Key environmental and social issues associated with United Water’s business in providing water/wastewater treatment services to municipal and industrial clients are summarized below. Environmental, social and health and safety issues that require ameliorative measures are included in the Environmental and Social Action Plan (ESAP) and will be addressed by the Company as agreed in IFC’s investment documents and any associated agreements.
Social and Environmental Assessment and Management Systems:
Local governments select sites for locating water/wastewater treatment plants, and obtain documented approval from the impacted communities for location of the facility. Consistent with the PRC laws and requirements, ESIAs were prepared for the projects under consideration for IFC financing and approved by the government. The impact assessment process includes detailed assessment of potential environmental and social impacts, as well as extensive consultation on various aspects of the project – from site selection, land acquisition through conditions for project operation, monitoring and reporting. Through the impact assessment process the government ensures that potential impacts of the project are identified and addressed during the project planning stage, and are used to prepare specific environmental control plans containing identified mitigation measures. The Company''s obligation in the concessions is to comply with the requirements set forth in concession documents. The Company’s environmental management team has overall responsibility for obtaining appropriate permits and approvals from various government agencies, and ensuring all operations are consistent with the terms of the concession agreement. The ESIA processes undertaken by the Company for the projects proposed for IFC financing are consistent with IFC PS1 requirements.
United Water has a corporate management system which provides limited oversight of environmental, social, health and safety (ESHS) issues. The Company’s management program includes operational policies and procedures that are implemented at the facilities level by supervisors who report to management on an informal basis. The Company monitors environment, health and safety performance for each project according to the procedures established in their existing management system. In addition to standard procedures detailed in the existing management system, project specific procedures are developed to comply with provisions contained in E&S impact assessments and concession agreements with local governments. For example certain identified major environmental, health and safety risks and impacts, measurable targets are established as compliance benchmarks. If monitoring results indicate nonconformance with standards or deviations from established benchmarks, appropriate corrective or preventive actions are initiated. A similar approach is adopted for unplanned events such as accidents where the events are investigated, and corrective or preventive actions initiated to prevent recurrence. Policies and procedures comply with applicable local regulatory requirements for operation of these facilities including those for human resources and labor, occupational health and safety, and environmental compliance.
Human resources are managed at the corporate level with oversight of all the United Water''s facilities and operations. Training of staff is done on a routine basis in compliance with local workplace regulations. The department of human resources is responsible to ensure that all employees are adequately trained to perform their work safely. Supervisors monitor that standards are met and any reportable incidents are reported and follow up action taken when required. Training, monitoring and reporting framework is consistent with PRC requirements, and is expected to be consistent with IFC requirements after implementation of the ESMS program.
As United Water continues to grow rapidly, it will augment its management capacity by assigning additional staff and resources to provide oversight of its environmental and social performance. The Company will implement an effective Environmental and Social Management System (ESMS) to provide consistent oversight of environmental, social and health and safety for all its activities from construction management to operation of facilities, as well as screening of new opportunities in expanding its business. The ESMS will include a series of procedures, work instructions, and reference documents which, when combined with the findings of the ESIAs, comprise a program of mitigation and performance improvement measures and actions necessary to effectively manage the E&S risks and impacts of its projects. As part of the ESMS implementation program, United Water will either hire or designate an individual on the board of the Company to ensure compliance with group policies, procedures and regulatory requirements, and ensure consistency with good international industry practice for ESHS performance, including IFC Performance Standards and applicable guidelines. At the operational level, responsibility for the management of environment, health, safety and social performance will be assigned to a senior level staff as a newly established position within the Company. The newly created position will be adequately resourced and have overall responsibility for implementation of strategies, policies, standards, compliance, and management initiatives related to environmental and social matters at the Company.
Labor and Working Conditions:
The Company’s policies and procedures on labor and working conditions are replicated at each of the project companies. Currently, United Water employs 531 employees directly, while the number of sub-contracted employees can vary significantly depending on construction activities from a dozens to hundreds at any given time. United Water has a Human Resources policy that complies with local and PRC regulatory requirements, and is applied consistently to all direct employees. As required by law, the policy is included in employment contracts, and addresses working conditions, terms of employment, and wages and benefits. This information is provided in the form of an employee handbook at the time of induction. As is common practice in China, although not explicitly stated, employment relationships recognize the principals of non-discrimination and equal opportunity. Project companies under United Water have workers trade unions made up of employees. Employees have the right to freedom of association and have the opportunity to collectively represent to the management any issues or grievances that they may have.
The minimum employment age at United Water is 18 years. United Water ensures that child labor or forced labor is not employed directly or by subcontractors through verification of relevant documents. Working hours on site can vary by nature of activity and phase of project, with most labor intensive phases being at the construction phase during which there are continuous operations. Construction activity is largely subcontracted for which unskilled labor is procured from nearby villages. Management of influx of labor into local communities and the responsibility for accommodation is managed by the subcontractor. Regulatory requirements in PRC do not require United Water to provide direct oversight of wages, working or living conditions of subcontracted labor. Wages are paid on a monthly basis and calculated with basis on the hours worked, inclusive of overtime. Terms of employment for sub-contractors are as per PRC laws and the Company relies on regulatory agencies for ensuring that sub contractors comply with applicable labor laws. Moving forward, United Water will review its human resources policy to ensure consistency with IFC Performance Standard 2 on labor, working and living conditions for any labor employed by United Water, either directly or through sub-contractors.
