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
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

This proposed corporate investment targeting specifically the five agro-processing plants represent on-going and planned initiatives within existing industrial footprints. As such, these are expected to have limited environmental and social impacts which are site-specific, and largely reversible. Those impacts can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria as described in the following sections. Thus, overall, this is a Category B project in accordance with IFC’s Environmental and Social Sustainability Policy. This categorization is in accordance with other similar type of projects within the sector. The targeted projects are designed to avoid, minimize and manage environmental and social risks and impacts of Olam’s subsidiaries’ operations in compliance with applicable IFC’s Performance Standards and World Bank Group (WBG) General and Sector (Sugar Manufacturing, Food and Beverage processing) Environmental, Health and Safety (EHS) Guidelines.

Key E&S issues applicable for this corporate and plant-level investments are: (i) Olam’s QEHS policies, risk assessment and management/monitoring systems, plans and procedures, and technical capacity to manage E&S performance of all its various operations, especially the five facilities targeted by the use of the proceeds; (ii) Olam’s corporate HR policies and onward adherence to national labor law, worker conditions, standards and OHS risk prevention and management, including Olam’s employees, contractors and nearby communities; (iii) land acquisition and expansion planning procedures, (iv) Life and Fire Safety (L&FS) provisions and emergency preparedness and response; (v) use of public utilities (water supply and energy), optimization of water and energy use through project design and resource conservation measures and greenhouse gas emissions; (vi) wastewater collection and treatment, solid waste disposal, air emissions from generators and boilers, potable water quality, treatment and monitoring, hazardous material handling, management and control of pest and rodent; (vii) food and transport safety, and (viii) engagement with communities on EHS, food and traffic safety and social performance.

Description of key environmental and social issues and mitigation
To ensure that Olam will continue to comply with IFC Performance Standards and WBG EHS Guidelines as well as national environmental, labor and social laws and regulations for its corporate and targeted operations under this investment, Olam will implement the measures summarized below and in the attached Environmental and Social Action Plan (ESAP), which has been agreed upon by Olam and IFC and which will address any compliance gaps with PS requirements. The scope of the E&S due diligence has been focusing on the E&S performance of the proposed Approved Projects. Main gaps deficiencies identified against IFC Performance Standards for these five facilities have been the following: limited environmental and social management system and related standard operating procedures, deficient internal EHS technical capacities, less than optimum OHS performance, including absence or early development of OHS management plan and practices, oversight monitoring of third-party contractors, resource efficiency, and wastewater and solid waste management measures needed to be improved at several sites. Plant-level due diligence reports, including EHS findings and deficiencies against PS requirements have been shared with Olam’s corporate and plant-level managers for corrective actions at each facility. IFC further carried out a review of Olam’s corporate EHS management systems and procedures which is presented below.

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.

Environmental and Social Policies. Olam’s vision statement, adopted in 2009 and further enhanced in 2011, states that “Olam endeavours to generate economic prosperity, contribute positively to social welfare and manage our stewardship of the environment in a sustainable way, so as to ensure the creation of a real long-term value for all”. These three pillars of sustainability, namely economic prosperity, social welfare and environmental stewardship constitute its commitment towards achieving the Olam Sustainability Standard. The operational translation of this Standard has been consolidated by the adoption of Quality, Environment and Sustainability, Occupational Health and Safety (QEHS) Policies in June 2011. This forms the foundations of Olam’s Codes of Practices which are being rolled out across its businesses. As set forth in the attached Environmental and Social Action Plan (ESAP), these Policies will be reviewed and updated in order to capture the expanded scope of Olam’s business model toward primary production and processing, while making a direct reference and a commitment to comply with IFC Performance Standards and relevant World Bank Group’s Environmental, Health and Safety (EHS) Guidelines.



Environmental and Social Risk Assessment and Management System and Program. In accordance with Olam’s original business model focusing on sourcing and trading of agro-commodities, Olam has established in 2005 a Corporate Responsibility and Sustainability (CRS) function to pro-actively identify, assess, and manage supply chain’s E&S requirements as part of the Function’s operations. Specifically, Olam adopted in 2011 its Livelihood Charter (olamonline.com/sustainability/olam-livelihood-charter) framework encompassing 8 qualifying principles, namely 1) finance (pre-finance crop purchase and provide capital advances for production), 2) yield improvement (training of farmers in Good Agricultural Practices (GAP), establishment of model farms and farmer field schools, provision of seedlings, tree grafting, fertilizer and crop protection products), 3) labor practices (educating farmers groups to adhere to a “no child labour policy”, training in OHS and safety use of equipment), 4) market access (fair and competitive price offered to farmers), 5) quality (good quality products, including promotion of defined good quality parameters and payment of premium), 6) traceability (farmer record keeping for full chain of custody to the customer, including all in-country transportation, primary processing and storage, all to independent auditing standards), 7) social investment (investment in community-based projects to enhanced livelihoods and contribute to economic development, such as building primary schools and health units, HIV/AID awareness training and installation of water pumps), and, 8) reduction of environmental footprint across the supply chain (working with farmers to intensify production of existing farms, reducing deforestation, water management
and reinforcing sustainable agricultural practices). These principles captured the IFC Performance Standards’ supply chain requirements as they relate to harmful child/forced labor and biodiversity risks associated with conversion of natural and critical habitats. To date, more than 17 Olam supply chain initiatives fully complies with the 8 principles, encompassing 212,377 farmers (annual increase of 230% from 2011) and covering 369,740ha (annual increase of 236% from 2011). More than 80% of these results have been achieved in Africa. In addition, 11 additional supply chain initiatives are presently under implementation but have not yet reached compliance with all of Olam’s principles. Olam has set a target that by 2020 there will be 800,000 smallholders within the Olam Livelihood Charter.



