Key environmental and social issues (E&S) are listed below. In addition, specific information is presented on the way Favorita will address these impacts to ensure that the project will, upon implementation of the specific agreed measures, comply with the environmental and social requirements of the host country laws and regulations, the IFC Environmental and Social Performance Standards and the World Bank Group (WBG) General Environmental, Health and Safety (EHS) Guidelines. The information about how these potential impacts will be addressed by Favorita is summarized below. Further information is provided in the attached Environmental and Social Action Plan (ESAP), which has been agreed with the company. As per the ESAP of the most recent investment in 2007, Favorita upgraded its training on E&S issues, improved its monitoring and reporting of E&S issues, updated its human resources policy to include all elements of PS2 in its Human Resources Policy, developed community engagement, conducted a labour efficiency audit in one of its subsidiaries, ensured that contractors followed all E&S requirements, implemented an operational safety management procedure at Fertisa, addressed the housekeeping at Reybanpac’s dairy farms, installed computer based groundwater monitoring tools at Mirador, and further implemented a sustainable management certification programme for suppliers started in previous investments. Further, the Company implemented additional sustainable agricultural practices.
PS1: Social and Environmental Assessment and Management Systems:
Social and Environmental Management System: Favorita (www.favoritafruitcompany.com) is an environmental and social conscious organization. The Company maintains compliance with the Ecuadorian Law and regulations. All social and environmental management issues at the Company take place within a formal and well maintained management system. Favorita is ISO 9001 certified, and the Social and Environmental Management System and associated procedures comply with Ecuador regulations, IFC Performance Standard 1, WBG Environmental Health and Safety General Guidelines (WBG EHS General Guidelines), and are committed to ISO 14001. Other certifications obtained by Favorita include: GlobalGAP, Rainforest Alliance, Tesco Nature’s Choice (TNC), HACCP, Forest Stewardship Council (FSC), BASC (Business Alliance for Secure Commerce), and ISPS (International Ship and Port Facility Security Code). Prior to undertaking material expansions, Favorita conducts an EIA as part of its SEMS, to ensure environmental and social compliance with IFC Performance Standards.
Organizational Capacity: During previous IFC investments, the Company developed an organizational structure with defined roles, responsibilities and authority to manage environmental and social affairs. Competent staff is appointed, and financial resources are granted. Each of the Company’s subsidiaries has full-time staff responsible for environment and occupational health and safety reporting directly to the Corporate Environment Department.
Training: Training on environmental and social issues, is performed at all Company subsidiaries to all employees, emphasizing training on those directly involved in project activities. Contractors are included in the E&S training. The E&S training includes but is not limited to: human resources policy, emergency preparedness, food safety, certifications, environmental health and safety, water and energy saving practices, waste management, safe handling of agrochemicals, accident prevention, sustainable agricultural practices, management of suppliers, community engagement, etc.
Community Engagement: Some Favorita operations are located within the urban limits of communities, others are in the farms with no immediate surrounding communities, and community engagement is an ongoing process for Favorita. The Company has developed constructive relations and mainstreamed a formal system whereby the Company can address concerns.
Monitoring and Reporting: Favorita has developed management system procedures for monitoring of key environmental and social information on its operations. The Company has implemented a management system process for periodic reporting and monitoring of environmental and social information to senior management, to allow monitoring of progress, a proactive response and periodical realignment of Favorita’s sustainability project priorities and mitigation of potential Favorita exposure to business risks in the short and long term.
Supply chain: Favorita produces sixty percent of exported bananas in their own lands. The remaining production is done through suppliers directly linked to Favorita, where the Company has full knowledge of their compliance with E&S standards, and sustainable cultural practices under which bananas are produced.
PS 2: Labor and Working Conditions
Favorita has a labor force of approximately 9000 employees at all its operations. 67% of the workforce are farm workers. Aproximately 1000 employees are women. Favorita promotes good labor relationships through full respect. Workers, contractors and others engaged by the Company are made aware of their rights and responsibilities at the beginning of their contract. The Company maintains a transparent system for workers to manifest any concern they might have within a management system procedure and designated staff to deal with these.
