The sections below describe measures that Conaprole has taken or will take to manage the potential environmental and social risks and impacts described above.
PS1: Social and Environmental Assessment and Management System
Policy
Conaprole has a policy dated May 26, 2009 which describes the company’s approach to occupational health and safety (OHS), the environmental and societal issues. The approach is based upon continuous improvement of social OHS and environmental impacts, compliance with all legal obligations and application of the highest management standards. Additional commitments are made, among other things, to prevent occupational illness and workplace accidents, to undertake hazard identification and risk analysis, and to prevent environmental contamination through use of clean technologies to reduce waste, effluents and air emissions. At present, Conaprole is working to develop a policy for the integrated management of quality, food safety, environment, occupational health and safety and social responsibility that will when adopted replace the 2009 policy.
Risk and Impact Assessment
Environmental and social risks and impacts arising from the ongoing dairy processing operations are well understood and were listed earlier in this review, and are managed, with a focus on continuous improvement, by Conaprole’s Engineering, Environmental, Quality and OHS functions and teams. Additional impacts, over and above those of existing operations, presented by the capacity expansion projects are expected to be relatively minor, being limited to additional emissions to air from boiler systems at VR, and increased effluent loadings at both sites. Utility system capacity upgrades to address these issues will be included in the project. The Projects will be subject to environmental assessment meeting the requirements of the Uruguayan regulator.
Management Program and Organizational Capacity
Conaprole demonstrates thorough management of social and environmental risks. Relevant elements of the management structure feature senior managers overseeing Technical, Innovation and Environmental matters, an Engineering Manager and a Human Resources Manager. A Sustainability Committee and a Human Resources committee report to senior management. There are departments for occupational health and safety and social accountability, reporting to human resources, and groups working on effluent management, waste minimization, energy efficiency and water savings reporting to the Technical, Innovation and Environmental and Environmental managers. Food safety is supported by a central quality laboratory and laboratories and testing at each production site.
The Company has a routine of internal auditing of environmental and OHS issues based on checklists, and can demonstrate continuous improvement in these areas. At six of the eight processing plants, the environmental management systems have been certified compliant with the requirements of ISO 14001:2004.
Emergency Preparedness and Response
The dairies’ refrigeration systems, as is typical in this industry, are based on ammonia refrigerant. At the Montevideo CIM plant, the condenser and high pressure liquid receiver systems contain approximately 25 tonnes of ammonia. Conaprole will commission an air dispersion model which will postulate a large scale refrigerant leak, to determine the distance from the tanks at which hazardous ammonia concentrations could be expected under a variety of ambient conditions. If indicated necessary by this modeling, Conaprole will modify its emergency response procedures to incorporate appropriate warning to the site’s neighbors in the unlikely event of such a leak.
In addition, Conaprole will undertake a review of ammonia storage at all its other processing sites, and if off-site impact of large scale ammonia leakage is possible, similar modeling will be undertaken and emergency response planning adapted as shown necessary by the modeling.
Monitoring and Review
Conaprole has comprehensive systems for monitoring and reporting environmental and social impacts of its operations. Monitoring frequencies and methodologies are defined by the management system, and all monitoring data stored in an enterprise software system from which reports are widely available. Reports are available, for example, describing lost time accidents, process water testing, effluent quality, boiler air emissions, and specific use of water, electricity and fuels. In addition, Conaprole is in the process of developing Global Reporting Initiative (GRI) compliant public reporting of its social and environmental impacts.
PS2: Labor and Working Conditions
Policy
Conaprole has adopted a human resources (HR) policy that outlines rights and responsibilities of the workforce and the Company. This policy observes ILO Conventions 138 on Minimum Age and 182 on Worst Forms of Child Labor. The policy is communicated to workers at the time of their employment, through regular briefings of employees, and in communication through bilateral management / union “commissions” present in each industrial plant and which meet on a two-weekly basis.
Working Conditions and Terms of Employment.
Conaprole has a unionized workforce, with approximately 80% of the workforce of approximately 2,100 persons being members of the Association of Workers and Employees of Conaprole (AOEC). Some of these are temporary workers who are employed on a seasonal basis – factory activity is seasonal and based upon the availability of milk which varies throughout the year.
