As a member of the FCC Group, the Sponsor belongs to an institution with a mature environmental and social risk management culture which includes well articulated policies and a qualified organizational structure dedicated to the identification, management, and monitoring of projects risks and impacts. FCC’s commitment is articulated in publicly available documents including FCC’s Master Plan for Corporate Responsibility 2009-2010 (Plan Director, Responsabilidad Corporativa -
http://www.fcc.es/fcc/corp/esp/rc_pd.htm). The Master Plan, developed by a Corporate Responsibility Committee which is presided by the Executive Director from FCC’s Board of Directors, defines FCC’s corporate objectives with regards to such aspects as: corporate governance; human resources management (including labor rights and occupational health and safety); communication with internal and external stakeholders; environmental management (including energy conservation and climate change initiatives); and research and innovation applicable to all corporate activities.
The following section describes in more detail how the Sponsor has adopted FCC’s environmental and social policies through the development and implementation of the Aqualia’s own environmental, health, safety, and social policies and procedures. The section also outlines aspects where enhancements are required for the Sponsor’s management program to comply with IFC’s Environmental and Social Performance Standards in the context of new project development in emerging markets.
PS1: Social and Environmental Assessment and Management Systems
- Environmental and Social Assessment –
The Sponsor’s Quality Management System requires all projects to comply with local environmental licensing requirements which typically entail the preparation of an environmental and social impact assessment (ESIA) according to a scope defined by local law. In some cases, the ESIA process is completed by host country governments, who also issue the environmental licenses prior to the concession bidding process. In other cases the responsibility falls on the Sponsor or the Sponsor’s joint venture partners, typically with the assistance of external consultants. Where environmental licenses are already in place, the Sponsor, together with joint venture partners (where applicable), ensure that facilities are built and operated according to environmental license requirements.
ESIA’s have been completed for the previously referenced assets currently planned for contribution to the Company in Algeria, Egypt and Mexico. These ESIAs cover key environmental and social aspects of each type of project and are substantially consistent with IFC requirements in terms of scope and content.
The Sponsor will update its risk evaluation procedure for development of new projects or concessions – to the extent that these are expected to be ultimately owned by the Company – to ensure that the risk screening process and any subsequent ESIAs cover aspects of the IFC Performance Standards applicable to each project to be transferred to Aqualia Capital when such project reaches financial close. The risk-screening process will include a review of potential environmental and social risks related to associated facilities such as water transmission lines or water intake dams constructed by third parties. When the ESIA is prepared by a third party prior to concession bidding process, the Sponsor will review and where necessary amend and complement the ESIA to ensure that it identifies all risks and impacts addressed by the IFC Performance Standards applicable to the specific project development.
- Management Program –
Aqualia’s senior management has a strong commitment to the principles enshrined in Aqulia;s Quality Management System (QMS), which include an integrated view about the importance of environmental and social development; environmental conservation; and continual improvement of operations among other aspects. The commitments undertaken in quality and environmental management policy are established as a framework which covers each of the aspects of an environmental management system (assessment, management program, organization, training, monitoring, and reporting) consistent with IFC Performance Standard 1 requirements.
The Sponsor has further developed separate corporate environmental and occupational, health and safety management programs which are applicable to all business activities. The applicability of the Environmental Management Program (EMP) is defined through the Sponsor’s Quality Management Program (QPM) which defines management and organizational processes to be followed by all business units through the project cycle. Occupational, health and safety aspects are defined through a recently enacted Occupational Prevention Plan (OPP). The Occupational Health and Safety Policy focuses on such aspects as the assignment of responsibilities; communications and training; continuous improvement and compliance with legal requirements. This policy is further supported by the aforementioned Occupational Prevention Plan (OPP) with documented plans and procedures covering key aspects such as risk analysis; preventive plans; roles and responsibilities; training and communication; and auditing and verification of compliance. Both the environmental and the occupational health and safety management plans are primarily designed to be applied to the Sponsor’s operations in Spain.