Human Resources Policy: Favorita has a comprehensive and well developed Human Resources Policy. The Company operates within the labour law of Ecuador and IFC Performance Standard 2, to maintain and promote fair treatment and safe and healthy working conditions to employees. The Human Resources policy includes references to non-discrimination, freedom of association and collective bargaining, child labour and forced labour. All compensation and benefits are explained during the inception period of each employee.
Occupational Health and Safety (OHS): Favorita has developed OHS plans for each of its operations and has a formal health and safety management procedure implemented in accordance with Ecuadorian health and safety regulations. As part of its operations, Favorita conducted, in the past, a detailed health and safety audit and implemented all actions needed to ensure compliance with WBG EHS General Guidelines. The Company manages OHS at the level of each operation by a designated OHS supervisor. During the induction period, technical and hygiene procedures are fully explained to employees. The Company provides personal protective equipment (PPE) and appropriate training to all workers. Fire and PPE safety signage is visible and adequate.
Life and Fire safety: The Company has installed fire equipment and fire safety standards in all its operations. A quality control plan ensures that all fire equipment will function properly in case of an emergency. Fire drills and emergency preparedness drills are conducted on regular basis with participation of employees.
Contractors and supply chain: Favorita has implemented rigorous reporting requirements ensuring that contractors in all their operations and independent banana suppliers are in compliance with: a) workers legal benefits; b) wages paid on time; c) health and safety regulations; and, d) ILO Conventions 138 on Minimum Age, and 182 on Worst Forms of Child Labor.
PS 3: Pollution Prevention and Abatement
Field operations include sustainable practices for plantations. For crop nutrients, chemical fertilizers and lime are applied. Only EPA and GlobalGAP registered pesticides are applied by Aerovic, a subsidiary of Favorita, according to appropriate SEMS procedures. Well adapted Sahiwal cattle provides milk for the dairy processing operations. Natural grazing constitutes 85% of the dairy cattle forage diet at Favorita. The main sources of emissions to the environment and the risk of environmental contamination come from the dairy processing plants. These include process liquid effluents from processing. All other Favorita operations have effluents discharged into the local municipal sewage system. The quality of the effluent discharged at the dairy plant at Sangolquí (Quito) is in compliance with WBG EHS General Guideline limits and discharges its effluents to the municipal sewer.
Waste Management: Favorita operations generate 31700 tons of crop (organic) residues. No burning of crop residue is performed to avoid air pollution. Main waste: general waste-2.6 tons; paper and cardboard-211 Kg; plastic-803 tons; light bulbs-385 units; burned oil-15,000 liters; oil filters-3810 units. Waste and hazardous waste are handled through municipal collectors, except for paper, cardboard, and plastic, which are recycled by a municipal licensed company. Broken wood pallet units are used as fuel in boilers.
Energy Source: Favorita operations obtain power from the national electricity grid, but have back-up generators in the rural areas. During energy shortages, reported to occur 60% of the time, the Reybanpac milk processing plant at Mirador uses two generators fueled with diesel. During 2009, generators were operated 135,000 hrs, and used 193,000 gallons of diesel. In 2009, engines to run irrigation systems and drainages were operated 206,476 hours and used 1,496,693 gallons of diesel. Favorita’s overall electricity consumption during 2009 has been 14,502,108 KWh.
Saw mill at Mirador: The saw mill is located in the forest for the production of pallets which are sold to banana and tropical fruit exporters. The certified (Smartwood Certification) wood pallets plant generates around 1,100 m3 of wood waste per month with 55-60% moisture. At the moment, most of this wood waste is sent to an adjacent wood pile (landfill) where it just sits. Favorita presented a plan to IFC to ensure disposal of the sawdust waste in compliance with Ecuador regulatory limits and IFC guidelines, and has placed an order for a Biomass Boiler to use this sawdust residue to generate steam for the dairy plant whereby replacing the two bunker fired boilers. Given that the boiler is going to consume biomass as fuel, the reduction of GHG are estimated to be 5,400 t CO2 (eq) per year. The company will provide assurances to IFC that the biomass boiler will comply with WBG EHS General Guidelines for air emissions.