In the context of the expansion of its business model towards upstream operations across nine products (timber, palm, rubber, coffee, almond, rice, cotton, and dairy) and in eleven origins (for details, consult olamonline.com/sustainability/sustainability-reports), the Olam Executive Committee (ExCo) has laid out the following requirements:1) all upstream operations shall undergo a detailed Environmental and Social Impact Assessment (ESIA) Study using host country’s laws and regulations and Principles and Criteria of Voluntary Agro-Commodity Standards as applicable E&S requirements; 2) all plantation projects should obtain certification against recognized sector standards (e.g., FSC, RSPO); 3) a separate technical plantation competency team accountable to ExCo, and liaising with the CRS function should be established through the recruitment of internal and third-party environmental and social experts; and 4) the strengthening of the internal E&S due diligence process prior to investment through completion of a due diligence report, to be reviewed by the CRS Board Committee prior to submission to Olam’s Capital Investment Review Committee (CIRC). During the IFC due diligence, validation of compliance with these requirements has been done, especially for timber, palm oil, rubber and rice. Specifically, a review of detailed Environmental and Social Impact Assessment (ESIA) Studies has been done for a sample of upstream businesses, including discussion on High Conservation Value (HCV) and Free Prior Informed Consent (FPIC) processes. It is now being rolled-out for other commodities, especially coffee plantations in Laos, Tanzania and Zambia. Olam is presently one of the largest natural forest managers with over 2.2. millions hectares of forest concessions under management, including over 1.3 million hectares of FSC-certified forests in the Republic of Congo, making Olam amongst the largest suppliers of FSC certified tropical hardwoods in the world. In addition to its goal in achieving certification for all its timber concessions (65% achieved to date, while the rest of the concessions are certified under French-based Sustainable Forest Management), Olam is com
mitted to reaching, as requested under IFC’s PS6 requirements, RSPO certification for its palm oil plantations and to any other relevant and credible standards, if existing, for its rubber, rice and coffee plantations.



As mentioned above, Olam has also invested in more than 110 agro-processing units so far. To address Quality, Environmental, Occupational Health and Safety (QEHS) aspects of these acquisitions and/or greenfield investments, Olam has established - in early 2010 - another central function, named Manufacturing, Innovation and Technical Services (MATS). Building on the EHS policies adopted in June 2011, this Unit has developed QEHS standards and code of practices under each corporate QEHS policies, namely a) Quality (Food Safety, Good Manufacturing Practices, Hazard Analysis and Critical Control Points, Good Laboratory Practices, Traceability and Certification, Recall Procedure, Suppliers, Environmental Monitoring, etc.); b) Environment and Sustainability (Energy, Water and Waste, etc.); and c) Occupational Health and Safety (Workplace Risk Assessment, Incident Investigation and Corrective Action Plan (CAP), Power Lockout and Tag out (LOTO), PPE, Workplace Inspection, Permits, Hot Work, Confined Place, etc.). When considering the acquisition of an existing asset or greenfield investment, MATS conducts either a comprehensive technical review or an audit of prospective facilities, benchmarked against Olam’s policies and QEHS standards, to determine areas of concern and identify necessary mitigation measures to ensure compliance with the relevant national requirements. IFC reviewed the quality and robustness of MATS’s QEHS risk assessment process and recommendations during its due diligence, including for the five targeted plants, for an acquisition process and a project investment thesis for a greenfield investment. The process included the inclusion of specific QEHS recommendations into the CAPEX program. The MATS’s QEHS risk assessment process is now being mainstreamed for all new investments over 1 million dollars. Going forward, as set forth in the ESAP, the scope of review and audits will be expanded to include the requirements of all IFC Performance Standards and applicable WBG generic and sector-specific EHS guidelines.



In addition, MATS is presently developing a master list of QEHS procedures, which will cover all Performance Standards requirements (e.g., stakeholder engagement plan, external communication and grievance mechanisms, supply chain management system procedure, resource efficiency, security personnel, land acquisition and involuntary resettlement, management of ecosystem services, indigenous peoples, and cultural heritage’s chance finds procedure) and quantifiable parameters under World Bank Group General and Sector-specific EHS Guidelines, to be adopted and implemented in each agro-processing / packaging facility encompassing: a) governance/management (integrated management control (e.g., policy and legal rev
iew, emergency preparedness, customer and consumer feedback, procurement), improvement management (e.g. data collection and analysis), production management, and personnel management); b) quality and food safety management (e.g., supplier and input management, product control, and QFS monitoring); c) environmental management (e.g., energy, water, waste, emissions, packaging, ODS management, release prevention and response management, and microbiological hazard control); and d) occupational health and safety program management (e.g., workplace health and safety, including contractors, machinery and equipment, hazardous work activities, occupational health management, occupational and industrial hygiene, and fire safety management).



