31647 - Bayer Ukraine CA

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Environmental & Social Review Summary

Project Number

31647

Company Name

Bayer RSF - Credit Agricole Ukraine

Date ESRS Disclosed

Feb 21, 2012

Country

Ukraine

Region

Europe

Last Updated Date

Jun 12, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Mar 28, 2012
Signed : Mar 30, 2012

Sector

Diversified Edible Agricultural Crops Production

Industry

Agribusiness and Forestry

Department

Regional Industry MAS LAC & EUR

Project Description

The proposed project is a risk sharing facility (“RSF”) with CREDIT AGRICOLE BANK (the “Bank”), a 99.9955%-owned Ukrainian subsidiary of Credit Agricole S.A, on portfolio of receivables generated by Bayer in connection with sales of crop-protection products to private sector farmers in Ukraine. The RSF will cover a portfolio of seasonal receivables (with maturities less than 1 year) with a total portfolio amount of up to US$35 million equivalent in local currency. IFC will share 50% of credit losses in the portfolio with the Bank up to a maximum IFC exposure of up to US$17.5 million equivalent in the local currency. IFC will enter into agreement with Bayer in order to complement the risk sharing arrangement with the Bank.

The Project is designed to improve access to finance for small and medium enterprises (SMEs) that purchase or would purchase, should they have access to credit, certified and top quality crop protection products from Bayer Ltd., Ukraine (the “Company” or “Bayer Ukraine”).

Bayer Ltd., Ukraine, a fully owned subsidiary of Bayer AG, offers products in three business areas: CropScience (crop protection and non-agricultural pest control), HealthCare (pharmaceutical and medical products) and Material Science (high-tech polymers and materials). The Company is a main input supplier of crop protection products, mainly insecticides, herbicides and fungicides in Ukraine and the Project will support the Company’s plans to extend its reach to a larger pool of farmers who currently lack access to credit and are using fewer and lower quality products for their agricultural production.

Overview of IFC's Scope of Review

The proposed project is a repeat IFC’s risk sharing facility with Bayer Ukraine and Raiffeisen Aval and extension of IFC’s commitment with Bayer through risk sharing facility that will entail partnering with Credit Agricole in Ukraine.

The environmental and social (E&S) review of the existing project (Project # 30595) was conducted in March 2011. The summary of the review (ESRS) and the Action Plan (ESAP) can be found at the following link:
http://www.ifc.org/ifcext/spiwebsite1.nsf/ProjectDisplay/ESRS30595

To determine the compliance of the existing project with at-approval agreements and evaluate the new proposed Project, the scope of the appraisal included a site supervision visit to Bayer Ukraine in January 2012. The site visit has focused on key updates and changes in Bayer’s quality, health, safety and environment (QHSE) policies and procedures, Ukrainian legal framework, incident statistics, local regulatory product certification, Bayer’s communications with farmers on safe use of crop protection products (CPP) and promotion of Integrated Pest/Disease Management (IPM/IDM) plans.

The E&S appraisal of this new project consisted of discussions with Bayer’s senior management, including the QHSE manager; the occupational health and safety (OHS) specialist; representatives of human resources, logistic, legal, supply chain, marketing, business development, customer services and sales departments.

Also, the implementation progress of the ESAP agreed upon under project #30595 and actions to enhance Bayer’s E&S performance were discussed during this site visit. These actions will be implemented in the framework of the existing ESAP, which is also applicable for the proposed project.

E & S Project Categorization and Applicable Standard

IFC’s environmental and social review reveals that the investment will not have material impacts and must be managed in a manner consistent with the following IFC Performance Standards (or “PS”):

PS1: Social and Environmental Assessment and Management Systems
PS2: Labor and Working Conditions
PS3: Pollution Prevention and Abatement

Impacts related to PS4: Community Health, Safety and Security, PS5: Land Acquisition and Involuntary Resettlement), PS6: Biodiversity Conservation and Sustainable Natural Resource Management, PS7: Indigenous People and PS8 Cultural Heritage were not expected since the project operations will not have direct impact on communities as per provisions taken in the ESAP under PS3 to avoid impacts on soil, land, or water resources in use by communities. In addition, the Company has no involvement in land acquisition, no impacts on natural and critical habitats, indigenous peoples or cultural heritage.

This repeat investment remains a Category B project according to IFC’s Environmental and Social Sustainability Policy because IFC’s review and supervision of the Company’s activities indicates no changes in Bayer’s business operations, therefore this investment will not result in any material change in relation to the associated environmental and social risks and impacts. Given the fact that transportation and storage are carried out by Bayer’s contractors, the Project has limited environmental and social adverse impacts that can be avoided or mitigated by adhering to Ukrainian laws and regulations and generally recognized good industry practices and guidelines.

