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
Impacts related to PS5: Land Acquisition and Involuntary Resettlement, PS:6 Biodiversity Conservation and Sustainable Natural Resources Management, PS7: Indigenous Peoples and PS8: Cultural Heritage are not expected with this investment for the following reasons: NCL has leased land directly from the Local Authority of Dak Lak Province, Vietnam, for a 70 year period. The land was converted into an industrial estate by the local authority in the year 2010 and NCL is the first industrial unit to be established. The land was previously managed by the local authority as a 50 year old rubber plantation. There were 4-5 people employed who are now engaged in the coffee processing plant and rubber plantations managed by the local authority in the surrounding areas. No physical or economic displacement was required. NCL is located in an industrial estate and as such no conversion of natural or critical habitat will take place. There is no presence of Indigenous Peoples or cultural artefacts in the project area.

The proposed investment is expected to have limited environmental and social impacts which are expected to be site-specific, temporary and none are expected to be significant. Those impacts can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria as described in the following sections. This is a Category B project according to IFC''s Environmental and Social Sustainability Policy. This categorization is in accordance with other similar type of project within the sector. The project is designed to avoid, minimize and manage environmental and social risks and impacts of the Company’s operations in compliance with applicable Vietnamese legal and regulatory requirements, IFC’s Performance Standards and WBG’s EHS Guidelines.

Key E&S issues applicable for this investment are: social and environmental assessment impacts of the Project; NCL and Sponsor’s social, environmental, occupational health and safety and food safety management system and performance, adherence to Vietnamese’s labor laws, working conditions and OHS risk prevention and management, including NCL’s employees, contractors and nearby communities; utilization of equipment and operational practices that maximizes conservation of energy, water and process materials, including recycling and reuse initiatives; management of air emissions, liquid effluents, and solid/hazardous wastes from its proposed processing facility; impacts of transport and warehousing infrastructure, and EHS issues associated with the supply chain - especially related to procurement of green coffee from traders & wholesale dealers in Vietnam.

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. NCL has presented plans to address the environmental and social impacts to ensure that upon implementation of the specific agreed measures, it will comply with the environmental and social requirements including: the host country laws and regulations; IFC’s Performance Standards. The information about how these potential impacts will be addressed by the Company is summarized in the paragraphs that follow.

Environmental and Social Assessment:

An EIA was conducted for the construction and operation of NCL’s processing plant in accordance with the local regulations. The EIA report documents the various potential environmental and social impacts, the severity of impact, the risk of occurrence, and proposes management and mitigation measures. Based on its existing experience at its plant in India, key EHS risks are air emissions, water discharges, water and energy consumptions, waste management, water treatment, occupational health and safety, and life and fire safety. As set forth in the ESAP, NCL will develop and implement an Environment Management Program in line with EIA findings. In addition, NCL will develop and implement procedures for identification of EHS risks and impacts and document them as a part of its Company Manual. The EIA report has been approved by the local government authority. NCL has received environmental permits from the local government authority.

Policy:

The Sponsor has adopted in the year 1996 a policy covering EHS issues which is already implemented in its Indian facility. NCL has developed a draft policy covering different EHS issues and their management which will be finalized and implemented by October, 2012.

Management Program: The Sponsor has achieved 3rd party certifications for ISO 9001:2008, HACCP, BRC, Fair Trade, Halal, Kosher, Organic and Rain Forest Alliance. The Sponsor has documented and implemented EHS related procedures, such as resource management & monitoring, emergency preparedness & response, and risk assessment & control. NCL has adopted the Sponsor’s practices and procedures as per its needs and requirements. NCL has engaged a consultant who is developing EHS management systems in line with requirements of ISO 22000:2005, HACCP & BRC. As set forth in the ESAP, NCL will get 3rd Party certifications for the same by December, 2012. NCL plans to go for Halal & Fair Trade certifications in the future.

Organization:

The Sponsor has a well defined organization structure for its existing operations in India. The EHS issues related to effluent treatment plant (ETP), boilers & cooling towers are managed by ETP Manager. The EHS issues related to factory utilities, such as diesel gensets, liquefied petroleum gas (LPG) yard, transformers, factory operation & maintenance are managed by Production Manager. The EHS issues related to OHS, liaison with regulatory bodies, training, welfare, etc. are managed by HR Manager. NCL has developed a similar organizational structure in line with the Sponsor’s organization structure, covering different roles and responsibilities relating to EHS issues.