Need identification and definition of these procedures are assessed through the completion of Olam’s QEHS Maturity Gap Analysis Tool at each plant and are integrated into the preparation of a plant-level QEHS roadmap. Considering the significant legacy of processing units and the work required to bring them up to Olam’s QEHS standards, MATS’s interventions has prioritized, on a pragmatic risk assessment approach, plants assessed as having higher risks on Quality and Food Safety and OHS management issues. As a consequence,environmental and sustainability issues will be covered on a more comprehensive basis in the next implementation phase. IFC site visit and its findings at the plants in India and Nigeria support this risk prioritization. This being said, reporting on environmental and sustainability (e.g., carbon, water usage, energy usage, waste usage) at all these plants will start in the next few months.



As set forth in the ESAP, going forward, Olam’s senior management has agreed to further develop and integrate CRS and MATS’s Environmental, Occupational Health and Safety (EHS) and quality/food safety management system elements – in line with ISO 14001, OHSAS 18001 and HACCP/ISO 22001 – into an Integrated Management System consistent with IFC’s PS1 requirements and applicable WBG General and Sector-Specific Environmental, Health and Safety (EHS) Guidelines. In addition, the application of the Master List of QEHS Procedures that must be in place for quality control and compliance during operational phase will be expanded to all Olam operations.



Organization. In 2008, under the leadership of Olam Group Managing Director and Chief Executive Officer (CEO), Mr. Sunny George Verghese, the CRS Executive Committee was established to deliver, monitor and evaluate corporate and product-level sustainability initiatives across its businesses and origins. Chaired by the Managing Director of Olam’s Cocoa Business & Executive Committee Member, its activities are managed by the Function Head, Senior Vice-President based in London and CRS representatives in Africa and Asia. The CRS Executive Committee is accountable to the CRS Board Committee. The CRS function on supply chain risk management, including the Livelihood Chart
er’s initiatives, is composed of 637 nationals working with farmer associations and cooperatives. CRS has also established a corporate team of 5 technical resources, covering CRS and plantation related activities, which is going to expand through identification of internal Olam’s technical competencies based on critical skill sets and development of “champions” and “Communities of Practice” in key disciplines. On its side, the MATS Leadership team is composed of 8 dedicated senior professionals assigned to processing projects at corporate and regional levels (Americas, Africa & Europe, and Asia) or products (spices, food staples and packaged foods). The MATS community also includes plant managers and staff, engineering and project managers, technical experts, Quality Assurance, Food Safety / Environmental and OHS experts assigned at the plant level, technical services, product application, and sale support. MATS intends to establish and formalize Communities of Practice on specific issues (e.g., wastewater management, air emissions, waste management and valorization) in the next few months. In addition, for greenfield processing investments, a Steering Committee is systematically established consisting of Country Head, Business Product Leader, and MATS to define and select state-of-the-art design processes and equipment and to monitor project implementation, including EHS performance. CRS, the plantation unit, and MATS are supported by an extensive consultancy network. The global Human Resources (HR) function also has a team of auditors that visit individual country operations to ensure compliance with local law and Olam HR policy.



Training. Considering the expansion of Olam’s business model toward upstream and midstream operations in the agro-commodity value chain, in addition to its original trading activities, the establishment of the CRS and MATS functions has been accompanied by delivery of training programs over the last two years to effectively ensure the implementation of its corporate EHS policies, operational QEHS standards, and procedures. In particular, Olam’s extensive team working on its sourcing from small-scale agribusiness suppliers works with farmer organizations and cooperatives in strengthening their internal control systems as well as continuous training support to farmers in alignment with Olam Livelihood Charter Principles. Considering the significant increase in the number of farmers reached, the effectiveness of this program has been validated, including through meetings with Olam supply chain representative in Ivory Coast. As indicated above, ESIA studies complying with national EIA regulations and/or Principles and Criteria of Voluntary Standards for large-scale plantations have raised the level of awareness and familiarity of project/plantations managers with the proposed ESMP, including EHS mitigations measures to be implemented during construction and operation phases. Lastly, MATS had embarked on the delivery of
an ambitious number of competency workshops to Olam project/plant managers from January 2012 to June 2012, especially in the Africa region, on introducing corporate EHS policies, standards, QEHS Self-Assessment GAP Tool, plant-level QEHS management system procedures, MATS’s QEHS scorecard and monthly reporting requirements, etc. Additional delivery of these workshops will take place in Asia in FY12-13. MATS has also started delivering plant site-specific HACCP, BRC and QEHS management system and procedures training sessions in Africa. Further Olam’s senior management has agreed to further consolidate this training program, especially in the context that ultimate responsibility for the day-to-day E&S performance rests respectively with the contractor and project/plantation/plant managers during construction and operational phases.