Occupational health and safety of employees at United Water is managed by the Human Resources and Administration. There is a plan for accident prevention and worker safety consistent with local regulatory requirements. All employees in the company have to undergo a training program at induction and subsequently regarding worker health and safety relevant to their job activity. Facilities are audited yearly by regulatory agencies to monitor compliance with labor regulations. The Company has been in compliance with regulatory requirements and has recorded no significant lost time incidents or fatalities in its operational history. Although United Water has been in compliance with applicable regulatory requirements, there is variance between the Company’s regulatory obligations when compared to IFC Performance Standard 2 and Guidelines on Occupational Health and Safety (OHS). The variance is primarily in reporting requirements and applicable thresholds which are less stringent when compared to international best practice for the sector. As part of the agreed ESAP, United Water will either hire or designate a qualified individual in the Company to review and develop an implementation plan to achieve internationally acceptable standards for OHS for its employees and sub-contractors. The Company will take corrective measures to enhance its training programs, and implement standard operating procedures that specifically seek to mitigate OHS risks during construction and operation of municipal wastewater treatment plants. It is anticipated that the Company''s occupational health and safety performance will achieve consistency with applicable IFC policies and guidelines for the sector only after recommendations from the OHS review are implemented.
Pollution Prevention and Abatement
United Water operates water and wastewater treatment plants that produce effluents, process residuals and miscellaneous waste streams that are managed in compliance with local/PRC regulatory requirements. For municipal water and wastewater treatment, United Water primarily uses conventional technology that is widely used elsewhere in the world. Potable water supplied by United Water complies with PRC drinking water sanitation standard for urban areas (GB5749-2006). This standard is consistent with internationally acceptable standards for potable water supplies. Treatment plant designs are typically developed by the client for EPC contracts, or specified in most concession agreements. The technology used is fairly basic and robust to provide reasonable assurance of meeting regulatory standards when operated with adequate training. Level of service and standards are established by the government and vary by project location and receiving water quality standards, and are consistent with applicable IFC guidelines for municipal projects. However, for wastewater treatment, limited effectiveness of industrial source control programs can result in industrial pollutants to be discharged to wastewater treatment plants (operated by United Water) that are not equipped to treat such pollutants, resulting in a potential pass through to receiving bodies of water and contamination of treatment plant residuals. Concession agreements do not require monitoring of industrial chemicals in the influent or effluent. Moving forward, United Water will review and quantify industrial sources of wastewater at each of its operations and implement a monitoring program for contaminants relevant to the sources of discharge.
United Water also provides industrial wastewater treatment (common effluent treatment plants) for industrial clients. Currently the Company operates two industrial wastewater treatment plants (Tongxiang and Tuoxian) which discharge treated effluent to receiving bodies of water. The Tongxiang facility is in compliance with local/PRC regulatory requirements of Class 1B [GB5749-2006]. As required under the terms of the concession for the Tuoxian facility, United Water is currently undertaking a design review to upgrade the facility to meet compliance effluent quality standards specified as Class 1B [GB5749-2006]. The Company has provided confirmation from an independent technical expert (Mott MacDonald, United Kingdom) that Tuoxian industrial wastewater treatment facilities can achieve effluent discharge standards established by the relevant Chinese pollution standard of Class 1B [GB5749-2006]. Effluent quality discharge standard specified by Class 1B [GB5749-2006] is less stringent than applicable IFC/WB guidelines for the discharge of treated industrial effluents to surface water. Although not contractually obligated, when discharge is to surface water, United Water will design, build and operate all industrial wastewater treatment facilities to be in compliance at all times with relevant IFC/WBG guidelines. Compliance will be monitored, and any non-compliance rectified in accordance with best industry practice. For the existing industrial wastewater treatment plants at Tongxiang and Tuoxian, the Company will either hire or designate a qualified individual to the map all significant industrial customers served and the identification of the industry in which they operate and the risk elements within their waste water discharges with reference to IFC industry discharge standards. Additionally, the Company will provide confirmation from a technical expert on ability to comply with IFC/World Bank guidelines (Textile Manufacturing for Tongxiang and Pharmaceuticals and Biotechnology Manufacturing for Tuoxian). If any gaps are identified, the Company will agree on cure period and resource allocation with IFC.