Training:

The Sponsor has a documented and well established process covering training in India. This includes training needs identification, training plans, conducting specific trainings relating to E&S issues, such as awareness, fire safety, process safety, training feedback and recording mechanism. The HR department undertakes training programs to all staff and personnel on different subjects covering EHS and other professional development aspects such as time management, team work, etc. NCL will adopt similar procedures for its operations.

Supply Chain:

The Sponsor and NCL are aware of EHS issues associated with the supply chain and are committed to take pro-active initiatives to prevent child labor/forced labor, conversion of natural and critical habitat leading to biodiversity loss. The Sponsor in India is already implementing measures to ensure sustainable purchasing procedures and to increase traceable/certified coffee. It is presently producing 80 tons of certified coffee annually based on its business requirements. The Sponsor does not source its raw material (green coffee) directly from the farmers. The Sponsor is sourcing green coffee only from large traders and wholesale suppliers, such as ECOM. These traders are very aware of the sustainability issues associated with E&S risks in their supply chain and have adopted third party certification in the coffee supply chains, as the most effective approach to promote and secure sustainable environmental and social farming practices while ensuring productivity and improvement of livelihoods of farmers within a business development approach. As for CCL, NCL will be sourcing green coffee from these large traders and wholesale dealers. In addition, NCL is not planning to source green coffee directly from the farmers in the immediate future, however, as set forth in the ESAP, it will proactively engage with them to promote Good Agricultural Practices and 3rd party certifications. To further ensure that the EHS risks associated in the supply chain are identified and necessary mitigation measures are adopted, NCL will undertake the preparation of supplier’s database and will assess which traders and wholesale dealers are actively promoting EHS management practices in their respective supply chain levels. This will include identification and assessment of supply chains covering their origin, use of child / forced labor, and impact on natural and critical habitats.

Monitoring and Reporting:

The Sponsor has implemented a monitoring and reporting system for key EHS parameters, such as air emissions, water and energy consumption, wastewater discharges, accidents & incidents, trainings, etc. The Sponsor has installed CCTV cameras and remote monitoring facility for its existing operations in India.NCL is developing a monitoring and reporting system which will be documented in the Company Manual. This system includes several key E&S performance indicators (KPIs) related to the Project, such as monitoring of specific energy & water consumption, occupational health and safety, accidents & incidents, training, waste recycling and management, etc. NCL is also innovatively harnessing information and communication technologies, such as mobile phone, internet, CCTV cameras for real-time and remote monitoring of the Project.

Human Resource Policy and Management:

As of February 2012, the Sponsor employs 355 direct employees. In addition 120-150 seasonal workers are recruited on a contractual basis depending upon seasonal work requirement. The contract workers are paid wages in line with government and minimum wage requirements. The Sponsor provides similar work amenities, such as canteen, medical aid, Personal Protective Equipment (PPE) to the contract and direct workers. NCL will employ around 150 direct employees when fully operational. NCL promotes employing female work force and presently 38 female employees are employed in its facility out of a total of 86 employees. NCL has a direct, annual and renewable work contract with all its employees and expatriates in line with Vietnam Labor codes. NCL presently employs most of the personnel from the local community, except for highly technical activities where employees from Sponsor’s company are presently deployed.

The Sponsor has developed and implemented HR policies and practices in India. It has documented procedures that cover the aspects, such as terms of employment, non-discrimination and equal opportunity, employment opportunities for local community, code of ethics and conduct and behaviour, and grievance mechanism. The Sponsor’s HR policy meets the IFC PS2 requirements.

NCL has adopted the HR procedures and practices from the Sponsor. These HR standard operating procedures have been slightly modified to meet the Vietnam Labor codes and IFC PS2 requirements. These documents are also available in Vietnamese language and accessible to all its employees. There is a female HR manager who is supported by a team of 3 persons in the department. NCL will establish a worker’s union in line with the requirements of Vietnam Labour Code.