Monitoring and Reporting. Olam has adopted a comprehensive EHS monitoring and reporting system for all its various operations in order to measure its development impacts and the continuous improvement of its E&S performance. In particular, for the Olam Livelihood Charter – the Olam-wide commitment to developing sustainable supply chains – CRS is annually monitoring and reporting on a range of KPIs aligned to its 8 Principles, including all its on-going 28 initiatives (including some not as yet qualifying for the Livelihood Charter). Information, such as general farmer organization information (number of farmers, number of hectares, and average farmer income), key yearly achievements, cost of the initiative, finance, training, inputs (fertilizers), labor practices, market access, quality, premium prices paid, traceability and certification, community social investment projects and collection of socio-economic data) is collected, analyzed, aggregated and reported in its annual CRS and Livelihood Charter publications, as well as the Company website. It is worthwhile to indicate that this monitoring and reporting framework captures PS2 and PS6’s supply chain requirements. On its side, the plantation unit has provided to the IFC team a final draft of the M&E framework, encompassing key metric categories to be monitored, including economic (e.g., cost per unit of production), agronomic (e.g., productivity), ecological (e.g., soil, air quality, water use and efficiency, carbon balance, and energy consumption) and customer (e.g., traceability and certification) parameters. The Olam plantation-based projects funded by DFIs undergo semestral E&S monitoring and reporting on the implementation status of the ESIA’s ESMP by independent consultancy firms. Olam’s CRS plantation unit and project/plantation managers work closely with these firms during this process for continuous improvement. Lastly, MATS has also introduced standard performance metrics and reporting framework (Olam balanced scorecard across QC4S) based on 15 key parameters, including quality, cost, safety (Lost Time Incidence Frequency Ratio and Accident Free Days),
Sustainability (Carbon, Water Usage and efficiency, Energy usage – energy consumption/tons produced, Waste – biomass produced), staff (retention, training days). It is worthwhile to underline that these capture IFC E&S mandatory Development Outcomes Tracking System (DOTS) indicators for IFC investments in agriculture and food and beverage. As indicated above, monthly tracking of quality and food safety, as well as OHS issues, has already started for most agro-processing units, and its scope will expand to include environmental/sustainability indicators in the next few months. Based on this tracking, MATS will use these reports to pro-actively establish Communities of Learning on key issues (wastewater, waste valorization) and pro-actively identify resource efficiency projects (e.g., cleaner production, co-generation plant). It is worthwhile to underline that Olam has been producing increasingly transparent, result-based, and forward-looking Corporate Responsibility and Sustainability (CRS) Reports since 2008. In addition, Olam started reporting on its E&S performance in 2012 following the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines (G3.1), the most comprehensive sustainability reporting guidance currently available, and on Carbon Disclosure Project in 2011. Olam will report annually to concerned country/local authorities and IFC as part of the Annual Monitoring Report (AMR) for the five targeted projects.


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Supply chain risk assessment and management. Olam is committed to the responsible and sustainable management of its supply chains from seed to shelf. As indicated above, Olam’s trading operations include multiple agro-commodities across 16 product platforms spanning 65 countries. In particular, Olam is one of the largest global supplier, by market share, of raw cashew nuts, Robusta coffee, cocoa beans, teak wood, cotton, rice, peanuts and is one of the largest almond orchard owners in Australia. Based on its 2010 baseline, Olam has an outreach of 3.5 million farmers, out of which more than 259,653 farmers and 451,544 ha are covered by 28 Olam lead farmer initiatives. The livelihood initiatives are mostly targeting cashew, cocoa, coffee and cotton, agro-commodities grown by smallholders, and reducing potential harmful child/forced and biodiversity related issues. Olam is on course to meet its 2015 target as it relates to farmer numbers reached by its Livelihood Charter (400,000 farmers) and its product traceability (from 40% in 2012 to 60% in 2015). As indicated above, Olam has judiciously invested substantial efforts in establishing its supply chain E&S risk management framework, assigned dedicated staffs (637 nationals working with farmer associations and cooperatives), defined its principles/standards and established annual M&E and reporting processes. To further meet this leadership commitment, Olam has launched the development of a Supplier Code of Conduct, which will explicitly request Olam’s suppliers to meet O
lam’s principles/standards, including social welfare (e.g., avoidance of harmful child and/or forced labor, working hours, freedom of association and collective bargaining), quality and traceability, environmental stewardship and commitment for reporting and third-party auditing. As set forth in the ESAP, Olam’s Supplier Code of Conduct will integrate the IFC PSes’ supply chain requirements, namely harmful child and/or forced labor, significant OHS issues leading to life threatening situation, and risk of significant conversion of natural and/or critical habitats leading to biodiversity loss. Olam will pursue the development and implementation of a risk assessment and management based approach for its supply chain, specifically for “high risk” agro-commodities being sourced directly from primary suppliers over which it has direct leverage and control, as set forth in the attached ESAP: 1) as part of its existing corporate ESMS, Olam will develop a specific supply chain component; 2) Olam will upgrade its purchasing policy (mainstreaming its Olam’s Supplier Code of Conduct into its overall purchasing policy) to promote sustainable sourcing practices promoting compliance with national labor and environmental laws and PS’s supply chain requirements, including among others, avoidance of child labor, forced labor, deforestation and biodiversity loss, and natural forest conversion; 3) where Olam has direct relationships with producers of a commodity, it will develop and maintain a supply chain database (georeferenced, if possible) describing, at a minimum, the geographical position and extent of each farmer’s fields, number of trees, fertilizer use, yield, certification, status, family members, and other observations about labor use. This will allow Olam to assess the dynamics of its “high risk” supply chain on a yearly basis and to determine how those risks are being managed through its sourcing strategy (mostly relying on Olam’s Livelihood Charter traceability or third party certification). Olam will measure progress through KPIs and will report back to IFC its assessment of success – all this taking into consideration potential political and/or value chain structure changes that may affect direct access to farmers; 4) Olam will develop a management procedure for monitoring and reporting on key E&S risks in “high risk” commodities, including classifying suppliers in categories based on these risks, depending on the compliance with IFC’s Performance Standards and the reliability of Olam’s information on its sourcing and compliance. The categories will reflect the level of knowledge available to Olam regarding E&S standards and risk assessment under which the crop was produced (e.g., certified, traceable not certified, traceable within a region, unknown sources/spot/no traceability). This process will allow Olam’s senior management to monitor the progress under the supply chain sustainability strategies and will allow for periodic realignment of Olam’s
strategies to mitigate potential exposure to commodity business and E&S and reputational risks in the short and long term. Notwithstanding IFC’s ongoing monitoring and Olam’s own commitments, Olam’s ability to manage aspects of its supply chain in some geographical areas will be challenging and there can be no absolute guarantee that harmful child labor will not be present at the supplier level.



