Key environmental and social issues are: (i) the development and implementation of a corporate environmental, occupational health and safety (OHS) and social management system, including supply chain management procedures; (ii) adherence to IFC’s labor and working conditions (PS2) requirements and PNG’s labor law, during the construction phase as well as in KCL’s terms of employment; (iii) OHS risk prevention and management during operations (employees, contractors), including Life and Fire Safety (L&FS) provisions and emergency preparedness and response; (iv) optimization of water and energy use through project design and resource conservation measures, waste management; and, (v) engagement with local communities regarding environmental, occupational health and safety and social performance during the construction and operational phases.
PS1: Social and Environmental Assessment and Management System
Kongo Coffee Limited is a PNG family owned business which sources high quality arabica coffee from both coffee dealers and from smallholders, principally from remote communities in Simbu province in the Highlands region of PNG. KCL adds value to parchment by primary processing (drying, hulling, polishing, and sorting) in a dedicated facility at Chuave, storage in Goroka, and then exporting primarily to Germany (largest customer), and Japan. Small quantities of cherry are also bought and processed to parchment and green bean. There is also a small coffee roasting / grinding business which packs coffee into retail packs for both the domestic and Australian markets. KCL is a significant source of wealth in Simbu, as coffee is the sole income for approximately 90% of the population. At Simbu, each household or grower group has an average of less than 1,500 coffee trees (less than 20 bags of coffee per year). Almost all production is shade grown and intercropped with food crops. Coffee represents 28% of PNG’s agricultural exports by value. Less than 6% of PNG coffee is certified.
Management Structure: The senior management structure of KCL consists of the CEO and his wife, and a recently hired Finance Manager. The environmental and social risks are managed by the Company’s engineer and staffs, working in field extension services with coffee growers and in environmental health and safety (EHS) management at the factory.
Environmental and Social Management System (ESMS) for Social and Environmental affairs, Quality, and Occupational Health and Safety Management: Kongo Coffee Limited has an evolving Environmental Policy, and Occupational Health and Safety management system for managing environmental and OHS risks. As set forth in the attached Environmental and Social Action Plan (ESAP), KCL will upgrade its management system to encompass social, OHS, human resources, and environmental affairs management during construction and operational phases. The ESMS shall comply with applicable PNG regulations and IFC Performance Standard 1. The upgraded ESMS will specify operating policy requirements as well as basic procedures that must be in place for: (i) Life and Fire Safety (L&FS), emergency preparedness and response, and ongoing management of fire risk, including maintenance of fire safety equipment and performing fire drills; (ii) energy and water consumption and efficiency; (iii) KCL and contractors’ compliance with labor and OHS requirements; (iv) non-hazardous and hazardous waste management; (v) community engagement and grievance mechanism procedures; (vi) supply chain management procedures.
Environmental and Social Responsibilities: The Company agrees to appoint a qualified professional to manage environmental and social affairs, responsible for environmental and social performance in all KCL operations. The Company will implement a management system procedure addressing the training of employees and contractors (field and factory) to ensure knowledge of its social and environmental policies, including community grievance procedures.
Supply chain Risk Monitoring: At PNG, coffee moves from the smallholders to buyers (who often buy by the side of the road), to processors, and to exporters. Grades are basically divided between smallholder (referred to as ‘native’) Y grade coffee, and the products of the remaining estates. There are some intermediate grades which exporters are trying to develop based on smallholder coffee. KCL is one of the 10 largest producers/exporters in PNG, and the majority of it’s coffee is sourced from smallholders. KCL coffee is sourced either from small and medium size traders who buy coffee in outlying parts of Simbu and in Western Highlands, or smaller quantities of coffee are bought directly from identified coffee farmers in the Chuave district. KCL produces “Elimbari”, a higher quality prepared smallholder coffee. Elimbari specialty coffee is UTZ certified, which provides an assurance that no child labor is involved in the Elimbari supply chain. UTZ certification has been organised by Hamburg Coffee Company for the factory, green bean exports and roast coffee products, Documentation was examined and the KCL UTZ certification is found up to date. The UTZ logo is carried on the roast ground packages. These farmers follow a rigorous picking and processing protocol, and are supported intermittently by the Company’ extension services through farmer meetings in the field or at the factory.
Sustainable agricultural practices and environmental and social assessment of coffee suppliers: Kongo Coffee Limited will collect and submit baseline data (current situation) of their suppliers once a year to obtain data on sustainable agricultural practices; integrated pest and disease control programs; agrochemical and fertilizer use and management; use of Personal Protection Equipment (PPE); storing and recycling of agrochemicals and packages; improvements in occupational health and safety at the smallholder level; improved quality assessment and monitoring of product; and organic waste management practices. The Company will promote best practices placing emphasis on Elimbari specialty coffee suppliers, and report to IFC on implementation of this plan as part of its regular annual reporting.
Supplier Database: In an integrated fashion, the supply chain component of the ESMS will periodically collect information and categorize suppliers according to identified social and environmental impacts and risks and knowledge of suppliers’ practices (Elimbari specialty coffee and other suppliers). The supplier’s database will be a tool to collect data of suppliers with “unknown practices”, where some informal information is available, to undertake actions to disseminate improved agricultural practices (such as use of inputs, better coffee production technologies, etc.), proactively move suppliers to a higher category, and to monitor the dynamics of suppliers. The categories of suppliers will reflect the level of knowledge available to KCL regarding E&S standards and risk assessment under which the crop was produced (e.g. Certified, Traceable within a region, Non-traceable).