Reybanpac’s effluent treatment plant at Mirador: This dairy processing facility was expanded and has exceeded the capacity of the small effluent treatment plant currently installed. Currently, untreated process effluent from cleaning and spillages at the milk plant, effluents originating from cheese processing including whey, with levels of BOD5, COD and solids are not compliant with WBG EHS General Guidelines, and are sent to a natural channel. The Company will present a plan for IFC’s approval to build a new effluent treatment plant to ensure effluents are in compliance with Ecuadorian regulatory limits and WBG EHS General Guidelines. The plan will include a detailed water and material balance study, which includes: water/material used in all the processes, including the water use and discharges during the cleaning in the production process, water and material leakages, and effluent discharge, including the effectiveness of the new wastewater treatment plant. In addition, Favorita will benchmark the energy/water and main raw material consumptions of the plant, as per the international standards in similar industry type and generate key performance indicators for the operation.
Refrigeration Agents: To contribute to international efforts to protect the ozone layer and combat climate change, Favorita has agreed to use an ozone-friendly refrigerant in all existing refrigeration equipments in its facilities.
Pesticide Management: Use of pesticides by Favorita is well managed and controlled. There is use of PPE and training. To the extent possible, the Company will minimize and eliminate the use of WHO Class 1a and 1b chemical formulations in their field operations. Favorita will provide adequate PPE based upon MSDS and/or ICSCs for the WHO Class 1a and 1b chemical formulations used. Favorita will provide documentary evidence of the training of employees handling such pesticides, specifically in the use of adequate Personal Protection Equipment (PPE) based upon MSDS and/or ICSCs, and will fully integrate pest management procedures into its SEMS procedures manual.
Agricultural Operations and Sustainable Management Certification for Banana Operations and Suppliers: Reybanpac is working with the Rainforest Alliance on commodity certification for sustainable management, and is strengthening their GlobalGAP certifications in appropriate areas for their own plantations. Favorita’s goal is to ensure similar world-class practices are applied to all suppliers, as is currently found on its own plantations, and to achieve independent certification to this effect. As per the action plan of previous IFC investments, improved agricultural management practices, which include environmental and social aspects, are further extended to Favorita’s independent banana suppliers. Favorita has developed and implemented a phased approach to achieve this over a five year period. The programme, which has been implemented at 72%, includes implementation of: integrated pest and disease control programs; improvements in occupational health and safety, and medical care: improvements in agricultural production and banana productivity; improved quality assessment and monitoring of product; improved waste management practices; and upgrading of worker housing. Favorita will continue reporting to IFC on implementation of this programme as part of its regular annual reporting to IFC.
PS 4: Community Health, Safety and Security
Community Emergency Preparedness and Response is managed at each business unit. Relations with local authorities, including local fire departments, are clear and understood by all parties.
Security personnel: All security guards have received proper training in community relations as it relates to the use of weapons and respectful behavior in all community undertakings. In general, Favorita’s operations pose no risks to local communities.
PS 6: Biodiversity Conservation and Sustainable Natural Resource Management
There are no legally protected areas in the vicinity of any of Favorita’s operations. Favorita’s operations do not involve modification, conversion, or degradation of any critical habitats. No known endangered species are affected by the project’s operations. No legally protected conservation areas are impacted. All 4000 Ha forest plantations owned by the Company have been certified by SmartWood under the FSC label since 2001. Reybanpac’s dairy processing plants depend on groundwater sources for water supply, amounting to approximately 465,000 m3/year; Sangolqui plant’s water consumption is almost 30% (141,000 m3), and Mirador is 70% (323,000 m3) of the total water consumption. To ensure sustainability of the water supply, the Company has installed remote control computer-based groundwater level monitoring tools in the wells at Mirador and is tracking trends in groundwater availability. Mean annual rainfall at Mirador is 1500-2000 mm, while at Quito is 2500 mm.
