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 investment is classified as a Category B project in accordance with IFC’s Policy on Environment and Social Sustainability. Based on information reviewed by IFC, this investment will have limited adverse E&S impacts that are few in number, site specific, largely reversible and readily addressed through mitigation measures, as outlined in the Environmental and Social Action Plan (ESAP) attached to this ESRS. The main E&S issues include updating the HR manual and communicating changes to all workers and ensuring continued oversight of those involved in the construction of new company facilities.

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 Assessment. When establishing new operations (e.g. mixing plants) the Company targets available land within designated industrial parks; such land is already provided with the required infrastructure (roads, sewers, power, etc.) and is ‘zoned’ for light industrial activity the type of which occurs at Anyou plants. Once the land is determined to be available, it is obtained (through a leasehold agreement with the local municipality as is the typical approval approach in China) and the Anyou in-house design/engineering department creates plans for the new plant. Once the design has been determined, the Company undertakes an Environmental Impact Assessment (EIA), as required by the local authority. EIAs are prepared by a locally listed and pre-qualified consulting company. Upon completion, the EIA must be approved by the city-level Environmental Protection Bureau before construction license is provided. Summary project information is provided at the industrial park office. Construction is carried out by contractors that have to provide evidence of appropriate OHS performance to qualify for biding on construction projects. Evidence of OHS performance includes the following: nationally recognized qualification; fully developed OHS management system and site supervision management capacity and qualification; provision of safety awareness and Personal Protective Equipments (PPEs) as well as enforcing PPEs use and completion of the work on time with the required technical specifications. In addition, a 3rd party project supervisor (reviewing issues of both construction quality and worker’s occupational health and safety) has to be engaged according to Company practice; lastly the Company maintains an on-site presence (through their engineering department) that is also tasked with ensuring appropriate OHS performance.



Management Program, Organization and Training. The EHS function is organized under the corporate HR department and it’s Management Development Center. This center is one of three HR’s operational areas, the other two being the Operation Center and the Research Institute. Individual plants have a General Manager (GM); the GM is ultimately responsible for matters of environmental, OHS and social issues and heads a plant-level OHS committee comprised of line workers and supervisors. Specifically, environmental issues (which are limited in number and type) are managed within the respective plants by the production departments. A total number of 50 individuals are directly involved in environmental, OHS and social issues throughout the Anyou Group (i.e., including corporate office and approximately 20 plants).



The company uses the 5 ‘S’ approach to organization and management within plants; seiri, seiton, seiso, seiketsu, and shitsuke – which can be thought of as sorting, straightening, systematic cleaning, standardizing, and sustaining the workplace - to which they have added a sixth ‘S’ for matters of safety. T
his approach is commensurate with the limited E&S risks observed at the plant visited; this plant was organized and exhibited a well thought out workflow that provided for a low risk working environment. Practices are reinforced by well placed signage throughout the plant, detailing roles and responsibilities, examples of working safety, details regarding emergency preparedness and the required response, etc. The Company temporarily transplants experienced personnel from existing plants to initiate good practices in new plants and to train newly hired personnel at those plants.



Monitoring and Reporting. At the plant level, impacts such as noise, excess dust and use of forklift trucks are the most evident hazards and risks. These are recognized and are subject to monitoring and management; for example, noise is monitored and meets applicable regulatory limits which are in line with WBG limits and dust is minimized through constant cleaning of the workplace following the 5S approach. Statistics are kept on OHS performance; corporate officials confirmed that only minor injuries and no fatalities have occurred on sites to date and such worker injuries are required to be reported to appropriate authorities when they do occur. Key Performance Indicators (KPIs), such as the avoidance of accidents and injuries to assess plant-level EHS management performance, are reported on a monthly basis to the corporate HR function. Corporate EHS personnel corroborated that plants conduct monthly risk assessments/safety audits and results are reviewed by the plant OHS committees. Routine inspections of plants are conducted by local fire departments; in addition, the local Environmental Protection Bureau conducts periodic audits of plants against EHS issues identified in the EIA/Environmental and Social Management Plan (e.g. noise in the workplace).



