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
The Project does not involve any new land acquisition and there are no forest lands, ecologically sensitive areas, indigenous people or cultural heritage in the vicinity of any of the Project sites. No new impacts are expected on the marine ecology due to the refurbishment of hotel in Bentota (as NHR has been in operation at the same place since 1969).

Accordingly, the findings of the Project review indicate that there are no impacts related to Land Acquisition and Involuntary Settlement (PS5), Biodiversity Conservation and Sustainable Management of Living Natural Resources (PS6), Indigenous Peoples (PS7) or Cultural Heritage (PS8).

This is a category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines.

Key environmental and social (E&S) risks and issues related to this project include: adequate assessment of the E&S impacts of the Project; implementation of social, EHS management systems; engagement with local communities in accordance with local requirements and IFC Performance Standards and World Bank Group (WBG) environmental, health and safety EHS Guidelines; assurance of fair, safe and healthy working conditions; resource efficiency; management of emissions, wastes and discharges; and life and fire safety management of all the public access buildings.

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. The Company has presented plans to address these 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 World Bank Group WBG/EHS guidelines. The information about how these potential impacts will be addressed by the Company is summarized in the paragraphs that follow.

IFC’s assessment considered the Company’s management of its EHS performance in the establishment and operation of its facilities; compliance with national and local permit requirements; and the Company’s engagement with local communities as well as its suppliers, regarding environmental, health and safety performance and corporate social responsibility.

- Environmental & Social Assessment:

The retail business will involve opening of new stores with an average area of 750-1000 sqft in rented or leased premises in well established urban commercial areas. No formal environmental and social impact assessment (ESIA) is required for this purpose. However, as a part of permitting process, Company is required to assess and revise its designs/plans as required, so as to comply with a range of requirements related to structural safety, fire safety, water, electricity supply etc. – thereby mitigating key environmental and safety related impacts.

The hotel in Bentota being part of NHR is governed by SLTDA, which also acts as one-stop center for all the regulatory approvals. Since the Project involves refurbishment of an existing facility, a formal ESIA was not required. However, the SLH is required to follow guidelines stipulated by Coastal Conservation Authority, Urban Development Authority and Irrigation Department.

- Management Systems:

SLH has not yet implemented a formal and documented management system certifiable to international standards (such as ISO 9001 or ISO14001). However, corporate-wide procedures and practices are in place for the day-to-day operations as well as for new project development.

The Company has also articulated an Occupational Health and Safety policy covering all the operations of SLH. The policy articulate the Company’s commitment to safety management and compliance with environmental and safety laws and regulations.

For the proposed Project, the Company will establish an overarching policy defining the E&S objectives and principles that will guide the Project to achieve sound E&S performance. The policy will specify that the Project will comply with the applicable laws and regulations and the IFC Performance Standards. The policy will indicate who, within the organization, will ensure conformance with the policy and be responsible for its execution. SLH will communicate the policy to all levels of its organization and other stakeholders.

- Organization:

SLH comprises of several business verticals, and E&S issues for each vertical are managed independently in a decentralized manner. Accordingly, the manager of each retail outlet is responsible for all the day-to-day operational issues at the store including managing the E&S and workforce related issues.

For the roll out of new retail stores and the hotel dedicated project teams are in place for retail and leisure/tourism businesses.

As per the proposed E&S policy (as above), in order to manage the E&S aspects of the operations across the retail store and hotel(s), SLH will designate a senior officer as management representative at the corporate level, who will oversee and coordinate the E&S and corporate social responsibility (CSR) functions with the help of respective operational teams.

- Monitoring & Reporting:

SLH’s corporate office compiles the information related to Human Resources, operational aspects and commercial aspects such as stocks and sales (in case of retail operations).

In order to extend this monitoring program to cover E&S aspects, and benchmark the performance of various retail outlets, internally as well as against the international best practices, SLH will develop a Standard Operating Procedure (SOP) for monitoring and reporting of key performance indicators (KPI) across all the stores. The summary reports coming out of this exercise shall be submitted to top management on regular basis.

The upcoming hotel in Bentota will be managed by Centara, who will be responsible for monitoring and reporting of key E&S aspects associated with the hotel operation. As per its own Sustainability Vision and Policy (http://www.centarahotelsresorts.com/CentaraSustainability.asp), it will “report on key environmental performance indicators in order to raise environmental awareness among its associates, guests and communities” and “establish action plans on sustainability practice with a regular and consistent monitoring system”.

- Managing Supply Chain:

SLH’s supply chain for the retail business comprises of consumer goods manufactured by prominent international brands such as Panasonic, NEC, Nokia, Samsung etc. Many of these brands have initiated their own initiatives for “green design innovation” or “eco-products development” for enhanced resource efficiency and reduced environmental impacts throughout the life cycle of the product. Company not only promotes such products, it also participates in various sustainability related activities of such suppliers; e.g. it is implementing an electronic waste collection and recycling program with Nokia.

