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; PS3 - Pollution Prevention and Abatement; PS5: Land Acquisition and Involuntary Resettlement. The current sites are located in designated industrial parks and no impact on community health safety and security, biodiversity, indigenous people and cultural heritage is expected. PS4: Community Health, Safety and Security; PS6: Biodiversity Conservation and Sustainable Natural Resource Management; PS7: Indigenous Peoples; and PS8: Cultural Heritage are therefore not applicable to this investment. A condition of IFC’s investment going forward will be that any and all joint venture projects will be subject to consideration of all relevant environmental risks and impacts, including the issues identified in PS1 through PS8.

The project has been categorized as Category B according to IFC’s Environmental and Social Review Procedures. Key environmental, social, health and safety impacts associated with the Project during construction and operation include: environmental and social management system (scope and implementation); labor and working conditions, including life and fire safety and supply chain labor practices; emissions to the environment; and acquisition of land use rights. The project may result in a limited number of specific environmental and social impacts that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. Haitai will manage its environmental and social performance in accordance with applicable local laws and regulations and international standards, including IFC’s Performance Standards on Social and Environmental Sustainability and IFC's Environmental, Health and Safety General Guidelines.

The sponsor has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with host country laws and regulations, IFC’s Social and Environmental Performance Standards, and relevant environmental, health and safety (EHS) guidelines. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. PS1: Social and Environmental Assessment and Management Systems Social and Environmental Assessment: In line with national regulations, Haitai has undertaken an environmental impact assessment prior to receiving consent to operate the Tianjin factory from the Environmental Protection Bureau. For the Tianjin operations, the Environmental Impact Report was prepared in 2006 and, construction was approved, conditional upon the implementation of various environmental protection measures. Construction started in August 2006 and put to trial operation in December 2008. Following a period of testing and monitoring, an administrative license to operate was granted in December 2009. While the operations were found to be compliant, the Tianjin Environmental Protection Bureau required that the company make a waste water discharge application with the Environmental Protection Bureau of Dagang District; and establish an ISO14001 environmental management system as soon as possible. The company intends to obtain accreditation in 2011. Haitai has agreed to provide IFC with verification of environmental acceptance from the Environmental Protection Bureau for each Joint Venture. Management Program and Organization: Within Haitai, there is clear designation of responsibility for environmental management, occupational health and safety. Haitai has a corporate policy document that contains the Human Resources, Health and Safety, Fire Prevention and Response, and Environmental Protection policies and procedures. This corporate document has been rolled out across the JVs, with amendments to ensure compliance with local provincial laws. The Company organizes regular skill development and training including an initial 3-5 days orientation program and weekly training events. Regular environmental monitoring is the responsibility of the Environmental Protection Bureau. At Tianjin, within the last year the environment authority undertook an inspection and discovered that the emission control equipment had been shut down before the production process had completely cooled causing emission of untreated gas. Disciplinary action was taken in line with national laws. Haitai has agreed to incorporate procedures in its forthcoming ISO14001 Environmental Management System to undertake regular environmental monitoring of its operations and to prevent future incidents. Community Engagement In China, dialogue and communication with potentially affected communities including public consultation and disclosure of environmental and social impact assessment occurs through procedures established by PRC regulations. As a result no formal information dissemination activities have been undertaken by the Company so far. However, Tianjin Environmental Protection Bureau publicly disclosed information about the environmental impact assessment for this project for two weeks before approving construction of the project. As part of its environmental and social management program, Haitai will establish methods for communicating relevant environmental and social aspects to external interested parties and maintain procedures for receiving, documenting and responding to concerns from any external interested parties relating to the project. PS2: Labor and Working Conditions: Haitai currently employs around 95 staff, of which around 12 are in the head office, and 20 management and 30 production staff are in Tianjin. The existing Joint Ventures in Hebei and Anhui employ 15 (12 production staff and 3 managers) and 18 people. The company employs 20% women (50% of the management are women). While the management are appointed by the board, the production staff are hired locally through a local employment agency. In the high season the factories work three 8 hour shifts. However, in the low season there is only one shift, during which skilled staff undertake maintenance. At this time, unskilled staff, who are employed on temporary contracts, are released. Working Conditions and Management of Workers Relationship: Haitai has detailed corporate staff handbook that includes