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 Systems; PS2: Labor and Working Conditions; PS3: Pollution Prevention and Abatement; PS4: Community Health, Safety and Security; and PS6: Biodiversity Conservation and Sustainable Natural Resource Management. Nuqul policy is to obtain unencumbered land for its new developments, generally in urban or peri-urban areas, that is purchased on a willing buyer-willing basis. For this reason, PS5 is not applicable to this investment, and there is no potential for impacts on Indigenous Peoples (PS7), or on cultural heritage (PS8).

Nuqul, an existing IFC client (since 1990), has maintained an Environment and Social Risk Rating (ESRR) of 1 (Good) or 2 (Average) over the life of IFC’s investments. No land acquisition is required for the proposed expansions. The nature of the Company’s operations is such that it will be possible to avoid or mitigate any limited adverse environmental and social impacts relating to for example emissions to air and water, utility use, and occupational health and safety issues that might result. Moreover, Nuqul will utilize the same Environment, Social and Health and Safety management systems and procedures in the Egyptian operations as it has implemented successfully in its Jordanian operations, which comply with IFC requirements and good industry practice. As a result, the investment has been classified as a Category B project according to IFC’s Environmental and Social Review of Procedure.

Key environmental and social issues reviewed include social and environmental assessment of Nuqul’s proposed expansions in Egypt, Jordan, Morocco and Saudi Arabia; E&S management system covering all operations; labor management and working conditions for permanent and contract employees; recycling, treatment, and discharge of process effluent, air emissions; efficient management and monitoring of energy and water use across operations; waste minimization, fiber recycling and reuse; consultations with communities impacted by operations to be financed; and risk assessment and emergency preparedness. Nuqul’s plans for managing these environmental and social risks and impacts are summarized below.

Social and Environmental Assessment and Management Systems

Corporate policies and management systems: The Nuqul Group has established a corporate mission statement that guides all of its activities at each of its operations. The mission statement includes a formal commitment to adhere to “the strictest ethical and world class standards and places a “high priority on investing in our human resources and in servicing our communities.” In addition, Nuqul has developed and made public its four Core Values, which are the Group’s guiding principles and include specific references to equal opportunity, integrity, quality, and social responsibility. These broad commitments are operationalized in the Group Standards Manual (GSM), which contains standard operating procedures for carrying out all aspects of its business activities in accordance with best industry practices. For example, the complaint system in the GSM formally incorporates the Six Sigma approach to quality management, as well as the Kaizen philosophy of continuous improvement. Its quality management system in different Business units has been certified against the standards of ISO 9001:2000.

In 2009, the Group adopted a revised approach for managing the environmental, health and safety (EHS) aspects of its operations that incorporated the existing EHS management system into its overall continuous improvement efforts. The GSM EHS system is aligned with ISO 14001 (Environmental Management) and OHSAS 18001 (Occupational Health and Safety). Nuqul’s organizational structure includes a corporate level EHS manager in the Group’s head offices in Amman, as well as EHS coordinators in each of the business units. In addition, the Group has established a corporate EHS committee chaired by the CEO. Every Nuqul employee, including those working in the corporate offices in Amman, has a safety objective as one of their key performance indicators (KPIs). Nuqul employees throughout the organization have access to the EHS systems through “dashboard” software that enables staff to access policies, the GSM, reporting deadlines, reports, and basic EHS monitoring statistics from their computers.

At the operational level, the Group mills have adopted the standards of both the Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC) certified to ensure that its products and supply sources are management in accordance with international standards of responsible forestry management. In 2007, Nuqul was one of the first companies in Jordan to become a signatory to the United Nations'' Global Compact, the world''s largest voluntary corporate responsibility initiative whose aim is to bring private companies together with the UN Development Program (UNDP), labor groups and civil society to support fundamental human rights, labor rights, anti-corruption measures and environmental protection. As part of its participation in the Global Compact, the Group has committed to integrate the ten corporate social responsibility principles of the Global Compact in its corporate culture and day-to-day business operations. Consistent with the Global Compact initiative, Nuqul publishes an annual “End of Year Communication on Progress), which can be viewed on the Nuqul Group website under the “Communities” section. In addition, the Group is working toward publishing its first “Sustainability Report” in the next few years, which will be prepared in accordance with the standards established by the Global Reporting Initiative (GRI).