For SLH’s proposed hotel, its operator Centara has articulated corporate procurement guidelines, by which Centara gives preference to energy saving, water efficient, durable and organic products for all the hotels that it operates.

SLH employs a total workforce of over 6,000 across all its businesses. Women constitute 51% of this workforce.

The leisure business currently has around 55 employees, which will be scaled up to around 215 once the new hotel is operational. The retail business employs nearly 600 – comprising of both direct and indirect employees.

- Human Resource (HR) Policy, Management

SLH’s corporate HR department oversees the HR management across all its businesses and facilities, with dedicated HR teams for each business vertical. Corporate HR policies have been developed, covering various issues related to terms of employment and working conditions for the employees, such as: recruitment, probation, confirmation, performance evaluation, remuneration and promotion, leave, overtime, maternity benefits, retirement and disciplinary procedures.

For the retail business, the store manager is the direct employee of the Company and s/he is responsible for recruiting and managing the sales staff in each store as per her/his personal discretion. The store manager is also responsible for ensuring the compliance with applicable labor laws for these employees.

In order to standardize the management of this sales workforce in retail stores, Company will establish policies and procedures for managing and monitoring these indirect employees in relation to the requirements of local labor law as well as the IFC Performance Standard 2.

- Child and Forced Labor

Child or forced labor is not employed in any manner in SLH’s operations. There was no evidence of child or forced labor during the visits to SLH facilities. Further, to ensure that no child labor is employed by any of its contractors (especially construction / transportation) relevant clauses will be issued in these contracts.

- Freedom of Association, Grievance Mechanism

Management has no restrictions on unions, although there are none that are active at any of SLH businesses. There is provision for collective bargaining in Sri Lanka.

Currently, employees can raise grievances verbally or through written complaint to their direct supervisors; grievances may then be further escalated depending on the nature of the complaint. Going forward, Company will update its HR manual, to include formal grievance handling procedures, in line with the international best practices.

This mechanism will involve an appropriate level of management to address concerns promptly, using an understandable and transparent process that provides timely feedback to those concerned, without any retribution. The mechanism will also allow for anonymous complaints to be raised and addressed. SLH will ensure that contracted workers – such as sales staff – will have access to this grievance mechanism.

- Training and Human Resources Development

Each business vertical defines training needs for its staff, which are then forwarded to the corporate HR team. Accordingly, training programs are developed and delivered by the corporate HR team throughout the year.

All the new employees undergo extensive induction training, which is organized every month. Induction programs for the retail business also include on product-related trainings to the sales staff.

For the new hotel, extensive training will be provided by the hotel operator (Centara) to all the employees, to be recruited in the future. Training on life and fire safety aspects will also be provided.

- Occupational Health and Safety

The retail store and hotel environments do not present significant occupational health and safety risks for the employees. Loading/unloading of some heavy material may result in limited ergonomic impacts on the workers. Adequate personal protective equipment (PPE) such as shoes, gloves and masks are provided to the workers as needed.

- Construction Safety

The new retail stores will not require any new construction, as most will be leased / rented in the existing buildings.

For the hotel project in Bentota, substantial construction / refurbishment work will be required, for which several contractors will be deployed. Accordingly, subcontractors will be responsible for site safety and working and living conditions of construction workers, according to specific clauses included in the contracts based on the standard template developed by Sri Lanka’s Institute of Construction Training and Development (ICTAD), and are similar to those produced by International Federation of Consulting Engineers (FIDIC).

This contract requires each subcontractor to appoint a safety officer on site reporting to SLH; develop a safety calendar for the site and procure insurance for all the workers. In addition, SLH’s projects team will closely monitors each subcontractor’s performance.

Labor camps will be developed and managed at Bentota site by the respective contractors in accordance with the contract conditions.

IFC’s assessment considered the Company’s operations with regard to resources consumption (water and energy), efforts to optimize resource inputs, waste minimization and management practices in the construction and operations of facilities.

- Resource Efficiency:

Electricity is the key resource for SLH’s operations, which also has a direct impact on its operating costs, and also the primary cause of the Company’s Greenhouse gas (GHG) emissions. SLH would like to reduce the electricity consumption in its operations in line with global best practices. Accordingly, SLH is designing the new hotel to make it energy efficient and thus achieve LEED (Leadership in Energy Efficient Design) certification. Currently, Company is in the process of recruiting external consultants to assist in this.

Further, SLH will review its store designs comparing with global best practices and develop standard guidelines for future stores. These guidelines, for instance, could include energy efficient “solar passive architectural design” of stores, high standards of thermal insulation, switchover to energy efficient lighting systems, water efficient plumbing and sanitary fixtures etc.