Community engagement. Olam’s processing operations visited during the due diligence are and/or will be located into isolated rural and/or industrial estates. Main E&S concerns from surrounding communities could include induced traffic, noise and air emissions. As set forth in the ESAP, Olam will define in its corporate ESMS a Stakeholder Engagement procedure to mainstream and strengthen its consultation and communication processes, as needed, with concerned communities on the E&S risks of all its operations. This management procedure will also be mainstreamed into the Olam QEHS Master List of Controlled Documents applicable for all of its operations (plantations and processing units).h ♪


Human Resources (HR) Policy and Management. Olam has over 18,000 direct employees in 65 countries. The basic management principle of Olam’s HR function is that the country managers and/or business heads are responsible for HR matters in their operations. Sometimes, this arrangement is not feasible as some countries where Olam operates have only 4 employees. However, when Olam operations within one country reach more than 200 employees, Olam establishes a senior HR position to manage HR issues. As an example, Nigeria and India already have HR teams. Business heads receive training on HR matters during a compulsory one week induction course led by Olam’s CEO, which sets a common culture and values for the Company. Olam has also adopted policies on equal opportunity and sexual harassment as contained in its 2009 Code of Conduct. These are available, as is the corporate grievance policy, on Olam’s intranet site so that all employees can easily access it. In addition, Olam has a standing committee on diversity and inclusiveness. Most human resource policies and procedures are spelled out in national employee handbooks, which is appropriate given the basic requirement to meet national labor and employment law. The Employee’s Handbook for Olam Nigeria, for example, details the company policy with respect to hours of work, benefits, compensation, and promotion.



Working Conditions. Olam’s corporate and country’s operations do not discriminate against workers seeking collective bargaining arrangements. In the spice plant in India, for example, there is a union associated with the Bangla Congress Party of Kerala. In Nigeria, both CFM and the sesame hulling unit have their respective workers’ organization, representatives being elected by staff. In fact, a majority of Olam’s employees in Africa belong to a union. Because it has only recently gone into manufacturing, Olam does not have an explicit labor relations policy. Although, in practice it has an implicit policy of actively engaging with unions. As set forth in the ESAP, Olam corporate and country-based HR Policy will have explicit references to the employees’ rights to freedom of association and collective bargaining.



Retrenchment. Olam is in the process of acquiring existing companies as it seeks to expand its operations globally, both in upstream and midstream parts of agro-commodities value chain. In some cases, these acquisitions involve reductions in staff, typically of prior senior management team. Olam Nigeria Ltd’s Employee Handbook does cover redundancy, including seeking deployment of the workers to other parts of the in-country operations, setting out the principles by which people will be selected for retrenchment, and what their separation benefits will be. Olam needs, additionally, to ensure that workers receive notice of dismissal and timely payments as required by national law. Where there are collective dismissals that are justified by business necessity, Olam’s country operat
ions will need to prepare retrenchment plans based on consultation with the workers to be retrenched and their representatives. As set forth in the ESAP, Olam corporate and country-based HR Policy will have explicit references to PS2 retrenchment requirements.



Grievance Mechanism. Olam has a corporate grievance policy, as mentioned above, that is available on-line. Individual country operations, such as Olam Nigeria have a grievance mechanism in line with PS2 that is detailed in its Employee Handbook.



Child/Forced Labor. Olam’s directly-controlled operations globally do not hire people younger than 18 years of age. Issues concerning child/forced labor in its supply chain have been discussed above in the Supply Chain section of PS1.



