30568 - PRAN Dairy

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Environmental & Social Review Summary

Project Number

30568

Company Name

PRAN DAIRY LIMITED

Date ESRS Disclosed

Apr 1, 2011

Country

Bangladesh

Region

South Asia

Last Updated Date

Jun 3, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : May 23, 2011
Signed : Jun 15, 2011
Invested : Sep 15, 2011

Sector

Dairy Products

Industry

Agribusiness and Forestry

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Pran is the leading food processing company in Bangladesh, that produces and distributes beverages such as fruit juices, cola, bottled water; snacks, confectionery (candies, biscuits), culinary products, dairy and soft drinks. It enjoys a strong brand reputation in the country and exports its products to 70 countries.

The proposed IFC investment in Pran Dairy Ltd. (one of the group companies) includes expansion and modernization of its existing milk processing operations, by upgrading some of the machinery and installing some new modern processing and packaging lines (“Project”).

Overview of IFC's Scope of Review

IFC’s review of this proposed investment consisted of appraising technical, environmental, health and safety (EHS) and social related information submitted by Pran Group (“Pran” or “Company”) including: Environment, Health and Safety (EHS) and Human Resources (HR) related corporate level policies and procedures; food safety management system policies and procedures, organization chart; training records; reports of external audits (related to HR, resource efficiency/cleaner production); environmental monitoring reports; emergency response plans, etc. The appraisal included site visits to Pran’s food processing facilities in Ghorashal and the existing dairy operation at Pran Industrial Park (PIP), Polash; and discussions with Pran’s senior management, technical and EHS teams – at each facility as well as at the corporate office in Dhaka.

This is a repeat investment by IFC in the Pran Group. The Environmental Social Review Summary (ESRS) for the previous IFC investment (“PRAN”, Project no. 27005), disclosed in June 2008, is available at: Project #27005

This review also considered the EHS related information submitted by Pran Group through annual monitoring reports related to the previous IFC investment. This review thus, builds upon the previously disclosed ESRS, and covers specific EHS aspects related to the dairy project.

E & S Project Categorization and Applicable Standard

While all of IFC’s Performance Standards are applicable, IFC’s due diligence identified social and environmental risks that must be managed in compliance with the following Performance Standards:

- PS 1: Social and Environmental Assessment and Management System;
- PS 2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement; and
- PS4: Community Health, Safety and Security

The proposed Project is being implemented in the existing milk processing facility at PIP, Polash, which is located close to Ghorashal town, approx. 80 km from Dhaka. It does not involve any new land acquisition or construction. Hence, PS5 (Land Acquisition and Involuntary Settlement) does not apply. Also, there are no impacts related to Biodiversity Conservation and Natural Resources Management (PS6) Indigenous Peoples (PS7) or Cultural Heritage (PS8).

Key environmental and social (E&S) issues associated with this Project include: development and implementation of integrated management systems covering quality, environment, health and safety and food safety; assurance of fair, safe and healthy working conditions in compliance with local regulatory requirements and relevant Performance Standards; resource efficiency of the operations (water, energy); monitoring and management of air emissions, wastewater treatment and discharge, solid and other waste disposal; the impacts of operations on local ambient air quality; life and fire and safety management including emergency preparedness and response; and the supply chain of milk.

The Project may result in limited number of specific environmental and social impacts that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines. This is therefore a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects.

Environmental and Social Mitigation Measures

Pran has presented plans to address the E&S issues and impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements including: the host country laws and regulations; IFC’s Performance Standards; and the relevant World Bank Group (WBG) Environmental, Health and Safety (EHS) guidelines. The information about how these potential impacts will be addressed by the Company is summarized in the paragraphs that follow.

PS 1: Social and Environmental Assessment and Management System

IFC’s assessment considered Pran’s management of its EHS performance in the establishment and operation of its facilities; compliance with national and local permit requirements; and Pran’s engagement with local communities, regarding EHS performance. - Environmental & Social Assessment:
As the Project involves only the replacement and/or installation of new machinery in its existing plant, the environmental and social impacts of the Project are minimal. Also, as per the local regulations, the Project did not require a formal Environmental and Social Impact Assessment (ESIA) study as part of permitting process. Pran has however, duly procured all the necessary permits and is compliant with the regulatory requirements.

- Management Systems:

Pran has obtained a group-wide ISO 9001 (Quality) certification. Moreover, as a part of its commitment under the previous IFC investment, it has initiated the implementation of integrated management system (IMS) covering ISO 9001-2000, ISO 14000, and OHSAS 18000 standards across all its facilities. Pran expects to complete the implementation of IMS across all facilities by December 2012.

Pran’s juice packaging line in Ghorashal has recently received Food Safety Management Systems (FSMS) certification according to ISO 22001 standard, which it plans to roll out across all the other food processing and production lines in coming years.
- Organization:
Pran has designated officers for managing EHS aspects in each of its facilities. Moreover, in order to coordinate the implementation of IMS across all its facilities, it has created a corporate level position for IMS Officer to coordinate the EHS activities and implementation of IMS.

- Supply Chain:
Majority of the farmers who supply milk to Pran own 1-2 cows in their household, while some have upto 8-10 cows. A major pillar of the Pran’s dairy operations and mission is enhancing the collection of milk from these farmers at the village level and thus providing them with opportunities for generating additional income.

One key feature of this supply chain development effort is the concept of “Dairy Hub” which comprises establishing a network of village level collection and chilling centers and the transportation of chilled milk to the processing facility.

The extension services also focus on increasing the farmers’ awareness and knowledge about the dairy related best practices, such as health and hygiene of animals, and improving the milk yields. Pran has recruited nearly 180 full-time staff for this purpose, comprising of veterinarians, extension officers and other support staff.