- Water and Energy Supply:

Electricity is the primary source of energy for all the stores, which is sourced from the national grid. Some stores have small capacity diesel-fired backup generators. The hotel in Bentota will have diesel generators of adequate capacity to provide backup power.

Treated water is sourced from municipal supplies for all the stores as well as the hotel in Bentota. It is estimated that the total water requirement of the hotel will be around 70 cu.m/day at about 70% occupancy.

- Emissions and Waste Management:

Wastewater from the stores is discharged into the municipal sewerage system, which is further treated in the central treatment plant.

Effluent from the proposed hotel in Bentota will undergo pretreatment after which it will be discharged to the central wastewater treatment plant operated by NHR.

Solid waste from the Project (primarily domestic waste and waste packaging materials) shall be collected by the municipality for further treatment and disposal as per the environmental permit condition.

Emissions will be primarily from backup diesel generators and boilers. These will be monitored and managed in accordance with environmental permit conditions.

IFC’s assessment considered the Company’s operations with regard to the impacts of the construction and operations of facilities, including: movement of vehicles to and from construction sites, containment of dust, noise and other nuisance factors; and Life and Fire Safety.

- Impacts on Communities

Development of new retail stores will not entail new construction, and hence there will be no significant impacts on the nearby communities. Similarly, the hotel redevelopment will be carried out inside NHR, which is directly accessible by the national highway and is far away from any communities. As such, traffic related impacts due to the Project are expected to be minimal.

Other impacts due to construction such as noise, dust will be temporary in nature and will be limited to the project site.

- Life and Fire Safety of Public Access Buildings

SLH complies with all local fire safety related regulatory requirements across all its stores. In addition, SLH complies with the design and safety specification of the manufacturer (such as Nokia, Panasonic, Levi’s) for their stores. Accordingly, SLH’s operational stores are equipped with fire fighting systems such as smoke detectors, fire alarm, fire extinguishers etc. depending on the fire risk profile and the specific local situation.

In order to ensure minimum common fire safety design standards across all its stores consistent with the international standards, SLH will commission a fire safety professional to undertake a review of fire safety systems for a sample of its existing stores. Based on this review, the professional will develop screening criteria and standard design specifications for life and fire safety systems for all the future stores. These will be then implemented for all the future stores being developed under the Project.

For the its leisure/tourism business, SLH will commission a fire safety professional to develop a site-specific Life and Fire Safety Master Plan for the upcoming hotel in Bentota, responsive to all national requirements and an internationally recognized fire and life safety code, as required the life and fire safety section of the WBG EHS General Guidelines. The fire safety professional shall represent that each building-specific Master Plan shall meet the requirements of local and an international code and the WBG EHS General Guidelines.

Following construction, the fire safety professional shall inspect the newly constructed buildings. SLH will submit to IFC certifications from this professional that each facility is designed, constructed, and operated in full compliance with local building codes, local fire department regulations, and one international fire safety code or alternatively listing additional work needed for such compliance.

SLH will consider the potential risks due to earthquakes as well as potential impact of tsunami in the design of the proposed buildings.

- On-site Emergency Response Plan:

As an outcome of systematic life and fire safety risk review, SLH will develop an Emergency Management Plan, for retail stores. This will cover emergencies such as fire and natural disasters. Similar Emergency Management Plan will also be prepared for the hotel, before it is operational.

On the basis of the above information, and by implementing the Environmental and Social Action Plan it is concluded that the Project has been designed and will be operated in compliance with IFC’s PS and relevant environmental, health and safety guidelines.

Care for the community and the environment and taking the responsibility to protect them is one of the core values articulated by SLH in its annual report. Accordingly, SLH implements several CSR projects.

Company is in the process of formalizing its engagement with the communities in a more strategic manner. For the Project in Bentota, Company will develop and implement a stakeholder engagement plan, comprising a grievance mechanism and plan for external communication on Project''s environmental and social impacts for the nearby communities and other stakeholders. Local disclosure of this ESRS will be an important aspect of Company’s community engagement and disclosure program.

The Company will disclose this ESRS and the ESAP at its website: http://www.softlogic.lk as well as
locally at the following address:

Softlogic Holdings PLC
No 14, De Fonseka Place,
Colombo 05
Sri Lanka

Local disclosure address for Bentota Project
Centara Ceysands Resort and Spa
Aluthgama
Sri Lanka

All inquiries and comments may be directed to:
Ms Rashika Weerasena
Designation: Manager – Investor Relations
Softlogic Holding PLC
Address: No 14, De Fonseka Place, Colombo 05. Sri Lanka.
Tel: +94115575176, Cell: +94773037849
Fax: +94112595441
Email: mailto:rashika.weerasena@softlogic.lk

Broad Community Support is not applicable for this project