Contracted Workers. Olam’s country operations can involve significant numbers of contracted workers. For example, at Vallabhas Kanji Ltd (SVI) in India, there are 80-90 contractual workers recruited on a monthly basis through two HR service providers. SVI undertakes due diligence before establishing a contractual arrangement with a service provider, including review of the provider’s registration with the Ministry of Labor. In the context of the proposed expansion, SVI is not planning to recruit any additional permanent employees. Instead, additional contractual workers are being considered. At India’s Hemarus sugar mill (HIL), 150 seasonal/part-time employees (e.g., security personnel, loading laborers at sugar mill and canteen workers) are contracted through HR service providers. HIL also undertakes due diligence of service providers before establishing a contractual arrangement. During harvesting season, HIL recruits third-party sugar cane harvesting and transport companies. HIL has introduced pertinent sections in contracts to ensure that all contractors and sub-contractors are in compliance with the payment of workers’ legal benefits; timely payment of wages; OHS regulations, including provision of personal protective equipment (PPE); and ILO Convention 138 on Minimum Age. As set forth in the ESAP, each Olam operational unit will contractually ensure and monitor the compliance of service providers with minimum age employment requirements. This provision is particularly of key importance for the contracted third-party harvesting and transport companies. Olam units will also ensure that contracted workers have access to a grievance mechanism, as required by PS2, either through the contractor/subcontractor or Olam unit’s own mechanism.



Occupational Health and Safety. Olam has adopted, in 2011, a corporate Occupational Health and Safety (OHS) Policy, which is being mainstreamed into all its operations. From an operational standpoint, MATS, as per its project investment thesis (new investment) or technical due diligence (acquisition of existing asset), ensures planning and/or upgrade, if need be, based on the OHS Maturity GAP Tool self-assessment, of necessary OHS mitigation measures (included into CAPEX),
including establishment of OHS management system (e.g., procedures developed, certified first party OHS auditor on-site, and document control program in place), leadership (e.g., communication of the plant-level OHS policy, safety goals and procedures, including responsibilities and accountabilities, and regular workplace inspection), compliance (e.g., enforcement of use of Personal Protective Equipment (PPE), compliance of energy power control, power lock out and tag out, accident and incident reporting and investigation), zero accident mindset (e.g., training, monthly safety data collected, including lost time injuries, restricted work injuries, first aid, near misses unsafe acts and conditions, and monthly reporting), equipment and process design, permit to work (e.g., hot work, at height, and confined space procedures) and staff capability (e.g., structured induction program on safety for staff and contractors, and documented competency based assessment program for all operators, including contractor, engaged in safety related tasks). OHS training of project/plant managers, as well as the recruitment of plant-level OHS officers, is on-going. OHS Procedures are clearly spelled out in MATS QEHS Master List of Controlled Documents and are under development in all the five processing units that IFC visited. Data related to the ratio of total lost man-hours due to accident to total man hours worked was not available at any of the sites. Monthly QEHS from each site will allow MATS corporate and regional specialists to develop an OHS Corrective Action Plan (CAP) if necessary. As set forth in ESAP, Olam is presently planning and/or conducting an OHS audit for the five operations targeted by the use of proceeds of IFC. Olam will provide OHS performance update, including a CAP, if necessary, at these plants.



Life and Fire Safety. MATS, as per of its project investment thesis (new investment) or technical due diligence (acquisition of existing asset), ensures planning and/or upgrade of the fire hydrant system’s hoses in accordance with national regulations and statutes. The recommendations of MATS specialists are then integrated into the CAPEX program. Based, on site visits of the targeted agro-processing units and review of MATS QEHS recommendations, IFC confirmed the efficiency of this L&FS risk assessment process at all sites. As set forth in the ESAP, upon completion of the construction phase of the Nigeria/sesame hulling plant (Lagos) and cashew mechanized plant (Ilorin), the upgrade/rehabilitation phase of the India/sugar mill and spice processing unit, and the upgrade of the Nigeria/Crown Flour Mill (Lagos), Olam will recruit an independent fire consultant to perform an independent Life and Fire Safety audit at each of these facilities against the respective countries’ life safety codes.

As part of its existing QEHS management system and program, Olam is committed to adopt state-of-the-art technology/equipment and design for all of its operations, as well as implementing a comprehensive set of procedures for the management and monitoring of energy, potable water use, liquid and solid waste, and greenhouse gases (GHG) emissions. Considering the early stage of the establishment of the QEHS at the five facilities visited, IFC was not able, during its due diligence, to access comprehensive data related to energy use (kWh & diesel consumption/ton of product) and estimation of tons of CO2 equivalent per ton of product, water treatment, consumption and efficiency (kilolitres/ton), wastewater treatment volume and treatment (effluent parameters), ambient and stack air emissions, hazardous and solid waste management and disposal, etc. As set forth in the ESAP, Olam has committed itself to achieve compliance with the country/local, PS3 requirements, and WBG’s generic and sector-specific Environmental, Health and Safety Guidelines. As part of the MATS reporting balanced scorecard across QC4S, as set forth in the ESAP, MATS will expand its sustainability indicators to encompass monitoring of wastewater effluents & air emissions.

Community Health and Safety. As indicated above, the five targeted Olam agro-processing facilities are either located in remote rural areas or industrial estates. Adverse risk and impacts to human settlements are relatively limited. In addition, induced traffic should not represent a significant risk for the local population. Olam requests transport sub-contractors to produce a validated driver license. As set forth in the ESAP, Olam will develop and implement a safe driver and transport safety vehicle procedure, including a training session for its driver. This procedure will be mainstreamed into the QEHS Master List of Controlled Document. Idem for certificate requirement for forklift operator, if appropriate. Olam is committed to extend the application of this procedure and training to its fleet contractors.



