The key environmental, social, health and safety impacts associated with the project include occupational health and safety and terms of employment, child labor, environmental planning and permits required by national authorities; solid waste management, air emissions from all sources; energy consumption and energy efficiency; terms of employment; life and fire safety; and security arrangements. The information about how these potential impacts will be addressed by ALH is summarized in the paragraphs that follow and in the attached Environmental and Social Action Plan (ESAP).
Social and Environmental Assessment and Management Systems
In selecting premises for its retail outlets, ALH considers a number of factors, including suitability of the location to its business model as well as whether the development has been constructed to meet all national building codes, safety and security standards, and fire and life safety standards. As part of its efforts to identify possible locations for new stores, ALH’s marketing team requests landlords to provide copies of all government permits, consents and clearances in order to satisfy itself that the premises are operating legally. To date this process has not been a formal and documented requirement. Going forward, ALH will develop a procedure for ensuring that key environmental, health and safety (EHS) issues are considered when selecting new premises. The procedure will require completion of a standard EHS checklist, to be developed by ALH with review by IFC, for any new premises to be leased by ALH. The checklist will cover key EHS risks such as construction to acceptable building codes, provision of adequate infrastructure, etc. The checklist will require sign off by a senior Manager or Director to whom ALH assigns this responsibility, and will become part of the permanent record for the leased premises.
Given the nature of its operations, ALH does not have a single management system specifically designed for environmental and social considerations of its operations. Rather, the relevant policies and procedures are captured within the Group’s Human Resources (HR), loss prevention, occupational health and safety (OHS), security and emergency response, and project management systems, all of which have been submitted to IFC. As ALH has expanded its operations into new countries, each of the Group level systems is rolled out at the Country level, adapted as needed to take account of host country conditions (e.g., national labor law).
At the Group level, the key members of ALH’s senior management team responsible for environmental, working conditions and OHS issues are the HR Director, Loss Prevention Manager and Projects Director. ALH has appointed an HR Manager for each of its country operations who reports directly to the Country Director with dotted line reporting to the corporate HR director. The Loss Prevention Manager oversees a team of staff at ALH corporate headquarters in Riyadh, as well as two loss prevention staff based in Almaty, Kazakhstan. The Projects Director is responsible for ensuring that each new store location is selected, constructed and equipped in accordance with ALH’s policies and standards, which include an explicit commitment to ALH’s duty of care to its employees, customers and shareholders.
Group policies and procedures are conveyed to all ALH staff through an extensive staff training program, which starts at the time of hiring. All staff undergo induction training, which includes an overview of HR, loss prevention, customer relations and basic occupational safety. Periodic training is conducted on specific topics as wend when needed: for example, the Loss Prevention Manger recently developed a revised training module on internal theft control, which will be delivered to retail staff in all locations. The HR manger for each country maintains a record of training completed by each staff member.
Labor and Working Conditions
At the time of IFC’s appraisal, ALH’s full time employees totaled 5218, with the following country level breakdown: 4376 (Saudi Arabia), 383 (Egypt), 289 (Kazakhstan) and 170 (Jordan). ALH employs no one under the age of 18. ALH’s HR Director has established a comprehensive set of HR policies and procedures that have been approved by the Board of Directors and are applicable in all of the countries in which ALH has operations. The Country Directors are responsible for implementing the HR program, in conjunction with the country level HR Managers and with the approval of the Group HR Director. The HR Director holds conference calls with each of the HR Managers every three weeks to ensure that any issues or concerns are identified and resolved in a timely manner.
ALH’s HR policies and procedures are standard across its operations, with the exception of specific provisions needed to ensure compliance with host country labor law. Prior to establishing operations in a new country, ALH’s HR Manager and Country Director conduct a thorough labor due diligence of the country, including a review of labor laws, consultations with local labor lawyers, and assessment of market conditions and available skills. A key objective of this process is to benchmark wage and benefit programs for the sector against both host country law and Hay Group methods, in order to ensure competitive employment terms. At the time of IFC’s due diligence, this process was underway for ALH’s proposed operations in Azerbaijan. In countries where ALH has established operations, the HR Director conducts periodic audits to ensure consistent application of its policies and procedures; audits are currently being undertaken in both Egypt and Jordan. Audit findings are incorporated into an Action Plan with time bound deadlines for addressing any inconsistencies identified.