At the project level, in accordance with the Sponsor’s Quality Management Program, the Sponsor or the Sponsor’s joint venture partners, develop and implement construction-phase environmental, health, and safety management programs (EHSMPs). Construction and operational phase environmental management plans are prepared for each project based on the information presented in the ESIAs, the identification of other potential environmental impacts based on prior experiences in similar projects, and standard procedures included in the Quality Management Program. During the construction phase, contractors are assigned responsibility through contracts requiring compliance with applicable environmental license conditions and other management plan requirements. In some cases, where the construction activity is not done entirely by the Sponsor or an affiliate, and is contracted with third parties, the Sponsor relies on the environmental management plans and procedures of such construction partners.
Going forward and within the above described existing set of environmental and social management plans and procedures, the Company (and the Sponsor to the extent that it performs activities on behalf of the Company) will adopt IFC’s Performance Standards as part of legal and other requirements that apply to future operations. The Sponsor – to the extent that it acts on behalf of the Company – will amend the internal procedure covering the identification of applicable legal requirements to make specific reference to IFC’s Performance Standards. The Sponsor will review the Quality Management Program (QMP), Environmental Management Program (EMP), and Occupational Prevention Plan (OPP), as it may apply to projects to be transferred to the Company, against the requirements of the IFC Performance Standards and amend it to include procedures on such aspects as specific to biodiversity conservation and natural resource management; community consultation, engagement and grievance processes; labor aspects of non-employee workers; land acquisition and involuntary resettlement; and indigenous peoples.
The following sub-sections describe additional specific aspects of the Sponsor’s environmental and social management program in the areas of labor and working conditions; pollution prevention and abatement; community health and safety; land acquisition and involuntary resettlement; biodiversity conservation and natural resource management; indigenous peoples; and cultural heritage, with additional reference to the Projects that will be transferred to the Company.
Pollution Prevention and Abatement
The Sponsor’s environmental management program (EMP) includes procedures for the identification of environmental aspects applicable to construction and operational phases of projects, a specific set of environmental requirements, and requirements for the management of environmental emergencies. Energy conservation aspects are also addressed as a separate specific aspect of the environmental management program focusing on energy conservation aspects consistent with the corporate policy. The EMP is further supported by a comprehensive series of technical procedures covering the most common aspects applicable to the Sponsor’s business activities, including: hazardous waste management; non-hazardous waste management; construction waste management; water treatment sludge management; laboratory waste management; hazardous materials management; noise management (general); noise management from pumping activities; noise monitoring; atmospheric emissions from stationary sources; atmospheric emission from mobile sources; consumption of chemicals; installations and equipment maintenance; effluents management; environmental signage in construction sites; environmental behavior in construction sites; environmental training; environmental aspects of office activities.
- Energy efficiency and Greenhouse Gas Emissions – As defined in the FCC Groups Master Plan, the Sponsor has a strong commitment to the conservation of energy and minimization of direct and indirect emissions of greenhouse gases (GHGs). The Sponsor has developed an Energy Conservation Policy (part of the EMP) which includes a series of principles specifically targeting innovation and development of efficient and safe environmental technology; prevention of environmental pollution through rational use of resources and application of the best available technologies; practical application of energy conservation measures in all Sponsor work centers; use of performance indicators related with energy consumption; and inclusion of energy consumption metrics in the corporate monitoring reports.
As an example of efforts to conserve energy and reduced direct and indirect emissions of GHGs, all desalinization projects worldwide include the use of hyperbaric/compression chamber energy recovery devices which use the principle of positive displacement and isobaric chambers to achieve extremely efficient transfer of energy from a high-pressure waste stream, such as the brine stream from a reverse osmosis desalination unit, to a low pressure incoming feed stream. Pressure energy is transferred directly from the high-pressure concentrate/reject stream to the low-pressure feed/seawater stream. This device is considered best available technology in the conservation of energy in desalinization projects.
Other significant sources of energy consumption in the type of water and wastewater projects that may be included in the Company in the future include pumping systems for inter-basin transfer of water and pumping and aeration compressor for water and wastewater treatment processes (including filter regeneration). The Sponsor procured pumping technologies and control systems that optimize the use of energy in these processes. Where included as part of the bidding specifications, the Sponsor will also convert WWTP sludge to gas (anaerobic digestion) to generating energy to use onsite.