Emergency Preparedness and Response. As part of the MATS GAP analysis on QEHS standards, emergency preparedness plan’s need assessment is being assessed and included, as needed, within each plant’s QEHS roadmap, including emergency preparedness and response protocols, procedures and plans. The emergency plans respond to the needs of accidents, bomb threats, fire, breach of security, oil, chemical and fuel spills, and severe weather alerts. An emergency team has and/or will be established at each facility. Emergency Preparedness and related Code of Practice is already identified into MATS QEHS Master List of procedures.



Community Grievance Mechanism. Olam has not yet adopted a formal Community Grievance Mechanism at each of its facility, especially for its plantations and processing units. As set forth in the ESAP, such a mechanism will be formalized and included as part of the QEHS Master List of procedures in order to receive and to address any issues and/or complaints raised by surrounding stakeholders and end-customers resulting from its plantation, production, and transport activities.



Security Personnel. Security personnel at Olam’s operations visited during the field visits in India and Nigeria were all contracted, licensed providers. Staff assigned to security purposes are trained for defensive measures and are armed or not, depending on security level. In addition, Olam is progressively installing CCTV cameras at most of its facilities, including India’s SVI spice processing unit, Nigeria’s flour mill (CFM), and cashew mechanized plant (Ilorin).



Corporate Social Responsibility Projects. Olam pro-actively pursues CRS initiatives at each of its operations. In India’s operations, its main objective is to support education through career guidance to students and provision of computer to primary school, health awareness (AIDS), water and sanitation projects in surrounding villages, environmental protection and community improvement in villages surrounding the plant. In addition, for all its plantations and agro-processing units, Olam is actively seeking the development of out grower scheme and/or sustainable sourcing of
products through its Livelihoods Charter’s Principles through improving farmer productivity, increased access to finance, introduction of good agriculture practices, traceability and certification, etc. Olam is currently developing an initiative to support the sugar farmers supplying the India mill that will be within the Olam Livelihood Charter.

The ESRS and the attached ESAP will be made available via the World Bank Group’s InfoShop. Olam will be requested to make them accessible on its corporate website (http://www.olamonline.com) or provide a web- link to IFC’s disclosed ESRS and ESAP.

Name/ Address
Mr. Jayant Parande
Senior Vice-President, Group Treasurer
Olam International Limited
Tel: +65 631 79553
E-mail: mailto:jayant@olamnet.com
Website: http://www.olamonline.com

