While all Performance Standards are applicable to this investment, IFCs 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. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
The findings of the project appraisal indicate that there are no impacts related to PS4: Community Health, Safety and Security; PS5: Land Acquisition and Involuntary Resettlement; PS6: Biodiversity conservation and Sustainable Management of Living Natural Resources, PS7: Indigenous Peoples and PS8: Cultural Heritage given that the project does not include any land acquisition and the nature of the operations is limited to distribution of training materials, books and other media and education financing. Health and safety of communities are not impacted.

This is a category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, procedures, guidelines and design criteria.
**Information On IFCs Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives. Key environmental and social issues identified during the appraisal include the following:
Environmental and social management capacity in the operations
Labor and working conditions
Maintenance and air emissions control from the automobiles and vans used to distribute and promote the products/services
Occupational health and safety in the distribution system, and
Edilar’s relationship with the commission agents (sales representatives) who promote and sell Edilar’s products and services

Edilar has presented information showing how its current practices and policies seek to address the identified impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the Mexican laws and regulations and IFC’s Performance Standards. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow.

Edilar’s operations are limited to offices in Mexico City; a main warehouse and Distribution Center (DC); and 23 regional distribution centers that typically are office spaces with limited (less than 20m2) storage space for books, small electronics (laptops, tablets, accessories) and teaching material. Potential adverse environmental impacts of Edilar’s operations are limited.

Regional distribution centers are leased offices and do not typically require operation licenses or permits, the storage of material at each location is minimal and there are no significant loading or unloading operations. However depending on the location and applicable regional requirements, Edilar might obtain specific permits such as (i) certification of the use of the soil, (ii) verification of fire protection conditions, and (iii) authorization of the local environmental authority, within other requirements. Edilar obtains and maintains the required permits for all locations, including the main warehouse/distribution center. Edilar owns automobiles and small vans (mobile distribution centers), used primarily by the commission agents for sales and distribution purposes. Edilar performs periodic maintenance of the vehicles and obtains emissions certificates for those vehicles that require them. Edilar applies equivalent maintenance program to all the vehicles. The company uses a national courier company to distribute the products from the main DC to the regional DCs. Each DC has in place basic life and fire safety provisions. Waste management and basic recycling is performed at each Distribution Center based on individual initiatives. Edilar will provide a more structured procedure/program to ensure that all DCs apply basic E&S practices including but not limited to fire safety procedures and solid waste management/recycling program.

Edilar has a clear organization chart, showing differentiation between sales, administration, logistics and strategic planning. The vice president for administration and finance coordinates the human resources program and the administrative operations at each regional DC. Edilar has a dedicated function in charge of visiting at least annually all the distribution centers to verify basic conditions. Edilar will expand the functions of that position to perform environmental and safety inspections of the distribution centers. Edilar will ensure that the administrative personnel located at each distribution center have the knowledge and skills to identify and implement basic E&S measures such as verification of extinguishers, proper operation of them, proper management of waste (including promotion of recycling activities) and efficient use of resources.

Edilar keeps basic information of its operations, including energy consumption and operational data of the fleet. However, environmental and social monitoring and reporting is not defined; records such as fire drills, extinguisher inspections and waste generated were not available for review. The company will ensure monitoring and reporting of its Environmental and Social management activities.

Edilar has well documented manuals with detailed procedures regarding working conditions; the manuals define the responsibilities at different levels of the organization. The company currently does not have a formal human resources policy; however, principles of non discrimination, equal opportunity, fair conditions and compliance with local laws are strictly followed by the company. Edilar has 133 direct employees and 55% of the employees are women. Edilar complies with the Mexican labor law regarding age of employment, compensation and benefits. Edilar will implement a formal HR policy, aligned with PS2 requirements.

Conditions of employment for direct employees are defined in the contracts, including benefits and salaries. All salaries are above the minimum Mexican salary. Edilar has signed collective agreements with three different unions, conditions of the agreements are comparable and the applicability of each agreement depends on the location and type of job the employee performs. The management team of Edilar confirmed that they would not prevent employees to organize or participate in other workers organizations or collective bargaining. There have been no such requests. Edilar doesn’t use child or forced labor, not is there any suggestion of such practices in Edilar''s supply chain, which consists essentially of formal editorials, electronics distributors and education companies.