- Effluents and emissions – Through the process of assessment of impacts, the Sponsor evaluates the potential effects of discharges on aquatic environments using internationally recognized effluent dispersion models. Such is the approach used to evaluate the impact of brine discharges from desalinization projects which typically contain total dissolved solid (TDS) levels twice the background levels of the receiving ocean water. Based on the results of these predictive models, the Sponsor designs the type and location of discharge diffusers to minimize impacts to water quality and aquatic organisms. Effluent discharge quality from water and wastewater treatment plants are also be established through standards specified in permits issued by local environmental authorities. Treated wastewater may be re-used for irrigation purposes as is the case in the wastewater treatment project currently under construction in Egypt.
- Hazardous materials management – Potable water treatment projects, including desalinization projects, use potentially hazardous materials which may include, depending the type of water to be treated, sodium hypochlorite, ferric chloride, sulfuric acid, polyelectrolyte, sodium hydroxide, and gaseous chlorine. The Sponsor’s EMP includes procedures for the safe handling and storage of these types of materials. Emergency prevention and control plans are part of the management programs, and include provision of appropriate response equipment and materials, and procedures to be followed to minimize the harm of potential accidents to employees and surrounding communities.
- Wastes – The Sponsor’s EMP includes procedures for the management of wastes associated with the Sponsor’s business activities. Construction phase waste materials consisting of construction site materials (i.e. wood, cardboard, plastics, metals, etc) are managed according to the construction phase environmental management plans, typically through recycling where a local market for these materials is available, or through disposal in local authorized landfills. Water and wastewater treatment sludge is also managed according to local regulatory requirements although the typical technical approach includes digestion and dewatering (in centrifuges to reduce moisture content) followed by either disposal in specially designed containment facilities (for potable water treatment sludge) or re-use as a soil amendment based on project-specific permits (for wastewater treatment sludge). Disposal of wastewater treatment sludge must consider potential concentrations of industrially-contributed toxic metals and organics in the disposed sludges. Desalinization projects generate high salinity sludge which, like other water and wastewater treatment sludge, must be periodically tested to establish its correct waste classification and disposal method according to local requirements.
- Noise – The desalinization projects under construction and operation generate potentially significant levels of noise during the construction and operational phase. Construction phase noise levels are temporary and are managed mainly by following daytime working hours to minimize disturbance to nearby communities. Operational phase noise emissions are managed according to the EMP through enclosure of pumping and water treatment equipment in buildings or the siting of facilities in industrial zones or away from population centers (by the nature of the projects).
Community Health, Safety and Security
- Infrastructure and Equipment Safety - Access to the construction sites and operating facilities is restricted only to authorized persons or accompanied visitors under supervision and safety procedures. During construction activities the Sponsor applies management actions such as permanent or temporary barriers, safety signage and barriers to orient and separate vehicles and pedestrians from the construction sites according the EMP procedures or contractually requires construction companies to do the same.
- Public Health Issues – Potable water treatment plants produce water that generally comply with World Health Organization (WHO) drinking water standards, local water standard specifications and parameters contained in the agreements with local governments. During plant operation, the Sponsor implements detailed procedures included in its EMP that ensure quality of water, including ongoing sampling and monitoring of key indicators tested in on-site laboratories with appropriately trained staff. Sponsor operations involved in drinking water treatment and distribution also continually monitor source water quality. Municipal wastewater treatment projects treat to water quality standards also defined by local legislation and the concession agreements. In the case of the project in Egypt, applicable treatment standards are based on the concession agreement which requires treatment to a locally established irrigation water standard.
-Security Personnel Requirements – The Sponsor retains contractors to provide security, armed and unarmed, for the safeguarding of personnel in worker camps and property, based on an assessment of risks to those within and outside the project site. Going forward the Sponsor will formalize a procedure to evaluate the need for security forces, the type of protection (armed or unarmed), and the criteria for selection of contractors in alignment with IFC’s Performance Standard 4 requirements in the use of security forces.
Land Acquisition and Involuntary Resettlement
The Sponsor typically does not participate in decisions on project siting, land acquisition or resettlement as these activities are performed by host country governments prior to the issuance of concessions for the construction and operation of desalinization or other projects. However, since future investments in desalination, water/wastewater, and other projects will include the need for land acquisition with the potential for physical or economic displacement, the Sponsor will prepare as part of its EMP a formal Land Acquisition and Resettlement Framework (procedure) in alignment with IFC’s Performance Standard 5 to help guide its review of the work completed by the government and to define the Company’s responsibilities whether direct or under the government-managed resettlement or economic displacement.
