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
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
IFC’s review indicates that the investment will have impacts that must be managed in a manner consistent with the above Performance Standards. The proposed warehouse will be located in an industrial area therefore, PS4 – Community Health, Safety and Security, PS6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources, PS7 – Indigenous Peoples and PS8 – Cultural Heritage have not been identified as relevant to the IFC investment. The plots of land for the proposed warehouse were acquired through private sale, therefore PS5 – Land Acquisition and Involuntary Resettlement is also not considered relevant to the IFC investment.

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability. The environmental and social risks and impacts associated with the construction and operation of the warehouse are limited, site-specific and can be readily addressed through generally accepted mitigation measures.

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. Potential environmental, social, health and safety risks associated with the warehouse construction and operation include: the effective implementation of environmental, health and safety management systems; handling and management of construction wastes; environmental protection on site; noise and emissions controls; employee health and safety, and fair terms of employment; safe and secure handling procedures; and health and hygiene conditions for tea storage and processing.
This review summary will consider environmental, health and safety and social issues associated with the business activity to be funded, which is the construction and operation of the tea warehouse.
Information on how these issues are addressed by KTDA and its subsidiaries to comply with IFC’s Performance Standards and World Bank Group General and sector-specific Environmental, Health and Safety (EHS) Guidelines is contained in the following paragraphs.

IFC’s assessment considered: KTDA’s management of the environmental, occupational health and safety performance of KTDA-MS and CTCL; compliance with national and local permitting requirements; and public engagement and disclosure of information about its operations.

Environmental and Social Assessment: KTDA-MS manages all construction projects for the KTDA subsidiaries. KTDA-MS operates an ISO 9001 certified Quality Management System and all projects are handled in accordance with the requirements of applicable Kenyan Legislation. Kenyan Law requires Environmental Impact Assessments (EIAs) for all construction projects and permits are issued by the National Environmental Management Agency (NEMA). Construction projects are undertaken by contractors and KTDA-MS monitors the projects to ensure compliance with local laws and regulations as well as the conditions outlined in the NEMA permits. Typically, KTDA-MS retains the consultants that conduct the EIAs to provide support on E&S issues that arise in the course of the projects. The EIA for the proposed warehouse project has been awarded to a consultant and is expected to be completed by the end of August 2012.

KTDA-MS’ quality management process is audited annually to retain its ISO 9001 certification.

CTCL – KTDA-H’s warehousing and logistics subsidiary - maintains an ISO certified Quality Management System (ISO 9001) and an ISO certified Food Safety Management System (ISO 22000 obtained in 2011). CTCL’s operations pose limited and readily mitigable environmental and social risks; the most significant risks relate to food hygiene, labor, occupational health and safety aspects of the tea blending process and transportation. CTCL’s operations comply with local Kenyan Laws and the requirements of the ISO certifications.

Policy: CTCL has a formal Environmental, Health and Safety Policy which covers all its operations. The policy covers all procedures related to occupational health, safety, and the environment and is tailored to meet Kenyan regulations and the requirements of the ISO certifications.

Management Program: KTDA-MS has no formal Environmental Management System. Identified impacts and risks are monitored on a project by project basis through the EIA process and where action plans are developed, implementation is monitored by the project team. The proposed warehouse will be located in an industrial area and the risks and impacts associated with the construction and operation are expected to the limited. For the construction phase, any risks and impacts identified by the EIA will be managed the appointed contractor in line with Kenyan Law and the conditions outlined in the NEMA permit, and this will be monitored by the KTDA-MS project team.

Organization: Construction projects are handled by KTDA-MS’ Technical Services Department. Each project is led by a Team Leader (Architect or Civil Engineer) and monitoring of the construction is done by the Resident Engineer/Clerk of Works who liaises with the contractor and the KTDA-MS project team. KTDA-MS has recently hired an Environmental Officer to strengthen the company’s E&S review and monitoring of projects.

At CTCL, EHS issues are overseen by the HR and Administration Department with the Assistant Manager, HR and Administration being responsible for the EHS Policy implementation. The Operations Manager and Assistant Manager are responsible for ensuring that all employees are informed about the EHS Policy. Furthermore, the EHS Policy also specifies the roles and responsibilities of individuals, supervisors and managers in the implementation of EHS procedures.


Community Engagement: For construction projects, community engagement is managed by KTDA-MS Corporate Manager. Consultation with affected communities is facilitated by the municipal authorities – communities are informed of new projects and given the opportunity to raise any objections. Based on previous experience in rural areas, KTDA also engages directly with the local administrative authorities and KTDA contractors are required to employ labor from communities where projects are located. Although, the proposed warehouse is not expected to have any significant community impacts based on the location, as required by Kenyan Law, community engagement/public consultation will be initiated once the EIA has been submitted to NEMA. Notice of the construction will be given to the public by NEMA and any concerns raised will be handled by KTDA-MS prior to the issuing of the permit by NEMA.

During construction, complaints/grievances will be handled by the KTDA-MS project team; contact details of relevant personnel (Project Team Leader) will be made available to the public at the site. During operation, community-related issues do not represent a significant risk or impact. Therefore, CTCL undertakes no formal community engagement; the company however engages in CSR initiatives that benefit the community. The operation of the new warehouse will be beneficial to the local community as most of the laborers will be recruited from the neighborhood by CTCL’s appointed labor services providers.

Monitoring and Reporting: KTDA-MS’s Technical Services Department maintains all the records of construction projects and regular reports on project status and any issues including E&S issues are raised to the board of the subsidiary that owns the asset. Monthly team meetings led by the Team Leader (the appointed Architect or Civil Engineer for the project) are held and where issues are identified they are dealt with by the site management, KTDA Board or regulatory authorities as required. Quarterly reports are provided to the board of the subsidiary that owns the asset by KTDA-MS.