With regards to the Company’s supply chain, the practices at the Zhejiang plant were reviewed along with the corporate procurement approach. For example, the Zhejiang plant sources the ingredients for its two main products from a variety of suppliers. A local mill provides the plant with soy meal (which has in turn obtained its soy from suppliers overseas); fish meal is obtained from a supplier based in Peru and corn comes from the agricultural areas of North East China. Blood powder is obtained from licensed Chinese slaughterhouses. Amino acids must be sourced from pre-qualified quality suppliers according to corporate procedures; less critical inputs can be obtained by the plant locally according to who has the best prices. The Zhejiang plant uses a supplier checklist which is based upon standardized corporate practice. In summary, individual plants are several steps removed from countries/national areas of primary production of commodities and rely on suppliers/traders embedded within commodity value chains for sourcing ingredients.

Human Resources Policy and Terms of Employment. The corporate HR function has developed an HR Policy and manual which was reviewed by IFC. Those responsible for HR management at the plant level stated that they followed the corporate lead plus provided additional benefits in keeping with local custom. All staff signs a labor contract with the plant where they work (and its content is governed by the Labor Contract Management Procedure). Hiring and compensation are made according to pre-defined criteria based on experience and competence. Other key items included in the staff manual cover what is provided for employees such as accommodation (based on 4-6 people per room, a shared toilet, and constant supply of hot water, air conditioning and fan), meals, and an annual medical examination. Procedures on handling of dismissal, retirement, resignation and leave are included.



Workers’ Organizations. The Company has provided IFC with written confirmation that unions or collective bargaining is/are allowed and that whereas none exist at present, corporate HR is currently working to establish unions.



Non Discrimination, Equal Opportunity and Grievance Mechanism. No terms are explicitly set up for non-discrimination and equal opportunity although it was stated by HR that hiring and compensation decisions are made according to pre-defined criteria based on experience and competence. Whereas they do not have formal procedures on these aspects, it was reported that Anyou have been using fair, equal and open practices for hiring and promotion and that staff is provided with fair/equal opportunities regards work, training, career development and benefits. Formalization of the above is addressed in the ESAP. Regarding grievances, the Company will establish and publicize a more clearly defined worker grievance mechanism that will build upon the current practice of staff either accessing their General Manager via mail (which allows for anonymous messaging) or by contacting their human resource staff relation coordinator. In addition, the mechanism will allow for input from those working on behalf of the company but who are not employees (e.g., those involved in the construction of new plants or those transporting incoming raw materials.) This is addressed in the ESAP.



Protecting the workforce. The Company complies with national labor laws in matters of child and forced labor, i.e., the minimum age of staff that can be recruited is 18 years and they do not use any form of forced labor. The company does not employ contracted labor or use migrant workers.



Occupational Health and Safety. Construction activities are subject to company oversight as described above. Data on the OHS performance of contractors will be required to be submitted to IFC as part of the annual monitoring report. The mixing operations observed at the Longyou plant had limited worker OHS hazards and risks. Those that were potentially high risk were subject to appropriate oversight.
For example, with regards to fire prevention, new plant designs must meet/include minimum Chinese standards. The local fire control department must then sign off on the plant after construction and before it can operate. During the operational phase, the Company runs fire drills and practices (annually) and keeps records of such activity. Other higher risk activities, such as those involving maintenance of energized equipment, are subject to practices and procedures designed to prevent accidents from occurring (such as Lock-Out-Tag-Out).