Edilar’s sales system is structured on commission agents that are independent sales representatives whose compensation is a sales-based commission only, with no basic salary. Commission agents are organized by region and related to a regional manager. Conditions for payment of commissions are well defined and communicated to the commission agents. Edilar have documented in the policies and procedures manuals the details of the structure of the commission system and there are specific policies for premium payments, bonuses, and access to additional benefits such as life insurance, depending of achievement of targets. All commission agents sign a commercial contract with Edilar and receive a copy of the manuals. The regional managers are in charge of identifying and enrolling commission agents; all the commission agents are registered centrally and the payment of commissions is done directly by Edilar.

Training is provided to employees based on internal needs. All employees undertake a basic induction program when they are recruited. Basic training related to fire safety and emergency response has been provided to personnel in the main distribution center/warehouse and in the central offices. Edilar will ensure that all the administrative personnel at the regional distribution centers receive basic training on fire safety and recycling programs.

Occupational Health and Safety: Employees in the main distribution center/warehouse wear safety shoes and lower back support belts. Anti-fatigue floor mats were available for certain areas within the main DC. Adequate housekeeping practices were observed, avoiding excess storage, leaving passages and exits free of obstacles. A forklift and manual trolleys are available to facilitate the handling of materials. Regional DCs are quite small and do not require any equipment to handle materials. No serious vehicular accidents have been recorded during the company operations. Occupational accidents are recorded, and the occurrence is low.

Pollution issues of this project are limited to air emissions from the fleet and waste management. Aspects such as water use, energy efficiency and liquid effluents are minimal and associated with occupancy of employees in the distribution centers and central offices including sanitary purposes and illumination. The main distribution center/warehouse uses natural lighting, reducing the electricity consumption, other distribution centers use LED lighting.

Emissions to air derived from Edilar operations are limited to the emissions from the fleet; the company does not have any book printing operations. Edilar owns around 80 automobiles and vans used for sales purposes. The vehicles have emissions certificates from local authorities when they circulate in municipalities requiring this certification. Edilar provides preventive maintenance to all vehicles.

Most of the solid waste generated includes cardboard boxes and some plastic. Some of the cardboard boxes are used to package and distribute the products to the clients or to return merchandise to the main DC. Most of the regional distribution centers separate the cardboard and give it to local recycling entities, however there is not a corporate guideline to promote this practice; Edilar will enhance the recycling practice.

Greenhouse Gas Emissions: Greenhouse emissions of the operations are associated with the use of fuels for the vehicle fleet and the use of electricity in the distribution centers and main offices. The greenhouse gas emissions of the current operations have been estimated at approximately 600 tonnes of CO2-equivalent annually, 85% of which is derived from the fleet and 15 % from electricity used in the DC and main offices. Increase in Greenhouse emissions will be proportional to the growth, the company will open maybe 5 or 6 more regional distribution centers and might increase the fleet accordingly to cover additional territory, increased emissions derived from the expansion will be around 100 tonnes of CO2-equivalent annually.

Edilar’s shareholders are actively engaged in educational activities, Edilar has constituted the Fundación Educación, Voces y Vuelos, I.A.P., key activities involve the support of education to vulnerable groups. The foundation supports teachers in indigenous regions and those serving homeless and street children by providing training, educational materials and investigation. Public disclosure of E&S information has been done previously as part of the engagement with the Inter-American Investment Corporation.

This ESRS, which constitutes IFC’s complete E&S disclosure for the project will be publicly disclosed locally at Edilar’s corporate offices and at the following distribution centers.

To contact the project company, please write to:

Ignacio Uribe Ferrari
Telephone: (52) 55 5398 2597
Blvd. Manuel Ávila Camacho 1994-104 Col.
San Lucas Tepetlacalco, Tlalnepantla - Edo. de México - CP 54055
mailto:iuribeferrari@redmagisterial.com

The Company will make adequate public disclosure of this transaction in the Mexican business and trade press.

Broad Community Support is not applicable for this project

Current client performance is aligned with applicable Performance Standards and EHS Guideline requirements. No ESAP is required.