31829 - Pran Natore Agro

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Environmental & Social Review Summary

Project Number

31829

Company Name

PRAN DAIRY LIMITED

Date ESRS Disclosed

Dec 22, 2011

Country

Bangladesh

Region

South Asia

Last Updated Date

Jun 12, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Mar 6, 2012
Signed : Apr 4, 2012
Invested : Aug 24, 2012

Sector

Other Food

Industry

Agribusiness and Forestry

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Pran is the leading food processing company in Bangladesh, which produces and distributes beverages, such as fruit juices, cola, bottled water; snacks, confectionery (candies, biscuits), culinary products, dairy and soft drinks. It enjoys a strong brand reputation in the country and exports its products to 70 countries.

The proposed IFC investment is for the expansion of its food processing and fruit pulping operations within its existing Pran Agro Industrial Park in Natore, located around 200 km north-east of Dhaka, and will include construction and commissioning of: 6,500MT noodle line, 4,000 MT spice line, 12,000MT sauce/ketchup line, 4,500MT mustard oil line, 42,000MT fruit pulping line, 2,000MT papad (traditional South Asian crackers) line, and 4,500MT fortified cereal bar line and associated utilities, such as water and wastewater treatment plants, boiler and diesel generators for captive power generation (“Project”).

Overview of IFC's Scope of Review

IFC’s review of this proposed investment consisted of appraising technical, environmental, occupational health and safety (EHS) and social related information submitted by Pran Group (“Pran” or the “Company”) including, Environment, Health and Safety (EHS) and Human Resources (HR) related corporate level policies and procedures; food safety management system policies and procedures, overall organization chart, including E&S team; reports of external/third-party audits (related to HR, resource efficiency/cleaner production); environmental monitoring reports; detailed report for the proposed project under this investment. The appraisal included supervision site visits to the existing food processing facilities, including progress status of ESAPs, and to the construction site of the proposed investment at Pran Agro Industrial Park in Natore; and discussions with Pran’s senior management, technical and EHS teams – at each facility as well as at the corporate office in Dhaka.

Further information on the Environmental and Social (E&S) risks associated with the supply chain of agro-commodities in Bangladesh was obtained at US Department of Labor and ILO websites. The due diligence for this investment also benefited from IFC’s internal guideline on the E&S risk assessment and management of agro-commodities for traders and processors and IFC Performance Standard requirements (PS2 and PS6).

This is third investment by IFC in the Pran Group. The Environmental Social Review Summaries (ESRS) for the previous IFC investments are available at:
“PRAN”, Project no. 27005), disclosed in June 2008, is available at: http://www.ifc.org/ifcext/spiwebsite1.nsf/ProjectDisplay/ESRS27005
“PRAN DAIRY”, Project no. 30568), disclosed in April 2011, is available at: http://www.ifc.org/ifcext/spiwebsite1.nsf/ProjectDisplay/ESRS30568

The Company has, to this date, successfully implemented the Environmental and Social Action Plans (ESAP) action items for these investments. A summary status of the implementation is disclosed herewith.

Considering the nature of the proposed investment (ref. new processing plant next to the existing processing facility in Natore), this review thus, builds upon the previously disclosed ESRSs and ESAPs, and the information collected during IFC’s engagement with Pran over the past three years; and covers specific EHS and HR aspects related to the new processing facilities at Natore.

E & S Project Categorization and Applicable Standard

While all IFC’s Performance Standards are applicable, IFC’s due diligence identified social and environmental risks that must be managed in compliance with the following Performance Standards:
- PS 1: Social and Environmental Assessment and Management System;
- PS 2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement; and
- PS4: Community Health, Safety and Security

The proposed Project is being implemented within Pran’s existing footprint at the Agro Industrial Park in Natore on approximately 4 acres of land, already owned by the Company. It does not involve any new land purchase or acquisition. Hence, PS5 (Land Acquisition and Involuntary Settlement) does not apply. The agro-industrial park is located on the outskirts of Natore town in a rural residential / semi-agricultural area. As such, there are no impacts related to Biodiversity Conservation and Natural Resources Management (PS6) Indigenous Peoples (PS7) or Cultural Heritage (PS8).

Key environmental and social (E&S) issues associated with this Project include: development and implementation of integrated management systems covering quality, environment, occupational health and safety, and food safety; assurance of fair, safe and healthy working conditions in compliance with local regulatory requirements and relevant Performance Standards; resource efficiency of the operations (water, energy); monitoring and management of air emissions, wastewater treatment and discharge, solid and other waste disposal; the impacts of operations on local ambient air quality; and safety management, including emergency preparedness and response.