Environmental and Social Assessment: The Nuqul Group complies with all host country requirements regarding its operations, including requirements to undertake social and/or environmental impact assessments of new developments where these are applicable. Where host country law does not require such assessments, Nuqul will comply with good industry practice in this regard, in accordance with its GSM. As none of the projects being financed by this investment involve land acquisition or new construction but rather the addition of new processing equipment into existing plants, neither environmental nor social impact assessments were deemed to be necessary.

Training, monitoring, and reporting: The Nuqul group has an established program to provide necessary EHS training for all its employees related to their specific responsibilities and business units. The training requirements are explicitly documented in the GSM and include training on Nuqul’s Mission Statement and Core Values. The GSM includes a timetable for regular refresher training. EHS coordinators in each of the business units must report on training programs conducted and number of employees trained as part of their reports to the EHS Manager and the Corporate Safety committee.

Labor and Working Conditions

Human Resources Policy and Management: The Nuqul Group employs approximately 5200 people across all of its operations. The Group’s approach to labor issues is documented in its human resources (HR) policy, GSM and human resources manual, copies of which are provided to all Nuqul employees. These documents cover all aspects of human resources management, including a Group-wide Code of Conduct. Its HR policy includes a specific commitment to complying with the core labor standards of the International Labor Organization (ILO), as well as an explicit commitment to protecting the human rights of its employees. The HR manual is based on international best practice and requires a very high standard of performance. It specifies terms of employment and working conditions for all Nuqul employees. These include procedures for hiring and recruiting, probation, training, performance review, promotion, insurance, salary and compensation, resignation, layoffs and firing, leave and vacation, and retiring. HR management is centralized in the Group’s corporate offices in Amman, supported by dedicated HR managers and officers in each of the Group’s business units. The Group’s Board of Directors has a Human Resource (HR) Committee and one of the Director’s has specific responsibility for HR issues.

Nuqul benchmarks its salary and benefits packages up to75th percentile through regular compensation surveys in each of the markets in which the Company has operations. All employees are covered by corporate health insurance that extends to their family members. The Group has established several procedures at the corporate and business unit level for employees to convey grievances. A Grievance & Appeal System and Corporate Integrity Hotline System (CIH) were developed and implemented to address both daily and work related concerns including breach of Policy, Core Values, and Code of Conduct; issues directly pertaining to unfair treatment; integrity and ethical issues; and compliance with internal polices, regulations, and laws. The Corporate Integrity Hotline System is a vehicle with multiple options that provide employees with an independent system to report unethical behaviors and questionable matters anonymously. The objective of CIH is to promote honesty, responsibility, and fairness and institutes a culture of no-tolerance for ethical violations. Communications within the system are not traced and the information is treated in a confidential manner.

Worker’s Organization: In accordance with ILO core standards, Nuqul is committed to freedom of association, and labor unions are present in many of its operations. The labor unions also serve as an alternative grievance mechanism. The unions represent employees for salary and benefit negotiations every two years. The Group maintains strong and effective working relations with the unions active in its plants, and has had no strikes or other labor actions at any of its plants in recent years.

Non-Discrimination and Equal Opportunity: Nuqul Group’s second core value is Equal Opportunity: “Nuqul Group is heterogeneous in terms of gender, race, and ethnicity. At Nuqul, we appreciate the value of diversity. At Nuqul, we grant equal opportunity in all aspects of employment to all qualified persons without unlawful discrimination.” With respect to equal opportunity employment, the Group identifies the job specifications for all jobs and implements a systematic approach to explore the candidate’s skills and experiences and matching those with the job requirements. The recruitment policy establishes a fair and consistent procedure to recruit and select candidates, applies the principles of merit and equal opportunity to all hiring decisions, and ensures an adequate range of candidates is attracted for position vacancies.

Nuqul Group’s HR manual covers all organizational functions and activities. Nuqul Group has adopted a unified pay scale for all employees, irrespective of nationality or other personal characteristics. As part of its efforts to promote diversity and gender equality, Nuqul is a partner in the Engendering the Public Sphere Project (EPSP) with the Jordanian National Commission for Women (JNCW), Ministry of Labor, Ministry of Planning, Department of Statistics, and Danish Center for Information on Women & Gender (KVINFO). Activities undertaken in connection with this program include amendments to recruitment templates to ensure gender neutrality, development of systems that address women/gender concerns, training and awareness on gender issues for all staff. Nuqul monitors and reports annually to its Board of Directors on the percentage of women in its employ, as well as the nationalities of its employees (currently Nuqul’s employees are drawn from 23 countries).