Child Labor:

The Sponsor as a part of its HR policy does not employ child labour. It strictly follows and monitors that no employee, direct or contractor, is below the age of 18 years. The security persons in the factory in India monitor the movement of contract workers and ensure that no child labour is working at their premises. For direct employees, this is ensured at the time of recruitment by the HR department by verification of birth certificates. NCL has adopted and implemented similar policy and practices on child labour. Moreover, NCL has an agreement with its contractors for not recruiting the child labor. No child labor was found during the site visit conducted at NCL & Sponsor’s facility in India.

Occupational Health and Safety:

The Sponsor facility in India is managing the Occupational Health and Safety of its employees effectively. There has been no a major accident or emergency in its operations since 1995. The workmen were found wearing personal protective equipment (PPE), such as ear plugs, helmets, safety shoes, etc. The Sponsor facility in India has implemented system for assembly and evacuation of employees, in case of any emergency, Fire extinguishers are placed at required locations and a fire hydrant system is in place. Mock drills for fire are conducted on a quarterly basis and training is imparted to direct and contractor workers on safety. Medical examination for workers is conducted on an annual basis and an ambulance and a doctor is always available at site. There is a safety committee having equal representation from the management and worker’s side which meets regularly and addresses any concerns or suggestions raised by the employees for E&S improvement in the plant.

NCL has adopted similar practices and will periodically monitor incidents & accidents to ensure good workplace safety. NCL has commissioned equipments which has high levels of automation that reduces worker interface and are safe to operate. The facility maintains good housekeeping and will install EHS related signage, boards and display instructions.

The coffee processing is a fairly simple operation with minimal negative environmental impacts. The main processing steps include Green Coffee cleaning, Roasting, Grinding, Extraction, Clarification, Evaporation, Spray drying, Blending and Packaging. NCL has commissioned state of the art equipment in the facility which is more energy efficient and productive (in comparison to the equipment at Sponsor’s facility in India). The expected energy savings per unit of coffee produced is around 7 to
10 %.

Energy use and air emissions:

The Sponsor facility uses grid electricity as its main source of energy. It also has Liquefied Petroleum Gas (LPG) bullets to meet energy requirements for the process plant. The facility runs 3 boilers of capacity 31 tons per hour (tph), 12 tph & 9 tph each, to generate steam for process using rice husk and coffee spent as its input fuel. The Sponsor facility has 100% power back up provided by diesel gensets. The specific energy consumption is 900 units/ton of spray dried coffee and 2252 units/ton of freeze dried coffee.

The Sponsor facility regularly monitors and records air emissions from the boiler and diesel generator stacks for suspended particulate matter (SPM), sulphur di-oxide (SO2), Nitrogen di-oxide (NO2), etc. These emissions are maintained in line with statutory requirements and meet WBG’s EHS guidelines.

NCL uses grid energy for its power requirements. Liquefied Petroleum Gas (LPG) is used in the process and stored in 2 bullets of capacity 20 tonnes each. It will install 2500 kVA DG sets which will be operated only when the main source of power supply from local electrical utility is not available. NCL has a 35 tph biomass based boiler for generating steam which is used in the process and uses coffee spent, cashew and wood as its input fuel.

NCL will have a robust monitoring system to ensure that the emissions are within limits as prescribed by the government norms and WBG’s EHS guidelines and specific energy consumption per unit of production is improved. NCL will develop and implement a process for establishing internal benchmark for specific energy consumption.

Water use and wastewater effluents:

The Sponsor facility uses groundwater for its process and other facility requirements. There are 5 bore wells which are used for water requirements. The permit for water extraction is available. The Sponsor facility has an Effluent Treatment Plant (ETP) which treats water before it is discharged in a nearby canal. There is regular monitoring and testing of treated water as per the statutory requirements which are recorded and reported to the local pollution control authority. The treated water meets the WHO guidelines.

NCL sources its water requirements from 7 bore wells authorized by the local government. The production capacity of 10,000 TPA will require 1650 m3 of water per day. While water availability in the area is adequate as it receives good annual rainfall, NCL will regularly monitor its specific water consumption. NCL will develop and implement a process for establishing internal benchmark for specific water consumption. NCL is in the process of setting up an Effluent Treatment Plant (ETP). The ETP will treat process waste water to meet norms as laid out by the local authority and in line with effluents parameters found in Table of the WBG’s EHS general guidelines. NCL will identify opportunities for re-use / re-cycling of treated water in applications, such as gardening, washing, etc. The balance treated water will be discharged through a pipeline in a nearby lake as per the approval of the local authority.