The Project may result in limited number of specific environmental and social impacts that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines. On this basis, this project is therefore classified as a Category B project according to IFC’s Policy and Social and Environmental Sustainability.

Environmental and Social Mitigation Measures

Pran has presented plans to address the E&S issues and impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements, including: the host country laws and regulations; IFC’s Performance Standards; and the relevant World Bank Group (WBG) General and Sector-specific Environmental, Health and Safety (EHS) guidelines (ref. Food and Beverage Processing). The information about how these potential impacts will be addressed by the Company is summarized in the paragraphs that follow.

PS 1: Social and Environmental Assessment and Management System

IFC’s assessment considered Pran’s management of its EHS performance in the establishment and operation of its facilities; compliance with national and local permit requirements; and Pran’s engagement with local communities, regarding EHS performance.
- Environmental & Social Assessment:
As per the local regulations, the Project did not require a formal Environmental and Social Impact Assessment (ESIA) study as part of permitting process. Pran has however, duly procured all the necessary permits and is compliant with the regulatory requirements.

- Management Systems:

As a part of its commitment under the previous IFC investments, Pran has initiated the implementation of integrated management system (IMS) covering ISO 9001-2000, ISO 14000, and OHSAS 18000 standards across all its facilities. Pran expects to complete the implementation of IMS across all facilities by December 2012. In addition, Pran is progressively implementing Food Safety Management System compliant with ISO22000 across all its facilities. The new production lines under the new Project are being designed with due consideration to ISO22000 standards.

Based on IFC’s regular engagement with the Company, it can be confirmed that the Company is making measurable progress towards this goal. As mentioned above, a summary of implementation status of IMS across its facilities is included in the attached ESAP update.
- Organization:
Pran has designated officers for managing EHS aspects in each of its facilities. Moreover, in order to coordinate the implementation of IMS across all its facilities, it has created a corporate level position for IMS Officer to coordinate the EHS activities and implementation of the Group’s IMS.

- Supply Chain:
Key raw materials for the proposed Project are mango, tomato, coriander, chilly, turmeric, mustard seed, fat, flour etc.

Since 1998, Pran has been engaged with local farmers in contract farming program at the Group level. Currently Pran is working with nearly 30,000 farmers nationwide to procure tomatoes, chilies, peanuts, aromatic rice and cereals.

Recently, Pran’s contract farming operation has included mangoes, where the Company provides free saplings, sprayings and training to farmers. For all the products, Pran’s extension services staff regularly advices farmers on Integrated Pest Management, including, as appropriate, the safe handling and use of chemicals in farms as a part of good agricultural practices. This requirement has already been spelled out in the ESAP of previous IFC investment (Action Item 8, #27005) and the Company is closely working with the contract farmers through its extension services on this.

Pran recognizes increasing EHS and labor related risks associated with its supply chain – especially since agriculture sector in Bangladesh is known to have instances of child labor. Pran will, therefore, as a part of its IMS, develop and implement in a phased manner, management system and procedures to undertake supply chain mapping and risk assessment of harmful child/forced labor and biodiversity related issues associated with the contract farming operation. Accordingly, Pran will (i) Integrate E&S Supply Chain Risk Assessment and Management Procedure into its management systems, (ii) develop a supply chain Policy, (iii) develop and maintain a supplier’s database to collect information on suppliers’ compliance with applicable IFC’s Performance Standards requirements, especially on issues related to harmful child and forced labor, significant safety issues leading and conversion of natural and/or critical habitats leading to biodiversity loss, (iv)mitigate and/or minimize the identified E&S risk in the supply chain; (v) training of farmers in the supply chain and (vi) supply chain monitoring and reporting.

Produce from contract farming meets approx 15% of total Pran’s total requirement at Group level. Pran meets the balance of its requirement of raw materials through spot purchases from local market. The decision to purchase the commodities primarily depends upon the Company’s requirements vis-a-vis the market availability, quality and spot market prices. In this case, Pran has limited information and control on good agricultural and labor practices on primary suppliers at farm level.

Additionally, Pran closely monitors its contractors (such as construction and transportation) to ensure that they do not employ harmful child and/or forced labor.