Retrenchment: No retrenchment is expected with the projects to be financed under this investment. As more automated equipment is introduced in its operations, Nuqul’s HR policy is to retrain existing employees, wherever possible, to take up any new positions that result.

Protecting the Work Force: Nuqul complies with all national labor laws in the countries where is operates and does not hire workers below the age of 18. The Group has formally committed to achieving the goals of ILO’s CO29, which addresses the concerns of all forms of forced and compulsory labor. All of its operations are free of any forms of forced and compulsory labor.

Occupational health and safety (OHS): Nuqul Group has detailed policies and procedure in place to ensure a safe and secure workplace for all employees, and IFC’s review has determined that these are consistent with best international practice. The Group’s Safety Vision Statement: is “All Accidents are Preventable.” Managing workplace health and safety is an important corporate goal, implemented through a systematic effort to reduce hazards and risks in all aspects of its operations, including its corporate headquarters. As noted above, the majority of Nuqul Group Operations units (Egypt, Dubai, KSA) are certified against OHSAS 18001, an internationally recognized occupational health and safety management standard. In addition, the Group has deployed a comprehensive assessment tool covering 16 key areas of safety to guide sustainable improvements, such as planning for emergency preparedness and response, planning for hazard identifications, safety document control, etc. Moreover, the Safety module of the GSM covers all of the main OHSAS areas, thereby ensuring that these are adhered to by each of the business units. The Group has also initiated Hazard Risk Evaluations and Risk Assessments which operates at all unit levels to promote employee participation to reduce preventable accidents. All of these elements for overseeing and monitoring workplace health and safety are formalized in the GSM. Nuqul utilizes both Accident Frequency Ratios (AFR) and Accident Severity Ratios (ASR) as its key safety performance indicators. The AFR is the number of injuries per 100 employees and the ASR is the number of lost work days per 100 employees. The Severity Incident Ratio (SIR) is the average number of lost days per incident. All of these statistics are monitored on a daily basis, via the Company’s EHS dashboard, and key metrics are reported to the CEO, corporate safety committee, and the heads of each business unit. Data for 2009 indicate a drop of 12% in AFRs and ASRs across all business units. Nuqul has targeted a 30% improvement across business units for 2010. The EHS Manager works with business unit heads to set improvements targets for each of these metrics for each financial year, and these targets become a KPI for the business unit’s management team. All of Nuqul’s operations are regularly audited, both internally by EHS officers and by third parties, to ensure that workplace air quality, noise levels and illumination meet host country regulations, IFC guidelines and best industry practice.

The GSM specifies the requisite personal protection equipment (PPE) that the company must provide for each position at all of Nuqul’s facilities. Use of PPE is strictly enforced at all levels of the organization. Nuqul conducts routine H&S trainings including a four-day induction training and annual refreshers for its employees. Majority of workforce employees undergo annual physical check-ups. The Group maintains health clinics or medical representative at each of its operating facilities, staffed with doctors and/or nurses, as well as contracts with local ambulance provides to ensure seriously injured staff can be transferred quickly to local hospitals. In addition, Nuqul has established a Security Management System (SMS), whose purpose is to preserve a secured work environment free of burglary, threat, intimidation, harassment and violent acts.

Pollution Prevention and Abatement

Environmental compliances: One of Nuqul Group’s core values is to “bring excellence to the quality of the impact of our existence on the community and environment.” The Company complies fully with all host country environmental requirements as well as a number of international conventions. Nuqul has maintained a strong record of reporting on, and compliance with, IFC’s environmental requirements over the life of IFC’s investments in the Group.

Air emissions: Nuqul obtains power for its mills in Jordan and Egypt from the national grid. Boilers historically have been fired by diesel and heavy fuel oil. Nuqul monitors key air emissions parameters (particulates [PM10], SO2, NOx, and CO2) at its operating facilities continuously, as part of their host country monitoring and reporting requirements. In addition, host country authorities in both Egypt and Jordan conduct independent verification monitoring twice a year. Over the life of IFC’s investments in the Group, it has maintained a strong compliance record in meeting both host country and IFC limits. As part of a Group-wide program to reduce greenhouse gas (GHG) emissions, Nuqul has taken a number of plant level energy saving initiatives at its mills in Jordan and Egypt. One is an ongoing improvement project to lower boiler emissions, including reducing hood/stack heat losses through better design and insulation, coupled with electronic gas monitors and recalibration, to automatically adjust damper and burner settings in response to variations in fuel quality. As a result, hood thermal energy losses were reduced by 20%. To further lower GHG emissions, Nuqul is currently constructing a 12.5 megawatt (MW) natural gas fired turbine unit equipped with waste heat recovery (for paper drying) at its plant in Jordan, scheduled to go online by end of 2010. The plant will generate steam for its plant processing complex in Amman, with excess power to be sold to the grid. The project qualifies for carbon credits under the United Nations Framework Convention on Climate Change (UNFCCC). Nuqul is planning to implement a similar waste heat recovery project at its Egypt mills in 2010-11. As part of its long term relationship with the Nuqul Group, IFC has recently signed a Memorandum of Understanding with the Group to support its energy efficient and water conservation efforts (see below) through its Clean Production initiative.