The company has established a formal grievance mechanism for the farmers supplying milk. Contact numbers of senior management in corporate office are displayed at all the collection centers.

Milk is transported from collection centers to the processing facility in Pran’s own as well as rented tankers. Pran has implemented procedures to prevent harmful child labor in the milk transportation – which includes spot checks by security guards at the Company gates.

Monitoring & Reporting:

As a requirement of previous IFC investment Pran undertakes regular monitoring of effluents, solid waste and noise and reports to the regulatory authorities and IFC accordingly.

In addition, water and energy consumption are regularly monitored. Pran has plans to enhance this monitoring of water and energy and compile the information at corporate level for group-wide benchmarking and continual improvement.

PS 2: Labor and Working Conditions

Pran employs approx 9,000 employees across all its food processing operations, of which, dairy employs nearly 800 employees – comprising workers and management staff. Woman employees constitute approx. 50% of total workforce. Temporary workers are used primarily for packaging work through packaging contractors.

- Human Resource Policy, Management
Pran’s Human Resources (HR) division manages all HR related activities at corporate level, in coordination with the HR teams at each facility.

Pran’s HR manual articulates guiding principles, policies and operational procedures – which are in line with Bangladesh labor law requirements and IFC PS2 requirements. These are implemented across all the facilities by dedicated HR teams at each site.

In order to further enhance its HR practices and bring them at par with international best practices, Pran recently conducted an external audit of its HR policies, procedures and practices. Key issues that Company will address, include: enhancing workers’ comprehension of their rights, payroll records, appraisal, Incentive and promotional system, and grievance mechanism.

Pran is now implementing the recommendations of this audit and plans to accomplish all the recommendations by December 2011.

Pran has also developed and implemented policies and procedures to ensure that child labor is not employed in any manner in its operations.

There is an active elected union at the Ghorashal facility, and Labor Welfare Committees at each of the other plants. The company complies with the minimum wages legislation of Government of Bangladesh. Subsidized meals are provided to workers at all plant locations.

- Occupational Health and Safety

The General Manager at each facility is responsible for ensuring the occupational health and safety at each facility, with the help of safety team.

Based on a systematic assessment of fire risk, Pran recently modernized the fire safety systems at its facilities. Staff members are trained at each facility in firefighting. Development engineer at each location has the primary responsibility for fire-fighting.

Fire exits and the locations of fire extinguishers are clearly marked. Safety signage has been enhanced throughout the facility, to increase the workers’ awareness about safety issues.

PS3: Pollution Prevention and Abatement

IFC’s assessment considered the Company’s operations with regard to resources consumption (water, energy, fuel), efforts to optimize resource inputs, and waste minimization and management practices.

Pran’s dairy line at PIP comprises of three sections: liquid milk (pasteurized), liquid milk (UHT) and juice line.
- For pasteurized milk production, raw milk after receiving is filtered, chilled, homogenized, and pasteurized. In the process, cream is separated prior to homogenization, as required. Finally the milk is packed into pouches and then stored in the chill storage at 0-4 deg C.
- In UHT line, the pasteurized milk is further treated through UHT at high temperature to increase shelf life; cooled and packed into sterile “tetra pak” bricks.
- In juice line, mango pulp and other ingredients including sugar are fed to the blending tank. After blending, the juice is homogenized, pasteurized and packaged.

- Pollution Prevention and Resource Conservation:

In order to explore the opportunities for enhancing resource efficiency, Pran, with the assistance from IFC, recruited external consultants in February 2010 to conduct Cleaner Production audits across all its facilities. The audits identified several opportunities for reducing the energy and water consumption. Pran has already implemented several of the suggestions and is planning to implement remaining options, in the near future.

- Water Supply and Effluent:

The company sources its water from company owned deep tube wells at all plant locations and treats it in the water treatment plant. The quality of treated water used in process is monitored daily. The water consumption is not expected to increase after the implementation of the Project.

The company has an effluent treatment plant based on biological treatment, which treats the wastewater before discharging in the perennial river that flows along the plant boundary. Results of wastewater analysis reported in the Annual Monitoring Reports show that Pran complies with local regulatory as well as WBG EHS guideline requirements.

- Air Emissions

As a part of reporting requirements for the previous IFC investment, Pran is required to submit the air emissions monitoring data to IFC. Company has been facing difficulties in finding vendors who can provide air quality monitoring services in Bangladesh. Company is working with IFC to address this issue and ensure proper reporting of its air emissions.

- Hazardous Materials

Company has developed and implemented a Standard Operational Procedure (SOP) for handling of hazardous chemicals such as acids.

- Energy Sources and GHG Emissions:

Pran produces its own electricity required for the process with its captive gas-engine generators. Diesel generators are used as backup.

Based on the recommendations of Cleaner Production audits conducted in 2010, it is now commissioning a 2 X 4 MW power plant based on heat recovered from gas generators engine exhaust as well as engine jacket water. Once this power is available, the Company will not need any diesel fired backup generators.

PS4:– Community Health, Safety and Security

Pran’s facilities are located in rural areas. The nature of the company’s operations does not present significant safety and security risks to nearby communities.

Significant impacts likely to occur relate to the movement of vehicles on the approach road to Pran facilities for delivery of finished product.

On the basis of the above information, it is concluded that the Project has been designed and will be operated in compliance with IFC’s PS and relevant environmental, health and safety guidelines.

Stakeholder Engagement

Pran has a strong commitment to community engagement and social development in the areas where its facilities are located.

Apart from being the biggest employer for the neighboring communities, Pran undertakes several initiatives to help the nearby communities – especially in the area of education and health support. The company provides assistance such as food, shelter and other relief to community during floods.

Pran also provides merit scholarship in 30 schools around its facilities.

Client Documentation

File Name	Actions
2 PranDairy ESAP Final.pdf

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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