Non-Discrimination
Conaprole does not have a formal non-discrimination policy, but in practice it does not discriminate in employment upon any grounds related to an employee’s personal characteristics unrelated to inherent job requirements.
Retrenchment
No retrenchment is expected, since Conaprole is expanding production.
Grievance Mechanism
Employees are able to raise grievances with line management staff such as supervisors, and administrative heads or directly to the human resources department. This management / worker relationship is supplemented by the management / union communication channel described earlier. Both grievance mechanisms are able to receive and consider individual or collective complaints.
Occupational Health and Safety (OHS)
Conaprole has a centralized OHS department, within the Human Resources are, under the leadership of a medical doctor, with plant level OHS-focused engineering staff. In support of the OHS Policy, the team has undertaken risk assessment, which has identified the greatest OHS risks as those arising from machinery trapping, working at height, working in confined spaces, falls, electric shock and chemicals handling. Safety rules relating to these and other hazards and more general guidance are provided in a comprehensive OHS manual, while more easy-to-understand guides on prevention of workplace accidents have been prepared, with separate guides aimed at worker and supervisory level staff. Formal risk analysis is undertaken in each dairy, which is used to prioritize corrective actions. Conaprole records and investigates all lost time accidents, with records readily retrievable from its databases, and can demonstrate follow up after accidents and implementation of measures to prevent repetition.
Despite these measures, the lost time accident frequency of all Conaprole’s operating sites is approximately XX per million man hours worked; while many of these injuries are relatively minor, the lost time accident frequency is approximately three times benchmark with variation in lost time accident frequency between sites from XX at to YY at CIM. Moreover, there is some evidence of repetition of certain types of preventable incidents, for example chemical splashes when cleaning, and examples exist of lack of machine guarding in certain non-production areas. Lost time accident frequency at all dairy sites is essentially static, without any evidence of an improving trend.
Conaprole will commission an industrial safety engineer to review Conaprole’s safety management processes, to advise how to move from the current performance levels towards best practice levels. Revised safety management processes are likely to build upon the considerable work already undertaken, and focus on identification and replication throughout the Company of existing best practices, and more systematic “mining” of accident records to identify and disseminate the knowledge captured therein.
[Note to Conaprole: two items at CIM were of particular concern – the battery charging room which is not well ventilated, therefore subject to possible hydrogen accumulation, yet equipped with standard rather than flameproof electrical fittings and missing guards on refrigeration condensers. These items are too “micro” to mention in the disclosed ESRS or Action Plan, but both require attention. We understand that a new battery charging facility will be developed as part of the expansion plan.]
Supply Chains
Conaprole sources milk from family farms with which it has long standing purchasing agreements. There is not a high risk of economically exploitative child labor or forced labor in these milk supply chains.
PS3: Pollution Prevention and Abatement
Resource Efficiency
Conaprole pays considerable attention to resource efficiency issues, through continuous improvement of their processes, equipment selection and choice of fuels.
Continuous improvement teams are active in the areas of milk loss reduction, energy efficiency and water conservation. Milk loss varies between sites, being reflective of the product mix and site age, and is between 1% and 3% of intake, the lower figure being reflective of best practice.
Specific consumption of abstracted or utility water consumption at the most efficient dairies, which includes VR, is around 1.6 m3/thousand litres of milk received, which is within but towards the upper end of the specific consumption range that is consistent with Best Available techniques (BAT) defined by the European Union’s Integrated Pollution Prevention and Control (IPPC) Reference Document (the “BREF”). Conaprole has developed a water sub-metering network at one of its sites and will be replicating this technique throughout the Company. At VR, drains from milk reception; pre-treatment; and the powder, cheese and processing areas feed separately to the effluent treatment plant, enabling water control by process area and a water and COD (hence milk loss) balance by these process areas. VR also is working on recovering “cow water” from its evaporators which after reverse osmosis treatment is used as boiler feed water and other similar uses. It is also planning a trial of tertiary treatment of water discharged from the effluent treatment plant, to assess its suitability for reuse, and has a fully detailed work plan for other water savings initiatives.