Hazardous and Solid Waste:

Coffee processing does not require chemical or other hazardous inputs. The Sponsor facility in India is using 100 % of the solid waste generated during the process (coffee spent) in its boilers as input fuel.There are no major hazardous wastes generated during coffee making process. Waste oil, waste cloth, waste batteries, empty drums, etc. are taken by an agency authorised by the Pollution Control Board. NCL has adopted similar practices for the management of waste. NCL utilises 100% of coffee spent along with cashew shells and wood in its 35 tph boiler.

Greenhouse Gases:

The Sponsor facility in India has 3 biomass based boilers with a total capacity of 52 tph. These boilers use coffee spent and rice husk as their input fuel. In the absence of these boilers, the Sponsor facility would have used grid energy for generating steam. This is a positive initiative implemented by the Sponsor to reduce its carbon footprint. NCL uses biomass based boiler (35tph) for its steam requirement in place of conventional grid energy. The Green House Gas (GHG) footprint for NCL will be 53,910 tons of CO2 equivalent per annum at full capacity.

Noise:

There is high noise generation during the process, particularly in the areas of cleaning, grinding and spray drying. The Sponsor facility has regular maintenance of equipment and monitoring of noise in high noise areas. The workers are provided personal protective equipment (PPE). NCL will conduct noise mapping to identify high noise areas and implement necessary controls, as required. NCL will report noise mapping and monitoring results in the Annual Monitoring Report (AMR) to IFC.

The Sponsor facility has established and implemented a system of security and safety for its facility in India. Un-armed security persons provide 24 hour security to the facility. Only authorized persons are allowed entry inside the factory premises. The Sponsor facility has developed and implemented an on-site emergency plan and procedure. Mock drills are conducted on a regular basis to check the effectiveness. NCL has 12 security personnel working in 3 shifts providing security to the factory. These personnel are from the local police cell of the district. They do not carry any fire arms. Other impacts likely to occur relate to the movement of vehicles particularly heavy trucks (around 10-15 per day) moving through the small community roads. While the impacts on the nearby communities due to NCL operations are limited, as set forth in the ESAP, NCL will develop emergency plan covering emergencies related to fire, explosion, LPG gas leakage, etc. On the basis of the above information, it is concluded that the Project has been designed and will be operated in compliance with IFC’s PS and relevant WBG’s EHS guidelines.

The Sponsor in India have made a number of donations and charity for Educational Institutions, Religious Institutions, Hospitals, Financial contributions during emergencies such as floods & earthquakes, etc. NCL does not have a documented CSR or Community Engagement policy. As set forth in the ESAP, NCL will develop and establish a Community Grievance Mechanism and a Stakeholder Engagement process.

The ESRS and the attached ESAP will be made available via the World Bank Group’s Infoshop. The Company will be requested to place an advertisement in a local newspaper to inform the public that results from IFC’s environmental and social review and ESAP, while it will also disclose this ESRS and the ESAP at its website: http://www.ngoncoffee.com, as well as locally at the following address:

Ngon Coffee Company Limited
Cu Kuin Industrial Complex
Cu Kuin District, Dak Lak Province,
Vietnam
Tel +84-500-3642199
Fax +84-500-3642198

All inquiries and comments may be directed to:

Mr. Jaju Laxmi Nivas, Deputy General Director
Tel +84-500-3642199

Broad Community Support is not applicable for this project

	Task Description	Anticipated Completion Date
1	Develop and implement a procedure for Environment Management Program with defined roles & responsibilities. Develop and implement Company Manual and procedures for EHS management system covering risk identification and management, roles and responsibilities, monitoring and regulatory requirements. The EHS management system should be consistent with IFC’s PS1 requirements. Develop and implement management system for HACCP, ISO 22000 & BRC.	December, 2012
2	Design and implement an E&S Supply Chain Risk Assessment and Management Policies, Procedures & Mitigation Measures. As part of the above management system, NCL will develop and implement a supply chain E&S risk assessment and management policies, procedures and mitigation measures as outlined in ESRS.	December, 2012
3	NCL will develop and implement monitoring procedures for water and energy consumption for internal benchmarking.	October, 2012
4	NCL will develop and implement an Emergency Management Plan to meet emergencies, such as fire, explosion, etc.	October,2012