HR policies which outline general management and staff rules, including recruitment procedures, probation periods, working conditions, wages and benefits, disciplinary procedures as well as non-discrimination and equal opportunity policies. The company confirms that it strictly follows national labour laws and applies the same staff rules to direct employees as well as contract staff. This corporate handbook is common across all Joint Ventures. Haitai has agreed to verify for each Joint Venture that the corporate policies will be incorporated into each and every Joint Venture, being modified to meet local regulatory requirements and will be compliant with IFC’s PSs. Haitai invites and processes grievances through monthly staff meetings, a staff welfare committee and by encouraging staff to provide informal ideas and comments on improvements that can be made in the production and technology. Occupational Health and Safety: The company has a documented OHS system, with corporate policies and guidelines which outline respective responsibilities of managers and directors for production safety, training, including safety induction training for all new staff, and emergency response. The Operations General Manager has overall responsibility at each site and all managers have designated responsibilities, including responsibility for training, response to incidents and implementation of corrective actions. There have been no lost-time incidents at any of the facilities. The Staff Handbook outlines the requirement for use of PPE during production. Production staff are provided with work clothing, gloves, safety glasses, hats and masks. Haitai complies with national fire safety regulations. At the Tianjin factory, a dedicated fire prevention officer receives training and certification from the Fire Service Bureau and all firefighting equipment is checked by the Fire Service Bureau and maintained regularly. There is a fire fighting action plan, a summary of which is displayed in the control room. The Tianjin Municipal Public Security and Fire Service Bureau has confirmed that the fire service equipment and systems have been accepted and the fire certificate is dated July 2010. The systems include indoor and outdoor fire hydrants, a fixed foam fire extinguishing system at the tank area, mobile foam fire extinguishing systems, a mobile cooling system and a 720m3 fire service water pond. The Company will forward fire certificates for all Joint Venture facilities to IFC to demonstrate compliance with national regulations and IFC’s PSs. Supply Chain: Haitai purchases powdered rubber from a third party source. The Company has agreed to prepare procedures to verify labor practices of suppliers to confirm absence of child or forced labor. PS3: Pollution prevention and abatement: The process of manufacturing rubber modified asphalt involves blending, processing and developing powder rubber, a proprietary additive and asphalt, at 160°C. The rubber powder (from used tires) and asphalt are both purchased from 3rd party vendors. The facilities in Tianjin consist of two processing units: the first generation technology which is now used primarily for testing and trial production. This machinery is relatively old and heavily modified. The boiler is gas fired, using mains gas. The 6th generation machinery uses an electric powered microwave heating system. While the two Joint Ventures use the 5th generation production units, environmental management technology is the same for all sites. Future Joint Ventures will all use the latest most energy efficient technology. Aside from emissions from the gas fired boiler and diesel generators the major source of process emissions is from the blending, processing and developing tanks. Emissions are typically asphalt gas and benzopyrene and are treated before being emitted through a 15m stack. All emissions from the production process, boiler and diesel generators at Tianjin are tested regularly by the environment authorities and are generally compliant with local and IFC limits. All solid waste products are reused in the production process and other solid and liquid waste are entirely from domestic sources. While ambient noise is monitored, and meets local regulatory limits, workplace monitoring is not undertaken. Haitai has agreed to undertake workplace monitoring of temperature, dust and noise to ensure it complies with IFC Environmental Health and Safety Guidelines. The factory in Tianjin uses, on average 50,000m3 natural gas a month and 30,000kWh electricity a month. The Company has an Environmental Protection Emergency and Response Scheme that outlines responsibilities and division of labor in case of overflow, spillage or leakage. PS5: Land Acquisition and Involuntary Resettlement The company has acquired land for the factory in Tianjin, through standard government processes. The factory is located in a designated industrial park. While the land rights were acquired from the government in 2005, the area has been used by the chemical industry from many decades. For the Joint Ventures in Hebei and Anhui, space for the production unit is leased in the local partner’s compound. For all future Joint Ventures Haitai will ensure, and provide verification to IFC that the land use rights at each site were acquired in accordance with IFC’s PS5.

The Company has not been the subject of any public complaints or litigation related to its environmental or social performance. No local communities have been significantly affected by Haitai’s ongoing direct operations. The Company’s operations generate local employment and do not have adverse impacts on the communities.

The Company will disclose the ESRS and the ESAP at its website: www.tjhthb.com as well as at the address listed below. All inquiries and comments may be directed to : Mr Yu Qiang General Manager Tianjin Hi-tech Environment Development Co Ltd Dagang Petrochemical Industry Park, Dagang District, Tianjin, China Email: tjhthb@163.com Telephone: +86-22-63233983/63233986