IFC’s review considered KTDA’s operations with regards to fair, safe and healthy working conditions across the KTDA facilities.

Human Resources Policy and Management: All KTDA subsidiaries are covered by the KTDA Group HR Policy. Where applicable, each subsidiary may amend sections of the HR Policy to reflect the unique requirements of the sector in which it operates e.g. Majani Insurance Brokers staff are entitled to commissions as is the practice in the insurance industry. Across the seven subsidiaries and KTDA (H), there is a total of 1,462 staff – KTDA (H) 24; KTDA-MS 654; KETEPA 517; CTCL 111; Majani 83, Greenland Fedha 61; KTPC 9, and KTDA Tea House 3. KTDA-HR is operated as a shared service across all subsidiaries.

The terms and conditions of employment stated in the HR Policy meet, at a minimum, the wage scales and benefit entitlements established by the Kenyan Ministry of Labor the National Employment Act, Labor Relations Act and Regulation of Wages Act, which themselves are consistent with, at a minimum, the Core Labor Standards established by the International Labor Organization. All staff are entitled to medical cover for themselves and their dependants and all permanent staff are covered by the Group life insurance scheme.


Worker’s Organization: KTDA employees are free to form or join workers’ organizations. KTDA-MS staff are however not union members because they are all management staff. CTCL has a number of unionized employees and there is a Collective Bargaining Agreement between the company and these employees.

Occupational Health and Safety: KTDA has a Health and Safety Policy. KTDA’s health and safety policy and practices are formulated to fulfill the requirements of Kenyan Health and Safety Legislation, in particular the Occupational Safety and Health Act (OSHA), 2007. Protective equipment and clothing are provided for employees where required and failure to use or wear the equipment or clothing by an employee is subject to disciplinary action.

For the construction of the proposed warehouse, site safety will be managed by the contractor and the effectiveness of this management will be monitored by KTDA-MS and the regulatory authorities. Contractors are required to comply with the requirements of OSHA and are also required to have adequate insurance to cover accidents and injuries to personnel on the construction site. E&S requirements will be included in the contract tender process and the E&S performance of contractors will be considered during the selection process. Compliance with Kenyan Laws and the conditions outlined in the NEMA permit will be included in the contract with the winning bidder.

Non-Discrimination and Equal Opportunity: KTDA does not discriminate against any group in its operations. The HR Policy includes recruitment procedures, disciplinary procedures, grievance procedures and training and development procedures.

Retrenchment: KTDA’s redundancy process is covered in the HR Policy and is in conformance with Kenyan Labor Laws and the CBA (for the factories and CTCL). The last major retrenchment was at the time the company was privatized and the process was conducted in line with Kenyan Labor Laws. KTDA anticipates some redundancies in KETEPA – its tea packaging subsidiary – as result of an ongoing restructuring process. KTDA is currently in the process of consulting with KETEPA staff and is providing training to the staff; where possible, staff will be deployed to other KTDA subsidiaries.

Life and Fire Safety: KTDA operates robust fire safety systems in all factories and warehouses; all locations are equipped with smoke detectors and firefighting equipment with independent water supplies. The same standards will be applied to the new warehouse.

IFC’s review considered the KTDA’s management of its operations, resource use and waste disposal procedures and the impacts on the surrounding human and natural environment. The review focused on KTDA-MS (warehouse construction) and CTCL (warehouse operation).

Pollution Prevention, Resource Conservation and Energy Efficiency: The design work for the new warehouse has not started but it is expected to include energy efficiency aspects. CTCL has provided KTDA-MS with a number of desired initiatives for the warehouse project for consideration. These include: natural ventilation, natural lighting, spatial considerations, and use of asbestos-free and shatterproof construction materials.

Wastes: For KTDA-MS, a Site Waste Management Plan is developed for each construction project and this plan must be adhered to by the contractor. Monitoring is done by the KTDA-MS team.

Pesticide Use and Management: At the warehouses, pests (rodents) are controlled by the use of traps; no pesticides are used. Insects are controlled through the use of electric insectocutors. Bat-proofing structures mounted on the warehouse vents are fitted with nets to prevent any insect intrusion through the vents.

As part of the statutory EIA process, NEMA requires public engagement through public meetings and stakeholder interviews at the draft and final stages of the EIA process as well as announcements in local newspapers. Once the EIA for the warehouse project has been completed and submitted to NEMA, the public will be made aware of the project and the community engagement process will begin.

Furthermore, KTDA has set up KTDA Foundation as a vehicle for coordinating and delivering Corporate Social Responsibility projects across the Group.

Company Contact
Benson Ngari
Director, Kenya Tea Development Agengy (Holdings) Limited
KTDA Farmers Building, Moi Avenue
P.O. Box 30213-0010, Nairobi, Kenya
Tel: 254 020 322 7000
Fax: 254 020 2211240
Email: mailto:BNgari@ktdateas.com

Broad Community Support is not applicable for this project

Title	Anticipated completion Date	Status	Comments	Completion Date
Environmental & Social Management System: Develop and implement a formal Environmental and Social management System for KTDA-MS.	10/31/2012 12:00:00 AM	Completed	Completed	12/06/2012 12:00:00 AM
Submit an Environmental Management Plan for the project which describes how any risks and/or impacts associated with the construction of the warehouse will be managed.	10/31/2012 12:00:00 AM	Completed	Completed	12/06/2012 12:00:00 AM
Submit the design for the new warehouse demonstrating energy efficiency.	11/15/2012 12:00:00 AM	In Progress	Under discussion with IFC client