Specific use of electricity and heat at VR are respectively higher and lower than benchmarks adjusted for production mix, but this is explained by the use of mechanical vapor recompression (MVR) in the evaporator. Total energy use is approximately 70% of BAT benchmarks. An energy efficiency continuous improvement team is active throughout the group; considerable attention is given to housekeeping issues, such as control of leaks, steam trap maintenance, and regular combustion monitoring and adjustment. The Company has recently embarked on a company-wide program to enhance pasteurizer regeneration ratios to at least 94%, with consequent savings in heating and refrigeration. Refrigeration systems inspected were well controlled, with axial-fan evaporative condensers, generously sized with modest condensing temperatures. The company makes widespread use of variable speed drives for process and utility pumping systems, and has embarked upon a trial of LED lighting to replace fluorescent tubes.
Major capital plant purchases for VR include two new evaporators and a new spray drier. The two evaporators will each have two evaporation effects, with each effect heated by MVR. A two-stage spray drier has been specified, which has a spray drying chamber plus a separate fluidized bed drying section; this equipment selection corresponds to BAT. In addition, heat contained in the evaporator condensate will be used to preheat air supplied to the dryer. Specific energy consumption of the dryer will be around 3.5 GJ/tonne water evaporated, which represents highly efficient practice.
CIM is an older processing plant, and has higher specific consumption of energy and water, reflecting plant age and product variation: the plant produces ice cream, yoghurts and desserts as well as liquid milk products. Conaprole will complete the energy and water sub metering at CIM and after a period of data collection undertake a utilities efficiency audit at the plant.
Greenhouse Gases
In addition to the energy conservation measures described above, Conaprole makes some use of solar water heating for washrooms, and in four of its large processing plants including VR it uses dried eucalyptus wood as fuel for the steam boilers. Possible adoption of cogeneration of heat and power is under consideration for VR, while the Company is also reviewing options to install wind turbines at selected sites.
The Scope 1 and 2 greenhouse gas emissions associated with the expansion projects at CIM and VR are estimated at 54,000 tonnes CO2 equivalent per annum (tpa CO2 eq). This figure includes approximately 46,000 tpa CO2 eq associated with additional combustion of wood in VR’s boilers.
Effluent Treatment and Disposal
CIM pre-treats its liquid effluents to Montevideo city acceptance criteria, and discharges these pre—treated effluents to the city sewer. All other dairies treat effluents before disposal to surface waters, or wetland areas. In many cases, phosphorous, nitrogen and coliform content of treated effluent does not meet World Bank Group (WBG) guideline values, though effluent are generally compliant with Uruguayan requirements. Conaprole will embark on a program to upgrade its effluent treatment systems to meet WBG guidelines within three years. This program will consider opportunities to reduce effluent quantity as well as enhanced treatment options.
The considerable expansion of VR will require expansion of the waste water treatment facility at that site. The new system has not yet been designed, but it will be specified to meet WBG guidelines as well as Uruguayan standards.
Emissions to Air
While Conaprole regularly monitors flue gases from boilers and thermal fluid heaters the monitoring is aimed at maximizing combustion efficiency rather than control of emissions to air of the combustion products particulate matter and oxides of sulphur and nitrogen. Conaprole will supplement its existing monitoring regime with additional measurements for these parameters. If emissions exceed WBG guideline values, then appropriate pollution control measures will be agreed with IFC and implemented.
Wastes
Waste minimization and control is one of the objectives of Conaprole’s environmental management team. Wastes are collected separately by type (e.g. plastic, paper) and sold for recycling. Other wastes are collected by authorized companies and disposed to landfill.
Whey, produced at VR as a by-product of cheese-making was formerly disposed of to land, causing an issue with odor. This whey is now concentrated, using a membrane system and the whey concentrate sent to another facility where it is dried to powder.
PS4: Community Health, Safety and Security
Conaprole has well established procedures for control of process water quality, supplemented by regular testing and recording of test results in the enterprise software system. Review of these results showed that the system is working very effectively.