Senior Management Reporting and Monitoring: The Company will implement a process for periodic reporting and monitoring to KCL senior management, activities that have been identified to have potentially significant impacts on social issues and the environment, during normal operations and upset conditions. This will allow periodical realignment of KCL’s sustainability priorities.
PS2: Labor and Working Conditions
KCL is a non-discriminatory and equal opportunity enterprise that has a total permanent labor force of 85 employees. The workforce grows to 250 – 300 people in peak coffee season. No identity documents of workers are ever deposited with KCL management during employment for any reason. The minimum employment age at KCL is 18 years, and the appraisal mission found no evidence of forced and/or harmful child labor at KCL overall operations nor at the supply chain. The Company participates in funding several schools in the remote rural areas where it operates (please refer to the section on “Client’s Community Engagement” of this report).
Revise Human Resources (HR) Policy: Working conditions at KCL are managed directly by the senior management, reportedly in line with national law, and without the benefit of a formalized set of HR policies and procedures. To move forward, KCL will develop and implement human resources policies and associated procedures, appropriate to its size and workforce, that ensures full compliance with national labor law, and IFC Performance Standard 2 requirements (such as freedom of association and collective bargaining, and safeguards to further ensure that child labor and forced labor is not used directly, through contractors, and/or its supply chain). The HR policy will be communicated to all direct and contracted employees through clear and understandable documented information.
Occupational Health & Safety (OHS) Plan and Life and Fire Safety: The visit to the coffee processing facility at Chuave showed a need for improvement of OHS measures to protect the workforce. Electric wiring, companionways, and safety railings require upgrading, and general lighting in the factory was inadequate for night operation. The Company follows OHS standards informally, and the work force is trained on basic safety and health standards and practices. The Company is working to develop its OHS policy and regulations. Medical assistance for workers is obtained from local health centers. As part of the ESAP, KCL shall present to IFC, for review and approval, a management system procedure for managing occupational risks arising from their own or contractors’ activities, to comply with the national regulations, and the WBG General EHS Guidelines, and corresponding personal protection equipment in accordance to international recognized standards. The Company will disseminate a system to manage health and safety hazards. This will include employee training on safety awareness, development of in-house competence for job hazard analyses during the construction and operational phase, and appropriate use of personal protection equipment where required.
PS3: Pollution Prevention and Abatement
Energy and Water Use and Efficient Management: Energy is supplied from PNG Power that is generated by a large hydro at Yonki Eastern Highlands Province. A stand-by generator is used an average of about 170 hours/year. The water source is a surface water stream, trapped in a catchment tank, and pumped to a 30,000 liters reservoir tank. There are no documented procedures to reduce energy and water use at KCL. The Company will present a management system procedure to ensure efficient energy and water use. The Company will further develop a water conservation procedure and integrate into its management system procedures. The management system will encompass installing a digital water metering device at the surface water source and register water intake. The annual E&S monitoring report to IFC will include the monthly measurements of water intake, and potable water quality monitoring.
Implement Organic Waste Management System at Small Wet Mill for Premium Smallholder Coffee (PSC) Processing Facility. KCL’s processes in a small wet mill at Chuave about 150 Tonnes of Elimbari a higher quality coffee from 400 selected smallholders. By introducing improved pulping / fermentation at the PSC, it may be possible to produce much larger quantities of higher quality coffee, as well as to reduce the environmental footprint. Consideration might be given by KCL to implement more modern coffee pulpers, such as the Compact Ecological Wet Processing, which combine pulping and fermentation in one process and use very small quantities of water (barely 1 liter of water per kilogram of dry parchment coffee). This methodology could be further proposed to small coffee producers. KCL will review their organic waste (pulp) management procedures, and will develop a plan to be implemented for required modifications for organic waste management to comply with WBG General EHS Guidelines. This plan will include specific actions and timeline. There is no hazardous waste generated at the wet mill.
Waste Management at Kongo Coffee Limited: Waste minimization and/or segregation according to type are not performed at KCL in Chuave. The waste product from the coffee is the parchment hulls. These are stored in silos and are fed to the heat exchangers that dry coffee, or applied into gardens to improve soil structure and fertility. Waste products including truck batteries, waste oil, paint, etc., need to be correctly stored and a disposal plan must be initiated. As per the ESAP, a waste management system procedure will be developed, to manage and monitor both hazardous and non-hazardous waste streams (organic, non-organic) that will meet the more stringent of national laws and regulations and IFC’s Performance Standard requirements, including those of the WBG General EHS Guidelines, during construction and operational phase. Domestic sewage is captured into a soak pit.
PS4: Community Health, Safety and Security
The KCL processing facility is located away from the main community area (Kundiawa town of about 10 000 people is the capital and seat of the Simbu provincial government), and its operations do not restrict community mobility or right to public utilities. Nearby surrounding community settlements are scattered. The appraisal found that there has never been any complaint, disputes made by any individual, collectively by a community, or any interested party. Kongo Coffee Limited will prepare a management system procedure addressing community engagement during the construction and operational phase, including a mechanism for receiving, addressing and resolving community grievances and complaints during the construction and operational phase. Procedure content shall be guided by IFC Stakeholder Engagement Good Practice Manual.
Only local security staff is employed by the Company and these are trained in the use of force for defensive purposes.