The Group’s working relationship with its employees is documented and communicated to each employee through a written employment contract which states the position, detailed job description, rights and responsibilities of the employee and employer, contract duration, working hours, annual leave and salary, and performance evaluation and grievance procedures. All employees receive a copy of the Group’s HR manual during their induction training. ALH has set up an online HR help desk to enable employees to raise issues and questions and receive responses in a timely manner.
ALH endorses the principle of freedom of association consistent with host country law; in Egypt, for example, a majority of ALH’s employees belong to a trade union. Where host country law prohibits unions, ALH policy requires the designation of employee representatives, elected by staff, once operations reach a certain size, to ensure that employees’ views are represented in key discussions and decisions.
ALH’s HR Policy contains an explicit commitment to nondiscrimination and equal opportunity. The policy is supported by a formal written performance evaluation system which includes assessment of the suitability of the staff member for wage increases and/or promotion. ALH’s grievance procedures allow staff to raise employment related issues to their immediate supervisor, Country Director, HR Manager and/or HR Director. The Group also has a ‘whistleblower’ mechanism wherein employees may raise issues directly to the Group CEO via a dedicated hotline; all such communications, which are treated as confidential, are investigated thoroughly. The HR management system includes detailed procedures for dismissal with cause and retrenchment, in line with international good practice. Where commercial factors require the closing down of a particular stores ALH practice is to retain staff wherever possible by providing them, additional training to enable them to transfer to a different store and/or brand.
ALH’s commitment to occupational health and safety (OHS) is contained in its HR policy, with procedures established by the Loss Prevention unit and Operations department. OHS risks are relatively few in ALH''s operations; the most common relate to traffic accidents, warehouse activities, and use of electrical equipment. As ALH’s operations expand, however, it will be important to establish Group level standard operating procedures for OHS, and to ensure that these are implemented consistently across stores. The same OHS procedures should be provided to all contractors/subcontractors working at ALH facilities. ALH’s Kazakhstan operations recently designated four staff members to attend a Government-sponsored training course to become trained and certified OHS officers. These individuals will be responsible for implementing ALH’s OHS procedures and staff training. A similar process of identifying OHS officers should be undertaken for all of ALH’s country operations. Lost time incidents, including traffic accidents in the case of drivers of ALH-owned vehicles, are monitored at the facility level by the relevant HR Manager. Currently there is no system for aggregating lost time incidents at the Group level; ALH will develop a common reporting format to capture this information for all of ALH’s operations to enable reporting, on a regular basis, to the HR Director and ALH’s senior management team.
Pollution Prevention and Abatement
Power and water for ALH’s corporate office in Riyadh and distribution center in KSA, as well as for country administrative offices, are accessed from the respective national grids and municipal water authority. ALH ensures that potable water is available for employees at each of its facilities. There are no standby generators at any facilities. Electricity for stores is provided by the mall operator under one of two arrangements: in most cases, store consumption is metered and ALH is billed monthly by the eclectic utility for actual consumption. In some instances, the cost of electricity is built into the rental agreement, at a fixed rate per square meter of leased space. While some stores have installed high efficiency lighting equipment, there has been no systematic program to implement energy efficiency measures across stores, or to monitor aggregate electricity consumption or greenhouse gas (GHG) emissions. Within an agreed timeframe, ALH will benchmark its current GHG emissions; thereafter, the Company will monitor this amount annually and include it in the Annual E&S Monitoring Reports (AMRs) it submits to IFC. In addition, ALH will develop a Group level program to identify cost effective energy efficiency measures that can be implemented across stores, starting with regular monitoring and benchmarking of consumption.