Biodiversity Conservation and Sustainable Natural Resource Management
The ESIAs prepared for the existing facilities include an assessment of potential impacts to aquatic and terrestrial plant and vertebrate and invertebrate species, depending on the project type and location. For example, in Mexico, construction of water dams and water intake structures included considerations of the necessary ecological flow of the rivers as well as detailed programs for the management of nationally protected species of cacti. Going forward, as part of the EMP the Sponsor will prepare a formal biodiversity conservation framework (procedure) in alignment with IFC’s Performance Standard 6 to help guide its review of the work completed by the government or other entity as well as development and implementation of management plans as applicable to projects that will be incorporated into the Company.
Indigenous Peoples
The Sponsor’s desalinization projects in emerging markets under construction or in operation have been developed in industrial zones or locations without the presence of indigenous lands. As previously noted, the Sponsor typically does not participate in decisions on project siting, land acquisition or resettlement as these activities are performed by host country governments prior to the issuance of concessions for the construction and operation of desalinization or other projects. However, in the event that future possible investments include potential adverse impacts on indigenous communities, the Sponsor will prepare as part of its EMP a formal Indigenous Peoples Management Framework (procedure) in alignment with IFC’s Performance Standard 7 to help guide its review of the work completed by the government and the Company’s responsibilities for engagement and consultation in the event that projects take place in or near indigenous lands.
Cultural Heritage
The ESIAs prepared for some of the existing facilities include an assessment of potential impacts to cultural heritage as the projects are located in regions of significant cultural and archeological resources. The Sponsor’s EMP will be revised to include a Cultural Heritage Management Framework (procedure) in alignment with IFC’s Performance Standard 8, including a chance find procedure to guide its actions during projects’ the construction phase in the event of discovery of such cultural resources as archeological artifacts.
- Organizational Capacity–
Aqualia has dedicated environmental and occupational health and safety departments staffed by professionals based in the Shared Services Division at its headquarters in Spain. These departments provide support to regional as well as project level environmental and safety coordinators in Aqualia’s assets in Spain and Europe. In relation to the Projects that will be transferred to the Company, the assignment of responsibility for the management of environmental, health and safety, and social (EHSS) aspects during construction and operational activities is defined together by the Sponsor and the Sponsor’s joint venture partners. In some cases, where the construction activity is not done entirely by the Sponsor or an affiliate, and is contracted with third parties, the Sponsor relies on the organizational capacity of such construction partners and thus focuses on selecting local partners with well developed management programs.
Going forward the Sponsor will define and formally assign responsibility to the Sponsor’s environmental, health, safety and social in its Shared Services Division for oversight of the international projects to be transferred to the Company. At the regional or local level, the Sponsor will ensure that qualified, dedicated, coordinators of EHSS matters are engaged during the construction and operational phase of the projects.
- Training –
For the overall management of its business activities, the Sponsor identifies and contracts technically qualified persons to represent its interest in new project development and operations. A similar approach is applied through the selection of experienced construction or joint venture partners, to help ensure that a certain minimum level of technical capacity is available at the local level from the time of project inception. Additionally, the Sponsor’s Quality Management System (QMS) has a set of specific requirements for identification of training needs, including training requirements on aspects related to environmental management during construction and operational activities, supported by specific technical training instructions in the Sponsor’s environmental management program (EMP) and occupational prevention plan (OPP).
- Monitoring and Reporting -
Aqualia’s EMP and OPP define the need to develop and implement project specific monitoring activities during construction and operational activities. This activities not only include monitoring on key performance indicators central to the Sponsor’s principal business activities (potable water quality and treated wastewater quality), but also include reporting on potential environmental impacts of these activities. Monitoring programs are supported by self-audits (checklists) at the project level and by audits from the corporate environmental and occupational health and safety departments although these auditing activities are mainly focused on Spanish and European assets at the present time.