Environmental and Social Mitigation Measures

Key issues for this new investment are essentially the same as those previously identified under #30595 and include the following: i) local QHSE Management System capacity to address potential direct and indirect E&S impacts associated with crop protection products (CPPs) transportation, storage, use and waste disposal; ii) compliance with Ukrainian laws and regulations; the FAO’s International Code of Conduct on the Distribution and Use of Pesticides and the World Health Organization (WHO) Recommended Classification of Pesticides by Hazard; iii) human resources policy and procedures; iv) Working conditions and terms of employment, including occupational health and safety (OHS); v) Awareness and training of farmers on implementation of Integrated Pest and Disease Management Plans.

IFC’s site supervision visit indicated that the proposed Project will not result in any material change in the management of environmental & social impacts and risks.

The Company has presented plans to address environmental and social (E&S) impacts to ensure that the proposed Project will comply with the environmental and social requirements of host country laws and regulations, IFC’s Performance Standards and WBG’s General Environmental, Health and Safety Guidelines upon continuous implementation of actions included in the ESAP agreed with IFC in the framework of the existing project.

The updated information about how these potential impacts are addressed by the Company is summarized in the paragraphs that follow.

PS1: Social and Environmental Assessment and Management Systems

Bayer Ukraine follows strictly local requirements, including having licenses for CPPs import and trade in place. The local QHSE management system is being developed to meet Global Bayer CropScience QHSE and IFC’s Performance Standard 1 requirements. Ongoing process includes development and revision of training materials for personnel and farmers on step approach, including Integrated Pest Management/Integrated Disease Management and safe use of PPCs.

The Company has revised its organizational structure and adopted an internal memorandum to ensure that social and environmental function is implemented at all levels of operations and the QHSE manager reports to Bayer Ukraine’s senior management.

Reporting to IFC on continuous improvement of the QHSE management system and its effective implementation will be provided within the context of the Annual Monitoring Reports (AMR).

PS2: Labor and Working Conditions

The Company implements corporate HR standards consistent with the core requirements of the International Labor Organization and IFC’s Performance Standard 2.

Less than 2% of total staff could be considered as “field personnel” that have direct contact with CPPs. Bayer will continue monitoring of safe working conditions of employees applying pesticides through regular medical examinations, training on the use of adequate Personal Protection Equipment (PPE) based upon Material Safety Data Sheets (MSDS) and ongoing implementation of actions agreed with IFC. Safety records indicate zero incidents in 2011.

PS3: Pollution Prevention and Abatement

The Company has adopted and implemented a policy statement to commit that Bayer Ukraine does not supply chemical formulations that fall in the WHO Recommended Classification of Pesticides by Hazard Classes Ia and Ib to the Ukrainian market. This memorandum complies with agreements achieved between the Company and IFC and aligns with Bayer Group CropScience Stewardship Policy, consistent with the FAO’s International Code of Conduct on the Distribution and Use of Pesticides and IFC’s general guidelines. Bayer will continue further implementation of the policy through ongoing finalization of procedures.

In relation to safe handling of pesticides, Bayer Ukraine is going on with promoting the use of IPM/IDM plans among its clients through training and awareness sessions on development and implementation of integrated pest/disease management programs, safe use of crop protection products and disposal of empty containers.

Bayer keeps on regular communication and technical assistance to its clients. In cooperation with a local farm, Bayer invested in the installation of a mixing centre equipped with advanced facilities for centralized preparation of CPPs’ compositions ready to use. The centre provides services for farmers in adjacent regions and its operation contributes to reduction of potential negative impacts on natural resources and health and safety risks for end-users associated with CPPs use.

The Company signed an agreement with a local licensed state company for proper utilization of empty CPPs’ containers and contractually obliged distributors to include data on collection points and collector’s contact details in distributors’ contracts with customers/users. Direct clients were informed on terms of containers disposal through contracts as well.

Bayer will continue monitoring the implementation of HSE requirements by contractors (transport companies, warehouses) and distributors through regular audits of distributor’s facilities to ensure product safety and quality in terms of prevention of potential pollution due to accidental leakage.

Stakeholder Engagement

Owing to the nature of Bayer’s business, local communities are not directly affected by import and distribution activities. Any community-related risks and impacts associated with CPPs import and distribution are the responsibility of transportation or distribution contractors as described above. As a result, formal information dissemination activities have included publications on E&S aspects of the existing project on Bayer’s local website and public bulletin boards available for any external interested parties. Notwithstanding, the Company have established and maintains grievance mechanism procedures for receiving, documenting, and responding to any concerns raised by any external interested parties. In addition, Bayer will disclose locally, in an appropriate manner, the E&S information on this proposed Project.

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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