Selection and installation of air conditioning units at its stores is the responsibility of ALH’s Construction department, not the mall operator. ALH has confirmed that it only purchases air conditioning equipment that utilizes refrigerants permitted under the Montreal Protocol for that country, and in future will not install new air conditioning using any ozone-depleting refrigerant. (Of the eight countries covered by the Project, all but three – Azerbaijan, Belarus, and Kazakhstan – are Article 5 countries for which a specific phase out period for ozone depleting substances has been established). Going forward, ALH will discontinue the use of HCFC22 in new stores to be developed as part of the Project. Air conditioning units will be monitored regularly as part of regular store maintenance programs to identify possible leakage.
Solid wastes generated from operations at both administrative offices and stores are segregated by type (paper, cardboard, plastics, and styrofoam packaging), compacted and sold to local vendors for recycling. The only hazardous wastes generated are small amounts of oil and grease from equipment in use at the main distribution center in Riyadh; this is collected and sold to licensed vendors. Routine maintenance of vehicles owned by ALH is contracted out to third parties.
Community Health Safety and Security
Life and fire safety (L&FS) is handled jointly by ALH’s Project Director and the Loss Prevention unit. Given that all of ALH’s stores are small units located in much larger premises (primarily malls), much of the infrastructure related to L&FS is provided by the premises from which ALH leases space. With the exception of a very few of the older stores, all of ALH’s retail stores are located in premises equipped with sprinkler infrastructure (i.e., dedicated water mains). All of the stores included under this Project will be in premises equipped with these features.
ALH’s Project and Construction teams are responsible for connecting and fitting the actual sprinkler heads, using UK fire safety standards as a benchmark for determining how many sprinkler units are needed in a particular store. Sprinklers are installed in both the customer and storage areas of every store. Similarly, installation of smoke detection equipment and provision of fire extinguishers are done according to UK standards. Staff in all stores are trained on how to respond in the event of a fire emergency, including the correct use of fire suppression equipment. The vast majority of ALH’s stores are small, single story units with egress via wide doors, most of which are open during operating hours and which open to the mall’s common areas. Fire suppression, smoke detection and exit signage in the common areas is the responsibility of the mall operator.
To date, decisions regarding the fitting of L&Fs equipment for stores have been made by ALH’s Project Director and Construction teams, using UK standards as a common benchmark, Given the Company’s expansion plans, however, ALH recognizes that is important to formalize and record the process by which decisions are taken as well as the specifics of those decisions. ALH will develop a procedure for ensuring that L&FS infrastructure and equipment meet an internationally accepted (e.g., UK) standard. The procedure will include three standard checklists, to be developed by ALH with input from a third party life and fire safety professional acceptable to IFC. The first checklist will document that premises selected for new ALH stores have the requisite L&FS infrastructure to meet the internationally accepted standards; the second will document that the proposed store construction meets the references standard; and the third will confirm that construction was carried out in accordance with the agreed specifications. Each of the checklists will require sign off by a senior Manager or Director to whom ALH assigns this responsibility, and will become part of the permanent record for that store. Regular inspections by Loss Prevention and other ALH departments will audit against these documents.
Emergency response and security services are provided by the operator of the mall or other premises in which the store is located. In addition, the ALH Group has a corporate Security Policy and Procedures that specify actions to be taken to ensure basic security at all ALH locations, as well as to prevent and respond to a range of emergency situations including breach of data security, business interruption, bomb threats, terrorist attacks, civil unrest, etc. Staff are trained in these procedures and drills are conducted according to a schedule established annually.
ALH’s main offices in Riyadh are housed in a multi-storey structure that was constructed by the Company in 1985. The ground floor houses several and food outlets open to the public. To ensure that the building conforms to an internationally accepted L&FS standard, ALH will engage a suitably qualified consultant acceptable to IFC to conduct an audit of the building against an internationally accepted L&FS standard, and advise on remedial actions, if any, that are needed to bring the building into compliance with that standard. The remedial action plan, if any, will be completed within a timeframe agreed by IFC.