Significant quantities of solid waste are generated as part of water and wastewater treatment operations. United Water’s annual production of sludge is estimated to be in excess of 2,718 dry metric tons per year of water treatment plant residuals including 1,052 dry tons per year of municipal wastewater plant sludge and 1,666 dry metric tons per year of industrial sludge. As per terms of the concession agreements, United Water is required to deliver sludge at acceptable water content with no additional requirements on chemical or microbiological characteristics. All wastewater treatment plants operated by United Water are equipped with sludge dewatering facilities. Dewatered municipal sludge is disposed only in municipal sanitary landfills by the local government. Residuals from industrial wastewater treatment plants are disposed in approved hazardous waste landfills by the local government. United Water will make all reasonable efforts to continue to ensure that sludge is disposed solely to sanitary landfills, and not incinerated or reused to mitigate risk from any potential contamination of sludge from uncontrolled/unknown industrial discharges.
United Water’s principal energy usage includes electricity procured from the grid (estimated to be about 26,167 MWh per year). Net green house gas (GHG) emissions attributable to United Water’s annual consumption of electricity are estimated to be about 20,000 metric tons of carbon dioxide equivalents per year. Net GHG emissions associated with sludge and other residuals is estimated to be about 300 tons of carbon dioxide equivalents per year. After the projects being considered for IFC financing are completed, the Company''s annual GHG emissions attributable to these facilities will not exceed 100,000 tons of carbon dioxide equivalents per year. Nonetheless, the Company will continue to explore opportunities for energy efficiency in its operations to reduce operational cost and its carbon foot print.
Land Acquisition and Involuntary Resettlement
IFC’s assessment considered the potential displacement and compensation of occupants and users of land acquired for nine United Water facilities located in Xianning and Suizhou cities (Hubei Province), Suqian city (Jiangsu), Tuoketou county (Inner Mongolia), Tongxiang city (Zhejiang) in China, details of which are described below:
The 33mu land where the Suqian Yinkong facility is sited involved transfer of state owned land in 2005 and there was no instance of physical or economic displacement of local residents. Two of the Xianning facility sites (38mu and 3mu) were acquired in the early to mid 1980''s while the other two (76mu and 34mu) were acquired in 1998.
Original land acquisition for the Tongxiang site (54mu) was conducted in 2003 which economically displaced 35 persons - who each received a one-time RMB 35,000/person compensation, RMB 15,000/mu compensation, a RMB500/m3 housing compensation. Affected persons were also provided with social security coverage and vocational training to facilitate their employment by companies within the municipal industrial park.
At the Tuoketou (Touxian) site, acquisition of 65mu village collective land in 2005 economically impacted 30 villagers who received a RMB 6100/mu cash compensation and land insurance coverage. After land acquisition villagers had an average per household landholding of 3mu and a current annual per capita net income of RMB 5,000 from agriculture and non-agricultural work.
The Suizhou facility involved acquisition of a 150mu village collective land plot which physically and economically displaced 189 persons from one hamlet of the Wangchenggang village and two local enterprises. Affected persons and the two enterprises received RMB 8.4 million in compensation. Affected persons were provided re-housing, old-age pension for retirees, a minimum living stipend for those who cannot work, and vocational training to facilitate employment by companies within the Suizhou industrial zone.
Village collective forests (60mu) for the second United Water facility in Suqian were acquired in 2010 and economically affected 91 persons, who were compensated RMB 25,000 per person. Affected persons have a current per capita annual net income of RMB 7,000 from agriculture and from employment at industrial zone companies, and they have an average landholding of 5mu per household. The local Government adopted a policy to give preference to local villagers if they wish to take up work arising from local construction projects. The Company has plans to consider recruiting some of the affected villagers at its facility once operational.
For the above sites which involved compensation for land acquired, the Company has confirmed through interviews with affected persons and local Government representatives, that compensation funds have reached the intended recipients, and that there are no known concerns about the land acquisition processes. Local Government land acquisition directives reference the Land Management Law of China and local land market values in setting compensation levels. There are programs in place to help affected persons restore their livelihoods or develop new livelihoods.
Based on the above information, IFC concludes that the reported outcomes of land acquisition undertaken by the municipal and county governments are consistent with the objectives and requirements of IFC’s Performance Standard 5.
Community Health, Safety and Security
Engineering controls and some staff training are provided to mitigate risks and issues associated with United Water''s operation of its concessions, which includes transport, storage and use of hazardous chemicals. United Water uses gaseous chlorine for disinfection of potable water. Handling of chlorine at these facilities is in compliance with stringent national requirements and there have been no accidents reported to date. At United Water''s facilities, the use and storage of hazardous chemicals are subject to stringent safety standards as required under PRC laws. The company ensures that chemical stores provide for adequate containment and neutralizing systems to minimize the impact of release. United Water is required to have an emergency prevention and control plans which specifies responsibilities, ensures appropriate response equipment and materials are in place, and details a set of procedures to be followed to minimize the harm of any potential accident. Moving forward, United Water will review its scope of emergency response and update procedures as needed, including drills to test the effectiveness. United Water will also add a community involvement component that addresses appropriate behavior and safety measures to be implemented in the event of a hazardous chemical release beyond the plant boundaries.
