversight and for WHC operations and maintenance. Contract workers have typically engaged by the community as operators of the WHCs. Typically, there are two operators at each WC of 65 klpd and one operator at WC of 21 klpd capacity. The operators engaged at each WHC are usually recruited from the local community. WHI affiliates are involved in operator selection and provide intensive training to them including on safety, health and environment to ensure that the WHCs are operated in accordance with WHI’s policies and procedures. Each of WHI’s affiliates has formal human resource policies and procedures, which include those for: recruitment, equal opportunity, non discrimination, training, leaves, grievance redress, retirement/separation, personnel health and hygiene, employee welfare and benefits. Affiliate managers are responsible for communicating these policies and procedures to employees. The terms of employment and working conditions are also communicated through the appointment letter/agreement. Affiliates ensure that all of its employees and non employee workers (operators) engaged in process/production areas undergo periodic health check up. WHI’s India affiliate has introduced the following to its human resource policies and procedures: i) employee grievance redress, to ensure confidentiality and non-retribution; ii) disciplinary action/procedure; iii) adherence to PS2 provisions as regards non employee workers/contract workers; and iv) ensuring that the approved equipment and consumables vendors are in compliance with Indian labor laws. WHI affiliates technical services procedures include appropriate health and safety requirements. However, availability and use of personal protective equipment (PPE) at WHCs needs to be improved. Further, while material safety data sheet (MSDS) for washing chemical was available, the Company will: i) ensure their display these in the local language of the WHCs; and ii) ensure that antidotes in case of accidental exposure are readily available at each WHC. The employees and operators of each of WHI’s affiliates are trained in health and safety aspects of relevance to the operations. The Company has committed, as part of its integrated QMS, to implement procedures in its existing and prospective affiliates to ensure that: i) occupational health and safety in design and construction of WHCs meets IFC Performance Standards; and, ii) accidents/incidents during construction and operations are recorded, reported, monitored, investigated and corrective action implemented. PS3: POLLUTION PREVENTION AND ABATEMENT. IFC’s review considered the Company’s plans for controlling the impact of the project’s construction on the surrounding natural environment. Limited and temporary impact on ambient conditions (air quality and noise) may be expected during construction phase. The Company will implement mitigation measures including dust suppression and management of pollution from vehicular and equipment emissions to minimize these impacts. Electricity is generally sourced from the grid and there are no emissions to air during operation stage. All Company affiliates have implemented a QMS to ensure that the product meets, at a minimum, local potable water quality standards. The product/treated water is tested public health authorities every month and results displayed at each WHC. Further, the Company’s affiliates do more limited strip tests of the water on a daily basis. In its initial investment from IFC, the Company committed to: 1) review and further strengthen its water quality monitoring protocol where required; and, 2) implement procedures to display the treated water testing/monitoring results in the relevant local language at each WHC. This commitment will be extended to all facilities financed under the proposed equity investment by IFC. The Company’s affiliates provide water containers to customers. Further, the Company has procedures in place to ensure that these containers are periodically cleaned, with a cleaning chemical, to minimize risk of water contamination. Wastewater generated in the process includes: treatment plant back wash water; raw water tank cleaning and settling discharge (after alum addition to raw water); chlorine/hypo based sanitization wash/wastewater; and container and tank washing wastewater. Wastewater at some locations, is treated in a settling tank and the overflow used on WHC premises for irrigation/ horticulture. At other locations, the wastewater is discharged through the village drain. The Company’s affiliates will undertake periodic testing of the wastewater discharge from a sample of operating facilities locations to assess compliance with local wastewater quality limits, and if required implement appropriate mitigation measures to meet quality limits. The majority of WHC’s draw water from village ponds or other local water sources that are earmarked for drinking water purposes by local government. Material impact on water resources is not expected on account of the project. The Company has procedures in place for appropriate handling and storage of the washing agent (a hydrogen peroxide and acetic acid based agent). The Company will put in place a uniform procedure for all WHCs, in accordance with Performance Standards, for disposal of used/spent activated carbon, sand and other filter media through authorized entities only. Further, the Company will implement measures to ensure that hazardous material (chlorine/hypo, paints, lubricants and oils etc) which are brought to all WHC sites during construction and operation, and hazardous wastes (used/waste left over paint, paint and oil soaked rags/material, empty oil/paint drums, filters etc.) generated at site (during construction) are stored under segregation and containment, handled/used with appropriate care and personal protective equipment, and disposed of through entities authorized to handle and dispose hazardous wastes. Client’s Community Engagement WHI’s business model involves extensive community engagement since, typically, the community is the owner of the WHC, and the community is the beneficiary/client group for the WHCs. The Company and its affiliates engage with the communities at multiple levels. To obtain initial buy in/motivation of the community for starting a WHC project, the Company and its affiliates engage with the community leaders and elected local government institution. The local government is often the custodian of village resources and makes available land for setting up of WHC besides enabling access to community owned water resources. In view of the fact that local community is also the client group for the WHCs, the Company’s affiliates implement education and awareness program to increase the number of households seeking to use the WHC’s treated water. The Company will extend its commitment made for IFC’s investment in WIPL to implement a formal procedure to receive and respond to community concerns and grievances to all affiliate operations. Affiliates will display this community grievance redress procedure in the relevant local language at each WHC.

WHI’s business model involves extensive community engagement since, typically, the community is the owner of each WHC, and the community is the beneficiary/client group for the WHCs. The Company and its affiliates engage with the communities at multiple levels. To obtain initial buy in/motivation of the community for starting a WHC project, the Company and its affiliates engage with the community leaders and elected local government institution. The local government is often the custodian of village resources and makes available land for setting up of WHC besides enabling access to community owned water resources. In view of the fact that local community is also the client group for the WHCs, the Company’s affiliates implement education and awareness program to increase the number of households seeking to use the WHC’s treated water through print media and radio. The Company will extend its commitment made for IFC’s investment in WIPL to implement a formal procedure to receive and respond to community concerns and grievances to all affiliate operations. Affiliates will display this community grievance redress procedure in the relevant local language at each WHC.

The Company will locally disclose, at its corporate office (location details provided below) and on its website (www.waterhealth.com), a document summarizing the measures it proposes to implement to manage social and environmental risks associated with its operations. Any queries and/or comments about the project may be directed to: Sanjay Bhatnagar, President & CEO, WaterHealth International Inc 9601 Irvine Center Drive Irvine, California 92618, USA Telephone Number: 646-895-1905 Fax: 646-365-3166 info@corp.waterhealth.com.