Broad Community Support is not applicable for this project

Action Item	Deadline
1. QEHS Policies. Olam will review and update its corporate Quality, Environment and Sustainability, and Occupational Health and Safety (QEHS) Policies to encompass the expanded scope of its business model toward primary production and processing, including direct reference and a commitment to comply with IFC Performance Standards and relevant WBG’s EHS Guidelines.	1.1 December 2013 and publish in Olam’s Annual CR&S Report
1.1 Submission of the draft corporate QEHS policies for IFC review and approval by Olam’s Executive Committee
1.2 Adoption of the QEHS policies at the five agro-commodity processing facilities.	1.2. December 2013
2. Integrated Management System. Olam will develop and implement a corporate Integrated Management System (environmental, occupational health and safety for employee and contractors, food safety – if applicable, and social management system) in compliance with IFC’s PS1 requirements. This management system will be implemented at the five agro-processing units financed by IFC. The ESMS will include monitoring and reporting mechanisms to internally report E&S results for sign off on the reports and decision on Corrective Action Plan (CAP), if necessary.	2.1) December 2013 (midstream operations) and December 2014 (upstream operations)
The Master List of QEHS Procedures will be upgraded to address all Performance Standards requirements and will be in place for quality control and compliance during the operational phase of the five targeted facilities
2.1) Submission of the corporate Integrated Management System for IFC review	2.2) December 2014
2.2) Implementation of the ESMS at the 5 processing units targeted by the use of proceeds
2.3) Submission of the completed set of the QEHS procedures master list, in line with all IFC PS requirements and WBG EHS Guidelines.
	2.3) December 2013
3. Training. Olam will provide adequate resources for training programs for its employees and contractors to ensure effective and timely implementation of the QEHS procedures at each of the targeted five facilities.	3.1) December 2013
3.1) Provide a copy of the management system procedure and supporting training plan.
3.2) Report annually on the training program specifically applicable to the five targeted facilities.
	3.2) December 2013, and on an annual basis, in the CR&S Report
4. Monitoring and Reporting. Olam will monitor and report the implementation and results of its corporate Integrated Management System, including QEHS performance for the five targeted agro-processing plants supported through the use of proceeds, to Olam’s CRS Executive Committee through an update memo.	4.1) December 2013
4.1) Provide to IFC the final and consolidated QEHS’s management system procedure for monitoring and reporting of Olam’s operations, including the format of the external and internal report.	4.2) December 2013 and report annually in the Annual CR&S Report
4.2) Report on QEHS performance for the 5 targeted projects.
5. Supply Chain E&S management component, adoption of a Supplier Code of Conduct. In relation to its supply chain exposure and associated E&S risks, Olam will develop and implement a corporate Supplier’s Code of Conduct to promote sustainable sourcing practices promoting compliance with national labor and environmental laws and PS’s supply chain requirements.	5.1) December 2013
As part of this supply chain component, Olam will categorize suppliers (cooperatives and farmers group) and volumes according to identified E&S risks and impacts. This will be effectively implemented for the India’s sugar cane and spice suppliers and for the Nigeria’s cashew and sesame suppliers.
5.1) Provide to IFC a copy of its Management System Procedure for its supply chain, including the Supplier’s Code of Conduct and its mainstreaming into QEHS procedures
5.2) Provide to IFC effective implementation evidence for the five processing facilities having supply chain risk exposure.	5.2) December 2014
6. Development and Implementation of Agro-Commodity Supply Chain Sustainability Strategies, specifically for “high E&S risk” agro-commodity. Based on current activities, the strategies for selected “high E&S risks” agro-commodities will describe the means and methods for increasing traceability in the supply chain for “high E&S risk” commodities. The strategy will be high level, with baseline and operational targets, specific activities, including the Livelihood Charter’s initiatives, with key milestones and schedules to increase the procurement of traceable/certified commodities each year at each origin where projects are planned and where certification is available. Annual review will take place to assess the yearly performance and make any adjustments necessary for meeting the objective of increasing traceability/certified “high E&S risk” agro-commodities in the next year.	6.1) December 2013
6.1) Report on the implementation of the plan, or any deviations, in the CRS Report & Annual Olam Livelihood Charter update
	6.2 ) Report annually in the CR&S Report
6.2) Review strategies and monitoring results annually.
7. Stakeholder Engagement Plan. Olam will formalize the development of a Stakeholder Engagement Plan within its corporate ESMS, including a mechanism for receiving, addressing and resolving community grievances and complaints during the operational phase at the five targeted facilities in order to mainstream and strengthen its consultation and communication processes, as needed, with concerned communities on the E&S risks for all its operations. This management procedure will also be mainstreamed into Olam QEHS Master List of Controlled Document applicable for all its operations, including processing units. The content of this procedure shall be guided by IFC’s Good Practice Note on Stakeholder Engagement	7.1.1) December 2013
7.1) Submission of the draft of the Stakeholder Engagement Plan and implementation plan to IFC
7.2) Submission of evidence of dissemination of the grievance procedure in relevant public communication at each targeted facility	7.1.2) Report on implementation, on an annual basis, in the CR&S Report
	7.2) Report annually in the CR&S on treatment of the complaints received.
8. Human Resources Policy. Olam will review and update its corporate and country based Human Resource Policy and labor contracting specifications, including contracted workers, in compliance with national labor laws and regulations and IFC’s Performance Standard 2 requirements, in countries where the 5 targeted facilities are located. Specifically, this policy will have explicit references to the right of its employees to freedom of association and collective bargaining, retrenchment provisions, prohibition of child and forced labor among its employees and contractors, contractor management system procedure and verification mechanism to ensure compliance with local labor laws, grievance mechanism for employee and contractors, etc.	8.1) December 2013
8.1) Provide the revised Human Resource policy and labor contracting specifications for IFC review.	8.2) December 2013
8.2) Provide adequate evidence of HR policy and procedures incorporation into management systems, disclosure process to employees and full implementation at the five targeted facilities.
9. Occupational health and safety. Olam will be conducting OHS audit for the five operations targeted by the use of proceeds of IFC. Olam will provide OHS Corrective Action Plan (CAP) and performance update.	9.1) July 2013
9.1) Provide IFC with processing units’ OHS audit report, CAP and timetable for effective implementation at each of the five units;	9.2) October 2013 and report annually in the CR&S Report
9.2) Report on OHS performance.
10. Life and Fire Safety. Upon completion of the construction phase of the Nigeria/sesame hulling plant (Lagos) and cashew mechanized plant (Ilorin) and the upgrade/rehabilitation phase of the India/sugar mill and spice processing unit, and the Nigeria/Crown Flour Mill (Lagos), Olam will recruit an independent fire consultant to perform an independent Life and Fire Safety audit at each of these facilities against respective country’s life safety code.	10.1) December 2013
Olam’s operations will have regular L&FS training and drills according to the emergency preparedness plan.	10.2) After proposed construction / expansion projects are completed. December 2013
10.1) Submit the L&FS management procedure and action plan for the five plants, including timetable for its implementation.
10.2) Submit audit results and provide implementation timetable of audit’s recommendations. Provide certificate of conformity	10.3) December 2013 and report annually in the CR&S Report
10.3) Emergency preparedness plan and records of regular trainings and drills are maintained
Performance Standard 3: Resource Efficiency and Pollution Prevention
11. Compliance with WBG’s EHS Guidelines. Olam has committed itself to achieve compliance for each of the 5 facilities targeted by the use of the proceeds with the national legal and regulatory framework and PS3 requirements (greenhouse gases, water consumption, wastes, hazardous material management, pesticide use and management) as well as WBG’s generic and sector-specific EHS Guidelines.	11.1) December 2013
As part of MATS reporting balanced scorecard across QC4S, MATS will expand its sustainability indicators (KPIs) to encompass monitoring of wastewater effluents and air emissions.	11.2) December 2014 and report annually in the CR&S Report
11.1) Submit compliance audit report to IFC for the five targeted facilities
11.2) Corrective Action Plan (CAP) implemented