- Monitoring & Reporting:

Pran undertakes regular monitoring of water quality, effluents, solid waste and noise and reports to the regulatory authorities and IFC accordingly. In addition, it regularly monitors water and energy consumption in its facilities. As a condition of previous IFC investments, Pran has started compiling this monitoring information at corporate level for Group-wide benchmarking and continual improvement.

PS 2: Labor and Working Conditions

Pran employs approx 12,000 employees across all its food processing operations. The proposed expansion in Natore will require nearly 1500 employees – comprising workers and management staff. Woman employees constitute approx. 50% of total workforce of Pran Group.

- Human Resource Policy, Management
As part of previous ESAPs, Pran has been updating its HR policy and procedures, to enhance its HR practices in accordance with PS2 requirements. Based on the gap analysis from an external audit’s report conducted in 2010, the Company is addressing the following key issues: enhancing workers’ understanding of their rights, payroll records, appraisal, incentive and promotional system, and grievance mechanism. Pran has also developed and implemented policies and procedures to ensure that child labor is not employed in any manner in its direct operations.

PS3: Pollution Prevention and Abatement

IFC’s assessment considered the Company’s operations with regard to resources consumption (water, energy, fuel), corporate and plant’s level efforts to optimize resource inputs, and waste minimization and management practices.

- Pollution Prevention and Resource Conservation:

For the new Project in Natore, the Company has installed a dual fuel fired boiler of 10 ton/hr capacity. While the Company will use coal in the initial period, it plans to shift, in the short-term, to rice husk as a primary fuel for the boiler, which is available in its own rice mill nearby.

- Water Supply and Effluent:

Water requirement of the Project is estimated at a maximum of 75 m3/hr. It will be met by 2 deep tube wells at the Project site, which have shown a yield of 200m3/hr. Of the two wells, one well will be dedicated for fire fighting. Project will have its own water treatment plant with 100 m3/hr capacity to treat the water for process and drinking in accordance with WHO’s drinking parameters. Pran monitors the quality of treated water used in process in-house for every shift, and from the external government approved laboratory annually.

The Natore Agro Industrial Park already has an effluent treatment plant (ETP) based on biological treatment, which treats the wastewater before discharging in a small stream that flows along the plant boundary. For the new Project, considering the increased volume of effluents, the Company is building another wastewater treatment plant with a capacity of 100 m3/hr.

The results of the wastewater analysis from the existing operations show that Pran complies with local regulatory requirements as well as most of the WBG EHS guideline requirements. Effluent analysis data for indicates that Company exceeds the limit for oil and grease in the treated effluent. Pran has agreed to take corrective actions for the existing ETP and review the design of proposed ETP to ensure that the Project complies with the WBG’s EHS Guidelines for Food and Beverage Processing.

- Air Emissions

As a part of its reporting requirements in its Annual Monitoring Report to IFC under its existing investments, Pran is required to submit the air emissions monitoring data. The Company has been facing difficulties in finding vendors who can provide air quality monitoring services in Bangladesh. The Company is working with IFC to address this issue and ensure proper reporting of its air emissions.

In addition, the Company will review the design for the stack of its dual-fuel fired boiler, and make necessary changes, to ensure that the particulate matter from the stack does not affect the ambient air quality and create food safety issues for its production facilities.

- Solid Waste

Nearby farmers take the sludge from the ETP and use it as manure. While there are no hazardous chemicals in the sludge, in line with the local environmental permit conditions, going forward Pran will analyze the sludge contents annually and report to regulatory authorities and IFC accordingly.

Other domestic wastes, such as papers, plastic, and other domestic waste are sent to an unsecured landfill in Company’s own land, as per the permit condition.

- Energy Sources and GHG Emissions:

Energy requirement for the proposed Project will be met by 2 MW diesel generator, while the grid electricity will be used for backup.

As mentioned earlier, steam boiler will use coal as the fuel during the initial period; however the Company is planning to shift to rice husk as fuel in due course.

PS4:– Community Health, Safety and Security

Pran’s facilities are located in rural areas. The nature of the company’s operations does not present significant safety and security risks to nearby communities.

Significant impacts likely to occur related to the movement of vehicles on the approach road to Pran facilities for delivery of finished product.

Company does not employ armed security guards at its facilities. Security guards are appropriately trained to interact with the neighboring communities – and especially for screening of potential child labor with Pran contractors.

Stakeholder Engagement

Client Documentation

File Name	Actions
ESAP for Pran Natore Agro.pdf
Summary status of old ESAP Implementation.pdf

**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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