In addition, the Group has embarked on a project to phase out all diesel-powered forklifts and replace them with either Liquid Petroleum Gas (LPG) units or rechargeable battery operated units. To date, switching from diesel fueled forklifts to electrical forklifts has cut fuel cut fossil fuel by 40%.

A study is being conducted on the feasibility of to converting Al-Bardi company sales cars currently fueled with diesel to natural gas powered vehicles during the scheduled exchange-time. In 2008, as part of its adherence to the Montreal Protocol, Nuqul’s maintenance departments in Dubai and Egypt undertook an inventory of all support chemicals that contain ozone depleting substances such as CFCs and HCFCs. Nuqul has promoted carpooling among staff in all of its operations, including its corporate offices in Amman. These efforts have included awareness campaigns and financial and other incentives to encourage employees to carpool or use public mass transportation. Its Sales & Marketing Departments have instituted a procedure to reduce, monitor and report fuel consumption on a regular basis.

Water and wastewater: Nuqul obtains water for all of its operations from ground or surface water sources, for which it has obtained long term permits from the relevant water authorities. As with energy use, the Group has an aggressive ongoing program to identify and implement water conservation opportunities throughout its facilities. Recent examples include a reduction (by 3%) of reject process water, optimized shower nozzles (using 35% less water), high-efficiency pump seals (reduced water usage by 12%), and replaced open-looped chillers with closed-looped chillers (reduced water usage by 14%). Replacement of outdated steam condensers on boilers with more efficient condensers enabled reduction of the amount of boiler make-up water needed, reducing water usage by 20% and fuel consumption by 3%. In 2009, specific water consumption at the Jordan mills averaged 6.5 cubic meters per ton (m3/ton) of product and, at the Egypt mills, 8 m3/ton. These usage levels are consistent with good industry practice for paper mills globally. Nuqul has identified further water conservation measures to be implemented in the Egypt mills that it expects will lower specific water consumption to 6 m3/ton. The Group is in the process of carrying out a feasibility study for a major water reduction project at the Jordan operations that is targeting improvements to lower specific water consumption to below 4 m3/ton.

The Nuqul Group has wastewater treatment plants at all of its facilities that treat water to meet both host country requirements and IFC guidelines. Annual E&S monitoring reports submitted by Nuqul as required under earlier IFC investments confirm that treatment plants regularly meet required standards.

Solid wastes: Consistent with ISO 9001 and 14001, Business units have an ongoing programs to reduce wastes in all aspects of its business. Solid wastes of all types are monitored annually, and reduction targets are set for each business unit. A number of efforts have targeted reuse and recycling of raw materials that had previously been wasted. For example, Nuqul’s research and development department has identified improvements to product chemistry (for example, re-injection of non-conforming material into the production process) that have enabled the reduction of waste materials requiring disposal without compromising on product quality. New technologies for producing disposable diapers, one of its core products, have reduced the main raw material requirements (fluff) by 20% with no loss of quality or performance.

Mills in both Egypt and Jordan are working with one of the Group’s main chemicals suppliers (Hercules Chemicals) to identify production modifications to reduce chemical usage, as well as identify non-hazardous substitutes for process chemicals. A review of product packaging across the Group concluded that plastic packaging material thickness could be significantly reduced without compromising its integrity, resulting in an overall decrees in packaging materials by 20%. Every Nuqul facility, including its corporate offices in Amman, is required to set annual waste reduction and recycling targets to reduce the among of waste sent to landfills. Recent efforts included eliminating more than 50% of previously discarded cardboard, nylon and other recyclable materials by identifying licensed sorting and recycling businesses to collect and reuse the materials.