Aqualia’s operations are further required to monitor and report on a comprehensive series of environmental, health, safety, and social indicators such as: materials, energy and water consumption; biodiversity conservation; emissions, spills, and wastes generated; labor indicators including aspects of labor rights; and occupational accident rates, among others. The consolidated, summarized, results of these monitoring activities are published in Aqualia’s Corporate Social Sustainability Reports (available at
http://www.aqualia.es/aqualia/rsc.aspx). Aqualia’s reports are supported by information aggregated at the level of the FCC Group and published in their Corporate Social Sustainbility Reports (available at:
http://www.fcc.es/fcc/corp/esp/rc_idrsc.htm).
Going forward, the Sponsor will conduct EHS audits of the existing operational assets (to be included in the Company), focusing on the EHSS management systems of the operations to ensure that they appropriately reflect the procedural and organizational requirements of the Sponsor’s corporate EHSS policies. Prior to the negotiation of construction contracts, the Sponsor will review EHSS aspects to ensure they are properly addressed, also according to the procedural and organizational aspects of its corporate policies. This will be followed by EHSS audits of construction projects at early stages to evaluate the quality of EHS management program and the organizational capacity at the project level, providing training support where required.
PS2: Labor and Working Conditions
- Human Resource Policy and Management –
The projected number of workers in future projects to be included in the Company will fluctuate during the construction phase, reaching higher levels during peak construction periods and declining toward a more stable number during the operational phase as is typical of project development.
The FCC Group defines the Sponsor’s corporate Human Resources (HR) Policy and Code of Conduct. The FCC Group communicates employee rights and responsibilities through employment contracts and through the HR Policy and Code of Conduct. The HR Policy applicable to professional level employees addresses such aspects as: compensation; occupational accident prevention; recruitment policy; training; and pension policy. [This information was taken from notes of the presentation but please provide IFC with a copy of the policy itself]. The Sponsor will ensure that local operations develop and disclose to employees an HR Policy consistent with IFC Performance Standard 2.
- Non-Discrimination and Equal Opportunity –
The FCC Group shows strong support for equal opportunity and non-discrimination in employment as demonstrated through formal programs organized by FCC targeting the employment of persons with disabilities and by monitoring diversity targets reflected in sponsor metrics on gender, race, age, and level of education. The Sponsor is also committed to maximize local economic development impact by maximizing the hiring of local labor throughout its operations
- Workers’ Organizations –
The availability and role of workers’ organizations vary across the jurisdictions in which the Sponsor currently operates. In Algeria, for example, there is only a single, government sanctioned workers union. As a matter of policy the Sponsor does not (and the Company will not) restrict freedom of associations of its employees in any of the countries in which it operates. The Company will ensure that sub-contractors used in construction activities comply with employee’s legal rights for freedom of association by including this right as reference in contract documents.
-Retrenchment –
The Sponsor is projecting that the number of direct employees will grow over the next few years with the growth in the Company’s concession business. Some of the concession businesses will experience periods of growth and decline, primarily in the use of the use of temporary contracted labor for projected construction activities. In future concessions, if the Company becomes responsible for retrenchment activities it will conduct them in a manner which complies with IFC’s requirements, including development of retrenchment plans which are based on the principle of non-discrimination, reflecting consultation with employees, their organizations and, where appropriate, the government.
- Grievance Mechanism –
The Sponsor actively encourages employees and managers to openly discuss and resolve conflicts. Employees are currently able to lodge complaints internally through the Human Resources department and Sponsor management which includes a “Complaints Protocol,”(defined in the Sponsor’s Code of Conduct) and externally through the public labor rights systems of the jurisdiction in which they operate. The Sponsor will ensure that a similar process is made available to local employees in concessions included in the Company.
- Protecting the Work Force –
The Sponsor complies with legal minimum age of work requirements by requesting valid documentation of age in the employee contracting process and by requiring the same of subcontractors in construction and operational activities.
- Occupational Health and Safety –
The Sponsor’s occupational prevention plan (OPP) is supported by a series of procedures which include the following aspects: documents management; risk evaluation; monitoring and self-assessment; assessment of environmental conditions in the workplace including exposures to noise and vibrations, chemicals, biological agents, carcinogens, and asbestos; ergonomics management; psychosocial aspects; construction site occupational risks; training and communication; emergency planning; accident investigations; and health monitoring, among others. The OPP is further supported by specific operational instructions that address the following occupational hazards: work in confined spaces; interference with other utilities/services; chlorine gas management; asbestos containing materials management; exposure to biological hazards; explosion hazards; and high voltage electrical safety.