Pollution Prevention, Resource Conservation and Energy Efficiency. Steam (required to cook corn as part of the ‘recipe’ for the feed) is generated using small electric water heaters. The Company is beginning a program to benchmark energy and water usage against best-in-class feed mills in China. For example the Zhejiang plant used total electricity of 1.2M KWh in all of the production aspects of 42,000 tons of feed produced last year (for approximately 28.5KWh/ton which compares favorably with plants in other countries, e.g. the US). Overall, the Group reported figures of approximately 20 KWh/ton. The Zhejiang plant has established a goal of 20% reduction in the amount of water used in producing feed (based upon data obtained from the first full year of production). Forklifts use diesel; there was no fuel stored onsite of the plant visited and forklifts travel a short distance by road to a filing station, as necessary.



Wastes and hazardous materials. Limited waste is produced in the Zhejiang plant. Ostensibly bagged ingredients are delivered to the plant, mixed, and then bagged for delivery to customers. As such, the largest waste stream is empty bags from incoming supplies. These are separated and collected from the Zhejiang plant by local recyclers. There is little generation of process waste water; the small amount of steam that is produced is used in making feed pellets. Water from cleaning equipment, and from canteen operations (e.g. preparation of subsidized meals for staff) and emanating from the ablution block of the small dormitory building, is directed to the municipal sewer system via onsite drains. Wastes from the laboratory (which conducts tests of protein, fat, water and phosphorous content of product) is generated in small amounts, are diluted and/or neutralized, as appropriate, and drain to the municipal sewer system in accordance with local regulation.



Emergency Preparedness. As noted above, the Zhejiang plant has assessed emergency procedures and conducts drills to practice response. Feedback from previously conducted drills is posted for workers to review as part of the 5S (plus safety) system.



Greenhouse Gas Emissions. The Anyou Group''s total electricity consumption for 2011 was 9,060,000 kWh, all of which was purchased from the national grid. This equates to 6,728 tons of CO2 equivalent.



Pesticide Use and Management. The only chemicals used at production facilities are those to control rodents. These are only used in limited amounts.

Trucking is conducted using only third party firms; these contractors have to demonstrate good performance in order to bid on contracts, maintain fully licensed trucks, etc. in order to compete. Statistics on contractor performance are required to be submitted and are maintained by Anyou. The Zhejiang plant receives approximately 22 trucks per day (within the 8 hour shift) – from suppliers delivering ingredients and customers collecting a product. This is not a material addition to the traffic volume observed within the industrial park where the plant was located.



Security. Plant premises are secured (perimeter walls surround the buildings and a gate is used to control vehicular access). The Company uses its own employees to operate the gates that are trained and not armed.

Community Engagement. Risks and impacts associated with the Company operations are limited due to the nature of the operation. Sites/plants are purposely located in designated industrial parks and are therefore not adjacent to residential communities. New projects are disclosed at the park office and the local Environmental Protection Bureau (but only in summary form that confirms the EIA application was successful) as part of the EIA process. Individual complaints, if any, from the public would be directed to the industrial park’s management team, who in turns engages with their tenants (even if land is bought, it is a leasehold arrangement in China) and local authorities. If needed, the individual plant manager would be tasked to talk directly to the Environmental Protection Bureau to resolve the issue. Corporate is kept involved but individual General Manager at plant-level is responsible for managing the issue.

Contact:
Name: Ms. Zhang Xiaona
Address: No. 239 Xingang Road, Taicang City, Jiangsu Province, 215437, China
Tel: + +86 512 33006637
Fax: + +86 512 33006699
Email: mailto:sunnyzhang@anschina.cn

Broad Community Support is not applicable for this project

Title	Anticipated completion Date	Status	Comments	Completion Date
Formalization of Non Discrimination and Equal Opportunity clauses in HR manual; publicize the new clause within the Anyou Group	03/31/2013	Completed	Completed	05/20/2013 12:00:00 AM
Greivance Mechanism. Develop and implement a worker greivance mechanism, include publicizing the GM; to also allow for input from non-employees that may be working on behalf of the company	03/31/2013	Completed	Completed	05/20/2013 12:00:00 AM