Fire prevention and emergency response: Life and fire safety is one of the main risks at paper milling and converting plants. Given this, the Group devotes significant effort to fire risk identification, assessment and mitigation. An entire module of its GSM is devoted to life and fire safety, with standard operating procedures in place for regular hazard risk assessment across business units, selection of appropriate fire detection and response equipment, regular inspection of systems and equipment and training and drills. The GSM requires that fire detection and suppression systems (electrical and mechanical) must be inspected by a third party at least annually; portable fire extinguishers must be inspected monthly and refilled/recharged annually; and fire drills must be held a minimum of three times per year. Nuqul managers at each of its operating facilities work closely with local fire authorities to identify improvement to fire safety systems and training to ensure that the Group operates in accordance with global best practice in relation to fire prevention and emergency preparedness. Annual E&S monitoring reports submitted to IFC confirm that these requirements are complies with at all locations.

Community Health, Safety and Security

In accordance with its quality and EHS management systems, Nuqul has implemented a comprehensive risk assessment tool covering 16 key areas of safety to guide sustainable improvements. A key aspect of this is and hazard identification and emergency preparedness and response. The Group has initiated Hazard Risk Evaluations and Risk Assessments at all unit levels of its organization and in consultation and collaboration with local regulators and emergency response personnel. As with life and fire safety planning, Nuqul’s GSM requires that emergency response drills be held regularly and staff trained in all aspects of these procedures. Annual monitoring reports submitted to IFC confirm that Nuqul’s emergency response planning and implementation is consistent with global best practices.

Nuqul contracts with professional third party providers of security services at all of its premises, and regularly monitors the performance of these firms. The Company has had no significant incidents involving security personnel at any of its plants.

Biodiversity Conservation and Sustainable Natural Resource Management

Nuqul has a corporate level Supply Chain department that is responsible for purchasing raw materials, including pulp and fluff, for all of its business operations. As part of Nuqul’s commitment to operate in accordance with the principles of FSC and PEFC, described above, the supply chain departments has established a list of approved suppliers who meet FSC and PEFC requirements, and will only purchase from these suppliers for the FSC products. An essential component of both FSC and PEFC certifications is Chain of Custody (CoC) certificates, which provides a verifiable guarantee to customers that the products are originating from suppliers that promote sustainable forest management.

Nuqul has established a robust community and customer complaint and feedback mechanism across its operations, for both employees and external parties. All of its product packages contain a local telephone number (and email address for contacting the Company to provide feedback on the product, service, or to suggest improvements in any aspect of its operations. The same contact information is available at the gate of every Nuqul facility, and security guards have been trained to direct any party who arrives at the gate with a complaint to be transferred to staff dedicated to this function. Nuqul has designated a customer/ community service representative in each of its business units to receive comments, complaints and suggestions. The GSM requires that every comment received must be logged in through the EHS dashboard, and tracked until it is resolved and closed out to the satisfaction of the individual providing the feedback. The Group has been active in the local communities in which it operates for many years, particularly in Jordan where it is headquartered. The focus of these activities is education and healthcare. These programs are overseen by the head of Corporate Relations for the Group. Needs for the communities are identified annually and prioritized – assistance is provided to local schools, fire departments, mosques, and for the disabled. Employees’ children receive scholarships to attend school and university. In Egypt, the Group finances a business incubator to help young entrepreneurs, and has made large donations to the Cancer Hospital in Cairo. In Jordan, which is facing severe threats regarding the disappearance of biodiversity in its ecosystems, Nuqul Group participates in and sponsors the interest of society and the environment by supporting Al Shajarah (a local NGO) in an educational campaign for forests in Jordan through the "Care for Tree" Program, which aims at increasing the awareness levels of school children. This effort includes the planting of 5,000 saplings.

In Jordan Sonia Hosh Tel: (+962 6) 4022251 Fax: (+962 6) 4022626 P.O. Box: 154 Amman 11118 Jordan shosh@nuqulgroup.com Zakareya Abu Atiah Tel: (+962 6) 4403001 Fax: (+962 6) 4403003 P.O. Box: 154 Amman 11118 Jordan zatiah@nuqulgroup.com In Egypt Mohammad Barakat, Mohammad Al Nokaly P.O. Box: 206 Al Bardi Paper Mill Co. 4th Industrial Zone 6th October, in front of today news Tel: (+202) 38330960 Fax: (+202) 38330747 Mohamad Barakat: mbarakat@nuqulgroup.com Mohammad Nokaly: mnokaly@nuqulgroup.com